1.

1 Dairy Industry: An Overview

Industry is one of the major constituents of the comprehensive term ‘Business’

which may be defined as the regular or current production or purchase and sales of
goods undertaken with the main object of earning profit and acquiring wealth
through the satisfaction of human wants, and in the terms of Economics, business
may be described as a programmed of inputs (investment) and output (return)
aiming at the maximization of output with lowest input. Industry as a part of
business activity is concerned with the raising, producing, processing or fabricating
products or services which may be used either by the final consumers or by other
industrial units for further production.

Industry may, broadly, be classified into four types viz., (a) Extractive (b) Genetic
(c) Manufacturing and (d) Constructive industry. Historically, they may be
categorized into (a) Primary or Natural industries, and (b) Factory industry. In the
former are included (1) Hunting (2) Fishing (3) Animal husbandry (4) Forestry (5)
Agriculture (6) Mining (7) and all other industries, which use, predominantly
natural resources as the basis for their productivity activities and whose products
are utilized mainly by the ultimate consumers. While the later covers those
industries which undertakes, on massive scale, conversion of raw material into
finished products by extensive use of plant and machinery metallurgical industries,
engineering industries, textile industries, chemical and allied industries, food
industries, generation and distribution of electricity, etc. In the process of
industrialization, the primary industries get gradually and progressively submerged
with the factory industries.

Dairy industry occupies an important place in animal husbandry. It embraces the

production of milk, its preparation for sale as well as the manufacture of dairy
products. The Central Statistical Organization, Department of Statistics.
Government of India, have under the annual survey of industries, classified dairy
industry under industries major group-20, Food Manufacturing Industries.

1
A dairy industry depends on milk. Milk is raw material for dairy product. Milk is
the ‘nature’s perfect food’ for all ages. It has almost all the vital nutrients needed
for growth and well being of the human body. Milk is the richest source of calcium
and essential amino acids which is good for bone formation. It is particularly
beneficial for people recovering from sickness, children, sport person, aged ones,
women etc.

The dairy industry of India has grown from an almost completely unorganized but
vastly complex industry of a large magnitude to an organized industry during the
last 55 years with an annual milk production of about 29 million metric tones in the
year 1979-80. India’s milk production in 2001 is forecasted at 81 million tones. In
India it took nearly 30 years to achieve self- sufficiency in milk production. The
country had produced 123 million tones of milk in 2010-11, 127.9 million tons in
2011-12. The annual growth rate for production of milk is increased about 5% in
2011-12 as compared to 2010-11. India continued to rank third amongst the
countries of the world. The first two position being held by Union of Soviet
Socialist Republics and United States of America.

The dairy development in India has twin objectives of increasing total milk supply
on commercial basis and diversifying agricultural structure by developing dairy as a
supplementary or principal occupation which would help increasing the income of
the small and marginal agriculturists and/or landless labourers. Dairy industry
occupies an importance place in Indian economy. It embraces the production of
milk, its preparation for sale as well as manufacture of dairy products.

The growth of Indian dairy section has been spectacular during the past three
decades. The Indian dairy industry is not only a vital producer of an essential food
item but it also is one of the largest employers in the country in both the rural sector
as well as the semi urban and urban region. It gives an opportunity to about eight
crores families across India.

Apart from the nutritional importance of milk for human consumption, dairying
provides employment to the vest number of persons with no means of production of
their own and put them to productive work so as to enable them to contribute to the
2
national product and earn their share in it. It processes tremendous potential for
providing employment to the massive rural population. It can equitably distribute
the gain and thus assists even the weakest sections of our society. Further, milk is
one of the few commodities which give the producer a large share of what the
consumer pays for it. Thus, dairying is a very important instrument for the
upliftment of the rural economy of our country. Dairy development on modern lives
will generate additional income and employment in rural areas itself and can act as
an effective instrument for social change in rural India.

The composition of the milk production in India has been dominated by buffalo
milk with 76 per cent of the total milk production as compared to 94 percent of cow
milk in the total production of milk in the ward. Although mulch buffaloes have
come to be comparatively more prolific milk procedures in India. The importance
of cow continues as a supplier of cheap milk as also bullocks. Livestock keeping in
general and dairying in particular has been the integral party of Indian agriculture.
In additional, dairying provides a source of nutrition and additional income to our
farmers.

Inefficient and poor maintenance of large number of cattle in the context of

available resources could be responsible for the fact that although there are 12
percent more dairy animals in India than four leading countries put together, India
produces less than 12 percent of the milk produced by these leading countries of the
world.

1.2 Dairy Industry: Over The Time

1.2.1 Traditional Dairying

Traditionally, all the milk in the past had been produced in the villages in India.
Even today the bulk of the country’s milk supply comes from the cattle owners in
the rural areas. In the old days, the farmers produced milk usually for their own
consumption. Most of the milk was converted by them into butter, ghee and butter
milk, which constituted important food items for the family. As marketing facilities
for milk did not exist in those days, the surplus milk was generally turned into ghee

3
for sale in the villages or in the near-by town markets. Later on, this pattern
changed and most of the surplus milk was either sold by the cattle-owners to the
consumers, in the nearby areas or collected by the middlemen for sale in the urban
markets.

1.2.2 Modernisation of Dairy Industry

Modernization of the dairy industry in India gained momentum with the

commencement of India’s first five Year plan in 1951. With the aim of catering to
the requirement of clean milk for the growing population in urban areas, the initial
government action in this regard consisted of organizing milk schemes for the large
cities. The basic objectives of these schemes was to facilitate arrangement for the
efficient flow of milk produced in the rural areas to the dairy plants located in cities
and distribution of the processed milk to the urban consumers. The working of the
milk schemes was quite helpful for the development of the dairy industry on
modern lines in India.

1.2.3 Co-operativization

The establishment of milk co-operatives is another feature of the modern dairy

industry in India. For successful functioning of economic enterprises in our
villages, it is necessary that they are given a corporate identity. In most developed
countries, co-operative have emerged as the most cohesive organization of farmers.
They provide the middle course between the acquisitive and individualistic trends
of economy on one hand and too much centralization and regimentation on the
other. They have the merit of combining freedom and opportunity for the small man
with benefits of large scale management and organization as also good- will and
support from the community.

In India, though the co-operative movement was initiated by the co-operative credit
societies Act, 1904, dairy co operative could not be promoted till the passing of the
co-operative societies Act, 1912. though, with the establishment of the first co-
operative dairy society at Allahabad (U.P.) in 1913, the movement of dairy co-
operative got initiation and spread subsequently in different parts of our country. Its

4
real large sale and systematic break through could be noticed since 1946 when
Kaira District Co-operative Milk producers’ Union Limited (KDCMPUL)
popularly known as ‘Amul Dairy’ which was set up at Anand in the Gujarat state.

The genesis of co-operative movement can be traced back to the first half of the
18th century. Industrial revolution in U.K. had augmented the production at the cost
of ethics and values of mankind as man was replaced by machine. Because of lust
and lure for the production, it had directly resulted in the exploitation of the
mankind and so co-operative movement took birth in U.K. for improving the
condition of labourer. From England, co-operative movement spread out all over
the world and had been changed in to the great movement.

Table 1.1 : Co-operative movement in a various countries

No. Type of co-operative Name of country
1 Dairy Co-operatives Denmark, New-Zealand
2 Farming Societies Russia, Yugoslavia and Palestine
3 Labour Societies Italy
4 Insurance Co-operatives England
5 Co-operative Education England
6 Marketing Co-operatives Canada, U.S.A., and Australia
7 Land Mortgage Credit Germany, England and France
8 Consumer's Co-operatives England, Russia and Sweden
9 Credit Co-operatives Germany, Italy, Sweden and India
10 Producers Co-operatives France and England

1.3 Genesis of Co-operative Movement in India

1.3.1 Before independence

At the end of 19th century, most of the rural masses in India suffered from poverty,
ignorance, improvidence and ancestral debt and occasional outbreaks of natural
calamities. All these factors led to rural indebtedness. The rural poor was being
exploited by the moneylenders by way of charging unfair rates of interest. With the
purpose of saving the peasants from the clutches of money lenders, provincial

5
governments enacted several measures of relief like Deccan Agricultural Relief Act
(1879), Land Improvement Loan's Act (1883) and Agriculturists' Loan's Act
(1884). These measures were not much of help due to strict and awkward official
procedures.

In 1901 the committee under the chairmanship of Sir Edwand Law was appointed
by the Government to study the prevailing economic condition in India. The
committee recommended the introduction of Cooperative Credit Societies Act (No.
10), 1904 came into force. Introducing the Bill in the Imperial Legislative Council,
Sir Devzil Ibberson aptly remarked: "Only along the co-operative route will India
find the way from poverty to plenty"

1.3.2 After independence

In the post-independence era, co-operation has been assigned a notable role in

bringing socio-economic changes through the process of democratic planning with
accent on assisting the weaker sections of the community. Supporting this
viewpoint, R.B. Tyagi observed: "In fact, co-operation has begun to be felt as the
only panacea for all our maladies, both social and economic and specially of the
rural sector." According to a Government publication, "co-operatives in the
country's economy will not only avoid excessive centralization and bureaucratic
control likely to result from planning itself, but, also curb the acquisitive instincts
of the individual producer or trader working for himself." For these reasons, various
Five Year Plans have envisaged a great deal of scope for the organisation of co-
operative activity.

The first Five Year Plan of India recognized co-operation as an indispensable

instrument of planned economic action in democracy, combining initiative, mutual
benefit and social purpose." Reiterating the approach enunciated in the First Five
Year Plan, the Second Five Year Plan maintained that, "the building up of co-
operative sector as part of the scheme of planned development is thus, one of the
central aims of the national policy." The Third Five Year Plan observed that "a
rapidly growing co-operative sector with special emphasis on the needs of the
peasant, the worker and the consumer becomes a vital factor for stability, for
6
expansion of employment opportunities and lot swift economic development."
Based on the concept of growth with stability and social justice, the Fourth Five
Year Plan visualized a bright future for co-operatives.

During the Fifth Five Year Plan also, co-operatives were recognized as an
important institutional framework to ameliorate the condition of weaker sections,,
particularly in providing inputs and working as an important limb of the National
Public Distribution Scheme. The Plan stated, "there is no other instrument as
potentially powerful and full of social purpose as the co-operative movement." The
Sixth Five Year Plan pointedly recognized the non-exploitative character of co-
operatives, the voluntary nature of their membership, the principle of one man one
vote, decentralized decision-making and self-imposed curbs on profits extremely
qualifying them as an instrument of development combining the advantages of
private ownership with public good. The Seventh Five Year Plan aims at
developing the primary agriculture credit societies as multipurpose viable units,
promoting professional management and strengthening of effective training for
improving operational efficiency.

1.3.3 Progress of Co-operatives

The co-operative movement in India is one of the largest in world. Since

independence, it has progressively expanded in terms of membership, resources and
transactions.

A salient feature of the Indian co-operative movement is that it has not only
numerically expanded but has continuously diversified its activities over the years.
It has left almost no sector of economy, untouched. In addition to traditional
activities like credit, marketing, distribution etc., it has penetrated into fields like
fisheries, housing, handicrafts, handloom etc.

The Government's emphasis on the timely supply of agriculture credit and other
inputs to the farmers, through co-operative societies at the village level and
processing and marketing of their outputs through farmer-owned co-operatives, has
given an impetus to the co-operative movement and has also helped to protect the

7
interests of the farmers. At the initiative, and with the assistance from the
Government, the policies, procedures and programmers of co-operatives have also
been increasingly oriented to helping the weaker sections and to developing the
backward areas.

The Central Government over the years has set up various expert committees and
working Groups to study specific problems and issue. Since independence, 34 such
committees have been set up.

By and large, co-operatives in developing countries have failed to fulfill their

objective or strengthening the economically weak. They have thus, been unable to
bring about the socio-economic structural change. Rather, it has been found that in
India. Though 45 per cent of the rural population is reported to be covered by the
co-operatives, according to the Sixth Plan the weaker sections of the community are
still not adequately represented in the membership roll. Thus, the fruit of co-
operatives are reaped by the rich and influential people at the expense of the rural
poor. It is, therefore, necessary to evolve suitable ways and means to increase the
flow of benefits to these sections. One of the alternatives is that co-operatives
should be made to extend credit facilities only to the weaker sections of society,
while credit needs of big cultivators should be met by financial institutions other
than the primary credit societies.

Due to rapid economic development from 1969 onwards, the Central Government
resorted to the multi-agency approach by setting up public and private sector
institutions. These institutions have, however, emerged as competitors to the
budding co-operatives in almost all the fields and consequently its growth has
slowed down. It is suggested that the Government may find out ways and means
whereby duties and responsibilities may be clearly demarcated. At the same time,
there is need of an effective co-ordination between these agencies so that they play
a supplementary, complementary and mutually stimulating role against the
exploitative practices of private sector.

At present, there is no independent Ministry at the national level which can take
care of all the facets of the third emerging sector of the economy in a rational
8
manner. In fact, co-operation has been given a step motherly treatment by the
Central Government. It was tagged with a number of Ministries at various times,
for example, Ministry of Food, Ministry of Community Development, Ministry of
Agriculture and Irrigation, Ministry of Industries and Civil Supplies. At present, co-
operation merely forms one of the divisions in the Department of Agriculture and
Co-operation (Ministry of Agriculture and Rural Development). Although there are
constraints to multiply the number of departments at the centre, yet looking at
significant role assigned to the co-operatives in the socio-economic development of
the country through the participation of the neglected, weaker and down-trodden
sections of the community, it is suggested that as and when it is feasible,
Government may set up an independent Department for Co-operation.

1.3.4 Beliefs in Dairy Business

Further to my interactions with scores of people thinking of entering dairy business

all across (especially India) the country, it was quite evident that the general beliefs
are

1. Dairy farming is an easy business

This is because dairy farming is done by a farmer, who in most cases is not much
learned and has been doing this business for quite a lot of years and is making
money. However the main constraint in his dairy farming is that he has been
following the traditional methods in everything viz., feeding and management
(which comprises more than 80% of the farming costs) by virtue of which he is not
in profits but just making both ends meet along with little help from his agricultural
income. This business is easy provided you are well aware of the basics and are
able to apply scientific methods which can help improve the overall profitability. At
the same time, it must be understood that dairy has to be closely observed day in
and day out as there is no holiday in dairy farming.

2. Animal provides milk throughout the year

The animal provides milk only after it gives a calf (offspring) and not otherwise.
On an average a cow gives milk for 270-300 days whereas the buffalo provides it
9
for 240-270 days. The period (called lactation) is followed by a dry period (during
which it does not give milk but just eats) is called as intercalving period after which
she gives birth to the next calf. In India the average intercalving period in cows is
around 450 days and in buffaloes its 500 days or may be more also. The main goal
in successful dairying will be to reduce this dry period.

3. Dairy business breaks even in the first year

As in all businesses dairy business does not break even in first year. The main costs
in dairy farming are:

a. Capital Cost: For purchase of animals, construction of shed and purchase of

machinery, cans etc. This cost occurs only once and is depreciable over a
period of time totally.
b. Administrative Costs: It includes appointment of a farm manager, supervisor,
skilled and unskilled labours depending upon the requirements as well as the
size of the farm. This is a fixed cost for a certain period.
c. Recurring Cost: It includes the feeding and management along with vaccination,
insurance, treatment, AI and other miscellaneous costs. This is required daily
and is liable to fluctuate all times. It will be essential to control these costs
which will have a direct bearing on the production (of milk) as well as
reproduction (birth of next calf). At the same time balancing of feed will also
determine the reduction of the intercalving period which has a bearing on total
profitability.

4. Dairy business can be done by being dependent on labours

This is possible provided that the owner is aware of all the intricacies as well as the
loopholes in dairying. It is a well known fact that any labour is not at all concerned
with profitability but (his) netp at the end of the month. As such he is likely to use
his own parameters for optimizing the profitability of the farm. Thus it will be
extremely imperative for the owner to know and understand all the details of dairy
farming before starting the same. This will enable him to guide his labours towards
the right path and help in minimizing the losses.

10
1.4 Dairy Industry in India

Dairy industry plays a dynamic role in India's agro-based economy. Dairy is now a
highly specialized field today that involves production, procurement, storage,
processing and distribution of dairy products. The dairy industry involves
processing raw milk into products such as consumer milk, butter, cheese, yogurt,
condensed milk, skimmed milk powder and ice cream, using processes such as
chilling, pasteurization, and homogenization.

India is the largest producer and consumer of milk in the world. The Indian dairy
sector is characterized by a very large number of small herds. Production of milk
from buffaloes exceeds that of cows, which are considered sacred by Hindus. India
has an extensive government supported dairy cooperative structure. Milk from the
small herds is collected by the cooperatives with centralized cooling facilities and
transported to the end-users in urban centers. Most of the milk produced (over 80%)
is distributed as liquid milk for home consumption or manufacturing of traditional
products like ghee, paneer and mithais. From burfi to kulfi, from kalakhand to
shrikhand, from yogurt to ice creams extend the delectable world of Indian milk
delicacies. India surpassed the US in 1998 with a production of 92 million tonnes to
become the largest milk producing country in the world. In 2006, India's milk
production crossed 100 million tonnes, representing 15% of world milk production.
From being milk impoverished nation to the top producer has been an astonishing
success.

About 110,000 dairy cooperative village societies, involving 12 million farmer

members had been organized by 2003-04 to supply milk to processing units and
directly to consumers. Until the early 1990s, milk processing was reserved for the
cooperative sector through licensing. As part of the domestic economic reforms and
commitments to the WTO regulations, the Indian dairy sector was liberalized in a
phased manner starting in 1991. The government removed all restrictions on setting
up new milk processing capacity in March 2002

The dairy scene with an anticipated milk production of 127.9 million tonnes, an
increase of around 5 per cent over the year 2010-11, India continued to be the
11
largest milk producing nation in 2011-12. This accounted for about 17 per cent of
world milk production. More people in India now consume milk. The 66th Round
of National Sample Survey Organisation data on consumer expenditure showed that
while 85 per cent of the population in urban areas consumes milk in their homes, it
is 76 per cent in rural areas. The dairy cooperatives collected 10.5 million tonnes of
milk, an increase of around 10 per cent as compared to 2010-11. Milk marketing by
the cooperatives stood at 8.6 million tonnes, an increase of around 4 per cent
compared to the previous year. The co-operatives paid a higher procurement price
to milk producers to offset the high input cost for milk production. At the instance
of Government of India, NDDB imported 50,000 tonnes of milk powder and 6,000
tonnes of butter under the Tariff Rate Quota (TRQ) to ensure availability of liquid
milk during the lean season and to meet the requirements of cooperatives and city
dairies

The credit of the huge success behind the dairy industry must be attributed in great
measure to Operation Flood which was a rural development programme started by
India's National Dairy Development Board (NDDB) in 1970. One of the largest of
its kind, the programme objective was to create a nationwide milk grid. It resulted
in making India one of the largest producers of milk and milk products. The success
behind Operation Flood was the Gujarat-based Amul (Anand Milk Union Limited)
which in turn became a mega company based on the cooperative approach. Dr.
Varghese Kurien gave the professional management skills and necessary thrust to
the cooperatives and is considered as the architect of India's White Revolution. The
Amul model has helped India to emerge as the largest milk producer in the world.
More than 15 million milk producers pour their milk in 1,44,500 dairy cooperative
societies across the country. Their milk is processed in 184 District Co-operative
Unions and marketed by 22 State Marketing Federations, ensuring a better life for
millions.

Milk production is primarily a supplementary occupation for small landholders or

landless labourers. There are no official counts of dairy farms and estimates vary
widely. Some estimates indicate that approximately 70 million rural households are

12
engaged in milk production. The average herd size is two milking animals and
average daily milk production per herd is about four litres. The average yield per
cattle is very low in the country, because cattle are fed primarily on dried straw or
residues from crop production. Dairying is practiced throughout India, but
concentrated in the north-western states where the climate is temperate. The milk
surplus states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat,
Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The top 6 states, viz.,
Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Tamil Nadu and Gujarat
together account for 58% of the national production.

Dairy sector, mainly an offshoot of agriculture sector in India, has taken shape of an
industry in a big way today. Intimately interwoven with the socio-economic fabric
of rural people in India, dairying has played a crucial role in providing nutritional
security to the millions of households. It has also strengthened our economy all
along by supplementing family incomes and generating gainful employment in the
rural sector.

Indian dairy industry of late has become the major growth area and goes far beyond
being an important agri-business sector of the national economy. Besides being the
largest milk producing country with 5 per cent annual increase in milk production,
India has a large market of dairy products due to the constantly increasing demand
for variety of milk products in the urban as well as rural sectors. The rising demand
for value added milk products at the national level and opening of the markets at
the international level under the changing global scenario and WTO have opened
up new opportunities and threats alike for the Indian dairy industry

Our country is the world leader in the milk production thanks to the maximum
cattle heads it has, and farmers and co-operative societies. Main aim of the Indian
dairy industry is only to better manage the national resources to the highest milk
producer in the entire globe – India boasts of that status. India is otherwise known
as the ‘Oyster’ of the global dairy industry, with opportunities galore to the
entrepreneurs globally. Anyone might want to capitalize on the largest and fastest
growing milk and milk products' market. The dairy industry in India has been

13
witnessing rapid growth. The liberalized economy provides more opportunities for
MNCs and foreign investors to release the full potential of this industry. The
enhance milk production and upgrade milk processing using innovative
technologies.

The growth of the Indian dairy section has been spectacular during the past three
decades. But a sector growth depends heavily on the country’s trade policy and
especially so in the changing environment after the setting up the world trade
organization (WTO).

The Indian dairy industry is not only a vital producer of an essential food item but it
also is one of the largest employers in the country in both the rural sector as the
semi-urban and urban regions. The Indian dairy has called for continuous price
monitoring of dairy products of both the international as well as national level in
order to curb dumping.

As India is the largest milk producing country in the world, industry expert says
that the adverse impact of the recent policies going to have a far reaching
consequence on the economy as a whole.

Overall, the Indian dairy sector is experiencing an upheaval with new product
launches, repositioning of brands and entry of newer players. This will also prompt
several global players to enter the Indian market. The growth of disposable
incomes, change in family structures, more women joining the work force and
focus on healthy-nutritious and quality products are likely to result in demand for a
shift towards dairy products that are not just functional and convenient but also
meet the consumers' aspirational needs.

14
 Table 1.2 : The Dairy Industry around the World
(Milk Production in Million Tonnes)
Country 2000 2005 2010
India 79.66 95.62 117
U.S.A 76.02 80.25 87.46
China 12.37 32.02 41.14
Pakistan 25.57 29.44 35.49
Russian Federation 32.28 31.15 32.14
Brazil 20.53 25.53 31.82
Germany 28.35 28.49 29.67
France 25.74 25.71 24.21
New Zealand 12.24 14.64 17.01
United Kingdom 14.49 14.47 13.96
Poland 11.89 11.95 12.30
Netherland 11.16 10.85 11.65
Mexico 9.44 10.03 10.84
Argentina 10.12 9.91 10.50
Australia 10.85 10.13 9.02
Canada 8.16 7.81 8.24
Ireland 5.16 5.38 5.24
Romania 4.62 5.55 5.06
Denmark 4.72 4.58 4.91
Switzerland 3.91 3.96 4.11
Bangladesh 2.14 2.62 3.40
Austria 3.36 3.14 3.29
South Africa 2.54 2.87 3.23
Sweden 3.35 3.21 2.92
Chile 2.00 2.31 2.54
Finland 2.45 2.43 2.35
Afghanistan 1.66 1.73 1.82
Nepal 1.17 1.35 1.58
Norway 1.74 1.59 1.58
Indonesia 0.79 0.85 1.32
Thailand 0.52 0.89 0.85
Mauritania 0.32 0.37 0.39
Viet Nam 0.10 0.23 0.34
Sri Lanka 0.16 0.17 0.21
World 578.88 648.00 720.98
Source: The Statistics Division of the Food and Agriculture Organization of the United Nations.

15
1.5.1 Assistance to Co-operative

The scheme aims at revitalizing the sick Dairy Cooperatives Unions at the District
level and Co-operative Federations at the State level. Under the scheme
rehabilitation programme are prepared by National Dairy Development Board
(NDDB) in consultation with Milk Union Federation/State Government. A central
grant is released to milk union/federations through NDDB.

To bring about structural changes in unorganized sector, measures like milk

processing at village level, marketing of pasteurized milk in a cost effective
manner, quality up gradation of traditional technology to handle commercial scale
using modern equipments and management skills, a new scheme viz. Dairy Venture
Capital Fund was initiated in the Tenth Five Year Plan. The assistance under the
scheme is provided to the rural/urban beneficiaries under a schematic proposal
through bankable projects with 50% interest free loan component. The scheme is
implemented through NABARD and the funds released by GOI to NABARD are
kept as revolving fund. Under the scheme the entrepreneur has to contribute 10%
and arrange 40% loan from local bank. Government of India provides 50% interest
free loan through NABARD.

Table 1.3 : State-wise Procurement of Milk in India

(Milk Procurement in Tonnes)
States 2010-11 2011-12
North Region
Haryana 511 534
Himachal Pradesh 60 68
Jammu and Kashmir ** **
Punjab 1037 1110
Rajasthan 1629 1742
Uttar Pradesh 504 497
West Region
Chhattisgarh 25 30
Goa 38 41
Gujarat 9158 10450
Madhya Pradesh 588 721
Maharashtra 3053 3130
16
South Region
Andhra Pradesh 1371 1503
Karnataka 3742 4277
Kerala 688 802
Tamil Nadu 2097 2161
Puducherry 35 30
East Region
Assam 5 7
Bihar 1091 1061
Jharkhand 5 5
Nagaland 2 2
Odisha 276 300
Sikkim 12 13
Tripura 2 3
West Bengal 273 219

Table 1.4 : State-wise Dairy Co-operative Societies in India

States 2010 2011
North Region
Haryana 7019 7029
Himachal Pradesh 740 765
Jammu and Kashmir ** **
Punjab 7069 7639
Rajasthan 16290 16809
Uttar Pradesh 21793 22450
West Region
Chhattisgarh 757 794
Goa 178 178
Gujarat 14347 14631
Madhya Pradesh 6216 6744
Maharashtra 21199 21631
South Region
Andhra Pradesh 4971 4979
Karnataka 12372 12925
Kerala 3666 3695
Tamil Nadu 10079 10418
Puducherry 102 102

17
East Region
Assam 155 188
Bihar 9425 11331
Jharkhand 53 53
Nagaland 49 49
Odisha 3256 3337
Sikkim 287 289
Tripura 84 84
West Bengal 3019 3045

Table 1.5 : State-wise Milk Producer Members in India

States 2010 2011
North Region
Haryana 313 313
Himachal Pradesh 32 32
Jammu and Kashmir ** **
Punjab 385 403
Rajasthan 669 683
Uttar Pradesh 977 978
West Region
Chhattisgarh 31 33
Goa 19 19
Gujarat 2970 2970
Madhya Pradesh 271 271
Maharashtra 1818 1827
South Region
Andhra Pradesh 846 854
Karnataka 2124 2191
Kerala 851 859
Tamil Nadu 2176 2184
Puducherry 36 36
East Region
Assam 4 5
Bihar 523 614
Jharkhand 1 1
Nagaland 2 2

18
 Odisha 187 191
Sikkim 10 10
Tripura 6 6
West Bengal 213 215

1.5 Dairy Industry in Gujarat

(In the form of Milk Producers’ Co-operative Union)

Dairy industry has developed on co-operative lines in Gujarat and it has shown the
way of developing dairy industry on co-operative lines to other states. In our
country, however the milk producer co-operative got momentum in Gujarat, with
the organization in 1946, of the Kaira District Co-operative Milk Producers’ Union
Ltd. (KDCMPUL) is called Amul Dairy situated at Anand. Since, then district
followed this pattern of organizing with co-operative in Gujarat particular, and
across the country in general.

Now a days, there are 16 district unions in Gujarat and a large number of co-
operative dairies in villages affiliated to the respective district union. The Gujarat
Co-operative Milk Marketing Federation (GCMMF) handled the work load of 16
district unions of Gujarat. It frames the general policy of the union. GCMMF is
India's largest food product marketing organization with an annual turnover (2011-
12) US$ 2.5 billion. Its daily milk procurement is approx 13 million lt. (peak
period) per day from 16,117 village milk cooperative societies, 16 member unions
covering 24 districts, and 3.18 million milk producer members.

The Gujarat Co-operative Milk Marketing Federation is totally depended upon

farmers. The base of the GCMMF is only farmers. It also shows that GCMMF
purchase raw material and sale the product on behalf of the 16 district unions. The
district union collects milk and produce milk items from farmers. Thus, this
operation made successfully by farmers.

1.5.1 Beginning of Dairy Co-operative Movement in Gujarat

Over six decades ago the life of a farmer in Kaira was very much like that of
farmers anywhere else in India. His income was derived almost entirely from
19
seasonal crops. Many poor farmers faced starvation during off-seasons. Their
income from milch buffaloes was undependable. The milk marketing system was
controlled by contractors and middlemen. As milk is perishable, farmers were
compelled to sell their milk for whatever they were offered. Often they had to sell
cream and ghee at a throwaway price.

They were in general illiterate. But they could see that the system under which
contractors could buy their produce at a low price and arrange to sell it at huge
profits was just not fair. This became more noticeable when the Government of
Bombay started the Bombay Milk Scheme in 1945. Milk had to be transported 427
kilometers, from Anand to Bombay. This could be done only if milk was
pasteurized in Anand.

After preliminary trials, the Government of Bombay entered into an agreement with
Polsons Limited to supply milk from Anand to Bombay on a regular basis. The
arrangement was highly satisfactory to all concerned – except the farmers. The
Government found it profitable; Polsons kept a good margin. Milk contractors took
the biggest cut. No one had taken the trouble to fix the price of milk to be paid to
the producers. Thus under the Bombay Milk Scheme the farmers of Kaira District
were no better off ever before. They were still at the mercy of milk contractors.
They had to sell their milk at a price the contractors fixed. The discontent of the
farmers grew. They went in deputation to Sardar Patel, who had advocated farmers’
co-operatives as early as 1942.

Sardar Patel reiterated his advice that they should market their milk through a co-
operative society of their own. This co-operative should have its own pasteurization
plant. His advice was that the farmers should demand permission to set up such a
co-operative. If their demand was rejected, they should refuse to sell their milk to
middlemen.

Sardar Patel pointed out that in undertaking such a strike there should be some
losses to the farmers as they would not be able to sell their milk for some time. If
they were prepared to put up with the loss, he was prepared to lead them. The
farmers’ deputation readily accepted his proposal.
20
Sardar then sent his trusted deputy, Mr. Morarjibhai Desai, to Kaira District to
organize milk co- operative – and a milk strike if necessary. Mr. Desai held a
meeting in Samarkha village on January 4, 1946. It was resolved that milk
producers’ co-operative societies should be organized in each village of Kaira
District to collect milk from their member-farmers. All the milk societies would
federate into a Union which would own milk processing facilities. The Government
should undertake to buy milk from the Union. If this wasn’t done, the farmers
would refuse to sell milk to any milk contractor in Kaira District. The Government
turned down the demand. The farmers called a ‘milk strike’. It lasted 15 days. Not a
drop of milk was sold to the milk merchants. No milk reached Bombay from
Anand, and the Bombay Milk scheme almost collapsed. After 15 days the milk
commissioner of Bombay, an Englishman, and his deputy visited Anand, assessed
the situation and accepted the farmer’s demand.

This marked the beginning of the Kaira District Co-operative Milk Producers’
Union Limited, Anand. It was formally registered on December 14, 1946. Its
objective was to provide proper marketing facilities for the milk producers of the
district. The Union began pasteurizing milk in June 1948, for the Bombay Milk
Scheme – just a handful of farmers in two village co-operative societies producing
about 250 liters a day.

In the early stages, rapid growth brought in its wake serious problems. Their
solution provided the stimulus for further growth. For example, as the co-operative
movement spread in the district, it was found that the Bombay Milk Scheme could
not absorb the extra milk collected by the Union in winter, when buffaloes yielded
an average of 2.5 times their summer yield. Thus by 1953, the farmer-members had
no regular market for the extra milk produced in winter. They were again forced to
sell a large surplus at low rate to middlemen. The only remedy was to set up a plant
to process the extra milk into products like butter and milk powder. The logic of
this step was readily accepted by the Government of Bombay and the Government
of India, except for a few doubting Thomases. The government of India helped the
Union to get financial help from UNICEF and assistance from the Government of

21
New Zealand under the Colombo Plan. Technical aid was provided by F.A.O. An
Rs.50 lakh factory to process milk powder and butter was blueprinted. Its
foundation stone was laid by the then President of India the late Dr. Rajendra
Prasad on November 15, 1954. The project was completed by October 31, 1955, on
which day the late Pandit Jawaharlal Nehru, the then Prime Minister of India,
declared it open. The new dairy provided a further fillip to the co-operative
movement among milk producers. The union was thus enabled to organize more
village co-operative societies and to handle more and more milk each year. This
event also brought a breakthrough in dairy technology as the products were made
processing buffalo milk for the first time in the world. Kaira Union introduced the
brand “Amul” for marketing its product range. The word “Amul” is derived from
Sanskrit word ‘Amulya’ which means ‘priceless’ or precious’. In the subsequent
years Amul made cheese and baby food on a large commercial scale again
processing buffalo milk creating a history in the world.

1964 was the turning point in the history of dairy development programme in India.
Late Shri Lal Bahadur Shastri, the then Prime Minister of India who visited Anand
on 31s October for inauguration of Amul’s Cattle Feed Plant, having spent a night
with farmers of Kaira and experiencing the success wished and expressed to Mr
Kurien, the then General Manager of Amul replicating Amul model throughout our
country which will bring a great change in the socio-economic conditions of the
people. In order to bring this dream into reality, 1965 The National Dairy
Development Board (NDDB) was established at Anand and by 1969-70 NDDB
came out with the dairy development programme for India popularly known as
“Operation Flood” or “White Revolution”. The Operation Flood programme, even
today, stands to be the largest dairy development programme ever drawn in the
world. This saw Amul as model and this model is often referred in the history of
White Revolution as “Anand Pattern”. Replication of “Anand Pattern” has helped
India to emerge as the largest milk producing nation in the world.

22
1.5.2 Three Tier Model - The Anand Pattern

The Anand Pattern is essentially an economic organizational pattern to benefit

small producers who join hands forming an integrated approach in order to
economy of a large scale business. The whole operation is professionally managed
so that the individual producers have the freedom to decide their own policies. The
adoption of modern production and marketing techniques helps in providing those
services that small producers individually can neither afford nor manage.

It has succeeded largely because Anand Model involves people in their own
development and because their interests are safe in their own hands. Under
Operation Flood the entire institutional infrastructure set up at the village level, the
district level and the state level is owned and operated by the farmers themselves.
The Anand Model co-operatives have progressively eliminated middlemen,
bringing the producers in direct contact with consumers.

The Anand Pattern succeeded because it gave a fair price to the farmer and high -
quality milk and milk products to the consumer. What would have been
middlemen’s profits in the earlier system got absorbed into development projects
for primary producer or lower cost for the consumer. In short, the Anand Pattern
meant the utilization of resources in the most profitable manner at grass-root level.

1.5.2.1 Primary Village Co-operative Society (The First Tier)

Primary Village Co-operative Society: An Anand Pattern village dairy cooperative

member by buying a share and committing to sell milk only to the society. Each
DCS has a milk collection centre where members take milk every day. Each
member's milk is tested for quality with payments based on the percentage of fat
and SNF. At the end of each year, a portion of the DCS profits is used to pay each
member a patronage bonus based on the quantity of milk poured. This also acts as a
vital link for various productivity enhancement and development programmes of
farmers.

23
1.5.2.2 District Union (The Second Tier)

A District Cooperative Milk Producers' Union is owned by dairy cooperative

societies. It is a Union of primary village co-operative societies within a district.
The Union buys all the societies' milk, then processes and markets fluid milk and
products. Union also provides a range of inputs and services to village co-operative
societies and their members: feed, veterinary care, artificial insemination to sustain
the growth of milk production and the cooperatives' business. Union staff train and
provide consulting services to support village co-operative society leaders and staff.

1.5.2.3 The State Federation (The Third Tier)

The cooperative milk producers' unions in a state form a state federation which is
an apex marketing body is responsible for marketing of milk and milk products of
member unions. The Federation also plays a role in the overall development of the
district unions federated to it maximizing farmer profit and productivity through
cooperative effort is the hallmark of the Anand Pattern.

24
ANAND PATTERN-THREE TIER MODEL

25
1.5.2.4 Development and Growth

The dairy co-operative movement in Gujarat is similar to the co-operative

movement in India. “AMUL” is the pioneer of the dairy co-operative in Gujarat and
in India also. The Kaira District Milk Producers Union which is known as “AMUL
DAIRY”- ANAND was started in 1946. In the starting the Amul dairy collect just
250 liters of milk per day with the help of two co-operative societies of the union.
Due to Amul Dairy farmers were obtaining fair and sufficient reward on the basis
of fat content of the milk. They were paid promptly also. So, more and more
farmers joined the union, and the union got much strength. It turned today around
more than 20 lakh litre per day, being collected from 1163 village co-operative
societies with the help of 634675 farmer members.

1.6 About Gujarat Cooperative Milk Marketing Federation

Ltd. (GCMMF)

Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), is India's largest

food product marketing organisation with annual turnover US$ 2.54 billion in
2012-13. Its daily milk procurement is approx 13 million lts. per day from 16914
village milk cooperative societies, 16 member unions covering 24 districts, and
3.18 million milk producer members. It is the apex organisation of the dairy
cooperatives of Gujarat, popularly known as 'AMUL', which aims to provide
remunerative returns to the farmers and also serve the interest of consumers by
providing quality products which are good value for money. Its success has not
only been emulated in India but serves as a model for rest of the World. It is
exclusive marketing organization of 'Amul' and 'Sagar' branded products. It
operates through 48 sales offices and has a dealer network of 5000 dealers and 10
lakh retailers, one of the largest among such networks in India. Its product range
comprises milk, milk powder, health beverages, ghee, butter, cheese, pizza cheese,
ice-cream, paneer, chocolates, and traditional Indian sweets, etc.

GCMMF is India's largest exporter of dairy products. It has been accorded a

"Trading House" status. Many of our products are available in USA, Gulf

26
Countries, Singapore, The Philippines, Japan, China and Australia. GCMMF has
received the APEDA Award from Government of India for Excellence in Dairy
Product Exports for the last 13 years. For the year 2009-10, GCMMF has been
awarded "Golden Trophy" for its outstanding export performance and contribution
in dairy products sector by APEDA. For its consistent adherence to quality,
customer focus and dependability, GCMMF has received numerous awards and
accolades over the years. It received the Rajiv Gandhi National Quality Award
in1999 in Best of All Category. In 2002 GCMMF bagged India's Most Respected
Company Award instituted by Business World. In 2003, it was awarded the IMC
Ramkrishna Bajaj National Quality Award for adopting noteworthy quality
management practices for logistics and procurement. GCMMF is the first and only
Indian organisation to win topmost International Dairy Federation Marketing
Award for probiotic ice cream launch in 2007.

The Amul brand is not only a product, but also a movement. It is in one way, the
representation of the economic freedom of farmers. It has given farmers the
courage to dream, to hope, to live.

1.6.1 Milk Producers' Unions in Gujarat

1. Kaira District Co-operative Milk Producers' Union Ltd., Anand

2. Mehsana District Co-operative Milk Producers' Union Ltd, Mehsana
3. Sabarkantha District Co-operative Milk Producers' Union Ltd., Himatnagar
4. Banaskantha District Co-operative Milk Producers' Union Ltd., Palanpur
5. Surat District Co-operative Milk Producers' Union Ltd., Surat
6. Baroda District Co-operative Milk Producers' Union Ltd., Vadodara
7. Panchmahal District Co-operative Milk Producers' Union Ltd., Godhra
8. Valsad District Co-operative Milk Producers' Union Ltd., Valsad
9. Bharuch District Co-operative Milk Producers' Union Ltd., Bharuch
10. Ahmedabad District Co-operative Milk Producers' Union Ltd., Ahmedabad
11. Rajkot District Co-operative Milk Producers' Union Ltd., Rajkot
12. Gandhinagar District Co-operative Milk Producers' Union Ltd., Gandhinagar

27
13. Surendranagar District Co-operative Milk Producers' Union Ltd.,
Surendranagar
14. Amreli District Co-operative Milk Producers Union Ltd., Amreli
15. Bhavnagar District Co-operative Milk Producers Union Ltd., Bhavnagar
16. Kutch District Co-operative Milk Producers' Union Ltd., Anjar

Table 1.6 : Overview of GCMMF

Year of establishment 1973
Member 17 District milk pro. Union Ltd.
(16 member and 1 nominal member)
No. of producer member 3.18 million
No. of village societies 16914
Total milk handling capacity per day 16.8 million liters per day
Milk collection (total 2012-13) 4.66 billion liters
Milk collection ( daily Avg. 2012-13) 12.7 million liters
Cattle feed Mfg. capacity 5890 mts. Per day
Sales turnover 2012-13 Rs. 13735 crores
Source: Annual Reports of GCMMF.

1.7 About National Dairy Development Board (NDDB)

The National Dairy Development Board's creation is rooted in the conviction that
our nation's socio-economic progress lies largely on the development of rural India.
The National Dairy Development Board (NDDB) was founded in 1955 to replace
exploitation with empowerment, tradition with modernity, stagnation with growth,
transforming dairying into an instrument for the development of India's rural
people.

The National Dairy Development Board was created to promote, finance and
support producer-owned and controlled organizations. NDDB's programmes and
activities seek to strengthen farmer cooperatives and support national policies that
are favorable to the growth of such institutions. Fundamental to NDDB's efforts are
cooperative principles and cooperative strategies.

28
NDDB began its operations with the mission of making dairying a vehicle to a
better future for millions of grassroots milk producers. The mission achieved thrust
and direction with the launching of "Operation flood,” a programme extending over
26 years and which used World Bank loan to finance India's emergence as the
world's largest milk producing nation. Operation flood's third phase was completed
in 1996 and has to its credit a number of significant achievements.

As on March 2009, India's 1,33,349 village dairy cooperatives federated into 177
milk unions and 15 federations procured on an average 25.1 million liters of milk
every day. 13.9 million Farmers are presently members of village dairy
cooperatives.

Since its inception, the Dairy Board has planned and spearheaded India's dairy
programmes by placing dairy development in the hands of milk producers and the
professionals they employ to manage their cooperatives. In addition, NDDB also
promotes other commodity-based cooperatives, allied industries and veterinary
biologicals on an intensive and nation-wide basis.

1.7.1 Operation Flood

Operation Flood is one of the world’s largest rural development programmes,

launched in 1970, Operation Flood has helped dairy farmers direct their own
development, placing control of the resources they create in their own hands. A
National Milk Grid links milk producers throughout India with consumers in over
700 towns and cities, reducing seasonal and regional price variations while
ensuring that the producer gets fair market prices in a transparent manner on
a regular basis. The bedrock of Operation Flood has been village milk
producers' cooperatives, which procure milk and provide inputs and services,
making modern management and technology available to members. Operation
Flood’s objectives included:

 Increase milk production ("a flood of milk")

 Augment rural incomes
 Reasonable prices for consumers

29
1.7.2 Programme Implementation

Operation Flood was implemented in three phases.

Phase I

Phase I (1970-1980) was financed by the sale of skimmed milk powder and butter
oil gifted by the European Union then EEC through the World Food Programme.
NDDB planned the programme and negotiated the details of EEC assistance.

During its first phase, Operation Flood linked 18 of India's premier milksheds with
consumers in India’s four major metropolitan cities: Delhi, Mumbai, Kolkata and
Chennai.

Phase II

Operation Flood’s Phase II (1981-85) increased the milksheds from 18 to 136 and
290 urban markets expanded the outlets for milk. By the end of 1985, a self-
sustaining system of 43,000 village cooperatives covering 4.25 million milk
producers had become a reality. Domestic milk powder production increased from
22,000 tons in the pre-project year to 140,000 tons by 1989, all of the increase
coming from dairies set up under Operation Flood. In this way EEC gifts and
World Bank loan helped to promote self-reliance. Direct marketing of milk by
producers' cooperatives increased by several million liters a day.

Phase III

Phase III (1985-1996) enabled dairy cooperatives to expand and strengthen the
infrastructure required to procure and market increasing volumes of milk.
Veterinary first-aid health care services, feed and artificial insemination services
for cooperative members were extended, along with intensified member education.

Operation Flood's Phase III consolidated India's dairy cooperative movement,

adding 30,000 new dairy cooperatives to the 42,000 existing societies organized
during Phase II. Milk sheds peaked to 173 in 1988-89 with the numbers of women
members and Women's Dairy Cooperative Societies increasing significantly.

30
Phase III gave increased emphasis to research and development in animal health
and animal nutrition. Innovations like vaccine for Theileriosis, bypass protein feed
and urea-molasses mineral blocks, all contributed to the enhanced productivity of
milch animals.

From the outset, Operation Flood was conceived and implemented as much more
than a dairy programme. Rather, dairying was seen as an instrument of
development, generating employment and regular incomes for millions of rural
people.

1.8 Profile of Selected Dairy Units in Gujarat

1.8.1 Bharuch District Co-operative Milk Producers’ Union Limited

(Dudhdhara Dairy/Bharuch Dairy/Bharuch Union)

Bharuch district is one of the potential

districts in Narmada. The milk shed area
of the Bharuch district is from Baroda to
Surat. In the past, the dairy plant was
installed in 1959 with the capacity of
65,000 LPD. Before the year 1959, milk
producers’ of Bharuch district in a bad
situation. They didn’t have any
systematic network for selling the milk in
the city and people couldn’t get quality milk.

In the year 1959 District Registrar Shri Chaturbhai Patel had announced the concept
of the co-operative dairy to the people of Bharuch district in open meet. By getting
motivation from Amul co-operative dairy pattern and with the effort of all leaders
and milk producer societies from Bharuch, Jambusar, Honsot, Nandod etc. talukas
first time proposal for Bharuch dairy on co-operative basis and sent for registration
to Puna on 18/12/1959 and the journey Dudh Dhara Dairy begins.

The organization has started unit (chilling center) at Rajpipla. We added new units
(chilling centers) at Dediapada and Jambusar in February 2009 and May 2009

31
respectively. At present this organization is collecting milk from 654 Dairy Co-
operative Society located at different villages. Various Dairy Co-operative Societies
are equipped with Milko-Tester.

The dairy operations are being run in accordance with Good Manufacturing
Practices (GMP). The products of the organization are liquid milk, ghee and white
butter. The organization is well equipped with the state-of-the-art-technology for
quick and efficient milk reception, processing, quality control, manufacturing and
storage. Developmental efforts enables the dairy to upgrade its products constantly
and stringent quality control ensures that only products meeting the most exacting
standards to reach our discerning customers.

The dairy is manned by highly qualified, competent and experienced managerial

staff and dedicated work force to provide highest quality of products and best of the
services to customers. The production facilities are backed up by quality assurance,
training, financial management, system management. The dairy has a well equipped
laboratory to test the entire range of products that it produces to provide sound back
up to quality and food safety assurance program.

To further improve the efficiency and effectiveness of the organization’s

performance, it was decided to go in for implementation of ISO 9001:2000 Quality
Management Systems and ISO 22000:2005 Food safety systems to eventually get
certification and international recognition.

Table 1.7 : Development and Growth of Dudhdhara Dairy

Year No. of VCMPs No. of members Milk Procurement
(kg.)
2003-04 363 38060 15334452
2004-05 368 38060 18512292
2005-06 350 38060 15214063
2006-07 327 38200 12383223
2007-08 321 38200 13603036
2008-09 469 42500 17761746
2009-10 551 45000 27262073
2010-11 575 47000 32807903
Source: Annual Reports of Dudhdhara Dairy.

32
1.8.2 Valsad District Co-operative Milk Producers’ Union Limited
(Vasudhara Dairy/Valsad Dairy/Valsad Union)

Valsad District Co-operative Milk Producers’ Union Limited has been registered in
1973 and started dairy development activities on Anand patterns since 1975. A
survey conducted by National Dairy Development Board in the year 1973-74
recommended that the low yielding animals and poor economic condition of rural
farmers coupled with adverse geographical condition would come in the way of
developing this district.

The milk union did not have processing facilities of its own till November 1981 and
all the milk procured from
the rural procedure of this
district used to be sent to
the neighboring dairy
plant of Surat district. In
1981, dairy plant of 30000
liters per day capacity was
established at Alipur
village taking commercial
loan from financial
institution and assistance from the state government. In the beginning there was not
enough milk in the district, even to meet the requirement of new 30000 LPD
capacity plant. The milk union took up the responsibility to develop dairying in this
district and introduced cross breeding of the local un-productive animals to harvest
a new generation of high yielding animals to achieve the breakeven point of the
plant’s installed capacity.

The rural population in tribal belt, under the union’s operation is poor and has very
scanty agriculture income. The tribal area is facing with water scarcity during the
summer season. Hilly and rocky surface play crucial part in non development to
this was from agriculture point of view. The farmers are also marginal and do not
have any other reliable source of income. “VASUDHARA” has focused on this

33
segment and today it gets nearly 80% of its total milk from tribal area. The dairying
has always been considered as a subsidiary income in economy and probably has
not been given its due as major economic activities.

Table 1.8 : Development and Growth of Vasudhara Dairy

Year No. of VCMPs No. of members Milk
Procurement
(kg.)
2003-04 632 690 82780167
2004-05 678 742 97243146
2005-06 881 921 112023623
2006-07 986 994 114609982
2007-08 1009 997 111507996
2008-09 1042 1000 101214067
2009-10 1064 1022 116973386
2010-11 1096 1038 138660468
Source: Annual Reports of Vasudhara Dairy.

1.8.3 Banaskantha District Co-operative Milk Producers’ Union Limited

(Banas Dairy/Banaskantha Dairy/Banas Union)

The dream of late Galbabhai

Patel, founder chairman and
the selfless sage to uplift
Socio-economical status of
village farmers came true
after creation of Co-
operative milk union for
Banaskantha district, on the
foot print of “AMUL Dairy”
of Kaira (Presently Anand)
district, the model of a true
co-operative. Consequently eight village level co-operative milk societies in
Vadgam and Palanpur Taluka of district were registered and started collecting and
34
pouring milk at Dudh Sagar Dairy, Mehsana from 10th March 1966. With this
grass-root level work, followed by the registration of the milk union under co-
operative Act on 31st January 1969 as “Banskantha District Co-Operative Milk
Producers Union Limited” Palanpur, popularly known as “BANAS DAIRY” came
in to existence.

Banas dairy is a well known dairy in Gujarat and is a leading supplier of milk
products to Banaskantha district. Banas Dairy Ltd. is a large-scale unit. Banas dairy
markets its products under a very powerful brand name “AMUL”. It produces a
wide variety of products like milk, milk powder, ghee, ice-cream, Amul butter and
Amul cool etc.

Banaskantha District Co-operative Milk Producers’ Union Limited known as Banas

Dairy is a co-operative organization established in the year 1969 under the Gujarat
Co-operative societies Act 1961 with the support of NDDB as a part of their
Operation Flood Program launched to bring about white revolution in the country.
It manufactures a large number of dairy products under AMUL, SAGAR and
BANAS brands. Their product range includes Amul pasteurized milks, Amul
longer shelf life milk, Amul butter milk, Amul ghee, Sager ghee, Amulya powder,
Sager tea and coffee whitener, Sagar SMP, Amul SMP, Amul shakti powder, a
wide range of Amul ice–creams, Banas peda, Banas tea etc. The products of dairy
are marketed through Gujarat Co-operative Milk Marketing Federation, Anand. It
also provide a large number of technical inputs to over 1.8 Lac farmer households,
which are organized through 1200 old village level Co-operative Milk Societies.
Thus, the products are mainly marketed under world famous brand names “AMUL
and SAGAR”. The dairy has also recently started exports of ghee and milk powders
to Middle East, Far East, Australia and African Nations. It was one more feather in
the cap of Banas dairy when it got ISO 9002 and HACCP certification. The dairy
has taken benefit of custom duty exemption for import of capital goods under the
EPCG scheme of GOI, and has saved large sum of approx, Rs.11 Crore.

A total geographical area of the Banaskantha district is 12248 square km of which

72% is cultivable while 12% land is irrigated by tube wells canals, etc. The area

35
covered under forest is only sq.km. of total 15.99 lac livestock population 6.54 lac
Cattle and 9.45 lac Buffalo as per the cattle census 2007.Frequent droughts due to
average rainfall as low as 22” writes on the wall, serve shortage of water
accompanied by high TDS (3000 to 5000 mg) and as high as 2-5 ppm fluoride
content in water, makes live hood almost difficult.

The district enfolds the human population of about 25 lac predominantly depending
upon the income source from agriculture and allied activities like keeping milk
animals. Majority of population dwells in rural hinterland. However agriculture
mainly depends upon the rainy season as there is a severe shortage of ground water
besides poor quality of soil profile.

Year of Establishment

 The Banas Dairy was registered on 31st January 1969.

 The Plant Banas, it was Established on 14th January 1971.
 The Plant Banas II, it was Established on 2nd October 1998.

Table 1.9 : Development and Growth of Banas Dairy

Year No. of VCMPs No. of members Milk
Procurement
(kg.)
2003-04 1212 N.A 279662
2004-05 1225 187325 358282
2005-06 1255 201869 425439
2006-07 1295 227930 437026
2007-08 1337 260000 528454
2008-09 1351 297510 649472
2009-10 1345 307518 688356
2010-11 1368 311885 717663
Source: Annual Reports of Banas Dairy.

36
1.8.4 Surat District Co-operative Milk Producers’ Union Limited (Sumul
Dairy/Surat Dairy/Surat Union)

SUMUL or Surat Milk Union Limited, which is now renamed as The Surat District
Co-operative Milk Producers' Union Ltd., is one among the 17 district unions
which acts as manufacturing units of dairy products for Gujarat Co-operative Milk
Marketing Federation Limited, the
marketers of Amul brand of
products.

Surat district has been a pioneer in

India in channeling trade in cotton
and milk through co-operatives.
Before SUMUL stepped in,
traditional private milk traders
were dominant in the area.

The private trade was monopolizing the milk market and exploiting both the milk
producers and consumers alike. The milk procurement price which used to be fixed
by the traders (traditional Bhatias) was very low and was fluctuating from time to
time at their sole discretion. These have capitalized on the absence of any
infrastructure and processing facilities and have managed to keep producers from
deriving equitable benefits from the marketable surplus generated. As such their
income from milk was very low and they had no incentive for modern dairy
farming. The farmers resented the system, but were helpless in the face of these
traditional constraints and to their own lack of resource lessness.

Dairying on the other hand, was never popular with tribal's (a major rural
population in the district) as practically no infrastructure existed for milk marketing
in their talukas, inaccessibility to their villages as well as taboos regarding keeping
of buffaloes prevented the entire population of tribal's from considering dairying as
a source of income. The tribal's kept their cows to produce bullocks rather than
milk, which was insufficient even to nurse the calves. Most of the tribal's were
unaware of the usual milch breeds, and animal husbandry.
37
Hygienic and pure milk was almost unknown in the market. In fact unbridled
adulteration of milk was practiced by these traders to meet the growing demand of
milk in the city. To salvage the poor producers from the clutches of these private
traders, organization and integration of procurement, processing and marketing of
milk and milk products by the producers themselves on a sound co. operative line
was essential; this would also ensure elimination of middlemen, equitable
distribution of benefits to Rural Milk Producers and indirectly to urban milk
consumers as well. Hence, the Surat District Co-operative Milk Producers' Union
Ltd., SUMUL is trade name and literally meaning sound price, came into existence
on August 22, 1951.

Objectives

1. To provide year round milk market for their surplus milk and to earn reasonable
returns for the milk to improve their quality of life.
2. To procure milk and process it into good quality milk and milk products to
market it at most economically and efficiently to give maximum overall net
returns to the producers and general satisfaction to the consumers.
3. To provide essential technical inputs and services to the producers at their door
steps in an economic and efficient manner and also in a way most acceptable to
them to increase milk production and to reduce the cost of production.

Table 1.10 : Development and Growth of Sumul Dairy

Year No. of VCMPs No. of members Milk Procurement
(kg.)
2003-04 1006 217615 207302486
2004-05 1041 218975 230392432
2005-06 1048 221057 251746629
2006-07 1051 222307 240784166
2007-08 1055 223207 243337021
2008-09 1063 224437 282870876
2009-10 1068 225389 295069162
2010-11 1179 228164 296456069
Source: Annual Reports of Sumul Dairy.

38
1.8.5 Panchmahal District Co-operative Milk Producers’ Union Limited
(Panchamrut Dairy/Panchamahal Dairy/Panchamrut Union)

The Co-operative Dairy Movement in India initiated with the establishment of

AMUL in 1946. Following that the co-operative district milk unions in different
districts took shape. During early 70’s, when the co-operative leaders of erstwhile;
Panchmahal district, thought to have a district co-operative milk union at district
head quarter Godhra, the neighbouring districts of Sabarkantha, Kheda and Baroda
had already the existence of well established co-op. dairy network. On proposal of
district leaders to have a separate milk co-operative union at Godhra; the initial
survey conducted by
National Dairy
Development Board;
Anand revealed no
possibilities of
establishment of an
independent co-operative
Milk Producers’ Union
Ltd., at Godhra; due to
very low productivity of
native milch animals and
availability of insufficient
quantity of surplus milk. But the leaders were determined and committed for their
goal to establish a milk union and under the inspiration and guidance from late Shri
Maneklal Gandhi, Late Shri Ratilal Trivedi and Late Shri Dahyabhai Naik, in
May,1973 The Panchmahal Dist. Co-op. Milk Producers’ Union Ltd., got registered
under Gujarat State Co-op. Act. 1962. Initially, due to lack of milk processing
facilities in district, the milk procurement around 7000 kg per day from about 40
village primary dairy co-op. societies was diverted to the neighboring milk unions
of Sabarkantha, Kheda and Baroda. The then Chief Minister of Gujarat Hon’ble late
Shri Babubhai Jashbhai Patel laid the foundation stone for the establishing Dairy
building at Godhra; in presence of prominent co-operative leaders of the district;

39
including late Shri Maneklal Gandhi; in the year 1977.The milk chilling plant
having capacity to chill 30,000 ltrs of milk per day was established in 1978 with the
financial help from Draught Prone Area Project, Panchmahals. The concept
of Total Quality Management (TQM) was adopted by the Organization in 1996
which brought revolutionary changes in functioning of the organization. The
organization then was accredited as conforming to the ISO 9001:2000 and HACCP
International Standards; in the year 2000. The Organization observed lots of
technological changes and expansion of the milk processing capacity to 4 lakhs kgs
per day; with commissioning of State of art milk drying plant having the drying
capacity of 15 MT per day. The Cattle Feed Factory also was established during the
year 2002. The Milk Chilling Units at Limdi and Shivrajpur started functioning
during this period only.

Table 1.11 : Development and Growth of Panchamrut Dairy

Year No. of VCMPs No. of members Milk
Procurement
(kg.)
2003-04 1566 194000 239000
2004-05 1600 208000 258000
2005-06 1656 215000 275000
2006-07 1714 223000 296000
2007-08 1769 230000 324000
2008-09 1830 238000 403000
2009-10 1894 246000 449000
2010-11 1915 249000 449000
Source: Annual Reports of Panchamrut Dairy.

40
1.8.6 Sabarkantha District Co-operative Milk Producers’ Union Limited
(Sabar Dairy/Sabarkantha Dairy/Sabar Union)
The Sabarkantha District Co-operative Milk Producers' Union Ltd was established
in the year 1964 by collecting raw milk from 19 primary co-operative milk societies
and supplying it unprocessed to Ahmedabad Municipal Dairy. Municipal Dairy
being a consumer oriented dairy it could not accept more quantity of milk during
flush season and this had forced the Union to rotationally stop the milk collection
from societies during flush season. The milk union could not expand its activities
for the first seven years due to inadequate financial resources. In the year 1971
under Operation Flood-I Programme me of Indian Dairy Corporation (a
Government of India undertaking) a dairy project was sanctioned for handling 1.50
lakh liters of milk per day. The total cost of the dairy plant was Rs.2.52 crore,
which was received from the erstwhile Indian Dairy Corporation through the
Government of Gujarat.

In the year 1971 under Operation Flood-I programme of Indian Dairy Corporation;
a dairy project was sanctioned for handling 1.50 lakh liters of milk per day. The
foundation stone of Sabarkantha District Co-operative Milk Producers' Union Ltd.
was laid by Dr. Verghese Kurien, Chairman,National Dairy Development Board on
June 11, 1971. The reception and pasteurization of milk was started on May 12,
1973 and condensing and
spray drying plant was
commissioned in the year
1974. Under Operation
Flood-II programme the
dairy plant was expanded
to handle 4.00 lakh liters of
milk per day.

The 1st chilling center of

the Union was established
near Dhansura with the financial assistance received from Small Farmers

41
Development Agency. The chilling center was commissioned in October, 1976.
The milk processing capacity of this chilling center was 30,000 liters of milk per
day.

The 2nd chilling centre of the Union was established at Khedbrahma; one of the
four tribal talukas. The other three are Meghraj, Vijaynagar and Bhiloda. The
chilling centre was inaugurated by her excellency the Governor of Gujarat State
Smt Sharada Mukherjee in March 1979. In October, 1976, the initial milk
processing capacity of this chilling center was 25,000 liters of milk per day.

The 3rd chilling centers of the Union was established at Shamlaji, another tribal
dominated area The milk processing capacity of this chilling centers was 25,000
liters of milk per day. The milk collection from Bhiloda and Meghraj talukas was
processed at this new chilling center. The milk processing capacity of these two
chilling centers was further expanded with the financial support from the State
Government.

Table 1.12 : Development and Growth of Sabar Dairy

Year No. of VCMPs No. of members Milk
Procurement (kg.)
2003-04 1653 268568 270067301
2004-05 1670 272811 307352636
2005-06 1690 280038 322054448
2006-07 1698 288359 323367731
2007-08 1714 290021 369519961
2008-09 1732 300603 409314686
2009-10 1758 315673 407308419
2010-11 1779 322649 403102922
Source: Annual Reports of Sabar Dairy.

1.8.7 Kaira District Co-operative Milk Producers’ Union Limited (Amul

Dairy/Kaira Dairy/Amul Union)

The seeds of this unusual saga were sown more than 65 years back in Anand, a
small town in the state of Gujarat in western India. The exploitative trade practices

42
followed by the local trade cartel triggered off the cooperative movement. Angered
by unfair and manipulative practices followed by the trade, the farmers of the
district approached the great Indian patriot Sardar Valla bhbhai Patel for a solution.
He advised them to get rid of middlemen and form their own co-operative, which
would have procurement, processing and marketing under their control.

In 1946, the farmers of this area went on a milk strike refusing to be cowed down
by the cartel. Under the inspiration of Sardar Patel, and the guidance of leaders like
Morarji Desai and Tribhuvandas Patel, they formed their own cooperative in
1946. This co-operative, the Kaira District Co-operative Milk Producers Union Ltd.
began with just two village dairy co-operative societies and 247 litres of milk and is
today better known as Amul Dairy. Amul grew from strength to strength thanks to
the inspired leadership of Tribhuvandas Patel, the founder Chairman and the
committed professionalism of Dr Verghese Kurien,who was entrusted the task of
running the dairy from 1950.The then Prime Minister of India, Lal Bahadur Shastri
decided that the same approach should become the basis of a National Dairy
Development policy. He understood that the success of Amul could be attributed to
four important factors. The farmers owned the dairy, their elected representatives
managed the village societies and the district union, and they employed
professionals to operate the dairy and manage its business. Most importantly, the
co-operatives were sensitive to
the needs of farmers and
responsive to their demands. At
his instance in 1965 the
National Dairy Development
Board was set up with the basic
objective of replicating the
Amul model. Dr. Kurien was
chosen to head the institution
as its Chairman and asked to
replicate this model throughout the country. The Amul model has helped India to
emerge as the largest milk producer in the world. More than 15 million milk

43
producers pour their milk in 1,44,500 dairy cooperative societies across the country.
Their milk is processed in 184 District Co-operative Unions and marketed by 22
State Marketing Federations, ensuring a better life for millions.

Table 1.13 : Development and Growth of Amul Dairy

Year No. of VCMPs No. of members Milk
Procurement
(kg.)
2003-04 1059 598707 253856435
2004-05 1073 615415 276150374
2005-06 1084 628566 297436246
2006-07 1097 630132 324410536
2007-08 1113 631633 401718616
2008-09 1147 634678 468587136
2009-10 1151 635599 498033310
2010-11 1163 634675 515961530
Source: Annual Reports of Amul Dairy.

44
References
Books
1. Basu. P (2009), “Villages, Women, and the Success of Dairy Co-operatives in
India”, Cambria Press, Amherst, NY.
2. Mathur, B. S. (1985), “Co-operation of India”, Sahitya Bhavan, Agra.
3. Sharda V. (1986), “Theory of Co-operation”, Himalaya Publishing House,
Mumbai.
4. Shrivastava, Mohan and Singh, Jaishankar (2008), “Dairy Development in
New Millennium”, Deep and Deep Publications, New Delhi.
5. The Amul Story, A Saga of Co-operative Effort, The Kaira District Co-
operative Milk Producers’ Union Limited, Anand, Gujarat.
6. Venkatasubramanian. V, Singh A. K. and Rao SNV. (2003), “Dairy
Development in India (An Appraisal of Challenges and Achievements)”,
Concept Publishing Company, New Delhi.
7. Wilfred Candler, Nalinikumar (1998), “India: The Dairy Revolution, The
Impact of Dairy Development in India and World Bank’s Contribution”, The
World Bank, Washington, D.C.

Journals
1. Reddy, B. Parameswara (2010), “Growth and Trend Discerning of Indian
Dairy Industry”, Asia Pacific Journal of Social Sciences, Vol. II, No.2, June-
December, pp.105-125.
2. Ambhore, Shanker (2010), “Dairy Co-operative: An Overview”, Journal of
Shodh Samiksha Aur Mulyankan, September, Vol. II, No.20, pp.18-19.
3. Jatakia, Tushar D. (2006), “Analysis of Productivity of Co-operative Dairy
and Milk Supply Units of Gujarat State”, Ph.D. Thesis, Saurashtra University,
Rajkot, November, pp. 119-124.
4. Bandyopadhyay, Manob Kanti (1996), “Dairy Co-operative and Rural
Development (With Special Reference to Comparative Study Between the
Kaira District Co-operative Milk Producers’ Union Limited and the
Himalayan Co-operative Milk Producers’ Union Limited”, Finance India, Vol.
X, No.2, June, pp. 406-411.

45
5. Shrivastava, Mohan and Singh, Jaishankar (2008), “Dairy Development in
New Millennium”, Deep and Deep Publications, New Delhi.
6. Shah, Tushar, Nagarbrahman D. and Shah, Janat (1992), “A Problem in Milk
Pricing by Indian Dairy Co-operative: Key Issues and Present Policies”,
Indian Dairyman, Vol. 45, No.8.

Websites
1. www.amuldairy.com
2. www.sumul.com
3. www.panchamrutdairy.org
4. www.banasdairy.coop
5. www.sabardairy.org
6. www.dudhdhara.coop

Annual Reports
1. Annual Reports of Kaira District Co-operative Milk Producers’ Union Ltd.
2. Annual Reports of Surat District Co-operative Milk Producers’ Union Ltd.
3. Annual Reports of Valsad District Co-operative Milk Producers’ Union Ltd.
4. Annual Reports of Panchmahal District Co-operative Milk Producers’ Union
Ltd.
5. Annual Reports of Banaskantha District Co-operative Milk Producers’ Union
Ltd.
6. Annual Reports of Sabarkantha District Co-operative Milk Producers’ Union
Ltd.
7. Annual Reports of Bharuch District Co-operative Milk Producers’ Union Ltd.
8. Annual Reports of NDDB.
9. Annual Reports of GCMMF.

46