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FOR the dairy industry, the emergence of India as the world's No 1 milk producer has undoubtedly been the most significant development of the last decade. The sector owes its success to the critical input created to give farmers control over the resources they produce.

The cooperative structure — the Anand pattern — means that the dairies are owned by farmers and not by the government; these dairies are managed by the employees of farmers and not by bureaucrats; and they are managed so as to be responsive to the demands and needs of farmers. The results of creating such structures are there for all to see. When the cooperative dairy movement was started, the daily per capita milk consumption was 106 ml. Today, it is 250 ml or 90 kg per year. This contribution cannot be measured simply in quantitative terms. Indeed, in value terms, milk is the country's number one agricultural commodity, ahead of even rice. The estimated value of milk to producers, most of them marginal, small and even landless farmers, is more than $20 billion (about Rs 9,000 crore).

The other major development in the past decade has been de-licensing of the dairy industry paving the way for entry of the private sector and multinationals. Some of them have even entered the liquid milk market. But, the cooperatives have successfully faced this competition. For instance, Amul has overtaken HLL in the ice-cream market, just as Britannia has been forced to withdraw from the liquid milk market in many centres. Cooperatives that are managed professionally and are accountable to their real shareholders — the farmers — can definitely take on competition. Amul has trebled its turnover to Rs 3,000 crore in the last decade. The biggest strength of the industry, unlike in other countries, is its labour intensiveness and that animals are fed on enriched farm by-products such as rice bran and oil cakes. Dairying in India consumes less energy, is labour intensive, cost effective and sustainable. To really leverage these advantages, cooperatives have to become self-reliant. Amul today is not just a brand name; it represents the entrepreneurial spirit of the Indian farmer and the national commitment for self-reliance and development of human resources and values based on a sustainable development process.

Dr Varghese Kurien

At the same time, there is no room for complacency. So far, the industry was supply-driven. In future, it would be driven by demand as income levels rise and more people can afford milk. But to respond to the demand of the consumer and prevent him from opting for foreign brands, the quality of milk has to improve at all levels. Again, cooperatives are better placed to address this challenge since they are directly linked to the farmers, who, in turn, through these organisations, are in control of not just the milk they produce, but also its procurement, processing and final marketing. The segments that will see growth are liquid milk and indigenous milk products. India will definitely export more in the years ahead, but given that our own markets are still to be fully tapped, export in large quantities is unlikely.

Finally, liberalisation must provide farmers a level-playing field. The Government had allowed the National Dairy Development Board to import milk powder, when there was no real shortage of milk in the country. The dairies today are selling skimmed milk powder (SMP) in the domestic market for Rs 90 per kg. As against this, SMP of European origin is quoting at $1,900 per tonne f.o.b or Rs 86 per kg. But the latter is a distorted price, as the European dairy industry is also obtaining a refund of 570 euro ($720) for each tonne, which means an export subsidy of nearly 40 per cent. Allowing such imports will discourage Indian farmers, who do not enjoy any such subsidies. Moreover, the same European or US dairy industry, which is given access to Indian markets, erects all kinds of tariff and non-tariff barriers against our products. The diary industry should not go the edible oil way by creating artificial import dependency.

(As told to Harish Damodaran by Dr Verghese Kurien, Chairman, Gujarat Cooperative Milk Marketing Federation Ltd.)

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