Page 53 CHAPTER 3 PROFILE OF THE DAIRY COOPERATIVES IN INDIA 3.1 GLOBAL DAIRY SCENARIO Cooperatives dominate dairy industry not only in India but also around the World. In the United Kingdom, all the milk produced by farmers is procured by cooperatives. There are no private sector dairy plants in New Zealand. A total of 90 per cent of the dairies in former West Germany are cooperative, and in Denmark, Netherlands and Sweden the entire dairy industry is organized on cooperative lines. In the USA, 70 per cent of the dairy industry is in cooperative sector. Dairy programmes are subject to significant government participation and regulation than most other domestic agricultural industries in the USA. Annexure 1 represents the comparison of the milk production in India with other countries of the world for 8 five year periods, from1970 to 2010. It is important to note that India's percentage share in total world milk production has kept upward trend, competing with USA for top position. In the beginning of year 1997 India's milk production was on par with USA, which was ranked second by producing 70.80 million tons of milk in that year. India held the First rank in the production of milk to the tune of 70.88 million tons in the same year 1997 itself by over taking the United States and thereafter it become the world largest milk producer. (See the Annexure 1 Milk production across countries)
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Page 53
CHAPTER 3
PROFILE OF THE DAIRY COOPERATIVES IN INDIA
3.1 GLOBAL DAIRY SCENARIO
Cooperatives dominate dairy industry not only in India but also around the
World. In the United Kingdom, all the milk produced by farmers is procured by
cooperatives. There are no private sector dairy plants in New Zealand. A total of
90 per cent of the dairies in former West Germany are cooperative, and in
Denmark, Netherlands and Sweden the entire dairy industry is organized on
cooperative lines. In the USA, 70 per cent of the dairy industry is in cooperative
sector. Dairy programmes are subject to significant government participation and
regulation than most other domestic agricultural industries in the USA.
Annexure 1 represents the comparison of the milk production in India with
other countries of the world for 8 five year periods, from1970 to 2010. It is
important to note that India's percentage share in total world milk production has
kept upward trend, competing with USA for top position. In the beginning of year
1997 India's milk production was on par with USA, which was ranked second by
producing 70.80 million tons of milk in that year. India held the First rank in the
production of milk to the tune of 70.88 million tons in the same year 1997 itself by
over taking the United States and thereafter it become the world largest milk
producer. (See the Annexure 1 Milk production across countries)
Page 54
3.2 GROWTH OF DAIRY IN INDIA
The green revolution in India has now reached stagnation. In such a case,
there is a need for diversification of crop production system by greater integration
of livestock and inland fisheries. Fortunately, various government initiatives
through the promotion of dairy cooperative movement under Operation Flood
Programme and several other dairy production schemes have resulted in
augmenting milk production at an average annual growth of 4.5 per cent. The
implementation of Operation Flood brought a "White Revolution" in India with milk
production increased from 21.2 million tonnes per annum in 1968-69 to 66
million tonnes by 95-96, at the end of project period.
Indian dairy sector mainly depends on the small producers who have one or
two milch animals yielding 3-4 litres of milk per day. Dairy sector in India is part of the
farming system, so the Indian dairy is managed with lower capital investment. The
milch animals are generally fed with crop residues, agricultural wastes, compound
cattle feed and oil seed cakes which makes dairy farming profitable. The Royal
Commission on Agriculture observed that the cow and the working bullock carry
on their pertinent back the whole structure of the Indian agriculture. The growth
pattern of the livestock production vis-a-vis GDP during 2004-05 to 2010-11 is
furnished in Annexure: 2. It can be observed livestock production was Rs.119333
Crores in the initial year 2004-05 which increased to Rs.260300 Crores in the
terminal year 2010-11, recording 118 per cent increase over 7 years period. Live
stock production as percentage GDP has been fluctuated between the lowest of
3.6 per cent in 2006-07 and the highest of 4.0 per cent in 2004-05.
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Annexure 3 presents annual average growth rates of cattle, buffalo,
bovine and livestock population for five year periods stating from 1951-56 and
ending with 2003-2007. It can be observed that adult female buffaloes have
witnessed a growth rate more than female cows till 1997-2003. During 2003-2007
the adult female cow annual growth rate was more than the adult female buffalo.
Bovine population has grown at lower rates than other livestock population.
The Milk Animal Population by States is presented in Annexure 4 during
the year 2007. The total Cows and Buffaloes during the period between 2006-
2007 are 127390 thousands, out of which female buffaloes as over 3 years were
54474 thousands, crossbred cows 16156 thousands and Indigenous over 3 year
were 72916 thousands. The crossbred population is nearly 13% to the total
population.
Annexure 5 shows the milk production India and per capita availability of
milk during 1991-2012. It can be observed that there is a steady growth of milk
production and per capita availability over the years. Despite its being the
largest milk producer in the world, its per capita milk availability is one of the
least in the world. In the year 2010, the per capita availability of milk was 273 gms
per day.
3.3 ORIGIN AND GROWTH OF COOPERATIVE DAIRYING IN
INDIA
From the early days milk production was entirely on a decentralized basis
and collection of milk was attempted by a few private marketing organizations
like Keventers and Paulsons whose setup plants for producing table butter in
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some areas and also started selling liquid milk to some institutions and military
establishments. Due to the absence of a system of dairying based on commercial
line to meet the demand of the growing urban population, the gap between
demand and supply in cities continued to grow and acute shortage was felt in
many areas. Private vendors took full advantage of such shortages by large
scale adulteration of milk and also charged high prices for poor quality milk. On
account of the general exploitation by the private vendors and as a measure for
counter-acting these acute shortages, a few cooperative milk supply societies
were started during the second and third decades of this century but these
societies were invariably consumer oriented and they did not try to organize the
producers or to provide facilities and inputs for increasing milk production.
The first dairy cooperative society was registered in 1913 at Allahabad in
UP and was called “KATRA Cooperative Dairy Society”. Soon, there after seven
Dairy Cooperative societies were registered at Baroda, Belgaum, Dhulia,
Bhagalpur, Hubli, Bagalkot, Calcutta. Between 1914 and 1919 seven more
societies were formed. In the year 1919, Calcutta Co- operative Society (CCS)
was started in Nagpur. In 1927 Madras Milk Supply Union came into being with
first processing facilities. In 1932, the Lucknow Milk Producers Co-operative Union
Limited was established. In 1945, Aarey Milk Colony was established by the
Bombay government under the Greater Bombay Milk Scheme. During the
Second World War, the increased demand for milk and milk products from the
army and acute shortage of milk in various urban areas gave a new push to the
organization of milk cooperatives and a number milk supply societies were
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registered in different parts of the country, particularly in the then Bombay and
Madras States which included parts of the present States of Gujarat and Andhra
Pradesh. Most of the societies however continued to be consumer oriented.
Thereafter, till Independence there was no significant progress in the
development of diary co-operatives. However, after Independence, the first large
scale and systematic break-through in dairy co- operatives in India was made in
1948 by the Kaira District Co- operative Milk Producers Union at (KDCMPU)
Anand, ultimately, the union came to be known as the Anand Milk Union Limited,
abbreviated to "Amul" which in vernacular means 'highly valuable' or 'beyond all prices'.
Around this time, the Government of India also decided to make arrangements
for the supply of hygienic milk to Bombay city and this resulted in organized
collection of rural milk produced in Kaira District and its bulk transport by rail to
Bombay for distribution. This was the first organized link-up of rural milk shed
with major urban market. However, only the collection and transport of milk was
controlled by the cooperatives and they had no say in its sale in the urban areas
which was controlled by Government agencies. The dairy co-operatives in Kaira
district under the able guidance of Shri Thribhuvandas Patel and Dr. Varghese
Kurien, its chairman and general manager respectively, followed an integrated
approach to dairy development linking all the major elements of dairying viz.,
production, procurement, processing and marketing and achieved remarkable
progress.
3.3.1 Recommendations of working group, committees and conferences
The need for developing Dairy Cooperatives and the strategies to be
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adopted, have received attention from time to time of various Working Groups,
Committees, Conferences, etc., Some of the recommendations and suggestions
made are indicated below.
Conference of the Registrars of Cooperative Societies suggested that
special attention should be paid by the cooperatives to proper maintenance,
feeding and treatment of livestock, to the production of requisite green fodder
and concentrates their supply at favourable rates.
The Working Group (1962) recommended that where there was a
concentration of rural milk producers, separate milk producers cooperative
societies should be organized and to coordinate and provide technical guidance,
State Federations of Dairy Cooperatives should be organized at the State level.
The Working Group also endorsed the proposal made in the Third Plan that dairy
development should be attempted mainly through cooperatives and
recommended active steps for implementing this policy.
The Fourth Five Year Plan stated the pattern of organization of primary
milk producers’ cooperatives would need modification and it will be necessary to
work towards a progressive cooperativization of Government milk plants so that
the entire chain of operation from milk collection, transport, pasteurization and
distribution gets integrated.
3.3.2 Formation of the National Diary Development Board and IDC
Inspired by the success achieved by the Kaira District Cooperative Milk
Producers Union, Anand (Amul), the Government of India, Ministry of Agriculture
constituted on 26th September 1965 a National Dairy Development Board
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(NDDB) to organize and oversee the planning and execution of dairy
development programmes on national scale and to provide technical guidance to
various States in setting up projects for overall development of milk production,
processing and marketing in the country by making available on request,
technical and consultancy services on all relevant aspects. The Indian Dairy
Corporation (IDC) was set up in 1970 to handle the donated commodities, the
generation of funds and their disbursement for the generation of funds for the
dairy development programme.
3.3.3 Recommendations of the National Commission on Agriculture
The National Commission on Agriculture recommended that steps should
be taken to establish strong cooperative organization of primary milk producers
all over the country. It also recommended that Government should adopt a
rational pricing policy for milk, which will take care of the interests of both the
producers and the consumers. These recommendations were accepted by
Government in 1976.
3.3.4 OPERATION FLOOD I (1970-81)
In 1969-70 NDDB developed an ambitious integrated scheme for
development of the dairy industry and marketing of milk, which is commonly
known as “Operation Flood”. The first stage of the scheme-Operation Flood I was
approved on 17th October 1969. The Project envisaged the use of dried Skim
Milk Powder (SMP) and Butter Oil (BO) donated by the World Food Programme
for recombination into milk by modern dairies in the four metropolitan cities of
Bombay, Calcutta, Madras and Delhi and crediting the value of these donated
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commodities on an agreed basis to a fund for financing dairy development
programmes. The plan of operation for the project was signed by the
Government of India and the WFP on 4th March 1970 and the first utilization of
the commodities was recorded as 1st July 1970. The project which was initially
scheduled for a period of 5 years, was subsequently extended thrice to 11 years
and finally terminated on 30thJune 1981. WFP supplied 1,23,973 tonnes of SMP
and 41,510 tonnes of Butter Oil. Rs 116.6 crores generated by the transfer of
these commodities to the dairies, was credited to the Indian Diary Corporation, a
public sector undertaking and utilized by the IDC for financing the approved dairy
development programmes in the four metropolitan cities and related rural milk-
sheds which were being developed for supplying milk to the four cities.
The IDC had stipulated that programmes under Operation Flood should be
implemented through a three-tier cooperative structure comprising of primary
milk producers cooperative society at the village level, a District cooperative milk
producers’ union at the district level to which the village level primary societies
will be affiliated, and an apex milk producers’ Cooperative Federation at the State
level formed by Federating the milk unions. This was based on significant
success achieved by ‘Amul’ and the policy profile laid down by the National
Commission on Agriculture and the Planning Commission. This was
supplemented in some States like Tamil Nadu and Maharashtra with dairies and
milk cooperatives set up with financial and other assistance from the NCDC and
the state Government.
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3.3.5 OPERATION FLOOD II (1981-1985)
Operation Flood II was in effect a continuation of the development
programmes initiated in Operation Flood I. It was designed to cover 155 districts
in 25 milk sheds for organizing milk production and milk collection and to link 148
(including the four metropolitan cities) cities with a population of over 1 lakh in the
1971 census, to these rural milk sheds via a National Milk Grid. The financial
investment proposed was roughly four times that of Operation Flood I. The
programme was approved by the Government of India, for implementation during
the Sixth-Plan period, with an outlay of Rs. 273 Crores. About US$ 150 millions
were provided by the World Bank and the balance in the form of commodity
assistance from the European Economic Community (EEC). The project was
extended to 34500 village co-operative societies, covering 36 lakh farmer
members. The peak milk procurement increased to a level of 79 llpd and milk
marketing to 50 llpd. It also aimed at building up a rural cooperative infrastructure
for achieving the above objectives and also for modernizing the dairy industry.
Most of the development was to centre around the milk sheds already selected
and developed during Operation Flood-I. The cooperative structure proposed to
be built up was to consist of approximately 25 “cluster federations” of milk
producers, unions which were expected to carry out milk production, processing
and marketing activities on a viable basis and obtain a commanding share of
liquid milk markets in all the cities with population of one lakh or more by 1984-
85.
3.3.6 OPERATION FLOOD III (1985-2002)
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The third phase aimed at consolidation of the gains of earlier two phases. The
main focus of the programme was on achieving financial viability of the milk
unions state federations and adopting the salient institutional characteristics of
the "Anand Pattern" co-operatives. In 1987, NDDB was declared an institution of
national importance and a statutory body by an Act of Parliament. The Operation
Flood-III programme was funded by World Bank with a loan of US $ 365
millions, Rs.222.6 crores of Food-Aid (75,000 tonnes of milk powder and 75,000
tonnes of butter/butter oil) by the EEC and Rs. 207.7crores by NDDB from its
own resources. The programme covered some 170 milk sheds of two countries
by organizing 70,000 primary dairy cooperative societies. The World Bank
granted provisional extension of Operation Flood-III credit up to April 30, 1996. Its
major emphasis was to consolidate the achievements gained during the earlier
phases by improving the productivity and efficiency of the co-operative dairy
sector and its institutional base for its long-term sustainability. Investments in
Operation Flood-III were focused on strengthening the institutional management
aspect of dairy co-operatives at various levels to establish financially strong,
farmer owned and managed organization.
The Operation Flood III also had provision for productivity enhancement
inputs and institutional strengthening in the form of training, research, market
promotion, monitoring and evaluation. Particular emphasis was placed on
institutional and policy reforms. Efforts were made to expand infrastructural
facilities in all major markets, linking them to milk sheds through the National Milk