‘Dairy, the last resort in slump’

Amul, the cooperative dairy union, which has revolutionised milk production in Gujarat and India is unfazed by the global economic meltdown and it has set an ambitious target of doubling its production in the next decade. Recession, milk prices, competition from private players and political interferences in the dairy industry were some of the issues DNA discussed with BM Vyas, the managing director of Gujarat Co-operative Milk Marketing Federation Limited (GCMMF) which markets all Amul products.

How will the dairy sector be affected by the economic slowdown?
The Indian dairy industry will be the last resort for many in the urban areas who have come from villages. As of now, the slowdown hasn't impacted either the dairy sector or the cattle farmers and the demand for milk has not decreased. With job cuts in labour-intensive industries like textiles and diamond, many people will move back to their rural residences. Back in the villages, many of them will buy one or more cattle to generate some regular income for themselves and their families. So, this could possibly lead to a slump in demand for milk in urban areas. But, Amul is growing at around 30% per annum and we do not expect any major drop in our growth rate. 

Do you see any major impact on demand for milk from the slowdown?
The milk sector, worth Rs2 lakh crore, is the largest agricultural produce in India. The product is a basic demand in every Indian household and so a fall in its demand is not likely. However, the adverse effect of meltdown will be felt in the demand for all other kinds of products ranging from consumer durables and automobiles. The world's GDP is $64 trillion while India's contribution is a mere $1 trillion. Currently, exports of all products have been greatly affected because of which, there is an impact over the country's economy as well. In past years, India grew by over 8%, but this will now fall due to global recession; however, the GDP of the country will continue to grow unlike many of the developed nations.

Do you anticipate any further rise in milk prices this year?
We expect milk prices to remain constant this year without any further rise. Meanwhile, though the inflation rate is declining, the input costs for the dairy industry are rising. Even though price of cattle feed has increased considerably in the past few months, looking at the current slowdown, we do not expect any rise in milk prices from it.

How many farmers and cattle are attached with the federation in Gujarat?
The federation enjoys membership of more than 27 lakh milk producers who have 56 lakh cattle in 13,000 villages of Gujarat. We have 13 district union dairies and have 30 plants with processing capacity of 10 million litres of milk each day. The milk production will continue to rise as the cattle growth has been registered at around 1% per annum. We are also helping farmers increase milk productivity.

Are private dairies posing a threat to Amul?
There are several big entrepreneurs in the country who have come and will continue to enter the dairy sector. However, private dairies will find it very difficult to come anywhere close to GCMMF's success. Their market share is miniscule and so is the threat perception from them to us.

How many countries have succeeded in replicating the Amul model?
Representatives from many countries have come to study Amul and understand the federation's co-operative model. But, the key to the success of Amul is democracy. Most of the successful dairy cooperatives in European countries as well as Australia and New Zealand have flourished because they were democracies. A few years back, a delegation from Pakistan paid us a visit, but nothing has happened after that.

After the exit of Dr Verghese Kurien, do you think political interference has increased and that it could have a negative impact on GCMMF's future growth prospects?
Dr Verghese Kurien may not be directly associated with the federation now, but his presence amongst us is still here. Those who think they can change the course of Amul are making a big mistake and will get blown away with the wind. The chairmen of GCMMF's 13 unions belong to different political parties. But, when there is any board meeting or any matter related to the federation they set aside their political affiliations and focus only on how best they can serve this unique cooperative dairy union movement.

Has recession affected dairy exports?
Our export figures this year have been pegged at around Rs130 crore, which is much higher than the previous year. We export milk products to about 30 countries including the US, West Asia, Japan, Australia, Singapore, Bangladesh and a host of other countries. We target the NRI diaspora overseas. Among the NRG population, Patels are spread across the globe and we aim supplying them our products.