Amul - The Need Of India

Published by MBA Skool Team, Published on October 01, 2012

We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.

..... Come, my friends,
’Tis not too late to seek a newer world.


And a newer world was indeed created - An Egalitarian world where people from the lowest level of production were given the highest dignity.

At the crack of dawn ten million farmers of Gujarat start milking their cows-a way to financial independence. But the picture was not always rosy. It all started in 1946, when the farmers, oppressed by constant changing prices of the Polson Dairy, came together to start a co-operative. What moonstruck everyone was the constant growth it gained to become India’s largest milk co-operative. Even Dr. Verghese Kurien himself might not have thought it to grow so big. Started initially in Kaira District the movement slowly spread throughout the entire country. Today it is popularly known as ‘Amul’

The birth of Amul propelled the white revolution. In fact India today is the largest milk producer in the world. Now what can be done with milk, can also be applied to other products.

Mother India till today is grappling with the problem of feeding its own children. It is not that we are not producing enough. The problem is that our distribution and procurement system is so weak that around thousands of tonnes of the food grains are wasted every year. And the Govt. seems to be uninterested in such problems. Can’t an Amul be born in the field of crops and vegetables that would give birth to the Second Green Revolution which is the need of the hour?

Amul has a three tier organisation structure which marries farmer’s productivity with the professional excellence at Amul. At the village level there are Dairy Co-operative societies, where collection of milk is done and transported to the nearest chillers plants, which are directly linked to the District Milk Union, where procurement takes place, which in turn is linked to the State Level Federation, looking after the entire marketing and management. This model reduces not only competition among the unions but also brings them under one brand.

But how do co-operatives operate? Farmers are given receipts when the pour their milk at the co-operatives. Payment is done after every 10 days. So there is no question of being cheated. They are even given bonus from the profit that the co-operative earns. More over a 10% reserve is made for medical needs of the cattle of the members of the society. Bima facility is provided to the members, greater share of whose premium is paid by the respective co-operatives and less than half the amount of it is paid by the beneficiary. There is also a provision for education fund.

Milk business used to be done before also, but the way Amul started it changed the entire outlook. Farmers now have a sense of security. A National Dairy Development Board was created, much to the will of our late Prime Minister Dr. Rajendra Prasad, in Anand, far from the bureaucratic control of New Delhi on request of Dr. Verghese Kurien which is trying to replicate Amul throughout India.

Now when one Amul can be created, thousands more can also be created in other sectors. Talking about agriculture, a similar kind of co-operative working at the village level buying agricultural produce from the farmers, sending it to district unions for procurement and marketed by the state level can very well function. This would ensure better returns for the farmers. Most of the time, we see that farmers get very low price for their produce that what the actual market price is. Most of the profit is eaten away by the people acting as inter mediatory. Farmer suicide cases are not uncommon in a country which is predominantly agricultural in nature, a shame for everyone. An Amul model would help address such problems and give farmers their actual due. Farmers would be elevated to the rank of owners from the petty producers. Dr Kurien once said that at Amul, farmers are the real owners and he is just an employee. If he doesn’t work, he will lose his job. He will be out without work.

Better transport, storage and procurement facilities would reduce wastage by greater margins. Most importantly a huge no. of unorganized farmers would get technical support and input benefits from the higher levels. They can be given loans for buying agricultural inputs at lower rates of interest which would directly increase their farm produce. A secured future in agriculture would give rural India a big thrust. It would help curb migration. In fact a reverse migration of village people who leave villages for better prospects in city can instil the lost life into the rural economy.

Women participation can be increased as it happened in the Dairy sector giving a better democratic representation.  This can also be applied to horticulture, floriculture and pisciculture. As the middle class society swells up, more and more demand for such commodities are expected to rise. Already there has been a substantial rise in the consumption of milk and meat. And why limit to these? Co-operatives can also be applied to handicrafts, khadi, bidi making and numerous other industries which operate on a very small scale, and are highly unorganized and dispersed.

These days’ banks are focussing a lot on Financial Inclusion. The Govt with the help of these co-operatives can reach the poorest of the poor. Any payment involved in co-operatives can be done through banks. The respective banks can come forward to help open no-frills account which would bring the huge 63% population who are out of reach of banking services come under the ambit of banking.

Some may say that why do we need co-operatives? The govt is there to take care of such things. Had such been the case would an Amul be born? What we are looking at is creating more Amul s.

Co-operatives can bring about a great social change in rural India. It is not that co-operatives do not exist, but they operate on so small scale that they cannot reap such high benefits. Creating a brand is very necessary in order to grow, and this is where we can step into. We need to identify more and more such organisations and encourage more and more such entrepreneurs to come up. The best brains in the country think of earning dollars offshore. Even if they think of starting their own venture, they think of targeting urban consumers. What they fail to realize is that nearly 70% rural India, a huge market with huge potential, is waiting to be tapped. Some may feel that starting a venture in villages would not be profitable. I can give a thousand reasons why starting a rural venture could be more profitable than anything else. Let us not forget that in olden days, rural economy had been considered as upholder of natural resources.

 First setting up a business would incur less initial costs in contrast to urban areas. It would require very less time to reach breakeven. Any other business requires great level of risks. Moreover market conditions may at times not be conducive for the sector to perform.  Food market is never saturated. Population always grows. And in a country like India market is always there. In other sectors there are many established players in the market. Would it be easy for a new entrant to penetrate the market?

For example in telecom sector, you need to compete in a market that is already close to being saturated. Moreover you need to compete with the likes of Vodafone, Airtel, Tata Indicom, Docomo etc. But how many big multinationals are working in rural India, for rural India. Look at Amul. It started with a single co-operative at Kaira dist, a place even people of Gujarat might not have known at that time. Slowly it grew and today it is a 2.5 billion USD organization with worldwide presence.

At this stage I remember an advertisement saying- it’s your life make it large. There is huge untapped potential lying beneath. The only thing is that we don’t realize it. Remember, in mythology, elephant is the cleverest animal. When it awakes no one dares to encounter it head on. We are all waiting for the elephant to rise. And when it does, the entire civilization would be a witness to a new history.

This article has been authored by Priyam Mukherjee from IRMA.

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