A Report on the Milk Revolution in India
CHAPTER 1
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INTRODUCTION
Milk may be defined as the whole, fresh,
clean, lacteal secretion obtained by the complete milking of
one or more healthy milk animals, excluding that obtained
within 15 days before or 5 days after calving or such periods
as may be necessary to render the milk practically
colostrums-free and containing the minimum prescribed
percentages of milk fat and milk-solids-not-fat. In India, the
term 'milk', when unqualified, refers to cow or buffalo milk,
or a combination of the two.
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FOOD AND NUTRITIVE VALUE OF MILK:
Milk is an almost ideal food. It has high nutritive value. It
supplies body-building proteins, bone-forming minerals and
health-giving vitamins and furnishes energy-giving lactose
and milk fat. Besides supplying certain essential fatty acids,
it contains the above nutrients in an easily digestible and
assimilable form. All these properties make milk an
important food for pregnant mothers, growing children,
adolescents, adults, invalids, convalescents and patients
alike.
Milk contains:-
Milk is rich in protein and calcium which help build the
muscles you need to throw a ball or climb a tree. One 200 ml
glass of milk provides a power-pack of nutrients a child
needs daily. Here's how a glass of milk fulfills your daily
requirement of nutrients in percentage terms:
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MILK - ESSENTIAL FOR NOURISHMENT :
Milk is nature's ideal food for infants and
growing children in our country, except in rare cases of
lactose intolerance. The important place milk occupies in our
diet has been recognized since Vedic times, and all modern
research has only supported and reinforced this view. In fact,
milk is now considered not only desirable but essential from
the time the child is born. The baby is recommended to be
breast-fed
until it is weaned and thereafter given
cow/buffalo/goat/sheep or similar domesticated mammal's
milk till he or she reaches 12 years of age.
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The National Institute of Nutrition has recommended a
minimum of 300 gms daily intake of milk for children
between 1-3 years of age and 250 gms for those between
10-12 years, if they are vegetarian, and 250 gms and 200
gms for the same age groups of non-vegetarian children. In
our country, most such adults consume milk only as
whiteners for tea and coffee, some dahi or buttermilk.
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CHAPTER 2
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INDUSTRY PROFILE
Origin of the Industry
The creation of dairy industry has been
started since long back in India. Milk is one of the delicious
gifts of nature. From the very beginning it self people is
very fond of milk and the use of milk in various ways
through producing many kinds of food from it like curds,
butter, cheese, etc. as it exerted people to produce such
milk in an organized way to meet the increasing demand of
the customer, which results in the dairy industry
Present status of the organization
India is the world’s largest milk producer, with
output in 1999-2000 forecasted at 78 million tones. United
States, where the milk production is anticipated to grow only
marginally at 71 million tones, occupied the top slot till
1997. India’s milk production in 1998 at 557 million tones
would continue the steady progress in recent years.
Furthermore, against the world’s at 1%. The steep rise in the
growth pattern has been attributed to a sustained expansion
in domestic demand, although per capita consumption is
modes at 70 kg of milk equivalent. Annual milk production
has trebled in the
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last 30 years, rising from 21 million tones in 1968 to an
anticipated 80 million tones in 2001, this rapid growth and
modernization is largely credited to the contribution of dairy
cooperatives, under the operation flood project, assisted by
many multilateral agencies, including the European union,
the world bank and world flood program. In the Indian
context of poverty and malnutrition, milk has a special role
to play for its many nutritional advantages as well as
providing supplementary income to some 70 million farmers
in 50,00,000 remote villages.
White Revolution in India:
Operation Flood 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 the largest producer of milk and
milk products, and hence is also called the White Revolution
of India. It also helped reduce malpractices by milk traders
and merchants. This revolution followed the Indian green
revolution and helped in alleviating poverty and famine
levels from their dangerous proportions in India during the
era.
Gujarat-based Amul (Anand Milk Union Limited) was the
engine behind the success of Operation Flood and in turn
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became a mega company based on the cooperative
approach. Verghese Kurien (chairman of NDDB at that time),
then 33, gave the professional management skills and
necessary thrust to the cooperative, and is considered the
architect of India's 'White Revolution' (Operation Flood). His
work has been recognised by the award of a Padma
Bhushan, the Ramon Magsaysay Award for Community
Leadership, the Carnegie-Wateler World Peace Prize, and the
World Food Prize
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 a major share of the price
consumers pay.
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
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. Fair prices for consumers
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 the European Economic Community) 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 major
metropolitan cities: Delhi, Mumbai, Kolkata and Chennai.
Thus establishing mother dairies in four metros.
Operation flood, also referred to as “White Revolution” is a
gigantic project propounded by Government of India for
developing dairy industry in the country. The Operation
Flood – 1 originally meant to be completed in 1975, actually
the
period of about nine years from 1970-79, at a total cost of
Rs.116 corers.
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As start of operation Flood-1 in 1970 certain set of aims were
kept in view for the implementation of the programmers.
Improvement by milk marketing the organized dairy sector
in the metropolitan cities Bombay, Calcutta, Madras, Delhi.
The objectives of commanding share of milk market and
speed up development of dairy animals respectively hinter
lands of rural areas with a view to increase both production
and procurement.
Phase II
Operation Flood Phase II (1981–1985) increased the
milksheds from 18 to 136; 290 urban markets expanded the
outlets for milk. By the end of 1985, a self-sustaining system
of 43,000 village cooperatives with 42.5 lakh milk producers
were covered. Domestic milk powder production increased
from 22,000 tons in the pre-project year to 1,40,000 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
promote self-reliance. Direct marketing of milk by producers'
cooperatives increased by several million litres a day.
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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. Milksheds peaked to 173 in 1988-89 with the
numbers of women members and Women's Dairy
Cooperative Societies increasing significantly.
Phase III gave increased emphasis to research and
development in animal health and animal nutrition.
Innovations like vaccine for Theileriosis, bypassing protein
feed and urea-molasses mineral blocks, all contributed to the
enhanced productivity of milch animals.
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CHAPER 3
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Company Profile
Introduction
Large emerging markets like China and India are becoming
the proving grounds for existing business norms and
practices of multinationals (MNC) worldwide. To get a
foothold in these
markets MNCs have tried various models that range from
replicating home country practices to becoming a dyed-in-
the-wool host country firm. Most of these approaches,
however, have failed to deliver the promise with which these
markets were seen at the time of entry. For example, many
MNCs in India focused on the 200 million middle-class as
their target customers (a number which appears large
enough for any new entrant) but performed very poorly. This
segment was subjected to marketing efforts of all MNCs. All
wanted to sell their T-shirts or their cars or their expensive
shoes or their foreign holidays to the same set of consumers.
At some point the budget constraint of this large
segment and absence of an attractive value proposition in
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the products & services offered stood in the way of
successful MNC entry into India. The strategy failed and
many MNCs beat a hasty retreat.
Large emerging economies have their own
complexities that range from development of markets
(where the largest segment of population is the one which
has low purchasing power) to
integration of low cost suppliers who are predominantly
small. For firms that aspire to conduct substantial business
in such markets, such complexities have to be recognized
and then overcome.
The challenge is to understand the linkages between
markets and the society. This would also require
development of a new business model that helps a firm grow
in such environments. This project is about one such
successful model. The Kaira District Milk Cooperative Union
or AMUL in India is an example of how to develop a network
of firms in order to overcome the complexities of a large yet
fragmented market like those in emerging economies by
creating value for suppliers as well as the customers. It is
worth noting that today Amul competes successfully with the
private sector that includes multinational corporations and
domestic players, and provides handsome returns to farmers
without receiving any form subsidy from the government.
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Amul: The origin
The mighty Ganges at it's origin is but a tiny stream in the
Gangotri ranges of the Himalayas. Similar is the story of
Amul which inspired 'Operation Flood' and heralded the
'White Revolution' in India. It began with two village
cooperatives and 250 liters of milk per day, nothing but a
trickle compared to the flood it has become today. Today
Amul collects, processes and distributes over a million liters
of milk and milk products per day, during the peak, on
behalf of more than a thousand village cooperatives owned
by half a million farmer members. Further, as Ganga-ma
carries the aspirations of generations for moksha, Amul too
has become a symbol of the aspirations of millions of
farmers.Creating a pattern of liberation and self-reliance for
every farmer to follow.
The start of a revolution
The revolution started as an awareness among the farmers
that grew and matured into a protest movement and the
determination to liberate themselves. Over four decades
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ago, the life of a farmer in Kaira District was very much like
that of his counterpart anywhere else in India. His income
was derived almost entirely from seasonal crops. The income
from milch buffaloes was undependable. The marketing and
distribution system for the milk was controlled by private
traders and middlemen. As milk is perishable, farmers were
compelled to sell it for whatever they were offered. Often,
they had to sell cream and ghee at throwaway prices. In this
situation, the one who gained was the private trader.
Gradually, the realization dawned on the farmers that the
exploitation by the trader could be checked only if marketed
their milk themselves. In order to do that they needed to
form some sort of an organization. This realization is what
led to the establishment of the Kaira District Cooperative
Milk Producers' Union Limited (popularly known as Amul)
which was formally registered on December 14, 1946.The
Kaira Union began pasteurizing milk for the Bombay Milk
Scheme in June 1948. An assured market proved a great
incentive to the milk producers of the district. By the end of
1948, more than 400 farmers joined in more village
societies, and the quantity of milk handled by one Union
increased from 250 to 5,000 liters a day.
Obstacles : Springboards for success.
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Each failure, each obstacle, each stumbling block can be
turned into a success story. In the early years, Amul had to
face a number of problems. With every problem came
opportunity. A chance to turn a negative into a positive. Milk
by products and supplementary yield which suffered from
the same lack of marketing and distribution facilities became
encumbrances. Instead of being bogged down by their fate
they were used as stepping stones for expansion. Backward
integration of the process led the cooperatives to advances
in animal husbandry and veterinary practice.
Milk by products: An excuse to expand.
The response to these provided stimulus for further growth.
For example, as the movement spread in the district, it was
found that the Bombay Milk Scheme could not absorb the
extra milk collected by the Kaira Union in winter, when the
production on an average was 2.5 times more than in
summer. Thus, even by 1953, the farmer-members had no
assured market for the extra milk produced in winter. They
were again forced to sell a large surplus at low rates to the
middlemen. The remedy was to set up a plant to process
milk into products like butter and milk powder. A Rs 5 million
plant to manufacture milk powder and butter was completed
in 1955. In 1958, the factory was expanded to manufacture
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sweetened condensed milk. Two years later, a new wing was
added for the manufacture of 2500 tons of roller-dried baby
food and 600 tons of cheese per year, the former based on a
formula developed with the assistance of Central Food
Technological Research Institute (CFTRI), Mysore. It was the
first time anywhere in the world that cheese or baby food
was made from buffalo milk on a large, commercial scale.
Another milestone was the completion of a project to
manufacture balanced cattle feed. The plant was donated by
OXFAM under the Freedom From Hunger Campaign of the
FAO. To meet the requirement of milk powder for the
Defense, the Kaira Union was asked by the Government of
India in 1963 to setup additional milk drying capacity. A new
dairy capable of producing 40 tons of milk powder and 20
tons of butter a day was speedily completed. It was declared
open in 1965. The Mogar Complex where high protein
weaning food, chocolate and malted food are being made
was another initiative by Amul to ensure that while it fulfilled
the social responsibility to meet the demand for liquid milk,
its members were not deprived of the benefits to be had
from the sale of high value-added products.
Cattle : From stumbling blocks to building blocks .
Traditionally dairying was a subsidairy occupation of the
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farmers of Kaira. However, the contribution to the farmer's
income was not as prominent as his attachment to dairying
as a tradition handed down from one generation to the next.
The milk yield from animals, which were maintained mainly
on the
by products of the farm, was decidedly low. That together
with the lack of facilities to market even the little produced
rendered the scientific practice of animal husbandry
irrational as well as unaffordable. The return on the
investment as well as the prospects of being able to market
the product looked very bleak. It was a vicious cycle
reinforced by generations of beliefs. The Kaira Union broke
the cycle by not only taking upon themselves the
responsibility of collecting the marketable surplus of milk but
also provided the members with every provision needed to
enhance production. Thus the Kaira Union has full-fledged
machinery geared to provide animal health care and
breeding facilities. As early as late fifties, the Union started
making high quality buffalo semen. Through village society
workers artificial insemination service was made available to
the rural animal population. The Union started its mobile
veterinary services to render animal health care at the
farmers' doorstep. Probably for the first time in the country,
veterinary first aid services, by trained personnel, were
made available in the villages.The Union's 16 mobile
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veterinary dispensaries are manned by fully qualified staff.
All the villages are visited bi-monthly, on a predetermined
day, to provide animal health care. A 24-hour Emergency
Service is also available at a fee (Rs. 35 for members and Rs.
100 for non-members). All the mobile veterinary vans are
equipped with Radio Telephones. The Union runs a semen
production
center where it maintains high pedigreed Surti buffalo bulls,
Holstein Friesian bulls, Jersey bulls and 50 per cent crossbred
bulls. The semen obtained from these bulls is used for
artificial breeding of buffaloes and cows belonging to the
farmer members of the district. The artificial insemination
service has become very popular because it regulates the
frequency of calving in cows and buffaloes thus reducing
their dry period. Not only that, a balanced feed concentrate
is manufactured in the Union's Cattle Feed Plant and sold to
the members through the societies at cost price.Impressive
though its growth, the unique feature of the Amul sagas did
not lie in the extensive use of modern technology, nor the
range of its products, not even the rapid inroads it made into
the market for dairy products. The essence of the Amul story
lies in the breakthrough it achieved in modernizing the
subsistence economy of a sector by organizing the rural
producers in the areas.
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The Kaira experiment: A new beginning in more ways
than one.
A system which involves participation of people on such a
large magnitude does not confine itself to an isolated sector.
The ripples of its turbulence affect other areas of the
society as well. The cooperatives in the villages of Kaira are
contributing to various desirable social changes such as:
The yearly elections of the management committee and its
chairman, by the members, are making the participants
aware of their rights and educating them about the
democratic process. Perpetuating the voluntary mix of the
various ethnic and social groups twice-a-day for common
causes and mutual betterment has resulted in eroding many
social inequilibria. The rich and the poor, the elite and the
ordinary come together to cooperate for a common cause.
Live exposure to various modern technologies and their
application in day-to-day life has not only made them aware
of these developments but also made it easier for them to
adopt these very processes for their own betterment. One
might wonder whether the farmer who knows almost
everything about impregnating a cow or buffalo, is also
equally aware of the process in the humans and works
towards planning it.
More than 900 village cooperatives have created jobs for
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nearly 5000 people in their own villages -- without disturbing
the socio-agro-system -- and thereby the exodus from the
rural areas has been arrested to a great extent.The income
from milk has contributed to their household economy.
Besides, women, who are the major participants, now have a
say in the home economy.
Independent studies by various individuals and institutions
have shown that as high as 48 per cent of the income of the
rural household in Kaira District is being derived from dairying. Since dairying is a
subsidairy occupation for the majority of the rural population, this income is helping
these people not only to liberate themselves from the stronghold of poverty but also to
elevate their social status.
Members: 13 district cooperative milk
producers' Union
No. of Producer Members: 2.79 million
No. of Village Societies: 13,328
Total Milk handling
capacity:
11.22 million litres per day
Milk collection (Total -
2008-09):
3.05 billion litres
8.4 million litres
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Milk Drying Capacity: 626 Mts. per day
Cattlefeed manufacturing
Capacity:
3500 Mts per day
Sales Turnover
Rs (million)US $ (in
million)
1994-95 11140 355
1995-96 13790 400
1996-97 15540 450
1997-98 18840 455
1998-99 22192 493
1999-00 22185 493
2000-01 22588 500
2001-02 23365 500
2002-03 27457 575
2003-04 28941 616
2004-05 29225 672
2005-06 37736 850
2006-07 42778 1050
2007-08 52554 1325
2008-09 67113 1504
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The distribution network
Amul products are available in over 500,000 retail outlets
across India through its network of over 3,500 distributors.
There are 47 depots with dry and cold warehouses to buffer
inventory of the entire range of products.
GCMMF transacts on an advance demand draft basis from its
wholesale dealers instead of the cheque system adopted by
other major FMCG companies. This practice is consistent
with GCMMF's philosophy of maintaining cash transactions
throughout the supply chain and it also minimizes dumping.
Wholesale dealers carry inventory that is just adequate to
take care of the transit time from the branch warehouse to
their premises. This just-in-time inventory strategy improves
dealers' return on investment (ROI). All GCMMF branches
engage in route scheduling and have dedicated vehicle
operations.
Umbrella brand
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The network follows an umbrella branding strategy. Amul is
the common brand for most product categories produced by
various unions: liquid milk, milk powders, butter, ghee,
cheese, cocoa products, sweets, ice-cream and condensed
milk.Amul's sub-brands include variants such as Amulspray,
Amulspree, Amulya and Nutramul. The edible oil products
are grouped around Dhara and Lokdhara, mineral water is
sold under the Jal Dhara brand while fruit drinks bear the
Safal name.
By insisting on an umbrella brand, GCMMF not only skillfully
avoided inter-union conflicts but also created an opportunity
for the union members to cooperate in developing products.
Managing the supply chain
Even though the cooperative was formed to bring together
farmers, it was recognised that professional managers and
technocrats would be required to manage the network
effectively and make it commercially viable.
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Coordination
Given the large number of organisations and entities in the
supply chain and decentralised responsibility for various
activities, effective coordination is critical for efficiency and
cost control. GCMMF and the unions play a major role in this
process and jointly achieve the desired degree of control.
Buy-in from the unions is assured as the plans are approved
by GCMMF's board. The board is drawn from the heads of all
the unions, and the boards of the unions comprise of farmers
elected through village societies, thereby creating a situation
of interlocking control.
The federation handles the distribution of end products and
coordination with retailers and the dealers. The unions
coordinate the supply side activities. These include
monitoring milk collection contractors, the supply of animal
feed and other supplies, provision of veterinary services, and
educational activities.
Managing third party service providers
From the beginning, it was recognised that the unions' core
activity lay in milk processing and the production of dairy
products. Accordingly, marketing efforts (including brand
development) were assumed by GCMMF. All other activities
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were entrusted to third parties. These include logistics of
milk collection, distribution of dairy products, sale of
products through dealers and retail stores, provision of
animal feed, and
veterinary services.
It is worth noting that a number of these third parties are not
in the organized sector, and many are not professionally
managed with little regard for quality and service.
This is a particularly critical issue in the logistics and
transport of a perishable commodity where there are already
weaknesses in the basic Infrastructure.
Establishing best practices
A key source of competitive advantage has been the
enterprise's ability to continuously implement best practices
across all elements of the network: the federation, the
unions, the village societies and the distribution channel.
In developing these practices, the federation and the unions
have adapted successful models from around the world. It
could be the implementation of small group activities or
quality circles at the federation. Or a TQM program at the
unions. Or housekeeping and good accounting practices at
the village society level.
More important, the network has been able to regularly roll
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out improvement programs across to a large number of
members and the implementation rate is consistently high.
For example, every Friday, without fail, between 10.00 a.m.
and 11.00 a.m., all employees of GCMMF meet at the closest
office, be it a department or a branch or a depot to discuss
their various quality concerns.
Each meeting has its pre-set format in terms of Purpose,
Agenda and Limit (PAL) with a process check at the end to
record how the meeting was conducted. Similar processes
are in place at the village societies, the unions and even at
the wholesaler and C&F agent levels as well.
Examples of benefits from recent initiatives include
reduction in transportation time from the depots to the
wholesale dealers, improvement in ROI of wholesale dealers,
implementation of Zero Stock Out through improved
availability of products at depots and also the
implementation of Just-in-Time in finance to reduce the float.
Kaizens at the unions have helped improve the quality of
milk in terms of acidity and sour milk. (Undertaken by multi-
disciplined teams, Kaizens are highly focussed projects,
reliant on a structured approach based on data gathering
and analysis.) For example, Sabar Union's records show a
reduction from 2.0% to 0.5% in the amount of sour milk/curd
received at the union.
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The most impressive aspect of this large-scale roll out is that
improvement processes are turning the village societies into
individual improvement centers.
Technology and e-initiatives
GCMMF's technology strategy is characterized by four
distinct components: new products, process technology, and
complementary assets to enhance milk production and e-
commerce.
Few dairies of the world have the wide variety of products
produced by the GCMMF network. Village societies are
encouraged through subsidies to install chilling units.
Automation in processing and packaging areas is common,
as is HACCP certification. Amul actively pursues
developments in embryo transfer and cattle breeding in
order to improve cattle quality and increases in milk yields.
GCMMF was one of the first FMCG (fast-moving consumer
goods) firms in India to employ Internet technologies to
implement B2C commerce.
Today customers can order a variety of products through the
Internet and be assured of timely delivery with cash
payment upon receipt.
Another e-initiative underway is to provide farmers access to
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information relating to markets, technology and best
practices in the dairy industry through net enabled kiosks in
the villages.
GCMMF has also implemented a Geographical Information
System (GIS) at both ends of the supply chain, i.e. milk
collection as well as the marketing process.
Farmers now have better access to information on the
output as well as support services while providing a better
planning tool to marketing personnel.
Coordination for Competitiveness
Robust coordination is one of the key
reasons for the success of operations involving such an
extensive network of producers and distributors at GCMMF.
Some interesting mechanisms exist for coordinating the
supply chain at GCMMF. These range from ensuring fair
share allocation of benefits to the various stakeholders in the
chain to coordinated planning of production and distribution.
The spirit of cooperation is present in all transactions in the
chain and is constantly strengthened by the vision and
actions of Unions and the Federation. More importantly, the
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reason for setting up of this cooperative is not amiss to any
one in this large network organization.
Employees, customers and distributors are constantly
reminded that they work for the farmers and the entire
network strives to provide the best returns to the farmers,
the real owners of the cooperative. It may be remembered
that coordination mechanisms have to link the lives and
activities of 2.12 million small suppliers and 0.5 million
retailers!
There appear to be three critical mechanisms of coordination
that ensure that decision making is coherent and that the
farmers gain the most from this effort.
These mechanisms are:
• Inter-locking Control
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• Coordination Agency: Unique Role of Federation
• Supplier Enhancement and Network servicing
Inter-locking Control
Each Village Society elects a chairperson and a secretary
from amongst its member farmers of good standing to
manage the administration of the VS. Nine of these
chairpersons (from amongst those VS affiliated to a Union)
are elected to form the Board of Directors of the Union. The
Chairperson of the Union Board is elected from amongst
these members. The managing director of the Union, who is
a professional manager, reports to the chairperson and the
board. All chairpersons of all the
Unions form the Board of Directors of GCMMF. The managing
director of GCMMF reports to its Board of Directors. Each
individual organization, the Union or GCMMF, are run by
professional managers and a highly trained staff. It must be
pointed that all members of all the boards in the
chain are farmers who pour milk each day in their respective
Village Societies. A key reason for developing such an inter-
locking control mechanism is to ensure that the
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interest of the farmer is always kept at the top of the agenda
through its representatives who constitute the Boards of
different entities that comprise the supply chain. This form of
direct representation also ensures that professional
managers and farmers work together as a team to
strengthen the cooperative. This helps in coordinating
decisions across
different entities as well as speeding both the flow of
information to the respective constituents and decisions.
Coordination Agency: Unique Role of the Federation.
In addition to being the marketing and
distribution arm of the Unions, GCMMF plays the role of
acoordinator to the entire network within the State –
coordinating procurement requirements with other
Federations (in other states), determining the best
production allocation for its product mix from amongst its
Unions, managing inter-dairy movements, etc. It works with
two very clear objectives: to ensure that all milk that the
farmers produce gets sold in the market either as milk or as
value added products and to ensure that milk is made
available to an increasingly large sections of the society at
affordable prices. In addition, it has to plan its production at
different Unions in such a way that market requirement
matches with unique strengths of each Union and that each
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Union also gets a fair return on its capacity. In this regard,
the following aspects of the GCMMF’s strategy need to be
highlighted:
(a) Production Allocation across Unions: GCMMF, in
consultation with all the Unions, decides on the product mix
at each Union location. Some considerations that govern this
choice are the strengths of each Union, the demand for
various products in the region of the Union as well as the
country, long term strategy of each Union, procurement
volumes at different Unions, distribution costs from various
locations etc. Demand for daily products and supply of milk
vary with the season. Further, demand and supply seasons
run counter to each other making the planning problem
more complex.
The choice of product mix and its allocation
among the unions is determined in a hierarchical fashion by
GCMMF. First, annual demand targets are developed for
each product category based on long term growth plans and
pricing strategy. Next, these targets are converted to annual
plans by matching the targeted demand with projected
supply. In case of mismatch between projected supply and
demand appropriate adjustments are made as needed. For
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example, when demand exceeds supply (as is the case most
often), the projected supply is allocated among the products
in a sequential manner. In the allocation process liquid milk
gets the highest priority (as it is perceived as a primary
social obligation) followed by other products, the priority
typically
determined by product shelf life.
In the second stage, the allocation is disaggregated into
monthly plans for each union. In developing the monthly
plans GCMMF takes into account seasonality in demand and
supply availability at each union, geographical distribution of
demand, impact on costs and equity between unions. The
monthly plans are developed on a rolling horizon basis and
the buy-in from the Unions
is secured in the monthly meeting attended by MDs of all
Unions. The detailed production plans showing inventory of
intermediate products and finished goods at the Unions are
determined by each union.
(b) Pricing and Product Mix Choices:
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GCMMF pays the same price for each product
to all the Unions independent of their production costs. While
there is some variation in pricing by Unions
for its farmers, it forces the Unions to homogenize their cost
structures with other Unions as much as possible. By
devising appropriate pricing structures, it ensures that the
Unions (which are independent legal entities) have no
reason to produce other than what the Federation desires.
Often
conflict arises as the preferred mix of the Union (i.e., one
that will get them most returns) turns out to be different
from what
the Federation wants it to produce. GCMMF also manages
inter-dairy movement by setting appropriate pricing of
surplus quantity. At the end of the day, any surplus revenue
which is generated is shared between the Unions on the
basis of this inter-dairy movement.
Supplier Enhancement and Network Servicing
Each Union has a separate Department that
services the needs of the societies and also has the primary
responsibility developing new societies in their district. The
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Societies Department is a single window contact point of the
Village Society at the Unions. Their objective is to ensure
that
producers get maximum benefit and to resolve all their
problems. They manage the procurement of milk that comes
via trucks & tankers from the VSs. They negotiate annual
contracts with truckers, ensure availability of trucks for
procurement, establish truck routes, monitor truck
movement and prevent stealing of milk while it is being
transported. Development of farmers, however, remains as
their key role. They coordinate the requirements of the VSs,
be it choice of new equipment or animal husbandry or
purchase
of cattle, with the respective department at AMUL. They also
help in evaluating the performance of the VSs.
Supervisors and Field Officers from the Societies Department
constantly visit each VS.
These Field Officers form route teams and
each week they visit several VSs. Supervisors visit each VS
at least once in three months. They check on any problem
that a VS is facing, evaluate the testing facility at the VS,
take up complaints of the farmers with the VS officials, settle
any dispute between the Unions and VSs including settling of
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financial accounts etc. They also play the important role of
encouraging farmers to form new societies, evaluate these
potential cooperatives, explain the rules of business as set
by AMUL, help initiate their business, and provide all
necessary
support for its growth. These activities help in improving the
contribution of supplier to the
network.
GCMMF on the other hand manages the
distribution end of the network. In addition to
servicing the distributors and retailers, it also forms a bridge
for the transfer of network values to the distributors and
retailers. The network has also developed support services
that
would help improve productivity of the network as well as
reduce the probability of market failures due to inability of
individuals in the network to pay market prices from these
services. This was a classic example of cooperation in
developing common resources for the entire network. Such
network resources included 24- hour veterinary services,
animal husbandry services for better cattle management, an
animal feed factory, milk can production facility (which was
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later sold to a third party), strong linkages with the Gujarat
Agricultural University in Anand, an Institute for Rural
Management for training professionals, and management of
contracts with trucking service providers for pickup of milk
and delivery of milk products across each union. It may be
worth noting that each of the services have to be paid by the
farmers though some may have been subsidized by the
network. Subsidy, however, must be seen as the common’s
price for services as it ultimately was debited against profits
that may have accrued to each member of the network
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CHAPTER 3
SWOT ANALYSIS
Strengths:
Demand profile: Absolutely optimistic.
Margins: Quite reasonable, even on packed liquid milk.
Flexibility of product mix: Tremendous. With
balancing equipment, you can keep on adding to your
product line.
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Availability of raw material: Abundant. Presently,
more than 80 per cent of milk produced is flowing into
the unorganized sector, which requires proper
channelization.
Technical manpower: Professionally-trained,
technical human resource pool, built over last 30 years.
Weaknesses:
Perishability: Pasteurization has overcome this
weakness partially. UHT gives milk long life. Surely,
many new processes will follow to improve milk quality
and extend its shelf life.
Lack of control over yield: Theoretically, there is
little control over milk yield. However, increased
awareness of developments like embryo transplant,
artificial insemination and properly managed animal
husbandry practices, coupled with higher income to
rural milk
producers should automatically lead to improvement in
milk yields.
Logistics of procurement: Woes of bad roads and
inadequate transportation facility make milk
procurement problematic. But with the overall
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economic improvement in India, these problems would
also get solved.
Problematic distribution: Yes, all is not well with
distribution. But then if ice creams can be sold virtually
at every nook and corner, why can’t we sell other dairy
products too? Moreover, it is only a matter of time
before we see the emergence of a cold chain linking the
producer to the refrigerator at the consumer’s home!
Competition: With so many newcomers entering this
industry, competition is becoming tougher day by day.
But then competition has to be faced as a ground
reality. The market is large enough for many to carve
out their niche.
Opportunities:
"Failure is never final, and success never ending”. Dr Kurien
bears out this statement perfectly. He entered the industry
when there were only threats. He met failure head-on, and
now he clearly is an example of ‘never ending success’! If
dairy entrepreneurs are looking for opportunities in India, the
following areas must be tapped:
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Value addition: There is a phenomenal scope for
innovations in product development, packaging and
presentation. Given below are potential areas of value
addition:
o Steps should be taken to introduce value-added
products like shrikhand, ice creams, paneer, khoa,
flavored milk, dairy sweets, etc. This will lead to a
greater presence and flexibility in the market
place along with opportunities in the field of brand
building.
o Addition of cultured products like yoghurt and
cheese lend further strength - both in terms of
utilization of resources and presence in the market
place.
o A lateral view opens up opportunities in milk
proteins through casein, caseinates and other
dietary proteins, further opening up export
opportunities.
o Yet another aspect can be the addition of infant
foods, geriatric foods and nutritionals.
. Export potential: Efforts to exploit export potential are
already on. Amul is exporting to Bangladesh, Sri Lanka,
Nigeria, and the Middle East. Following the new GATT
treaty, opportunities will increase tremendously for the
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export of agri-products in general and dairy products in
particular.
Threats:
Milk vendors, the un-organized sector: Today milk
vendors are occupying the pride of place in the industry.
Organized dissemination of information about the harm that
they are doing to producers and consumers should see a
steady decline in their importance.
The study of this SWOT analysis shows that the ‘strengths’
and ‘opportunities’ far outweigh ‘weaknesses’ and ‘threats’.
Strengths and opportunities are fundamental and
weaknesses and threats are transitory. Any investment idea
can do well only when you have three essential ingredients:
entrepreneurship (the ability to take risks), innovative
approach (in product lines and marketing) and values (of
quality/ethics).
The Indian dairy industry, following its delicensing, has been
attracting a large number of entrepreneurs. Their success in
dairying depends on factors such as an efficient yet
economical procurement network, hygienic and cost-
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effective processing facilities and innovativeness in the
market place. All that needs to be done is: to innovate,
convert products into commercially exploitable ideas. All the
time keep reminding yourself: Benjamin Franklin discovered
electricity, but it was the man who invented the meter that
really made the money!
List of Products Marketed:
AMUL means "priceless" in Sanskrit. The brand name
"Amul," from the Sanskrit "Amoolya," was suggested by a
quality control expert in Anand. Variants, all meaning
"priceless", are found in several Indian languages. Amul
products have been in use in millions of homes since 1946.
Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray,
Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice
cream, Nutramul, Amul Milk and Amulya have made Amul a
leading food brand in India. (Turnover: Rs. 52.55 billion in
2007-08). Today Amul is a symbol of many things. Of high-
quality products sold at
reasonable prices. Of the genesis of a vast co-operative
network. Of the triumph of indigenous technology. Of the
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marketing savvy of a farmers' organisation. And of a proven
model for dairy development.
Milk Drinks
Amul_kool
Amul Kool Cafe
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Kool_Koko
A delight to Chocolate Lovers. Delicious Chocolate taste
Nutramul_Energy_Drink
A drink for Kids - provides energy to suit the needs of
growing kids.
Amul Kool Chocolate Milk
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Amul Kool Flavoured Bottled
Milk
Amul Kool Flavoured Tetra Pack
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Amul Masti Spiced Buttermilk
Amul introduces the Best Thirst Quenching Drink .Amul Kool
Thandai
Amul Lassee
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Bread Spreads
Amul_Butter
Utterly Butterly Delicious Low fat, low Cholesterol Bread
Spread
Amul Lite
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Delicious Table Margarine
The Delicious way to eat healthy
Powder Milk
Amul Spray Infant Milk Food
Still, Mother's Milk is Best for your baby
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Amul Instant Full Cream Milk Powder
A dairy in your home
Sagar Skimmed Milk Powder
Which is especially useful for diet preparations or for use by
people on low calorie and high protein diet.
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Sagar Tea Coffee Whitener
Amulya Dairy Whitener
The Richest, Purest Dairy Whitener
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Cheese
Amul Pasteurised Processed
Cheese
100% Vegetarian Cheese made from microbial rennet
Amul_Cheese_Spreads
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Tasty Cheese Spreads in 3 great flavours..
Amul_Emmental_Cheese
The Great Swiss Cheese from Amul, has a sweet-dry
flavour and hazelnut aroma
Amul_Pizza_Mozzarella_Cheese
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Pizza cheese...makes great tasting pizzas!
Gouda Cheese
Fresh Milk
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Amul Fresh Milk
This is the most hygienic milk available in the market.
Pasteurised in state-of-the-art processing plants and
pouch- packed for convenience
. Amul_Gold_Milk
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Amul Taaza Double Toned Milk
Amul Lite Slim and Trim Milk
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Amul Fresh Cream
Amul Shakti Toned Milk
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Amul Calci+
For Cooking
Amul/Sagar_Pure_Ghee
Made from fresh cream. Has typical rich aroma and granular
texture. An ethnic product made by dairies with decades of
experience.
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Amul Malai Paneer
Ready to cook paneer to make your favourite recipes!
Utterly_Delicious_Pizza
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Mithai_Mate
Sweetened Condensed Milk - Free flowing and smooth
texture. White to creamy color with a pleasant taste.
Masti Dahi
Desserts
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Amul_Ice_Creams
Premium Ice Cream made in various varieties and flavours
with dry fruits and nuts.
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. Amul_Shrikhand
Amul Mithaee Gulab Jamuns
Pure Khoya Gulab Jamums...best served piping hot.
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Amul Chocolates
The perfect gift for someone you love.
Amul Basundi
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Health Drink
Nutramul
Malted Milk Food made from malt extract has the highest
protein content among all the brown beverage powders sold
in India.
Amul Shakti Health Food
Drink
Available in Kesar-Almond and Chocolate flavours.
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Awards
GCMMF bags APEDA AWARD for 11th year in a row
Amul Pro-Biotic Ice-cream Gets No. 1 Award At World
Dairy Summit
. Ramkrishna Bajaj National Quality Award-2003
Amul - The Taste Of India (Gcmmf)Receives
International Cio 100 Award For Resourcefulness
Rajiv Gandhi National Quality Award - 1999
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Amul’s competitors:
13 Amul’s competitors:
Chocolates : Cadbury& nestle
Curd : Nestle& mother dairy
Flavored milk: Britannia & nestle
Butter: Britannia &Nestle
Ice-creams: HLL & Mother Dairy
Cheese: Britannia
Baby Food: Nestlé &Heinz UHT
Milk: Nestle &Britannia
Future Plans
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Amul to foray into bottled water
To capitalise on its tremendous
brand equity and offset the margin
pressure on the dairy business,
Amul is planning to foray into the
bottled water segment starting with its home state, Gujarat.
The brand name of the water shall be ‘Narmada Neer’ to
capitalise on the sacred status of Narmada river in Gujarat. It
would be available in 200ml pouches, 1 litre, 5 litre and 20
litre PET bottles.
If the product get accepted in Gujarat, the venture would be
extended to other states in Indian and then Amul could piggy
back on its extensive retail network of five lakh outlets
across the country.
Bottled water could otherwise provide good margins and the
profits from the venture would be primarily used for welfare
of
families in the Amul’s dairy trade. 10 years back, Amul did
take a shot at bottled water through ‘Jaldhara’ which was
produced by NDDB. However the venture failed owing to less
demand for packaged water in market.
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But with this market growing bigger and expected to grow at
40% every year, Amul is surely going to benefit. Another
positive for the company is that 40% of total national market
for packaged bottled drinking water is in western India,
which Amul is exploring initially.
But going by scale and investments of Amul, it would seem
that the venture would be albeit on a shorter scale and done
only to fulfill corporate social responsibility.
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Vision Of Amul
The vision of Amul is to develop rural India by uplifting the
farmers, empowering women and poor labourers, and in the
process, improving society as a whole.
MISSION 2020
Six decades ago, Sardar Patel had envisioned that dairy
cooperative movement could liberate our farmers from
economic oppression and lead them to prosperity. His dream
was carried forward by far-sighted and visionary leaders like
Shri Tribhuvandas Patel and Shri Motibhai Chaudhary, who
selflessly dedicated their entire lives to this noble cause.
Through his professional acumen and meticulous planning,
as well as leadership skills; Dr. Verghese Kurien successfully
translated this dream into reality. In early 1950’s, when our
cooperative movement was still in its infancy, Dr. Kurien
created the grand design for an apex marketing federation
for dairy cooperatives of Gujarat. After 20 years of persistent
efforts, this organization took concrete shape in 1973 and
has today transformed into a US$ 1.4 billion dairy giant.
Since the foundations of our organization are rooted in the
process of systematic long-term planning, we have also
attempted to emulate the same, in an effort to design our
future architecture. As we take confident strides towards a
grand tomorrow, we need a vision which will force us to
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challenge ourselves and stretch our imagination. In order to
achieve quantum and exponential growth, this vision must
be backed up by a concrete action plan, which is grounded in
reality. In view of growth in business volumes and related
complexities, it is pertinent that we have a clear vision for
the next 10 years. This will enable all relevant stakeholders
to align themselves to a common growth platform. In line
with objective, we have prepared a comprehensive roadmap
to guide dairy cooperatives of Gujarat to a glorious future, in
the year 2020.
This plan, appropriately titled “Mission 2020”, envisages that
the dairy cooperatives of Gujarat will have a group turnover
of Rs. 27000 crores by the year 2020. This will be a three-
fold increase over our current group turnover of approx. Rs.
9600 crores. With further expansion of cooperative network,
increase in number and productivity of milch animals; Milk
production in our milk shed area will increase to 231 lakh kg
per day (23.1 million kg per day), at an annual growth rate of
4%. We will be strengthening our milk procurement
infrastructure by installing Bulk Milk Chillers and Automatic
Milk Collection Systems in all our village cooperative
societies.
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This will enhance our milk procurement capacity in such a
way, that we easily collect as much as 195 lakh kg per day
(19.5 million kg per day) of milk in the peak flush season.
Through expansion of distribution network, creative
marketing, consumer education and product innovation, we
will leverage effectively on rising income levels and growing
affluence among Indian consumers. While expanding
markets for our existing products, we will create fresh
avenues for growth by tapping the rising demand for new
value-added products. Special emphasis will be given to
strengthening our presence in the large market for liquid
milk, in metropolitan cities. Satellite dairies with combined
processing and liquid milk packaging capacity of 50 LKPD
will be established in major metro markets. Our objective is
to ensure that the maximum share of the consumer’s rupee
goes back to the milk producers.
In view of the high demand and procurement projections, we
plan to double to processing capacity of our dairy plants to
20.7 million kg per day, by 2020. This would include multi-
fold capacity expansion for major product categories
including milk powders, Ice-cream, paneer, cheese, ethnic
sweets, curd, ghee and other dairy products. Milk drying
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capacity will also be enhanced by 200 MTs per day, to
process additional milk in
the peak season. For increasing milk production, it is vital to
provide nutritious feed to milch animals. For this reason, we
plan to expand our cattlefeed manufacturing capacity, more
than four times to 12000 MTs per day, by 2020. At current
prices, total investments envisaged for creating all the
required infrastructure would be Rs. 2600 crores (Rs. 26
billion) till the year 2020. I am glad to inform you that the
plan 2020 has been shared with all the member unions. It
has also been discussed in the respective boards and
necessary resolutions for investments have also been taken.
This detailed plan will serve as our comprehensive roadmap
for the next ten years and will ensure a glorious future for
our dairy cooperatives.
We are well poised to lead the Indian dairy cooperative
sector to a position of eminence in our national economy.
Our efforts will ultimately serve to bolster the rural economy,
which can then create an effective shield to protect our
nation from any future economic crises. We will succeed in
our endeavor with positive and continued support and
encouragement from all the government quarters, as has
happened in the past. The very foundation of any
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cooperative organization is a transparent and fair democratic
electoral process taking place at the scheduled intervals for
the cooperative structures to survive and faith of its member
remain intact, it is imperative
that elections to various tiers of the cooperatives take place
on schedule.
Future growth
The demand for milk land milk products is expected
to grow at a very rapid rate due to population growth,
urbanization and increase in income levels and changes in
food habits, and is likely to reach at 181 million tones in
2011-12 and precipitate consumption is expected to rise to
about 152 kg per year. The increase in demand for diary
products will increasing pressure on dairy production
systems, traditional breeds and feeding practices are likely
to give way to higher yielding breeds, associated
intensification of production systems, increased disease
risks, pollution and animal health issues and a greater
reliance on concentrates. Currently, Indian dairy farming is
dependent on crop residues, natural resources, and open
grazing as sources of feed. Expansion of these traditional
sources of feeds and fodder to support a large increase in
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dairy production is unlikely, as available grazing areas and
other common property resources are shrinking and already
degraded. Additional milk output will surely have to come
from intensified systems based on stall-feeding and
increasingly using concentrate.
BIBLIOGRAPHY
WEB SITES SERVED:
WWW. GOOGLE.COM.
WWW.AMUL.COM.
WWW.WIKIPEDIA.COM.
BOOKS REFERED:
BOOKLET OF AMUL BY KHAIRA UNION DISTRICT.
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CHAPTER 5
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CONCLUSION
Firms that desire to do business in emerging
markets need to understand the dynamics of the economic
and social environment while designing country practices.
The story of AMUL points to several lessons that can be
drawn in this context.
Long term perspective: Given the state of
economy in emerging markets, a long term perspective and
strategy is needed to realize the potential of these large
markets.
Consequently, new entrants need to take a long term view
on investment and develop business practices that help
understanding of the environment, build relationships, and
develop competencies for operating in such markets.
To succeed in these markets, firms need to adopt
a long-term perspective of the business and simultaneously
develop supplier capabilities on the one hand while
enhancing purchasing ability of potential customers. A
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network of firms appears to be the best way to
operationalize the above requirements. Large entrants may
have to develop such networks, while small firms may be
best served by becoming niche players and join an existing
network. Managing such distributed networks would require
effective supply chain coordination and capability building at
each entity.
Cooperative network with interlocking arrangement as
in AMUL is one example of success in managing such
complex supply chain. Of course, the long term challenge in
such cases is to bring more members into the network and
increase their capabilities.
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