A synopsis of the Indian Dairy sector

It was world milk day recently and I saw a few messages, hashtags etc. On the whole I felt that a more than a few generations of 21st century India have little or no idea of the grit, determination, hard work, vision and the will of a man backed by a nation to create a milk/ dairy eco system in India. In a world of apps how many know the history of what it meant to create an industry. Few seem to even know how the industry functions and so I thought will share a brief here without going into details. This to me is the real spirit of MakeInIndia or AtmaNirbharBharat

As India progressed towards its tryst with destiny to become a free nation, the founding fathers were busy planning their vision for a India of the future. One such man was Sri Vallabhai Patel. In those days India imported milk and milk was an elitist product served at the breakfast tables of the colonial masters along with butter. A popular name then was Polsons.

Now milk is a seasonal product. During what is called the flush season the animals produce twice the quantity they do in what is called the lean season. Milk in India then was predominantly buffalo milk while globally cow milk was the norm. Milk being a quickly perishable product the middlemen took the villagers for a ride and there was a lot of heartburn amongst the farmers. Importantly, this milk related activity in farmer households were predominantly managed by the womenfolk.

Vallabhai Patel tasked Sri Tribhuvandas Patel to lead the charge in the then non existent dairy industry. India was a nation then entering a new life with little or no understanding of most things. Everything was by gut feel and a determined dream to succeed. Tribhuvandas Patel decided to set up a dairy plant and established in December 1946 what is today called AMUL which is actually an acronym for – Anand Milk Union Limited. He nor anybody had much clue about milk, engineering, processing etc.

They needed to find a person who could be called an engineer – an all encompassing word with no boundaries in those days. The then govt was funding young Indians to study and had funded a 28 year old chap called Sri Verghese Kurien to study Metallurgy. The govt had a  bond that he needed to work where instructed before going his own way. Kurien was sent to Tribhuvandas in 1949 to work on the dairy plant - Metallurgy - Milk !!! Some genius in Govt likely matched the M in both words to make them equal. He had with him a colleague Mr. HM Dalaya who luckily had studied dairy technology. The only objective Kurien then had was to complete the bond period and leave. The location was Anand in Gujarat which in 1946 was little more than a village and for a youngster from Kerala seemed like a prison.

Tribhuvandas kept coaxing Kurien to stay on and finally a day arrived when Kurien decided to leave. Tribhuvandas requested him to get some equipment cleared in Mumbai port and sent to Anand before going on his way. Fatefully Kurien had to come to Anand with the equipment and then never ever left again till his death in 2012 – 63 years later.

The system they established was simple. Villagers collected and delivered milk at the village society which was then taken to the Kaira District Cooperative Milk Producers Union Ltd (the official name of AMUL the org) and the dairy then sold the milk and earned money. They also made value added products like Butter. The system was simple – a co-operative. Every milk supplying farmer was a shareholder of the dairy through the village society. Representatives from amongst them were elected to a board that managed the dairy and its operations. Every year a price was fixed for the milk based on the fat and non fat content of each farmers milk delivered. At the end of the year when profits were calculated they were disbursed amongst the milk suppliers in proportion to the quantity/quality they had supplied as a price differential. When you actually see the financial performance of these unions you will find they make little profits because it is distributed as price back to the farmers. This was called the co-operative system and it benefited farmers hugely.

Each such union covers a district in a state. All the unions in a state come together to form what is called a federation. The board of the federation compromises the Chairmen of each union. This federation called the Marketing federation is responsible for the marketing of the products from the state across the nation. This in Gujarat is called the Gujarat Co-operative Milk Marketing Federation or GCMMF.

Time passed and in 1965 one fateful day the then Prime Minister of India Lal Bahadur Shastri was staying in a village in that area and early in the morning saw women going in a line to deliver milk.

Enquiring what was happening and understanding it quickly he asked the young Kurien to replicate the system across the country and build the dairy industry. Kurien agreed but insisted that the organisation established – National Dairy Development Board – be established in Anand and not Delhi like most other national bodies. Shastri agreed. Kurien sought autonomy to operate and it was granted.

Funding such an activity was a challenge. Kurien noted that Europe had a glut of milk and it was being exported into India. He asked for a halt to the imports which the govt agreed to. Kurien knew that without India the European nations would have to kill their cows and face the wrath of their own farmers. When the European officials came to meet the government, even the Prime Minister told them that without the nod of Kurien no decision could be taken. By then Kurien had already obtained the reputation of being a hard task master, a rough and tough negotiator and like many said – arrogant.

Kurien demanded that the European countries supply the milk to NDDB free of cost and NDDB in turn would sell the milk to generate funds and help develop the Indian dairy industry. They finally agreed and thus was born the worlds largest and most successful food program – Operation Flood. In the 1970’s the funds generated and deployed was around Rs. 120 Crores.

Every state had to establish village level cooperative societies, hold elections to make the organisation self managed by the farmers, create district level unions and finally the state level marketing federation. Each state federation based on how enterprising the farmer leaders were, how much the local political leaders lent their weight without seeking rent and finally how professionally they ran their operations could compete and sell their products across the nation.

Technology was deployed across the chain with some classic examples as below

• Milk testing machines that gave instant resultsConverting even buffalo milk into powder which nobody had ever done globally
• Developing mechanised ways of producing value added products like Gulab Jamun, Rosgolla, Shrikhand and other such Indian sweets.
• A supply chain which twice a day picked up milk from every village and transported it to the district union dairy.
• Cryogenic technology for storage of semen.
• Local production of cheese.

Kurien understood and appreciated human needs so well that the medical system created to help the farmers take care of their cows/ buffaloes was simply brilliant. Even today it can be a benchmark  system for any government to extend quality medical care to its citizens living in villages.

In the system established 50 years back, every day a veterinary doctor with medical supplies leaves in a car on an established route of villages to check and treat the animals in that village. The villagers know on which day of the week and at what time the doctor would arrive. Each car is linked by a wireless radio to ensure they are connected. If any village had an emergency the central control room of the district union would either send a special doctor or re-route a doctor near that area.

The beauty of this system was that an educated veterinary doctor who would prefer to be in a city/ town requiring various facilities for his family and children gets that but also serves the rural populace. The popular joke in Gujarat is that cows have better medical care than humans.

The Indian dairy industry became the largest in the world in a short span of 28 years. Dairy farming became a huge revenue earning option for the farmers. The credit for this must go to the one and only Dr. Verghese Kurien. But then it is very important to note the way governments and politicians in those days supported, trusted and backed his decisions - it shows the maturity, relationships and trust that was predominant between politicians and professionals in those days with a focus on nation development.

Of course there were many others like Mr. Dalaya and of course the political leaders from Vallabhai Patel, Tribhuvandas Patel, Lal Bahadur Shastri to Indira Gandhi all of who backed these efforts. Whether they personally liked him is moot because given his humungous contribution to creating the worlds largest milk industry in the world – he was never given the Bharat Ratna and if anybody deserved it, it was him.

Some stories about Dr Kurien will follow in a later post.