Amul/NDDB

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Case study 4 India Amul/National Dairy Development Board (Amul/NDDB) Total cost: Financier Year of establishment: Value chain approach: NA Government 1946 Relational chain, producer-driven

Although Amul and NDDB are presented as one case study, they are in fact two separate chains that compete with each other under their respective brand names: Amul and Mother Dairy. Background. Amul derives its name from a Sanskrit word, Amoolya, which means “priceless”. It is the biggest dairy cooperative in India, based in Anand, in the state of Gujarat. It had its genesis in preindependence India when the dairy sector was dominated by private companies that exploited the poor farmers. In 1946, the milk producers in the state of Gujarat, led by Sardar Vallabhai Patel, started developing revolutionary ideas against the privately owned Polson dairy and established the first cooperative society: the Kaira District Cooperative Milk Producers’ Union Limited (KDCMPUL). The motto “No Cooperation, No Progress!” started spreading very fast and milk was used as a symbol of protest against British hegemony, through a 15-day farmers’ strike. Amul is the foremost dairy brand name in India and has held its position against competition from international giants such as Nestle. Intervention. Patel’s vision was to organize the farmers to enable them to gain control over procurement, processing and marketing while eliminating the middlemen. Amul started with 2 village societies and 247 liters of milk collected per day. The movement grew and, in 1973, the Gujarat Cooperative Milk Marketing Federation (GCMMF) was established, an apex organization responsible for marketing the milk and milk products of cooperative unions in the state of Gujarat. In the ‘80s the word Amul was converted into a brand. Currently, in the state of Gujarat, Amul produces 10.16 million liters of milk daily, which is collected from 2.7 million farmers, processed through 30 dairy plants, and distributed through 500,000 retail outlets. The annual sales turnover has reached USD 1,504 million (2008-2009). The Amul model became so successful that it was replicated in the ‘70s, after the government recognized the importance of milk cooperatives as a means of promoting socio-economic development in rural areas while simultaneously increasing milk production in India. The National Dairy Development Board (NDDB) launched the Operation Flood programme (OF) to create a nationwide milk grid. During the 26 years from 1970 to 1996, OF established linkages between rural milk producers and urban consumers by organizing farmer dairy cooperative societies. An investment of USD 439 million has generated an incremental return of USD 8.778 billion. OF was one of the world’s largest rural development programmes that: “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 fair market prices in a transparent manner on a regular basis”1. Dr. Varghese Kurien, a dairy engineer who was chairman of NDDB at that time, was the architect of the OF programme and is considered the father of India’s “White Revolution”. The Amul model. Under the model, the entire value chain –from procurement, to processing and marketing – is controlled by the farmer’s cooperative, which is directly linked to the final customer 1

http://www.nddb.org/aboutnddb/operationflood.html

(see Figure 1). There are no middlemen; the cooperative collects the milk directly at the producers’ doorsteps. The model envisages that democratic elections are held every three years, to elect the members of the management committees who, in turn, elect the chairman. This ensures an active participation of farmers in decision-making, as well as transparency and democratic management. Membership is open...
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