To Cooperate Or Not to…

 There’s a big debate going on in social media regarding the entry of Amul in Karnataka. There’s a fear that it is a ploy to finish off the existence of Nandini, the local milk cooperative - and the second largest in the country - and merge whatever left thereafter with Amul, the biggest cooperative. 

Not too long back, Shri Amit shah, the HM, had suggested something on the lines that Amul should take over Nandini and one single cooperative must be formed. Then too there were protests, and then there were clarifications that no such plans were afoot. 

Cooperative movements are what have saved the dairy industry in India - and Amul obviously is the first, best, and biggest success story. The National Dairy Development Board was established after the visit of Shri Shastri, the then PM to Amul premises, who was immensely impressed. 

The success story of Amul has been replicated across the country through state promoted cooperatives. Nandini is one such replication of success. So, what is making the people of Karnataka (and its politicians) jittery about Amul’s entry into the State. 

Already cooperatives sell their products in areas beyond their borders. But these products are usually longer lasting ones, usually. Or because the catchment area (area from where milk is primarily sourced and packaged) is close to other states and thus they get access. Like Nandini sells its fresh milk and curd (packaged plastic covers; and with much shorter shelf life) in the border areas of AP, and TN. Similarly, the cooperatives of AP and TN sell their products here too, if similar nature. 

The unwritten rule by which these cooperatives operate is that there is no poaching into catchment areas - no sourcing of milk from neighbouring states, through any means, right or ulterior. And, no selling of fresh produce at large in the areas of other cooperatives. Even though you’ll see Amul products in Bengaluru or Bhubaneswar, and nandini’s in Hyderabad or Kolkata, you don’t have Amul dairies in Karnataka or Nandini’s in Gujarat to source milk from the dairy farmers. 

What changes now in the instance of Amul entering Karnataka is that it start selling its fresh milk and other milk products in Bengaluru and other areas, in direct competition to Nandini’s. 85% of Nandini’s sales come from Karnataka - even though Nandini’s presence has become robust in other states - especially in the tetra pack segment. 

In all the war of words, what is lost is the clarity of why there is opposition to the entry of Amul and why it is bad for Nandini. It has become an issue of imposition of the hegemony of Gujarat over the entire country, and Karnataka. 

Two issues take prominence in one finding fault with the entry of Amul. And, these are serious issues. Not just based on identity of Karnataka or Kannada. Or mere opposition to what the central government desires. 

One, the number of dairy farmers in the state has almost reached saturation. Any increase in the numbers would only incremental. Milk production today can only increase through better methods of milk production, and by increasing the number of cattle owned by farmers. The only way Amul can procure fresh milk and milk products and sell in the market would be through poaching farmers supplying milk either to Nandini or small private players. This would increase procurement costs of milk. 

Two, competition among cooperatives will not benefit dairy farmers or the cooperatives. It only results in price wars, and detrimentally affect milk production and supply. Consumers may see an increase in price as a result. 

Three, Amul has deeper pockets than all other cooperatives, thanks to being the oldest and the leading player. Amul has a turn over of 72,000 crores as against 21,000 crores of Nandini, the second largest player - over three times. Aavin, the Tamil Nadu dairy farmers cooperative has a turnover of 5800 crores. Most other cooperatives would not be able to withstand competition from Amul and may either perish or get merged with it/another cooperative, resulting in creating a monopolistic situation. 

Also, it is not known if the governments are allowing other cooperatives too to set up similar facilities elsewhere. Like allowing Nandini or Aavin in Gujarat and elsewhere. Even if allowed, the cooperatives may not be ready to enter other markets, from investment perspective. 

Pitting one cooperative against another is a bad idea, in my opinion, for the cooperative movement itself. We are already struggling with loss of pasture and agricultural lands, as urbanisation expands ever so fast. The size of arable land per capita is already less; add to that the size of land holdings getting smaller as population grows unabated. 

It is time to think of cooperatives of small farmers so they get more income from their fields, and move away from hand-to-mouth existence and forget being dependent on either doles or employment guarantee schemes. 

Governments must promote farmer cooperatives across the states. That is the need of the hour. Let the dairy cooperatives exist and function as they do right now. How these cooperatives are run and how politicians have taken them over is another matter for discussion. That can wait.