Description
Different types of cooperatives, Kaira experiment, Three tier "Amul Model"
2010
CO-OPERATIVES AND RURAL DEVELOPMENT: CASE STUDY OF AMUL
CASE STUDY OF AMUL
Swati Gupta
MMS B
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No: 116
3/16/2010
Co?operatives and Rural Development: Case study of Amul
Contents
Introduction ..................................................................................................................................... 3 Indian Economy at a Glance ....................................................................................................... 3 Statistics: ................................................................................................................................. 4 Sector-wise GDP contribution: ............................................................................................... 4 Growth pattern since the last 10 years .................................................................................... 5 Rural development .......................................................................................................................... 6 Need ............................................................................................................................................ 6 Co-operatives and Rural Development ....................................................................................... 7 What are Co-operatives? ......................................................................................................... 7 Co-operatives and Sustainable Development ......................................................................... 8 Why Co-operatives?? .............................................................................................................. 8 Types of Co-operative Societies ........................................................................................... 10 Case study of amul ........................................................................................................................ 12 Company Profile ....................................................................................................................... 13 The Kaira experiment ........................................................................................................... 14 Three-tier "Amul Model" ...................................................................................................... 14 Impact of Amul Model.............................................................................................................. 18 Conclusion .................................................................................................................................... 20
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Co?operatives and Rural Development: Case study of Amul INTRODUCTION
Indian Economy at a Glance
The economy of India is now the twelfth largest financial system in the world according to the market exchange rates and the fourth largest through purchasing power parity (PPP) basis. But now in current times, India is under one of the fastest growing economic country in the world. Due to the involvement of the industries and the rigid environment, the economy is moving towards continuous improvement. Moreover, highly capable, expert and English-speaking human sources have formed a backbone for India. With the help of increasing purchasing power, the Indian market has changed into a vibrant, rapidly growing consumer market. India also exports and imports large market of consumer goods and advanced technology to renew its manufacturing power on the other base. India's diverse economy comprises of conventional village farming as well as modern agriculture, a wide range of modern industries, a large number of services and handicrafts also. Services are the chief source of economic growth, accounting for more than half of India's output with less than one third of its labour force. India's chief strength comes from its large numbers of well-educated, skilled people, adept in the English language, helping India to become a major exporter of software services and software workers. India pays large attention on agriculture, industrial sector development to provide large employment opportunities to the growing population. But to develop the current status and to accomplish the target GDP of 10% financial years, Indian economy has to conquer many challenges like population explosion, poverty, unemployment, rural urban divide and so on. Not this, in 2009, Indian economy has faced some other challenges also like inflation under control, diving growth equitably, investment plans, dealing with global financial uncertainty etc. However now at present, India’s economy has grown up by more than 9%, following 3 months running and has shown a decade of 7%+ growth. This result in 10% poverty reduced with 60% of India’s 1.1 billion populations. Moreover the growth rate of service area was 11.18% in 2007 but now it grew up to 10.63% with 29% of GDP.
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Co?oper ratives an nd Rural l Development: C Case stu udy of Am mul
ics: Statisti
Annual GDPGrowth Rat te
Yea ar GDP at NDP at GNP a at Factor Factor Factor r Cost Cos Cost New Series Base 1999-2000 7.5 7.3 7.5 9.5 9.5 9.6 9.7 9.7 9.8 9.0 8.8 9.3 6.7 6.4 6.7 NNP at Facto or Cos st 7.3 9.6 9.8 9.1 6.4 4 Pe er Cap pita NN NP 5.6 8.0 8.2 7.6 4.9
( Source: www w.dbie.rbi.org.in) )
2004-05 2005-06 2006-07 2007-08 2008-09
P contribut tion: Sectorwise GDP Year r Agricu ulture and A Allied Activ vities (in Rs Cro ore) 4829 910 5111 114 5313 315 122 5571 5660 045 SE ECTORWISE GDP CONTRIBU UTION As A a In ndustry As a Services %age of (in ( Rs % %age of (in Rs GDP G Crore) C GDP Crore) As a %age of GDP Total (in n Rs Crore)
2004-0 05 2005-0 06 2006-0 07 2007-0 08 2008-0 09
New Series Base 1999-2000 20.22 2 468451 4 19.61 19.54 506519 5 19.36 18.51 560775 5 19.53 17.8 1 602032 6 19.23 16.95 617882 6 18.5
1437407 1508468 1774029 1970563 2155448
60.17 61.1 61.96 62.96 64.54
2388768 2616101 2871119 3129717 3339375
Sectorwi Contri ise ibution as a %age of GDP s
Sector Agriculture A In ndustry Services
Total GD 2008-09: 3339375 R Crore DP Rs
(Source:http://www.rbi i.org.in/scripts/P PublicationsView. .aspx?id=11588 )
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Co?operatives and Rural Development: Case study of Amul
Growth pattern since the last 10 years
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Co?operatives and Rural Development: Case study of Amul RURAL DEVELOPMENT
Need
Rural development has always been an important issue in all discussions pertaining to economic development, especially of developing countries, throughout the world. India has a population of around 1.17 billion, 72.2% of which constitutes rural population. A large majority of rural people continue to suffer from persistent poverty. The socio-economic disparities between rural and urban areas are widening and creating tremendous pressure on the social and economic fabric of the Indian Economy. Inequalities in income, lack of employment opportunities, lack of infrastructure and civic amenities, inadequate access to education, healthcare and other basic services are some of the major areas where rural areas lag behind. Globalization and spread of the consumer society have further accentuated these disparities, visible in the affluence and glitz of urban areas, as against poverty and deprivation that characterize the rural landscape in India. These factors, among many others, tend to highlight the importance of rural development. Factor Population (%) Share in GDP Main Sector of Occupation Main Occupation Unemployment Rate (as of 1999-2000) Infrastructure Literacy Rate Rural 72.2 49 Primary Agriculture and allied Activities 7.08 Underdeveloped 58.7% Urban 27.8 51 Secondary and Tertiary Services 7.79 Somewhat developed 79.9%
From the above data it is clear that 72.2% of the Indian population contributes about 49% of GDP, whereas 27.8% of the population contributes to 51% of the GDP. Inorder to accelerate India on the growth trajectory and to sustain the growth for a longer period of time, rural development has to be the issue of major concern.
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Cooperatives and Rural Development
What are Cooperatives? Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary 3 cooperative members have equal voting rights (one member, one vote) and cooperatives at other levels are also organized in a democratic manner. Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited return on member capital, if any. Surpluses are allocated for any or all of the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership. Co-operatives are autonomous, self-help organisations controlled by their members. If they enter to agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy. Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public, particularly young people and opinion leaders - about the nature and benefits of co-operation. Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures. Co-operatives work for the sustainable development of their communities through policies approved by their members. Values, principles, ethics and business competence constitute the co-operative advantage for members and for the communities in which they operate. Cooperatives set industry standards by putting into practice their values and ethics. In others, co-operatives are seen as leaders in promoting food safety and security, in protecting the environment, and in providing decent employment. Still in others, co-operatives are building peaceful societies by promoting understanding and collaboration among people of different cultural and income backgrounds. In the words of the UN Secretary-General: Cooperative enterprises provide the organizational means whereby a significant proportion of humanity is able to take into its own hands the task of creating productive employment, overcoming poverty and achieving social integration…” Roll No 116 MMS B Page 7
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Coope eratives an nd Sustainable Development • Co-operativ ves routin nely integ grate mult tiple economic, s social, and ecological o objectives. ves are pr ractical veh hicles for co• Co-operativ operation a collecti action, both of wh and ive hich are crucial to sustain l nable deve elopment; t they build and r reinforce co ommunity, w which is both a medium fo and a measure o sustaina or, of, able developmen nt. mmunity ties and less n s need for sh hort• Given com term profit co-opera ts, atives have the capaci to embr ity race and act on longe planning er g horizons. • Co-operativ help to stabilize re ves egional eco onomies and provide a favorable climate for d r further inve estment. • Co-operativ reduce inequality a promot equitable sharing of the costs and benefits ves and te f a s of sustainab development. ble • Co-operativ can pro ves omote econo omic democ cracy and th empowe he erment of m marginalized d groups, a hallmark of sustain nable deve elopment a and a pre econdition for shared d ity. responsibili • Co-operativ serve as facilitating partners i alliances involving l ves s g in local and na ational, and d public- and private-sec organiz d ctor zations. • Sustainable developm e ment is knowledge and managem d ment-intensive; cooperatives have e organizatio capacity for comm onal y munication, t training, and education d n. • Co-operativ are part of a world movement that has st ves t d t trong links to other co ontemporary y social mov vements fo ocused on the envir ronment, w women’s li iberation, democracy, developmen alternativ poverty and resist nt ves, y, ting neoliberal globalism m. Why Co ooperativ ves?? Sustainable develo opment is of ften represe ented as hav ving three d dimensions, or theatres, for action: nomic, the social, and the environ nmental. Th draws att his tention to th requirem to meet he ment t the econ at least minimal s t standards o performa of ance in all three domains in ord to quali as truly der ify y sustaina able develo opment. The implicatio is that no claims to sustaina on ability can b justified be d where any one of t a these dimen nsions is ser riously negle ected, but a that these three are also enas interact t and mu utually cond dition outcom in impo mes ortant ways. Co-oper ratives rou utinely integ grate multi iple econom mic, social, and ecolo , ogical obje ectives. Cooperativ are prac ves ctical vehicl for co-operation an collective action, both of which are crucial les nd e h l to susta ainable deve elopment; t they build a reinforc commun and ce nity, which is both a m medium for, and a measure o sustaina of, able develo opment. Th hey provide an organ e nizational vehicle for r Roll No o 116 MMS B B Page 8 8
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sing collect tive social-ecological interests. This is a key contri ibution to sustainable e address develop pment since capitalist market ec e conomies fr requently fa when it comes to translating fail t g commu unal interes into ap sts ppropriate a action. Co-operatives also help to build sustainable e commu unities that are both a goal of sustainable developme and a crucial ing ent gredient for r implem menting susta ainable syst tems of prod duction and consumpti d ion. Sustainable develo opment req quires socia capital. S al Social et ganization p produced b the by Capital is the asse to an org tive social skills of i employe its ees. When they cumulat work w well, co-ope eratives rep produce and expand s d social capital, which the contribut to the s en tes success of other s. eratives pl lay an i integrating and projects Co-ope stabilizi role, fo ing oster allianc and coa ces alitions, and can d help to reduce s o social inequ uality. Co-operatives thus provide social ser e rvices to re egional econ nomies in m much the sam sense th some a me hat activities (e e.g., agricu ulture) may pr rovide envir ronmental s services. Given comm munity ties and less need for shortd d -term profit co-opera ts, atives have th capacity t embrace and act on longer plan he to nning horizon ns. Co-oper ratives redu inequality and pr uce romote equ uitable shari of the costs and benefits of ing f sustaina able devel lopment. C Co-operativ ves can p promote e economic democracy and the y e empowerment of m marginalized groups a h d hallmark of sustainable developm f e ment and a p precondition n for sha ared respons sibility. Co ooperatives promote greater econ nomic demo ocracy thro ough shared d ownersh and sha hip ared control. More peop gain dire roles in the allocation and man . ple ect nagement of f resources, and the skills an creativit are more fully eng eir nd ty e gaged. Econ nomic participation on n is cessary prec condition fo the emerg or gence of att titudes and practices of f equitable grounds i also a nec shared r responsibili that supp sustaina resourc use. ity port able ce Co-oper ratives serv as facilita ve ating partne in allian ers nces involvin local and national, and publicng and pri ivate-sector organizati r ions. Co-op peratives f frequently serve as fa facilitating partners in n alliance or coaliti es ions involvi combin ing nations of lo ocal, nation and inte nal, ernational, and publicand priv vate-sector organizatio Partners ons. ships are pa of the ne orthodox and prac art ew xy ctical reality y in comm munity econ nomic development. Cooperatives are often k partners trusted an respected s key s, nd d by non ngovernmen ntal organizations (N NGOs), stat agencies and priv te s, vate-sector firms. As s brokerin partners, they frequ ng uently provide leadersh resource and may s hip es serve as fac cilitators for r projects involving complex alliances. s Sustainable development is knowled dge and managemen nt-intensive cooperat e; tives have e zational cap pacity for communica ation, train ning, and e education. Co-operativ can be ves e organiz effectiv schools f sustaina ve for able develop pment, whic is, comp ch pared to les sustainab forms of ss ble f Roll No o 116 MMS B B Page 9 9
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pment, both knowledge and mana h e agement-int tensive. Edu ucating mem mbers, emp ployees, and d develop the pub is a coblic -operative principle, an many co p nd o-ops have been succe essful in upgrading the e technica manager al, rial, and or rganizationa skills of their mem al f mbership and staff. Sho courses, d ort advance education, peer inst ed truction, and learning b experime d by entation all become more feasible e in a coo operative co ontext. Coop peratives ca sponsor p an participator research in which m ry members and d employ yees design and manag research projects. T ge h They can s serve as net tworks for generating, sharing, and valida ating local expertise. T They can c collect, codi and cor ify, rroborate lo ocal or folk k knowledge. Co-oper ratives are a way by w which gover rnment or n nongovernm ment organizations can effectively n y deliver training, technical su upport, and adapted te d echnologies Compare to house s. ed ehold-based d or porate oper rations, co-operatives are more li ikely to hav the com ve mbination of f firms o large corp technica capacity and workp al place organi ization that allows them to manag more (ec m ge cologically) ) complex productio systems Sustainab develop x on s. ble pment requ uires adapt tive learnin flexible ng, e organiz zation, and a adept fine-tu uning. It requires moti ivated and t thoughtful w workers and managers. d Some fo orms of co-operative can produce and reprodu such a workforce. uce w Types of Cooper rative Soci ieties Althoug all types of coopera gh ative societie work on the same pr es rinciple, the differ wi regard to ey ith o the natu of activi ure ities they pe erform. Foll lowings are different ty e ypes of co-o operative so ocieties that t exist in our country y. Consum mers’ Coop perative S Society: The societies are formed to protect the interes of general ese s t st l consum by mak mers king consum goods available at a reasonab price. Th buy goo directly mer a ble hey ods y from th producer or manufacturers an thereby eliminate t middlem in the process of he rs nd the men f distribu ution. Kendr riya Bhandar, Apna B Bazar and Sahkari Bhan ndar are ex xamples of consumers’ ’ co-oper rative societ ty. Produc cers’ Coop perative So ociety: The societies are forme to protec the intere of small ese s ed ct est l produce by maki availabl items of their need for production like ra materials tools and ers ing le f aw s, d Roll No o 116 MMS B B Page 10 0
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equipments, machinery, etc. Handloom societies like APPCO, Bayanika, Haryana Handloom, etc., are examples of producers’ co-operative society. Cooperative Marketing Society: These societies are formed by small producers and manufacturers who find it difficult to sell their products individually. The society collects the products from the individual members and takes the responsibility of selling those products in the market. Gujarat Co-operative Milk Marketing Federation that sells AMUL milk products is an example of marketing co-operative society. Cooperative Credit Society: These societies are formed to provide financial support to the members. The society accepts deposits from members and grants them loans at reasonable rates of interest in times of need. Village Service Co-operative Society and Urban Cooperative Banks are examples of co-operative credit society. Cooperative Farming Society: These societies are formed by small farmers to work jointly and thereby enjoy the benefits of large-scale farming. Lift-irrigation cooperative societies and pani-panchayats are some of the examples of co-operative farming society. Housing Cooperative Society: These societies are formed to provide residential houses to members. They purchase land, develop it and construct houses or flats and allot the same to members. Some societies also provide loans at low rate of interest to members to construct their own houses. The Employees’ Housing Societies and Metropolitan Housing Co-operative Society are examples of housing co-operative society.
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Co?operatives and Rural Development: Case study of Amul CASE STUDY OF AMUL
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Company Profile
Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative movement in India. It is a brand name managed by an apex cooperative organization, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2.6 million milk producers in Gujarat, India. It is based in Anand town of Gujarat and has been a sterling example of a co-operative organization's success in the long term. The Amul Pattern has established itself as a uniquely appropriate model for rural development. Amul has spurred the White Revolution of India, which has made India the largest producer of milk and milk products in the world. It is also the world's biggest vegetarian cheese brand. GCMMF: Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006-07). Currently Amul has 2.6 million producer members with milk collection average of 10.16 million litres per day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries. Its bid to enter Japanese market in 1994 had not succeeded, but now it has fresh plans of entering into the Japanese markets. Other potential markets being considered include Sri Lanka. Dr Verghese Kurien, former chairman of the GCMMF, is recognised as the man behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF. Some points to remember about Amul are: • • • Asia’s largest dairy co-operative was created way back in1946 to make the milk producer self-reliant and conduct milk- business with pride. Amul has always been the trend setter in bringing and adapting the most modern technology to door steps to rural farmers. First self motivated and autonomous farmers’ organization comprising of more than 5000000 marginal milk producers of Kaira District. MMS B Page 13
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• • • • Created Dairy co-operatives at village level functioning with milk collection centres owned by them. Computerized milk collection system with electronic scale and computerized accounting system. The first and only organization in world to get ISO 9000 standard for its farmers cooperatives. First to produce milk from powder from surplus milk.
Amul is the live example of how co-operation amongst the poor marginal farmers can provide means for the socio-economic development of the under privileged marginal farmers. The Kaira experiment 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. More than 900 village cooperatives have created jobs for nearly 5000 people in their own villages, without disturbing the social agro-system, and thereby the migration of people from the villages has been controlled to a greater extent. The income from milk has contributed to their household economy. Threetier "Amul Model" The Amul Model is a three-tier cooperative structure. This structure consists of a Dairy Cooperative Society at the village level affiliated to a Milk Union at the District level which in turn is further federated into a Milk Federation at the State level. The three-tier structure was setup in order to delegate the various functions; milk collection is done at the Village Dairy Society, Milk Procurement & Processing at the District Milk Union and Milk & Milk Products Marketing at the State Milk Federation. This helps in eliminating not only internal competition but also ensuring that economies of scale is achieved. As the above structure was first evolved at Amul in
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t eafter replic cated all o over the co ountry und the der Gujarat and there Operati Flood P ion Programme, it is know as the ‘ , wn ‘Amul Mod or del’ ‘Anand Pattern’ of Dairy Cooperatives. d f
Village Dairy Coopera ative
Village e Dairy Coo operative S Society (VD DCS) The mi produce of a v ilk ers village, hav ving surplus milk afte own er consum mption, com together and form a Village D me Dairy Coope erative Distr rict Society (VDCS). The Village Dairy C y Cooperative is the pr e rimary Cooperati Milk ive society under the three-tier structure. I has mem It mbership of milk f Producers Union s’ produce of the v ers village and is governed by an elec d cted Manag gement Commi ittee consist ting of 9 t 12 electe represen to ed ntatives of the milk produce based o the prin ers on nciple of o membe one vote. The one er, village society fur rther appoi ints a Secre etary (a pa employee and aid State Coo operative Milk Fed deration member secretary of the Mana r agement Co ommittee) f managem of for ment the day y-to-day fun nctions. It al employs various pe lso s eople for as ssisting the Sec cretary in ac ccomplishin his / her daily duties. The ma function of the VD ng r ain ns DCS are as s follows s: • • Collection of surplus milk from the milk pr roducers of the village & paymen based on f e nt n quality & q quantity Providing support se ervices to the memb bers like V Veterinary First Aid Artificial d, l on d ineral mixt ture sales, f fodder & f fodder seed d Inseminatio services, cattle-feed sales, mi sales, condu ucting train ning on Anim Husban mal ndry & Dair rying, etc. Selling liqu milk for local consu uid r umers of the village. e Supplying m to the District Mil Union. milk lk
• •
Thus, th VDCS in an indepen he n ndent entity managed l y locally by the milk pro t oducers and assisted by d y the Dist trict Milk U Union. Distric ct Cooperat tive Milk P Producers’ Union (Mil lk Union) The Vil llage Societ of a District (rangi from 75 to 1653 per Milk Un ties ing 5 nion in Guja arat) having g surplus milk after local sales come toget ther and for a Distric Milk Union. The Mi Union is rm ct ilk s ond der e-tier structu It has m ure. membership of Village Dairy Soci p e ieties of the e the seco tier und the three District and is gov t verned by a Board of D Directors co onsisting of 9 to 18 ele ected representatives of f the Vill lage Societ ties. The M Union further app Milk points a pro ofessional M Managing Director for D r manage ement of th day-to-d functio he day ons. It also employs various people for as o ssisting the e Managi Director in accomp ing r plishing his / her daily d duties. The main functi ions of the M Union Milk n are as fo follows: • • nt from the Vil llage Dairy Societies of the Distric f ct Procuremen of milk fr Arranging t transportation of raw m from th VDCS to the Milk U milk he o Union. MMS B B Page 15 5
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• • Providing input services to the producers like Veterinary Care, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, etc. Conducting training on Cooperative Development, Animal Husbandry & Dairying for milk producers and conducting specialised skill development & Leadership Development training for VDCS staff & Management Committee members. Providing management support to the VDCS along with regular supervision of its activities. Establish Chilling Centres & Dairy Plants for processing the milk received from the villages. Selling liquid milk & milk products within the District Process milk into various milk & milk products as per the requirement of State Marketing Federation. Decide on the prices of milk to be paid to milk producers as well on the prices of support services provided to members.
• • • • •
State Cooperative Milk Federation (Federation) The Milk Unions of a State are federated into a State Cooperative Milk Federation. The Federation is the apex tier under the three-tier structure. It has membership of all the cooperative Milk Unions of the State and is governed by a Board of Directors consisting of one elected representative of each Milk Union. The State Federation further appoints a Managing Director for management of the day-to-day functions. It also employs various people for assisting the Managing Director in accomplishing his daily duties. The main functions of the Federation are as follows: • • • • • • • • • • • Marketing of milk & milk products processed / manufactured by Milk Unions. Establish distribution network for marketing of milk & milk products. Arranging transportation of milk & milk products from the Milk Unions to the market. Creating & maintaining a brand for marketing of milk & milk products (brand building). Providing support services to the Milk Unions & members like Technical Inputs, management support & advisory services. Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions. Establish feeder-balancing Dairy Plants for processing the surplus milk of the Milk Unions. Arranging for common purchase of raw materials used in manufacture / packaging of milk products. Decide on the prices of milk & milk products to be paid to Milk Unions. Decide on the products to be manufactured at various Milk Unions (product-mix) and capacity required for the same. Conduct long-term Milk Production, Procurement & Processing as well as Marketing Planning. MMS B Page 16
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• • • Arranging Finance for the Milk Unions and providing them technical know-how. Designing & providing training on Cooperative Development, Technical & Marketing functions. Conflict Resolution & keeping the entire structure intact.
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Impact of Amul Model
The effects of Operation Flood Programme are more appraised by the World Bank in its recent evaluation report. It has been proved that an investment of Rs. 20 billion over 20 years under Operation Flood Programme in 70s & 80s has contributed in increase of India’s milk production by 40 Million Metric Tonne (MMT) i.e. from about 20 MMT in pre- Operation Flood period to more than 60 MMT at the end of Operation flood Programme. Thus, an incremental return of Rs. 400 billion annually have been generated by an investment of Rs. 20 billion over a period of 20 years. This has been the most beneficial project funded by the World Bank anywhere in the World. One can continue to see the effect of these efforts as India’s milk production continues to increase and now stands at 90 MMT. Despite this four-fold increase in milk production, there has not been drop in the prices of milk during the period and has continued to grow. Due to this movement, the country’s milk production tripled between the years 1971 to 1996. Similarly, the per capita milk consumption doubled from 111gms per day in 1973 to 222gms per day in 2000. Thus, these cooperatives have not just been instrumental in economic development of the rural society of India but it also has provided vital ingredient for improving health & nutritional requirement of the Indian society. These dairy cooperatives have been responsible in uplifting the social & economic status of the women folk in particular as women are basically involved in dairying while the men are busy with their agriculture. This has also provided a definite source of income to the women leading to their economic emancipation. The three-tier ‘Amul Model’ has been instrumental in bringing about the White Revolution in the country. As per the assessment report of the World Bank on the Impact of Dairy Development in India, the ‘Anand Pattern’ has demonstrated the following benefits: • • • • • The role of dairying in poverty reduction The fact that rural development involves more than agricultural production The value of national ‘ownership’ in development The beneficial effects of higher incomes in relieving the worst aspects of poverty The capacity of dairying to create jobs MMS B Page 18
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• • • • • • • The capacity of dairying to benefit the poor at low cost The importance of commercial approach to development The capacity of single-commodity projects to have multi-dimensional impacts The importance of getting government out of commercial enterprises The importance of market failure in agriculture The power & problems of participatory organisations The importance of policy
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Co?operatives and Rural Development: Case study of Amul CONCLUSION
The co-operatives have thus had a very positive impact on the overall rural development. To conclude there have been the following improvements that has helped rural India rise out of the dark: • • • • • The cooperatives have provided gainful employment and brought the farmers close to the market. Modern technologies in animal breeding and feeding. Modern consumer processing and marketing facilities have been created Reduced the seasonal price variations. Technical input services including animal insemination, balanced cattle feed / bypass proteins feed, better fodder varieties and emergency veterinary health services helped in raising and sustaining milk production also ensuring a better quality of life in the villages. Created urban employment in dairy plants, marketing, transport and distribution. A sustainable rural employment program. Dairy as economic activity for landless, marginal or small farmers. The village cooperative is a clean well lit and orderly place, influencing the transformation of the villages Milk production and unexploitative marketing through the cooperatives is an assured source of income to farmers. The migrating population is settling down. Operation Flood has, as the largest rural employment scheme enabled the farmers to address not only the domestic but also global market opportunities. Requirement of skilled labour is relatively less. Dairy product market is active round the year. Minimum investment on inventory. (No need to stock raw materials in huge quantities.) Entire establishment can be shifted to a new location (if need arises e.g. Fire, Floods etc.) One can insure animals. Less energy requirement. Biogas plant fed with cow dung can supply maximum energy to meet farms day to day requirement. Decomposed slurry of such plant can also be effectively used as organic manure. It is eco-friendly and does not cause environmental pollution as compared to other industries.
• • • • • • • • • • • • • • •
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Different types of cooperatives, Kaira experiment, Three tier "Amul Model"
2010
CO-OPERATIVES AND RURAL DEVELOPMENT: CASE STUDY OF AMUL
CASE STUDY OF AMUL
Swati Gupta
MMS B
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No: 116
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Co?operatives and Rural Development: Case study of Amul
Contents
Introduction ..................................................................................................................................... 3 Indian Economy at a Glance ....................................................................................................... 3 Statistics: ................................................................................................................................. 4 Sector-wise GDP contribution: ............................................................................................... 4 Growth pattern since the last 10 years .................................................................................... 5 Rural development .......................................................................................................................... 6 Need ............................................................................................................................................ 6 Co-operatives and Rural Development ....................................................................................... 7 What are Co-operatives? ......................................................................................................... 7 Co-operatives and Sustainable Development ......................................................................... 8 Why Co-operatives?? .............................................................................................................. 8 Types of Co-operative Societies ........................................................................................... 10 Case study of amul ........................................................................................................................ 12 Company Profile ....................................................................................................................... 13 The Kaira experiment ........................................................................................................... 14 Three-tier "Amul Model" ...................................................................................................... 14 Impact of Amul Model.............................................................................................................. 18 Conclusion .................................................................................................................................... 20
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Co?operatives and Rural Development: Case study of Amul INTRODUCTION
Indian Economy at a Glance
The economy of India is now the twelfth largest financial system in the world according to the market exchange rates and the fourth largest through purchasing power parity (PPP) basis. But now in current times, India is under one of the fastest growing economic country in the world. Due to the involvement of the industries and the rigid environment, the economy is moving towards continuous improvement. Moreover, highly capable, expert and English-speaking human sources have formed a backbone for India. With the help of increasing purchasing power, the Indian market has changed into a vibrant, rapidly growing consumer market. India also exports and imports large market of consumer goods and advanced technology to renew its manufacturing power on the other base. India's diverse economy comprises of conventional village farming as well as modern agriculture, a wide range of modern industries, a large number of services and handicrafts also. Services are the chief source of economic growth, accounting for more than half of India's output with less than one third of its labour force. India's chief strength comes from its large numbers of well-educated, skilled people, adept in the English language, helping India to become a major exporter of software services and software workers. India pays large attention on agriculture, industrial sector development to provide large employment opportunities to the growing population. But to develop the current status and to accomplish the target GDP of 10% financial years, Indian economy has to conquer many challenges like population explosion, poverty, unemployment, rural urban divide and so on. Not this, in 2009, Indian economy has faced some other challenges also like inflation under control, diving growth equitably, investment plans, dealing with global financial uncertainty etc. However now at present, India’s economy has grown up by more than 9%, following 3 months running and has shown a decade of 7%+ growth. This result in 10% poverty reduced with 60% of India’s 1.1 billion populations. Moreover the growth rate of service area was 11.18% in 2007 but now it grew up to 10.63% with 29% of GDP.
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ics: Statisti
Annual GDPGrowth Rat te
Yea ar GDP at NDP at GNP a at Factor Factor Factor r Cost Cos Cost New Series Base 1999-2000 7.5 7.3 7.5 9.5 9.5 9.6 9.7 9.7 9.8 9.0 8.8 9.3 6.7 6.4 6.7 NNP at Facto or Cos st 7.3 9.6 9.8 9.1 6.4 4 Pe er Cap pita NN NP 5.6 8.0 8.2 7.6 4.9
( Source: www w.dbie.rbi.org.in) )
2004-05 2005-06 2006-07 2007-08 2008-09
P contribut tion: Sectorwise GDP Year r Agricu ulture and A Allied Activ vities (in Rs Cro ore) 4829 910 5111 114 5313 315 122 5571 5660 045 SE ECTORWISE GDP CONTRIBU UTION As A a In ndustry As a Services %age of (in ( Rs % %age of (in Rs GDP G Crore) C GDP Crore) As a %age of GDP Total (in n Rs Crore)
2004-0 05 2005-0 06 2006-0 07 2007-0 08 2008-0 09
New Series Base 1999-2000 20.22 2 468451 4 19.61 19.54 506519 5 19.36 18.51 560775 5 19.53 17.8 1 602032 6 19.23 16.95 617882 6 18.5
1437407 1508468 1774029 1970563 2155448
60.17 61.1 61.96 62.96 64.54
2388768 2616101 2871119 3129717 3339375
Sectorwi Contri ise ibution as a %age of GDP s
Sector Agriculture A In ndustry Services
Total GD 2008-09: 3339375 R Crore DP Rs
(Source:http://www.rbi i.org.in/scripts/P PublicationsView. .aspx?id=11588 )
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Co?operatives and Rural Development: Case study of Amul
Growth pattern since the last 10 years
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Co?operatives and Rural Development: Case study of Amul RURAL DEVELOPMENT
Need
Rural development has always been an important issue in all discussions pertaining to economic development, especially of developing countries, throughout the world. India has a population of around 1.17 billion, 72.2% of which constitutes rural population. A large majority of rural people continue to suffer from persistent poverty. The socio-economic disparities between rural and urban areas are widening and creating tremendous pressure on the social and economic fabric of the Indian Economy. Inequalities in income, lack of employment opportunities, lack of infrastructure and civic amenities, inadequate access to education, healthcare and other basic services are some of the major areas where rural areas lag behind. Globalization and spread of the consumer society have further accentuated these disparities, visible in the affluence and glitz of urban areas, as against poverty and deprivation that characterize the rural landscape in India. These factors, among many others, tend to highlight the importance of rural development. Factor Population (%) Share in GDP Main Sector of Occupation Main Occupation Unemployment Rate (as of 1999-2000) Infrastructure Literacy Rate Rural 72.2 49 Primary Agriculture and allied Activities 7.08 Underdeveloped 58.7% Urban 27.8 51 Secondary and Tertiary Services 7.79 Somewhat developed 79.9%
From the above data it is clear that 72.2% of the Indian population contributes about 49% of GDP, whereas 27.8% of the population contributes to 51% of the GDP. Inorder to accelerate India on the growth trajectory and to sustain the growth for a longer period of time, rural development has to be the issue of major concern.
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Cooperatives and Rural Development
What are Cooperatives? Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary 3 cooperative members have equal voting rights (one member, one vote) and cooperatives at other levels are also organized in a democratic manner. Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited return on member capital, if any. Surpluses are allocated for any or all of the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership. Co-operatives are autonomous, self-help organisations controlled by their members. If they enter to agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy. Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public, particularly young people and opinion leaders - about the nature and benefits of co-operation. Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures. Co-operatives work for the sustainable development of their communities through policies approved by their members. Values, principles, ethics and business competence constitute the co-operative advantage for members and for the communities in which they operate. Cooperatives set industry standards by putting into practice their values and ethics. In others, co-operatives are seen as leaders in promoting food safety and security, in protecting the environment, and in providing decent employment. Still in others, co-operatives are building peaceful societies by promoting understanding and collaboration among people of different cultural and income backgrounds. In the words of the UN Secretary-General: Cooperative enterprises provide the organizational means whereby a significant proportion of humanity is able to take into its own hands the task of creating productive employment, overcoming poverty and achieving social integration…” Roll No 116 MMS B Page 7
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Coope eratives an nd Sustainable Development • Co-operativ ves routin nely integ grate mult tiple economic, s social, and ecological o objectives. ves are pr ractical veh hicles for co• Co-operativ operation a collecti action, both of wh and ive hich are crucial to sustain l nable deve elopment; t they build and r reinforce co ommunity, w which is both a medium fo and a measure o sustaina or, of, able developmen nt. mmunity ties and less n s need for sh hort• Given com term profit co-opera ts, atives have the capaci to embr ity race and act on longe planning er g horizons. • Co-operativ help to stabilize re ves egional eco onomies and provide a favorable climate for d r further inve estment. • Co-operativ reduce inequality a promot equitable sharing of the costs and benefits ves and te f a s of sustainab development. ble • Co-operativ can pro ves omote econo omic democ cracy and th empowe he erment of m marginalized d groups, a hallmark of sustain nable deve elopment a and a pre econdition for shared d ity. responsibili • Co-operativ serve as facilitating partners i alliances involving l ves s g in local and na ational, and d public- and private-sec organiz d ctor zations. • Sustainable developm e ment is knowledge and managem d ment-intensive; cooperatives have e organizatio capacity for comm onal y munication, t training, and education d n. • Co-operativ are part of a world movement that has st ves t d t trong links to other co ontemporary y social mov vements fo ocused on the envir ronment, w women’s li iberation, democracy, developmen alternativ poverty and resist nt ves, y, ting neoliberal globalism m. Why Co ooperativ ves?? Sustainable develo opment is of ften represe ented as hav ving three d dimensions, or theatres, for action: nomic, the social, and the environ nmental. Th draws att his tention to th requirem to meet he ment t the econ at least minimal s t standards o performa of ance in all three domains in ord to quali as truly der ify y sustaina able develo opment. The implicatio is that no claims to sustaina on ability can b justified be d where any one of t a these dimen nsions is ser riously negle ected, but a that these three are also enas interact t and mu utually cond dition outcom in impo mes ortant ways. Co-oper ratives rou utinely integ grate multi iple econom mic, social, and ecolo , ogical obje ectives. Cooperativ are prac ves ctical vehicl for co-operation an collective action, both of which are crucial les nd e h l to susta ainable deve elopment; t they build a reinforc commun and ce nity, which is both a m medium for, and a measure o sustaina of, able develo opment. Th hey provide an organ e nizational vehicle for r Roll No o 116 MMS B B Page 8 8
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sing collect tive social-ecological interests. This is a key contri ibution to sustainable e address develop pment since capitalist market ec e conomies fr requently fa when it comes to translating fail t g commu unal interes into ap sts ppropriate a action. Co-operatives also help to build sustainable e commu unities that are both a goal of sustainable developme and a crucial ing ent gredient for r implem menting susta ainable syst tems of prod duction and consumpti d ion. Sustainable develo opment req quires socia capital. S al Social et ganization p produced b the by Capital is the asse to an org tive social skills of i employe its ees. When they cumulat work w well, co-ope eratives rep produce and expand s d social capital, which the contribut to the s en tes success of other s. eratives pl lay an i integrating and projects Co-ope stabilizi role, fo ing oster allianc and coa ces alitions, and can d help to reduce s o social inequ uality. Co-operatives thus provide social ser e rvices to re egional econ nomies in m much the sam sense th some a me hat activities (e e.g., agricu ulture) may pr rovide envir ronmental s services. Given comm munity ties and less need for shortd d -term profit co-opera ts, atives have th capacity t embrace and act on longer plan he to nning horizon ns. Co-oper ratives redu inequality and pr uce romote equ uitable shari of the costs and benefits of ing f sustaina able devel lopment. C Co-operativ ves can p promote e economic democracy and the y e empowerment of m marginalized groups a h d hallmark of sustainable developm f e ment and a p precondition n for sha ared respons sibility. Co ooperatives promote greater econ nomic demo ocracy thro ough shared d ownersh and sha hip ared control. More peop gain dire roles in the allocation and man . ple ect nagement of f resources, and the skills an creativit are more fully eng eir nd ty e gaged. Econ nomic participation on n is cessary prec condition fo the emerg or gence of att titudes and practices of f equitable grounds i also a nec shared r responsibili that supp sustaina resourc use. ity port able ce Co-oper ratives serv as facilita ve ating partne in allian ers nces involvin local and national, and publicng and pri ivate-sector organizati r ions. Co-op peratives f frequently serve as fa facilitating partners in n alliance or coaliti es ions involvi combin ing nations of lo ocal, nation and inte nal, ernational, and publicand priv vate-sector organizatio Partners ons. ships are pa of the ne orthodox and prac art ew xy ctical reality y in comm munity econ nomic development. Cooperatives are often k partners trusted an respected s key s, nd d by non ngovernmen ntal organizations (N NGOs), stat agencies and priv te s, vate-sector firms. As s brokerin partners, they frequ ng uently provide leadersh resource and may s hip es serve as fac cilitators for r projects involving complex alliances. s Sustainable development is knowled dge and managemen nt-intensive cooperat e; tives have e zational cap pacity for communica ation, train ning, and e education. Co-operativ can be ves e organiz effectiv schools f sustaina ve for able develop pment, whic is, comp ch pared to les sustainab forms of ss ble f Roll No o 116 MMS B B Page 9 9
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pment, both knowledge and mana h e agement-int tensive. Edu ucating mem mbers, emp ployees, and d develop the pub is a coblic -operative principle, an many co p nd o-ops have been succe essful in upgrading the e technica manager al, rial, and or rganizationa skills of their mem al f mbership and staff. Sho courses, d ort advance education, peer inst ed truction, and learning b experime d by entation all become more feasible e in a coo operative co ontext. Coop peratives ca sponsor p an participator research in which m ry members and d employ yees design and manag research projects. T ge h They can s serve as net tworks for generating, sharing, and valida ating local expertise. T They can c collect, codi and cor ify, rroborate lo ocal or folk k knowledge. Co-oper ratives are a way by w which gover rnment or n nongovernm ment organizations can effectively n y deliver training, technical su upport, and adapted te d echnologies Compare to house s. ed ehold-based d or porate oper rations, co-operatives are more li ikely to hav the com ve mbination of f firms o large corp technica capacity and workp al place organi ization that allows them to manag more (ec m ge cologically) ) complex productio systems Sustainab develop x on s. ble pment requ uires adapt tive learnin flexible ng, e organiz zation, and a adept fine-tu uning. It requires moti ivated and t thoughtful w workers and managers. d Some fo orms of co-operative can produce and reprodu such a workforce. uce w Types of Cooper rative Soci ieties Althoug all types of coopera gh ative societie work on the same pr es rinciple, the differ wi regard to ey ith o the natu of activi ure ities they pe erform. Foll lowings are different ty e ypes of co-o operative so ocieties that t exist in our country y. Consum mers’ Coop perative S Society: The societies are formed to protect the interes of general ese s t st l consum by mak mers king consum goods available at a reasonab price. Th buy goo directly mer a ble hey ods y from th producer or manufacturers an thereby eliminate t middlem in the process of he rs nd the men f distribu ution. Kendr riya Bhandar, Apna B Bazar and Sahkari Bhan ndar are ex xamples of consumers’ ’ co-oper rative societ ty. Produc cers’ Coop perative So ociety: The societies are forme to protec the intere of small ese s ed ct est l produce by maki availabl items of their need for production like ra materials tools and ers ing le f aw s, d Roll No o 116 MMS B B Page 10 0
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equipments, machinery, etc. Handloom societies like APPCO, Bayanika, Haryana Handloom, etc., are examples of producers’ co-operative society. Cooperative Marketing Society: These societies are formed by small producers and manufacturers who find it difficult to sell their products individually. The society collects the products from the individual members and takes the responsibility of selling those products in the market. Gujarat Co-operative Milk Marketing Federation that sells AMUL milk products is an example of marketing co-operative society. Cooperative Credit Society: These societies are formed to provide financial support to the members. The society accepts deposits from members and grants them loans at reasonable rates of interest in times of need. Village Service Co-operative Society and Urban Cooperative Banks are examples of co-operative credit society. Cooperative Farming Society: These societies are formed by small farmers to work jointly and thereby enjoy the benefits of large-scale farming. Lift-irrigation cooperative societies and pani-panchayats are some of the examples of co-operative farming society. Housing Cooperative Society: These societies are formed to provide residential houses to members. They purchase land, develop it and construct houses or flats and allot the same to members. Some societies also provide loans at low rate of interest to members to construct their own houses. The Employees’ Housing Societies and Metropolitan Housing Co-operative Society are examples of housing co-operative society.
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Co?operatives and Rural Development: Case study of Amul CASE STUDY OF AMUL
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Company Profile
Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative movement in India. It is a brand name managed by an apex cooperative organization, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2.6 million milk producers in Gujarat, India. It is based in Anand town of Gujarat and has been a sterling example of a co-operative organization's success in the long term. The Amul Pattern has established itself as a uniquely appropriate model for rural development. Amul has spurred the White Revolution of India, which has made India the largest producer of milk and milk products in the world. It is also the world's biggest vegetarian cheese brand. GCMMF: Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006-07). Currently Amul has 2.6 million producer members with milk collection average of 10.16 million litres per day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries. Its bid to enter Japanese market in 1994 had not succeeded, but now it has fresh plans of entering into the Japanese markets. Other potential markets being considered include Sri Lanka. Dr Verghese Kurien, former chairman of the GCMMF, is recognised as the man behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF. Some points to remember about Amul are: • • • Asia’s largest dairy co-operative was created way back in1946 to make the milk producer self-reliant and conduct milk- business with pride. Amul has always been the trend setter in bringing and adapting the most modern technology to door steps to rural farmers. First self motivated and autonomous farmers’ organization comprising of more than 5000000 marginal milk producers of Kaira District. MMS B Page 13
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• • • • Created Dairy co-operatives at village level functioning with milk collection centres owned by them. Computerized milk collection system with electronic scale and computerized accounting system. The first and only organization in world to get ISO 9000 standard for its farmers cooperatives. First to produce milk from powder from surplus milk.
Amul is the live example of how co-operation amongst the poor marginal farmers can provide means for the socio-economic development of the under privileged marginal farmers. The Kaira experiment 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. More than 900 village cooperatives have created jobs for nearly 5000 people in their own villages, without disturbing the social agro-system, and thereby the migration of people from the villages has been controlled to a greater extent. The income from milk has contributed to their household economy. Threetier "Amul Model" The Amul Model is a three-tier cooperative structure. This structure consists of a Dairy Cooperative Society at the village level affiliated to a Milk Union at the District level which in turn is further federated into a Milk Federation at the State level. The three-tier structure was setup in order to delegate the various functions; milk collection is done at the Village Dairy Society, Milk Procurement & Processing at the District Milk Union and Milk & Milk Products Marketing at the State Milk Federation. This helps in eliminating not only internal competition but also ensuring that economies of scale is achieved. As the above structure was first evolved at Amul in
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t eafter replic cated all o over the co ountry und the der Gujarat and there Operati Flood P ion Programme, it is know as the ‘ , wn ‘Amul Mod or del’ ‘Anand Pattern’ of Dairy Cooperatives. d f
Village Dairy Coopera ative
Village e Dairy Coo operative S Society (VD DCS) The mi produce of a v ilk ers village, hav ving surplus milk afte own er consum mption, com together and form a Village D me Dairy Coope erative Distr rict Society (VDCS). The Village Dairy C y Cooperative is the pr e rimary Cooperati Milk ive society under the three-tier structure. I has mem It mbership of milk f Producers Union s’ produce of the v ers village and is governed by an elec d cted Manag gement Commi ittee consist ting of 9 t 12 electe represen to ed ntatives of the milk produce based o the prin ers on nciple of o membe one vote. The one er, village society fur rther appoi ints a Secre etary (a pa employee and aid State Coo operative Milk Fed deration member secretary of the Mana r agement Co ommittee) f managem of for ment the day y-to-day fun nctions. It al employs various pe lso s eople for as ssisting the Sec cretary in ac ccomplishin his / her daily duties. The ma function of the VD ng r ain ns DCS are as s follows s: • • Collection of surplus milk from the milk pr roducers of the village & paymen based on f e nt n quality & q quantity Providing support se ervices to the memb bers like V Veterinary First Aid Artificial d, l on d ineral mixt ture sales, f fodder & f fodder seed d Inseminatio services, cattle-feed sales, mi sales, condu ucting train ning on Anim Husban mal ndry & Dair rying, etc. Selling liqu milk for local consu uid r umers of the village. e Supplying m to the District Mil Union. milk lk
• •
Thus, th VDCS in an indepen he n ndent entity managed l y locally by the milk pro t oducers and assisted by d y the Dist trict Milk U Union. Distric ct Cooperat tive Milk P Producers’ Union (Mil lk Union) The Vil llage Societ of a District (rangi from 75 to 1653 per Milk Un ties ing 5 nion in Guja arat) having g surplus milk after local sales come toget ther and for a Distric Milk Union. The Mi Union is rm ct ilk s ond der e-tier structu It has m ure. membership of Village Dairy Soci p e ieties of the e the seco tier und the three District and is gov t verned by a Board of D Directors co onsisting of 9 to 18 ele ected representatives of f the Vill lage Societ ties. The M Union further app Milk points a pro ofessional M Managing Director for D r manage ement of th day-to-d functio he day ons. It also employs various people for as o ssisting the e Managi Director in accomp ing r plishing his / her daily d duties. The main functi ions of the M Union Milk n are as fo follows: • • nt from the Vil llage Dairy Societies of the Distric f ct Procuremen of milk fr Arranging t transportation of raw m from th VDCS to the Milk U milk he o Union. MMS B B Page 15 5
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• • Providing input services to the producers like Veterinary Care, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, etc. Conducting training on Cooperative Development, Animal Husbandry & Dairying for milk producers and conducting specialised skill development & Leadership Development training for VDCS staff & Management Committee members. Providing management support to the VDCS along with regular supervision of its activities. Establish Chilling Centres & Dairy Plants for processing the milk received from the villages. Selling liquid milk & milk products within the District Process milk into various milk & milk products as per the requirement of State Marketing Federation. Decide on the prices of milk to be paid to milk producers as well on the prices of support services provided to members.
• • • • •
State Cooperative Milk Federation (Federation) The Milk Unions of a State are federated into a State Cooperative Milk Federation. The Federation is the apex tier under the three-tier structure. It has membership of all the cooperative Milk Unions of the State and is governed by a Board of Directors consisting of one elected representative of each Milk Union. The State Federation further appoints a Managing Director for management of the day-to-day functions. It also employs various people for assisting the Managing Director in accomplishing his daily duties. The main functions of the Federation are as follows: • • • • • • • • • • • Marketing of milk & milk products processed / manufactured by Milk Unions. Establish distribution network for marketing of milk & milk products. Arranging transportation of milk & milk products from the Milk Unions to the market. Creating & maintaining a brand for marketing of milk & milk products (brand building). Providing support services to the Milk Unions & members like Technical Inputs, management support & advisory services. Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions. Establish feeder-balancing Dairy Plants for processing the surplus milk of the Milk Unions. Arranging for common purchase of raw materials used in manufacture / packaging of milk products. Decide on the prices of milk & milk products to be paid to Milk Unions. Decide on the products to be manufactured at various Milk Unions (product-mix) and capacity required for the same. Conduct long-term Milk Production, Procurement & Processing as well as Marketing Planning. MMS B Page 16
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• • • Arranging Finance for the Milk Unions and providing them technical know-how. Designing & providing training on Cooperative Development, Technical & Marketing functions. Conflict Resolution & keeping the entire structure intact.
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Co?operatives and Rural Development: Case study of Amul
Impact of Amul Model
The effects of Operation Flood Programme are more appraised by the World Bank in its recent evaluation report. It has been proved that an investment of Rs. 20 billion over 20 years under Operation Flood Programme in 70s & 80s has contributed in increase of India’s milk production by 40 Million Metric Tonne (MMT) i.e. from about 20 MMT in pre- Operation Flood period to more than 60 MMT at the end of Operation flood Programme. Thus, an incremental return of Rs. 400 billion annually have been generated by an investment of Rs. 20 billion over a period of 20 years. This has been the most beneficial project funded by the World Bank anywhere in the World. One can continue to see the effect of these efforts as India’s milk production continues to increase and now stands at 90 MMT. Despite this four-fold increase in milk production, there has not been drop in the prices of milk during the period and has continued to grow. Due to this movement, the country’s milk production tripled between the years 1971 to 1996. Similarly, the per capita milk consumption doubled from 111gms per day in 1973 to 222gms per day in 2000. Thus, these cooperatives have not just been instrumental in economic development of the rural society of India but it also has provided vital ingredient for improving health & nutritional requirement of the Indian society. These dairy cooperatives have been responsible in uplifting the social & economic status of the women folk in particular as women are basically involved in dairying while the men are busy with their agriculture. This has also provided a definite source of income to the women leading to their economic emancipation. The three-tier ‘Amul Model’ has been instrumental in bringing about the White Revolution in the country. As per the assessment report of the World Bank on the Impact of Dairy Development in India, the ‘Anand Pattern’ has demonstrated the following benefits: • • • • • The role of dairying in poverty reduction The fact that rural development involves more than agricultural production The value of national ‘ownership’ in development The beneficial effects of higher incomes in relieving the worst aspects of poverty The capacity of dairying to create jobs MMS B Page 18
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Co?operatives and Rural Development: Case study of Amul
• • • • • • • The capacity of dairying to benefit the poor at low cost The importance of commercial approach to development The capacity of single-commodity projects to have multi-dimensional impacts The importance of getting government out of commercial enterprises The importance of market failure in agriculture The power & problems of participatory organisations The importance of policy
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Co?operatives and Rural Development: Case study of Amul CONCLUSION
The co-operatives have thus had a very positive impact on the overall rural development. To conclude there have been the following improvements that has helped rural India rise out of the dark: • • • • • The cooperatives have provided gainful employment and brought the farmers close to the market. Modern technologies in animal breeding and feeding. Modern consumer processing and marketing facilities have been created Reduced the seasonal price variations. Technical input services including animal insemination, balanced cattle feed / bypass proteins feed, better fodder varieties and emergency veterinary health services helped in raising and sustaining milk production also ensuring a better quality of life in the villages. Created urban employment in dairy plants, marketing, transport and distribution. A sustainable rural employment program. Dairy as economic activity for landless, marginal or small farmers. The village cooperative is a clean well lit and orderly place, influencing the transformation of the villages Milk production and unexploitative marketing through the cooperatives is an assured source of income to farmers. The migrating population is settling down. Operation Flood has, as the largest rural employment scheme enabled the farmers to address not only the domestic but also global market opportunities. Requirement of skilled labour is relatively less. Dairy product market is active round the year. Minimum investment on inventory. (No need to stock raw materials in huge quantities.) Entire establishment can be shifted to a new location (if need arises e.g. Fire, Floods etc.) One can insure animals. Less energy requirement. Biogas plant fed with cow dung can supply maximum energy to meet farms day to day requirement. Decomposed slurry of such plant can also be effectively used as organic manure. It is eco-friendly and does not cause environmental pollution as compared to other industries.
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