India Dairy

Key features

Effective governance 

In the Amul model, farmers own the company that controls the post-production stages of procurement, processing, and marketing of milk and milk products. Democratic elections are held every three years to elect members of the management committees who then elect their chairman. This ensures active participation of farmers in decision-making, transparency, and democratic management. Membership in the cooperative is open to all farmers who own a cow and are able to provide an annual supply of 700 liters of milk.Coordinated delivery of servicesThese include technical support, collection, market access and brand name development and distribution. Amul provides support for animal husbandry, breeding services and veterinary services. It operates an animal feed factory, makes its own milk cans, and appropriate vehicles to ensure the right temperature and humidity. An agriculture university and a rural management institute are also part of the Amul set-up. In the event of droughts, Amul also subsidizes animal feed.Value added/Vertical integration

Amul is vertically integrated from production to retail.

Information flow

Procurement prices are announced in advance and variable according to fat content. Amul was one of the first major organizations in India to create a website in 1996, to facilitate communications amongst producers, distributors and consumers. One of Amul’s members, Banas Dairy, has also started a unique project involving the establishment of information kiosks in each village for internet and e-governance activities within the cooperative. Villagers use the kiosk to obtain official forms, agriculture and veterinary details.

Trust

Trust has been established through farmers´ participation in the ownership of the enterprise and through transparency with regard to business transactions, elections, etc.

Horizontal integration

The company is owned by the farmers’ cooperatives.

Policy/Enabling measures

The initial Government intervention played a significant role in facilitating the development of the dairy industry.

PPP

Substantial support has been provided by Government, which initially financed the project by recycling the profits from the sale of imported powdered milk. The funds were used to develop the dairy industry, including NDDB, which received over 50% of the funding in grants.

Diversification

Amul is a dairy chain with a broad range of end products (i.e. milk, ice cream, ghee and many others).

Capacity building

There is considerable focus on capacity building.

Infrastructure

Infrastructure is not financed by Amul. However, the cooperative members have been able to put pressure on local politicians to provide financing for water, roads, schools, etc.

Chain efficiency/Competitiveness

Amul established a direct linkage between milk producers and consumers by eliminating the middlemen. Production and marketing functions have been integrated along the chain, reducing transaction costs for farmers. Amul has been accredited with 9001 and HACCP certifications.

Inputs

Members are provided with animal feed.

Technology transfer

The installation of 4,000 Automatic Milk Collection Units at Village Dairy Cooperative Societies is used to collect information on animals, milk fat content, volumes, and amounts payable to each member. This information is also used with the objective of improving the breed.

Market linkages

The chain is fully integrated, from the producers to the retail outlets.

Sustainability

Amul is now a well-established company, entirely owned by over 2.5 million milk producers. It is managed by professional managers who have a strong track record of innovation in marketing, manufacturing and logistics.

Driving success factors

The success of the model was heavily determined by substantial government support and very dedicated management.

Drawbacks

There has been criticism that not enough attention has been paid to women. For this reason, both Amul and NDDB are currently trying to address gender issues and forming women cooperatives.

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