Amul Indian Milk Cooperative Company. History and Organisation.

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Micro Analysis of Amul Dairy and Gujarat Co-operative Milk Marketing Federation

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Chapter 1

Evolution of AMUL

Before the cooperative movement began, middlemen who supplied milk to the consumers were exploiting the dairy industry in the Kaira District. It began as a response to this exploitation and put an end to it. It grew because it responded to the farmers financially as well as with services. It has thrived because farmers who have a stake in its success, own it. And because it has been managed by capable professionals and strengthened by dedicated scientists, technologists and workers, it has forged ahead. Today in India, there are 75,000 dairy cooperative societies, spread all over the country with a membership of 10 million. The farmer in the village is now assured of a better future thanks to these cooperatives. Recently one of the European Embassies in Delhi requested Amul for information on the five biggest "companies" in the dairy business. The first three are in the cooperative sector - The Gujarat Cooperative Milk Marketing Federation (GCMMF), The Kaira District Cooperative Milk Producers' Union Limited and The Mehsana District Cooperative Milk Producers' Union. The Kaira District Cooperative is the second best in the country. It helped to create GCMMF, the apex body of all cooperatives in Gujarat.

The Root Cause

In the forties one firm - Polsons, dominated the dairy industry. Established by a rather enterprising gentleman who discovered that Kaira District, of what was then Bombay Presidency, produced a good deal of milk. He established a creamery and for a while the name Polsons was synonymous with butter - much as Amul is today.

One of Polson's businesses was to supply milk to Bombay. As Kaira district was an abundant source of the commodity, Polson was chosen to procure it from there. He in turn, entered into an arrangement with a number of contractors who actually went to the villages and collected the milk. Everyone was happy. Bombay received reasonably good quality milk and Polson made a handsome profit. The contractors too managed to earn large margins by over quoting the farmers. It was only the poor farmers who were unhappy for it. They invested in the animal feed and fodder and they put in their labor. Yet, it was they who received the smallest share of the Bombay consumers' rupee. The arrangement benefited everyone but them.

The First step: formation of Kaira union

Realizing that something needed to be done about the unequal balance of wealth, they turned to Sardar Vallabhbhai Patel for advice. Sardar Patel knew that their only chance of earning a decent income was when they themselves gained control over the resources they created. He also knew that the cooperatives offered them the best chance of gaining that control. So he advised them to stop selling milk to Polson and form a cooperative of their own. In his opinion they were to own their own dairy unit. He said, "Throw out Polson and his milk contractors". They followed his advice and the Kaira District Cooperative Milk Producers' Union (AMUL) was born, in 1946. By good fortune, they could get as Chairman - Shri Tribhuvandas Patel, an equally remarkable man. He understood the concept of cooperation and he understood people. His integrity was absolute. Because the farmers of Kaira district trusted and respected Tribhuvandas Patel, the cooperative was able to pass through some very difficult times and eventually become a model of cooperative dairying throughout the world.

The Kaira Union began with a clear goal, to ensure that its producer members received the highest possible share of the consumers' rupee. This goal itself defined their direction. The focus was on production by the masses, not mass production. By the early 'sixties, the modest experiment in Kaira had not only become a success, people began to recognize it as such. Farmers came from all parts of Gujarat to learn. They went back to their own districts and started their own cooperatives. The result - Together, the district milk producers unions of Gujarat own the Gujarat Cooperative Milk Marketing Federation, which markets the milk and milk products manufactured by its owners. The Federation's turnover was over Rs. 1700 crore making it the largest in the food industry.

In 1964, the then Prime Minister Shri Lal Bahadur Shastri came to inaugurate cattle feed factory owned by Amul near Anand. Impressed by the cooperative's success, he expressed his wish to "transplant the spirit of Anand in many other places". He wanted the Anand model of dairy development replicated in other parts of the country. With institutions owned by rural producers, which were sensitive to their needs and responsive to their demands, it was an ideal tool for progress. The National Dairy Development Board was created in 1965 in response to this call.

Amul: The origin

The mighty Ganges at its origin is but a tiny stream in the Gangotri ranges of the Himalayas. Similar is the story of Amul, which inspired 'Operation Flood' and heralded the 'White Revolution' in India. It began with two village cooperatives and 250 liters of milk per day, nothing but a trickle compared to the flood it has become today. Today Amul collects processes and distributes over a million liters of milk and milk products per day, during the peak, on behalf of more than a thousand village cooperatives owned by half a million-farmer members. Further, as Ganga-ma carries the aspirations of generations for moksha, Amul too has become a symbol of the aspirations of millions of farmers, creating a pattern of liberation and self-reliance for every farmer to follow. 

The start of a revolution

The revolution started as awareness among the farmers that grew and matured into a protest movement and the determination to liberate them. Over four decades ago, the life of a farmer in Kaira District was very much like that of his counterpart anywhere else in India. His income was derived almost entirely from seasonal crops. The income from milch buffaloes was undependable. Private traders and middlemen controlled the marketing and distribution system for the milk. As milk is perishable, farmers were compelled to sell it for whatever they were offered. Often, they had to sell cream and ghee at throwaway prices. In this situation, the one who gained was the private trader. Gradually, the realization dawned on the farmers that the exploitation by the trader could be checked only if marketed their milk themselves. In order to do that they needed to form some sort of an organization. This realization is what led to the establishment of the Kaira District Cooperative Milk Producers' Union Limited (popularly known as Amul) that was formally registered on December 14, 1946.

The Kaira Union began pasteurizing milk for the Bombay Milk Scheme in June 1948. An assured market proved a great incentive to the milk producers of the district. By the end of 1948, more than 400 farmers joined in more village societies, and the quantity of milk handled by one Union increased from 250 to 5,000 liters a day.

Obstacles: Springboards for success

Each failure, each obstacle, each stumbling block can be turned into a success story. In the early years, Amul had to face a number of problems. With every problem came opportunity. A chance to turn a negative into a positive. Milk by products and supplementary yield, which suffered from the same lack of marketing and distribution facilities, became encumbrance. Instead of being bogged down by their fate they were used as stepping-stones for expansion. Backward integration of the process led the cooperatives to advances in animal husbandry and veterinary practice.

Milk by products: An excuse to expand

The response to these provided stimulus for further growth. For example, as the movement spread in the district, it was found that the Bombay Milk Scheme could not absorb the extra milk collected by the Kaira Union in winter, when the production on an average was 2.5 times more than in summer. Thus, even by 1953, the farmer-members had no assured market for the extra milk produced in winter. They were again forced to sell a large surplus at low rates to the middlemen. The remedy was to set up a plant to process milk into products like butter and milk powder. A Rs 5 million plant to manufacture milk powder and butter was completed in 1955. In 1958, the factory was expanded to manufacture sweetened condensed milk. Two years later, a new wing was added for the manufacture of 2500 tons of roller-dried baby food and 600 tons of cheese per year, the former based on a formula developed with the assistance of Central Food Technological Research Institute (CFTRI), Mysore. It was the first time anywhere in the world that cheese or baby food was made from buffalo milk on a large, commercial scale. Another milestone was the completion of a project to manufacture balanced cattle feed. The plant was donated by OXFAM under the Freedom from Hunger Campaign of the FAO.

To meet the requirement of milk powder for the Defense, the Kaira Union was asked by the Government of India in 1963 to setup additional milk drying capacity. A new dairy capable of producing 40 tons of milk powder and 20 tons of butter a day was speedily completed. It was declared open in 1965. The Mogar Complex where high protein weaning food, chocolate and malted food are being made was another initiative by Amul to ensure that while it fulfilled the social responsibility to meet the demand for liquid milk, its members were not deprived of the benefits to be had from the sale of high value-added products.

Cattle: From stumbling blocks to building blocks

Traditionally dairying was a subsidiary occupation of the farmers of Kaira. However, the contribution to the farmer's income was not as prominent as his attachment to dairying as a tradition handed down from one generation to the next. The milk yield from animals, which were maintained mainly on the by products of the farm, was decidedly low. That together with the lack of facilities to market even the little produced rendered the scientific practice of animal husbandry irrational as well as unaffordable.  The return on the investment as well as the prospects of being able to market the product looked very bleak. It was a vicious cycle reinforced by generations of beliefs.

The Kaira Union broke the cycle by not only taking upon themselves the responsibility of collecting the marketable surplus of milk but also provided the members with every provision needed to enhance production. Thus the Kaira Union has full-fledged machinery geared to provide animal health care and breeding facilities. As early as late fifties, the Union started making high quality buffalo semen. Through village society workers artificial insemination service was made available to the rural animal population. The Union started its mobile veterinary services to render animal health care at the farmers' doorstep. Probably for the first time in the country, veterinary first aid services, by trained personnel, were made available in the villages. Fully qualified staff mans the Union’s 16 mobile veterinary dispensaries. All the villages are visited bi-monthly, on a predetermined day, to provide animal health care. A 24-hour Emergency Service is also available at a fee (Rs. 35 for members and Rs. 100 for non-members). All the mobile veterinary vans are equipped with Radio Telephones.

The Union runs a semen production center where it maintains high pedigreed Surti buffalo bulls; Holstein Friesian bulls, Jersey bulls and 50 per cent crossbred bulls. The semen obtained from these bulls is used for artificial breeding of buffaloes and cows belonging to the farmer members of the district. The artificial insemination service has become very popular because it regulates the frequency of calving in cows and buffaloes thus reducing their dry period. Not only that, a balanced feed concentrate is manufactured in the Union's Cattle Feed Plant and sold to the members through the societies at cost price.

Impressive though its growth, the unique feature of the Amul sagas did not lie in the extensive use of modern technology, nor the range of its products, not even the rapid inroads it made into the market for dairy products. The essence of the Amul story lies in the breakthrough it achieved in modernizing the subsistence economy of a sector by organizing the rural producers in the areas.

Chapter 2

Production Function


Explosion of the production technology and changes in technical field is going to bring out revolution in the industry sector which eventually gives stand to study and favors the come backing subject i.e. production and management.

Production and operation management is planning, organizing, staffing, directing and controlling of all the production system those portion of organization that convert inputs into products and services. In general production system takes raw material, personnel, machines, buildings and other resources and produce products and services.

The core of production system is its conversion subsystem where in workers; raw materials are used to convert inputs into products and services. This production department is at heart of the firm, as it is able to produce low cost products and superior quality in timely manners.

Thus, there arises enormous need of giving due importance to this department as a whole and a strong concrete base being foundation pillars of a manufacturing organization, if the intention is to succeed domestically and globally.

Co operative Milk Producing Societies in Gujarat

Following are the cooperatives that function under GCMMF.

  • Ahmedabad Dist Coop Milk Producers’ Union Ltd, Ahmedabad. Soc: 433, Mems: 52,428. Av Milk Proc: 90,000 lpd.
  • Banaskantha Dist Coop Milk Producers’ Union Ltd, Palanpur. Soc: 1,130, Mems: 97,251. Av Milk Proc: 295,000 lpd.
  • Baroda Dist Coop Milk Producers’ Union Ltd, Baroda. Soc: 783, Mems: 156,691. Av Milk Proc: 225,000 lpd.
  • Bharuch Dist Coop Milk Producers’ Union Ltd, Bharuch. Soc: 289, Mems: 37,900. Av Milk Proc: 38,000 lpd.
  • Bhavnagar Dist Coop Milk Producers’ Union Ltd, Bhavnagar. Soc: 190, Mems: 25,532. Av Milk Proc: 23,000 lpd.
  • Gandhinagar Dist Coop Milk Producers’ Union Ltd, Gandhinagar. Soc: 56, Mems: 13,000. Av Milk Proc: 46,500 lpd.
  • Junagadh Dist Coop Milk Producers’ Union Ltd, Junagadh. Soc: 400, Mems: 41,500. Av Milk Proc: 73,000 lpd.
  • Kaira Dist Coop Milk Producers’ Union Ltd, Amul Dairy, Anand. Soc: 943, Mems: 513,280. Av Milk Proc: 740,000 lpd.
  • Kutch Dist Coop Milk Producers’ Union Ltd, Kutch Dairy, Madhapar. Av Milk Proc: 25,000 lpd.
  • Mehsana Dist Coop Milk Producers’ Union Ltd, Dudhsagar Dairy, Mehsana. Soc: 1,020, Mems: 292,800. Av Milk Proc: 704,402 lpd.
  • Panchmahal Dist Coop Milk Producers’ Union Ltd, Godhra. Soc: 1,133, Mems: 126,510. Av Milk Proc: 112,000 lpd.
  • Rajkot Dist Coop Milk Producers’ Union Ltd, Rajkot. Soc: 193, Mems: 29,620. Av Milk Proc: 50,000 lpd.
  • Sabarkantha Dist Coop Milk Producers’ Union Ltd, Sabar Dairy, Himatnagar. Soc: 1,315, Mems: 200,482. Av Milk Proc: 322,346 lpd.
  • Surat Dist Coop Milk Producers’ Union Ltd, Sumul Dairy, Surat. Soc: 864, Mems: 160,000. Av Milk Proc: 300,000 lpd.
  • Surendranagar Dist Coop Milk Producers’ Union Ltd, Surendranagar. Soc: 486, Mems: 31,000. Av Milk Proc: 30,000 lpd.
  • Valsad Dist Coop Milk Producers’ Union Ltd, Vasudhara Dairy, Valsad. Soc: 348, Mems: 35,900. Av Milk Proc: 74,400 lpd.
    Plant Layout

Plant layout is the overall arrangement of the machine tools, handling equipments, storeroom and other various accessories required for facilitating production in a factory. These arrangements are pre-planned with the results that the building has been constructed to fit a layout of a given process.

AMUL plant is indigenously worked out with facilitation of various production processes and production of multi products under one plant. The total plot is nearly about 2.27 kms. Separate buildings are provided with required arrangements of machine tools handling and computers connection through the control room to fit for varying product-manufacturing departments.

The plant is engaged in producing milk, ice creams, milk powder and ghee. Entire department is uniquely provided with facilities for the processing each product. There are 4 production departments and packaging departments pertaining to each product respectively.

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Thus, plant layout encompasses all production and service facilities and provides for the most effective utilization of the men, materials and machines constituting the process.  It is the master blue print of coordinating all operations.

A good layout results in elimination or minimization of accidents and hazards and cost while increases the output. Thus a good layout specifically is observed to be beneficial on the following grounds:

  • Efforts minimization
  • Fewer material handling will be provided manufacturing units cost will be lover
  • Bottlenecking of production will be eliminated
  • Total item in process will be less
  • Specialization ...

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