Market Environment of Amul Dairies of India.

University Degree Business and Administrative studies

INDUSTRY PROFILE

Dairy Industry: In a Globe

The recently passed US Farm Bill 2002, titled the Farm Security and Rural Investment Act of 2002 and signed by the US President George Bush, provides for continuation of the existing Milk Price Support Program. This would further depress international prices of dairy products and enhance subsidies.

Under this Bill, instead of reducing trade-distorting subsidies, the US Department of Agriculture's Commodity Credit Corporation is committed to buy unlimited quantities of butter, cheese and skimmed milk powder (non-fat dry milk) from dairy plants at prices that enable them to pay a minimum support price for the milk supplied by farmers.

Under a scenario where international prices are lower than domestic prices, traders can and do make quick profits without any big investment. But the interests of the large numbers of farmers with critical dependence on dairy may be totally forgotten.

Though WTO framework is based on free trade, European Union and the United States have bypassed and even openly violated their (WTO) commitments. For developed countries confronting saturation in their own markets, penetration into large developing countries is but a logical choice. This may be the reason why New Zealand Dairy Board has dumped a large quantity of butter oil into India at prices below $ 1000 per ton, whereas the prevailing international price is around $1300 per ton.

In simple terms, New Zealand's butter oil made available at Rs 64.54 per kg is roughly cheaper by Rs 15 a kg, compared to the prevailing international prices of Rs 87.40 per kg.

DIAL-A-MARKET …. TO INDIA

Dairy industry in India has come a long way from dependence to self-reliance as the total amount of milk produced more than tripled from 23 million tonnes back in 1973 to 81 million tonnes in 2000.

Interestingly, it's the single largest contributor to India's GDP and involves as many as 80 million small farming households. The social impact of developing the dairy industry has thus been profound. With the opening up of the Indian market to an influx of foreign goods, much concern has been expressed over the state of the Indian dairy industry.

Indian milk farmers are paid on the basis of the value of fat in the milk. In the last one year, due to lower realisation of ghee prices, there has been approximately 15 per cent erosion in the milk value realised by the farmers. A further drastic decrease in the milk fat price would be enough for the farmer to exit the dairy industry. If the undervalued imports are not checked, then all the gains achieved by Operation Flood may be wiped out.

But this is just the beginning. What happens when imports of highly subsidised milk powders follow and domestic milk production and supply is taken over by reconstituted milk?

India has the world's cheapest milk but unfortunately costliest of milk products. It may be due to cost diseconomies, process inefficiencies and poor yield. In post-WTO regime cheap foodstuff need not necessarily mean poor quality. It could be a very high quality product from the developed countries, available at low prices due to lower tax barriers. I think we have already started to feel the heat of such market changes with multinationals and domestic majors like Amul improving their product mix and package.

Being a large country with small milk producers even a slight signal of a shortfall or surplus in production tends to influence its interests. While developed countries may have evolved better institutional mechanisms to protect the interests of farmers and processor, this is not the case with India.

Indian milk production, however, in contrast to other milk producing countries, is characterised by lakhs (millions) of small and marginal farmers including landless milk producers for whom it is not only a business but also the main source of earning.

Technology and management are both important factors affecting the competitiveness of India's dairy sector. We need latest technologies to produce high quality products at low cost and professional management to utilise optimally the industry's human and financial resources.

We can successfully meet the emerging challenges and harness the new opportunities if we ensure widespread adoption of the latest available technologies for processing, packaging and marketing of milk and milk products, organise milk producers and professionally manage their organisations. I feel that there should be level playing games for all the countries under WTO rules

Since the country is not faced with milk shortage, innovative use of technology and proper resource management can help the industry to achieve export competitiveness in terms of price and yield and quality.

India has emerged as the biggest producer of milk with an output of 81 million tonnes in 2000-01, outpacing 72 million tonnes produced in the United States.

ORGANIZATION PROFILE

INTRODUCTION:

AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand.

Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India.

Today Amul is a symbol of many things.... Of high-quality products sold at reasonable prices.... Of the genesis of a vast co-operative network..... of the triumph of indigenous technology.... of the marketing savvy of a farmers' organization.... And of a proven model for dairy development. Gujarat Co – Operative Milk Marketing Federation is carrying out the activities of marketing the Amul Products.

50 years after it was first launched, Amul's sale figures have jumped from 1000 tonnes a year in 1966 to over 25,000 tons a year in 1997. No other brand comes even close to it. It was all because a thumb-sized girl climbed on to the hoardings and put a spell on the masses.

BEGINS WITH A MILK STRIKE

The first Amul co-operative was the result of a meeting of farmers in Samarkha (Kaira district, Gujarat) on January 4, 1946, called by Shri. Morarji Desai under advice from Sardar Vallabhbhai Patel, to fight rapacious milk contractors.

Decision: Milk producers' unions in villages, federated into a district union, should alone handle the sale of milk from Kaira to the government - run Bombay Milk Scheme. The government, British then, resisted the move. The farmers called a milk strike. After fifteen days the government capitulated.

This was the beginning of Kaira District Co-operative Milk Producers' Union Ltd., Anand, registered on December.

November 14, 1946, a similar Milk Unions came up in other districts too. They formed the Gujarat Co-operative Milk Marketing Federation Ltd. in 1973.

In the early days of Kaira Union there was no dearth of cynics. They had doubt if they could handle sophisticated dairy equipment, if they could process western-style milk products from buffalo milk, if they could market these to sophisticated consumers in cities.

The Amul people confounded the scoffers by processing a variety of high-grade dairy products, several of them for the first time from buffalo milk, and marketing them nationally against tough competition.

A MUCH-APPLAUDED BRAND:

Marketers who believed that only English-sounding brand names would succeed in post-British India were proved wrong by Amul.

Its production-networking and advertising have been much admired. The current Amul Butter advertising campaign ("utterly butterly delicious Amul"), with its topical one-liners, and preference for outdoor media, has now run for 30 years - probably the longest-running campaign in India, and the winner of the largest number of awards. The popular "Amul Butter girl" of the ads quickly found a place on the packaging.

Several Amul products are now leaders in their market segments.

The late Prime Minister Shri paid the ultimate tribute to Amul. Lal Bahadur Shastri. He wanted the Amul people to replicate the Amul model all over India. This is what National Dairy Development Board (NDDB) is doing under Operation Flood.

India now has 82640 village milk co-operatives with 9.16 million farmer-members. And some of the new Milk Federations, started with help from Amul technologists, have now developed their own successful brands, which compete with Amul products.

Hope and confidence beyond belief to farmers. Quality beyond price to consumers.

Gujarat Cooperative Milk Marketing Federation

GCMMF: An Overview

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organisation. 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.