Does India have room for a dairy behemoth?

Context:

Many cooperatives are struggling financially. In this situation, creating a pan-India mega-brand will be hard.

India’s Milk Scenario:

Kaira Union introduced the brand Amul for marketing its product range in 1955.
In the decades that followed, India built one of the most formidable dairy cooperative movements globally.
Per capita milk availability grew over four-fold, from 107 gm per day in the 1970s to 427 gm in 2021, despite a growing population.
Farmer members of cooperatives receive between 75-85% of what the consumer pays for dairy products. This compares with 25-50% share in other farm products.
Milk is the largest farm product valued at close to ₹10 trillion annually.
India is also the largest producer of milk in the world—accounting for a fifth of global output—even though productivity per animal is low.
Top 5 states of India in contribution of milk output are Uttar Pradesh, Rajasthan, Madhya Pradesh, Gujarat and Andhra Pradesh.

Operation Flood:

Associated Organizations:

Amul is the largest fast-moving consumer goods (FMCG) brand, surpassing the turnover of giants like Hindustan Unilever by a wide margin in 2022-23.
Nandini is the second largest dairy cooperative, Aavin in Tamil Nadu, Milma in Kerala, Gokul in Maharashtra, Verka in Punjab, Saras in Rajasthan, and Sudha in Bihar (the largest cooperative in eastern India).

Challenges faced by the Dairy Sector:

Financial Struggle:
- Many are struggling financially.
- A 2020 research paper on farm value chains published by the Indian Council for Research on International Economic Relations (ICRIER), Delhi, found that 95 of the 175 milk unions it studied were in loss.
- The bulk of loss-making cooperatives—55 out of 95 unions—were from Uttar Pradesh, the largest milk producing state.
No attempt to restructure these co-operatives:
- Neglect of restructuring adversely affected the efficiency and accountability to farmers, which led to a collapse of cooperatives in states like Uttar Pradesh.

Merging Decision (White Revolution 2.0):
- A pan-India mega brand may dilute the spirit of decentralization and deviate from Kurien’s idea of hundreds of Amul-like brands across India, some feared.

‘Easy to destroy’:
- It is a thought process aligned with present-day political realities.
- Dairy cooperatives entering another state may increase competition, transparency and efficiency in the dairy value chain. But the larger the cooperative, the lesser its accountability to members.
- Further, they become more vulnerable to a technocratic capture with a select few taking all decisions.

Conclusion:

There can be some benefits of a multi-state cooperative giant at a national level—like advantages of scale, regional balancing and logistics, but these do not add up to much. Government needs to take appropriate steps after consulting and taking care of regional levels.

News Source: Livemint