The cooperative sector is the best model for the growth of Bharat: RS Sodhi

Few Indian brands enjoy the recognition and reputation of Amul. The dairy giant is now expanding its portfolio of dairy products and is launching into new products such as frozen vegetables and fruit. In an exclusive interview, RS Sodhi, Managing Director of Amul, talks about his plans and the bigger role Amul must play in the cooperative sector. Extracts:

Competition will bring more transparency, better prices for farmers and better products. It will also help us keep working on innovation and supply chain expansion.

Q / What are Amul’s expansion plans?

A / Amul’s expansion plans are based on how much milk we’re going to get. Usually every year there is an expansion from Rs800 crore to Rs1,000 crore. We get 9 percent more milk, which means 25 lakh liters. This means an investment of Rs1,000 crore. We invest in Gujarat and abroad in various categories of products.

We are developing in fresh products (milk, curds and buttermilk). A dairy of Rs500 crore is being set up in Rajkot; land is allocated by the state. Within two years, large dairy factories will also be established in Bagpat, near Delhi, Varanasi, Rohtak and Kolkata. The total investment would be between Rs300 crore and Rs500 crore.

We are also targeting Rs 1,000 crore in exports. Amul exports to 55 countries, but mainly to neighboring countries.

Q / What are the new technologies that Amul is introducing?

A / In dairy production, we recently introduced two new technologies and they are working very well. One is the sorted sex semen, so 95% of the calves born are females. The technology is subsidized (70% to 80%) for farmers. Second, embryo transplantation, which helps to increase the number (of high yielding cows). Usually, a cow gives birth to only one calf per year. Through embryo transplantation, 100 to 150 calves can (come from the same cow) each year, as the embryo can also be transplanted into a non-productive cow. The calf will have the genes of a good bull.

Milking machines are now no longer used. Each machine costs Rs50,000. As not all farmers can afford, we have mobile machinery.

For milk collection, we are working on solar-powered bulk milk coolers. In addition, our tank trucks can measure fat and other parameters and feed them into the system even as milk is being pumped into the tank truck. This ensures that no one changes the quantity and quality of the milk.

We recently built Asia’s largest milk powder factory. We’re also working on a technology that can store perishable candies like barfi and kalakand for up to 45 days.

Q / What are the new products in the pipeline?

A / New variations of butter and cheese, and we are investing a lot in traditional Indian fresh sweets. We want to make these products and paneer fresh in factories closer to the areas of consumption, and not at the central level of Gujarat.

We are working on high protein dairy products. We will add more markets for products like atta (flour) and honey. Bakery, frozen fruits and vegetables are other areas in which we are developing.

Q / There is a buzz around organic and healthy food.

A / It is a growing category; at the moment it’s very niche, small and scattered. In dairy products we can certainly work. But in fruits and vegetables, we will have to go into the main category first and then organic. India’s organic market is Rs4,000 crore to Rs5,000 crore per year.

In the fruit and vegetable category, we will add organic. Planning is underway and it should happen in a year. We have a forward distribution in the market, unlike others. We also have a pan-Indian frozen food chain. No other company has this advantage.

Q / What are the key issues before Amul?

A / Amul and the dairy industry therefore have the same challenge: how to increase the productivity of animals to reduce the price of milk. The price of milk is going up, but we need to make sure that milk and dairy products are reasonably priced for consumption to increase. It is about meeting these two diagonally opposed requirements by making the supply chain more efficient.

Another challenge is to dissuade the government from entering into free trade agreements for the importation of dairy products, as this would harm the interests of dairy farmers. So far, the government has responded favorably.

Another challenge is the propaganda of vested interests against milk, which is a universally accepted superfood and healthy product. PETA and other groups are launching false propaganda. In some countries there are special interests that do not want India to become a big force in the dairy industry.

The whole world is surprised at how well India is doing. This provides very good income for farmers in rural areas. There are 10 crore of farmers (families) in animal husbandry in India and Amul has 3.6 crore of farmers (families) under it.

Another challenge is to keep Amul a contemporary and modern food brand for young people and villages. It is the only food brand accepted by all age groups, income groups, geography, castes and religions. It is about keeping this brand image intact. The brand must be modern, contemporary and innovative. It is not easy. Any decision you make, whether it’s packaging, technology, pricing, or policies, you need to see that it doesn’t harm that image in any way.

Q / How do you see the competition from private dairies?

A / Liberalization took place in 1991. Many dairies were created, many survived and many closed. There is room for everyone. In India, the dairy sector is worth Rs9 lakh crore and the organized sector is worth Rs3 lakh crore. In another decade, the organized sector may be worth Rs10 lakh crore.

Competition will bring more transparency, better prices for farmers and better products. It will also help us keep working on innovation and supply chain expansion.

Q / Does Amul help others to start cooperatives?

A / Co-operatives hold 60 percent of the market share in India. And all of them are from the knowledge and experience of Amul. This has been happening ever since Dr Verghese Kurien formed the National Dairy Development Board in 1965 to replicate the Amul model through it.

In 2010, we decided to increase our milk purchases outside Gujarat. So we get milk from other states, including the northeast. We help the cooperative sectors. For example, we promote the Union of Milk Producers of Jammu and Kashmir. It is now an Rs300 crore industry. We are also helping Andhra Pradesh to set up a cooperative.

Q / Union Cooperation Minister Amit Shah has said he has high expectations of Amul.

A / It is because, if India is to grow, Bharat must grow. Bharat means small workers and small farmers. For this, the cooperative sector is the best model in which they are not exploited by intermediaries.

The cooperative is the way of doing small businesses by small people, through small people. India is a country of small farmers, entrepreneurs, retailers and consumers. And only cooperatives can support these segments.

Cooperatives are the only way to distribute wealth and eliminate income disparities. I think the government has realized this, and Amul is the proven, cost effective and well recognized model that the government would like to replicate.

Virginia S. Braud