Amul takeover of Chittoor Dairy, a welcome step

It was recently reported that Amul is going to take over Chittoor Dairy per the MoU entered with the State government. Chittoor Dairy was once a successful Vijaya Dairy unit in the State and went out of scene by 2002. By then several private dairies had started their operations in the district. This includes one reportedly backed by a political rival of the ruling party in Andhra Pradesh.

Recently, Andhra Pradesh Chief Minister Y Jaganmohan Reddy too referred to the dairy concerned as a ‘conspirator’ to destroy Chittoor Dairy. That said, there have been reports of private dairies sabotaging the cooperative dairy in the district.

During one of our field studies during 2004 in the district, farmers pleaded with us to help them revive their cooperative. Interestingly, they admitted to playing a role in destroying it. They were lured by an additional 50 paise per litre of milk offered by private dairies. They were members of Chittoor Dairy which reached 2 lakh litres per day capacity and offered several associated services like artificial insemination, feed, fodder and veterinary care.

However, the private dairies promised quick payment compared to lagged payment from the cooperatives. All the members started giving milk to private dairies and were happy.

Their happiness was short-lived as they started getting lower payments for spoilt milk anywhere in the milk supply line. They also missed the other tangible and intangible services that helped the upkeep of their livestock. The repentant farmers narrated all these aspects.

This story brings out an important flaw in the cooperative movement. Cooperatives members acted as mere customers, rather than owners. Many cooperatives became dysfunctional precisely for this reason.

Therefore, instead of blaming private dairies for the demise of cooperatives, we need to make cooperatives emerge as winners in the competition. Member education, especially in helping them see through the short-term temptations of higher price at the expense of the long-term value of being together, is crucial.

A cooperative or any member-focused organisation is best suited for dairy producers, as the success of Hatsun Agro Products (Arokya milk) reflects. Any dairy firm thinking of milking the producers will have a limited life as there are many elements in the relation between the producers and the dairy unit. Producers expect efficiency in services, and the dairy unit, stable but quality supply. In this context, taking over of Chittoor Dairy by Amul, a powerful brand internationally, is a welcome step. The objection to Amul taking over the dairy is frivolous. It has been said that Amul is an outsider, which will be given a large chunk of land on lease. This looks frivolous in a globalised world where even international brands can operate in the country.

Objecting to Amul, a cooperative body, is not in the interests of the farmers. Amul or no Amul, dairy farmers need a strong organisation to withstand competition from private dairies. The present opportunity to revive a dairy after two decades of inactivity needs to be grabbed.