Around 30% of Milk cooperative societies in Tamil Nadu are dormant

Tamil Nadu’s dairy industry has historically been strengthened by the network of cooperative milk societies. Today, around 30% of the primary milk producers’ cooperative societies are dormant.

Tracing the history behind these dormant societies is important and relevant in the light of the Narendra Modi government’s farm laws, to explain the possible impacts of these laws on the agricultural sector, especially on the small and marginal farmers.

Tamil Nadu currently ranks 10th in milk production in India. It is an important economic activity for small households, small and marginal farmers and landless agricultural labourers across the state. Until the 1990s, rearing cows was an essential part of rural life. The households which may not have cattle rearing as their primary source of income also generated a minimal income from milk production. And this was primarily with the women of the family. Women took care of the cattle, and after setting aside the milk needed for the family, sold the remaining to the local community.

Tamil Nadu Dairy development program

The dairy industry took a new shape when the Tamil Nadu Dairy development department was formed in 1958. This created a network of cooperative milk societies across the state. It is a three-tier system with the Primary Milk Producers’ cooperative society at the village level, District Cooperative Milk Producers’ Union at the middle level in the districts.

The Tamil Nadu Cooperative Milk Producers’ Federation (TNCMPF) was set up as the apex body at the state level. In 1981, the TNCMPF took over the activities such as milk procurement, chilling, processing, packing and sale of milk to the consumers etc., from the Tamil Nadu Dairy development corporation.

The primary milk producers at the village level registered themselves with the society. Each society had at least 25 members. The office bearers of the society at each level were elected by the members. These representatives along with the government officials arrive at the pricing from time to time. The society shared its profit with the milk producers.

Even a household that produces just 2 to 5 litres can drop off their produce in the society if they are a member. The volume did not matter. This led to more and more small farmers and landless agricultural labourers getting into the industry. The bovine milk production saw a considerable rise in 1970s and 1980s.

Society Foot print in Tamil Nadu

There are 12585 Primary milk cooperatives at village level, out of which 2,075 are exclusive Women Milk Producers Co-operative Societies.

This story saw its twist in 1992 when the government of India formulated “Milk and Milk Products Order” with a view to permit private dairies to enter into the dairy sector. It was told that this was to increase the availability of milk and milk products through the organised sector.

Private dairy companies started setting up their procurement centres in villages. They followed a door to door strategy. Private companies first approached the small and marginal milk producers individually. They were given attractive offers ranging from higher procurement prices to free cattle fodder. Gradually these small milk producers drifted away from the cooperative milk societies and started selling their produce to these private companies.

If you have to sell your produce to the society, you need to personally go and drop your produce there. The produce will be weighed, tested and procured. An entry will be added to your account held with the society. Periodically the account will be settled.

But these private companies offered ready cash. They picked up the produce from your doorstep using their own vehicle. This seemed comfortable for the milk producers.

Private companies in milk procurement

After securing the small milk producers within their network, the companies started bargaining on the price. It is important to note that this bargain was again on an individual basis. The prices offered by different producers in the village were compared. The milk producers, who were partners in a society, now became competitors. They started bidding prices against their neighbours. And the private companies gained through fueling this competition.

Then they introduced various systems like quality control etc., and found reasons to reject a produce, thus making the milk producers anxious of procurement. They put the milk producers on a spot where they were forced to follow the guidelines and instructions of these companies in order to get their milk procured. They also started providing loans to set up the infrastructure to follow these guidelines. Thus, these small milk producers became indebted to these companies on a great scale.

The milk producers who had a collective say in the prices as members of the society, did not have any such with the private companies.

Meanwhile with the drop-out of milk producers from the societies, many societies lost their membership. A society can be registered with the federation only if it has at least 25 members. If the numbers go below 25, the society automatically loses its legal stance. Further many societies became dormant with no procurement. The Tamil Nadu Government states that presently there are 3831 dormant societies which is 30% of the total milk societies registered

Declining number of active societies

The roots of this large network of milk societies that were established with a huge effort spanning 23 years from 1958-1981, was shaken. Once a society has lost its legal stance, it is not easy to re-establish it.

After 15 years, the milk producers are slowly realising the trap that they have fallen into. Some villages are trying to re-establish their societies and revive societies that have been dormant. But by then, many small and marginal milk producers are already out of the industry.

This is exactly the path that the agricultural sector will travel on, if the provisions of the recent farm laws are implemented. Indian agricultural economy is highly dependent on small and marginal farmers. It is not like western agricultural economies where the definition of a small farm is 100 acres. The Land ceiling Act  limits agricultural land holdings to 15 acres for a family of 5 members and an additional 5 acres for each additional member. The overall limit is 30 acres. So even a farmer who claims to be a large-scale farmer cannot hold more than 30 acres, unless it is owned by a trust or a registered company.

Today there is a clear governmental machinery that decides on the minimum price of each agricultural produce. There is a network of registered farmers associations at village levels which are linked to the agricultural department of the state government. These associations along with the government officials decide on many factors from distribution of irrigation water to pricing of commodities. This network will be bypassed, and individual farmers will be dealing with the private companies directly on pricing. This is exactly what happened with the milk societies.