Dairy Is A Source Of Livelihood For 100 Million Farmers In India, Emphasizes R. S. Sodhi, Managing Director, Amul India

I WOULD LIKE TO DEDICATE THIS AWARD TO FARMERS BECAUSE THE FAITH THAT THEY HAVE IN US AS PROFESSIONALS IS AMAZING. ONCE THEY COMMIT THEIR CONFIDENCE, THEY DO NOT QUESTION DECISION MAKING, ABILITIES OR PLANNING.

I would also like to dedicate the award to the team – I may be its face, but everybody works. We are lucky to have such a good team, one has to give one’s life to a cause and only then can this cause be achieved.

A big thank you to the Rotary Club of Bombay.

Bombay is important for Amul. Our Founder Chairman, Dr. Verghese Kurien always said that if Bombay had not been there, Amul would have not been there. Amul was founded because of Bombay, which was the market given to the farmers of Gujarat who started their first sales to Bombay then. Initially, for more than a few decades, Amul was dependent on feeding the Bombay market.

We were founded after your Club was founded, in 1946. So the British gave permission to start supplying good quality milk to Bombay.

My topic today: crisis management during the pandemic – Amul has been lucky as we have not been impacted much. Simply put, for the food industries overall, come what may – floods, disasters, or a pandemic, food is the one thing not affected.

During the first few months of lockdown, right from morning to night and throughout the day, the one common topic was food – what to cook? Who will cook? Where to buy ingredients from? Who will take the pictures? Who will upload it on social media? So, we have been lucky. When you consume more food at home, you buy more ingredients of better brands, things that are immunity-boosting. So, food is the one industry not impacted by anything but the number of stomachs and we have been lucky that we have 1.35 billion stomachs growing rapidly and that too with more disposable incomes.

People eating more and including fat and protein in their diets which is good for dairy products. The food industry is the biggest industry, about US$ 550 billion or Rs 40 lakh crore, out of which dairy is Rs 8 lakh crore and the organised sector in food is around Rs 5 lakh crore out of which dairy is Rs 2.5 lakh crore. It is the biggest industry in India. It is bigger than the combined value of wheat and sugar put together and it is growing at the rate of five per cent and organised is growing at 12-13 per cent.

So, we were under lockdown but two things were not under lockdown – one is our six million cows and buffalos in Gujarat that had to be milked every morning and afternoon. Similarly, our consumers all across the country also needed to be fed. Our job was to ensure that this supply chain remains uninterrupted, that was the job given to us. This supply chain is C2C or B2C – Cow to Consumer or Buffalo to Consumer and Amul is today the biggest FMCG with Rs 52,000 crore turnover. This is because people are eating more and we are somehow able to produce more.

The philosophy of Amul: we are owned by our suppliers who are small producers. We work on one basic principle which was given to us in the beginning by our founders right from Sardar Vallabhbhai Patel who told farmers to form the Amul Co-operative Society because they were being exploited by trade forces in 1940. Hence there was a need to aggregate, market and own the supply chain C2C. So, the basic principle was value for money and value for many, i.e., providing a tasty and good product to consumers, using the best technology, at affordable prices and providing a stable price to suppliers with 100 per cent farmer involvement – not a single penny goes to the government or anyone else. So, give more to earn more!

Coming back to the supply chain, we collect milk from farmers at 18,500 milk collection points from village co-operative societies. From there, milk is electronically tested for quality and quantity, untouched by hand, then chilled and transported to the nearest of 84 dairy plants or 200 chilling stations through insulated tankers. After processing, milk is sold throughout India.

Amul is the number one brand across India except in the South. We have four types of distribution, one for ambient products (like milk powder, ghee), chilled products (butter, cheese, shrikhand), frozen products (ice-cream and paneer) and fresh items (fresh milk, curd, yoghurt) which need to be distributed to the consumers within 4-5 hours of packing.

This supply chain needed to work smoothly during the pandemic. We were lucky that right from day one, milk was announced as an essential commodity. We knew it would be so, given the past experiences of curfews in the 90s.

Crisis management is communication! It is because of communication that the preparation began two weeks prior to March 24th, 2020, to undertake safety measures and sanitise everything including the milk tankers. Around March 16th, 2020, we began to discuss how things would be managed in case of lockdown. We began to dispatch more products during the second and third weeks of March, envisaging a temporary interruption of supplies in case of lockdown. We discussed operations and SOP changes with farmers, dairy plants, and warehouses.

When, on March 24th, 2020, the lockdown was declared, we expected panic. My wife said nothing would be available the next morning – no curd, butter or milk, so we should buy some. I walked down to the nearest Amul parlour and saw many people buying there. I got only 200 gm of butter and two 200 gm of curd. I realised then that there is panic buying and if this is happening at Anand, what would be the situation elsewhere in India? I shot a small video about it saying that the milk was exempted and I tried to assure all the farmers that we would collect milk, so, don’t panic. Similarly, we tried to reach our consumers to convey that milk would be available, there was no need to panic, and they should buy only what was required.

We must have done more than 50 communication videos that first week. We were also talking to more than a hundred Collectors, Chief Secretaries, and the IG of Police. I got calls from the highest authorities who expected us to continue supply and, in case of any problem, communicate with a point of contact provided by them. We got calls from ministers in Gujarat and Maharashtra after which we had to double milk production in Maharashtra as other companies had stopped supply and we needed to assure everyone that milk would be provided.

The other thing we did was provide incentives of 40 per cent extra wages or compensation to everyone, because those working were doing their best, taking risks. We did this because unorganised players had stopped taking milk, smaller players too, and we had begun to get more milk. We began paying our labour more, workers got 20-30 per cent more wages and, besides, everyone got all meals free. These incentives helped. We communicated to them that this is your duty and you have to work for the job, but this was not just job responsibility. In this hour of crisis, it was a duty to the nation to provide nutrition to consumers at home.

There were some problems like packaging material supplies not being allowed, for which we spoke to the Ministry of Home Affairs, took permissions, and went ahead. We got the biggest help from the railways. What would have taken seven to eight days to reach the North East, took just three days because there was no passenger traffic.

In normal times, you can communicate with farmers through banners, employees through emails and messages, but the only way to communicate with the consumers was through advertising. We doubled our advertising spend during the lockdown. On March 17th, 2020, we saw that everyone was watching the news because of the pandemic and people had stopped advertising. March was year-ending, so we immediately told our agency to talk to the TV channels that if we doubled our spend, would they give us a good bargain? Everyone gave us one plus one.

The other thing everyone was watching was epics like Ramayana and Mahabharata, so we sponsored them. For the first few weeks, we were the only ones advertising in these epic programmes. We thought that since everyone was at home, family viewings would happen. At my home, my father, daughter, grand daughter and myself were watching the same TV. So, it was the best platform to advertise upon and we thought we will get 5x benefit and it was a jackpot.

We got the serials at 1/10th the cost of last year’s IPL. And our viewership was 10x. So, we got 100x benefit. Through communication to consumers, we were not just visible but also available. We produced, transported, sold and were visible and managed the whole supply chain. In those first hundred days, we paid Rs 14,000 crore cash into the economy of Gujarat and extra.

After the initial panic, demand for fresh products declined by 15-20 per cent. While all other cities were selling, Bombay was in minus. The best sign to tell us how many people are in the city is the sale of milk. Bombay and Pune in Maharashtra and Surat in Gujrat were impacted. Smaller city sales increased because people shifted/ migrated. The sale of cheese, paneer increased 30-40 per cent because people started cooking at home more. Amul meets the genuine product parameters so we were lucky to have the increase, but ice creams’ sales were low. Today, also, it is about 10 per cent minus. As ice cream was not selling, the whole frozen product supply was lying idle. Fortunately, we don’t have a separate ice cream plant, but because we have demand in other products, so we shifted the supply chain of workers from frozen products to fresh products. So, one has to look at the positive points.

We realised that even after the lockdown, people began to consume branded, quality, and trustworthy products to boost immunity. It has gave us an opportunity. It will help by because, in another 10 years, it will create around 1.2 crore jobs. Animal husbandry will provide large-scale employment.

We have many challenges, the biggest of them being that India is a growing economy. India is the fastest growing country in the food sector and every country wants to come to India to evolve and exploit its growing market. We have to keep India’s food market safe for Indian consumers.

Atma Nirbhar – Vocal for Local helps! Milk is the best example. Another challenge of PBB, plant-based beverages – we are happy that somebody is promoting a new sector but the threat is that they are denigrating animals and saying that plant-based is nutritionally superior to milk and that there is a cruelty involved in producing milk from animals. But animal milk is the only food which is complete with the right type of protein, fat, and vitamin. It is natural secretion; nothing added in it and can’t be compared to PBB.

Milk gives lactose which helps develop brain cells. As for cruelty, a cow gives six litre of milk every day and a calf drinks about 400 ml. if you don’t milk the cow, it will become toxic and the cow may die. Then, if farmers don’t get economic value by selling or consuming milk, why should they feed and breed 30-40,000 cows and buffalos in India? Imagine where will the 60 crore cows go if they stop? Is it not cruel? In short, I can tell you that we were lucky that we were allowed to work and operate our supply chains and everybody has given their best.

To conclude, I would say Amul is what it is today because Bombay’s consumers wanted fresh, good quality milk. I request consumers to recognise the importance of food; we must appreciate, encourage and motivate the person who is growing food, especially farmers, if we want the next generation of farmers to continue dairy farming so, that our next generation gets good quality food. We should not feel bad if there is Rs 2 increase in food. That increase is the increase in the income of about 10 crore dairy farmers in India.

What is the reason for Amul’s resounding success compared to the failure of the sugar co-operatives of Maharashtra?
The reason for Amul’s success, which is true for any organisation, is leadership. We are lucky to have a self-less dedicated political leadership in Shri Tribhovandas Patel who founded Amul, and a committed professional leadership in Dr. Verghese Kurien. It is a fusion. Somebody once asked Dr Kurien, ‘If we have a bhundred Kuriens in India, can we have self-sufficiency across India?’ Dr Kurien replied, ‘We don’t need a hundred Kuriens, we need ten Tribhovandas Patels to attract, retain, motivate and protect professionals.’

In 1948, when Dr. Anand landed in Anand, he was on a six-month apprenticeship. He wanted to go back after completion. Before his departure, he advised Tribhovandas Patelji to pasteurize the milk because it was curdling and there was no money. Tribhovandas Patel gave his wife’s money to take loan from a bank and offered the money to Dr. Kurien to go and place an order in Bombay. So, you can’t expect the government to do this, it has to be bottoms-up and it has to be political and professional leadership. This model can work in any business.

You have the infrastructure for frozen products like ice-creams – will you let the government use that infrastructure to transport the vaccine to other parts of country?
We have a pan-India logistics; we have a cold storage right from Leh to Coimbatore and we would be happy to serve. We also started distributing masks during lockdown while there was shortage and corruption. We do whatever we can with our infrastructure.

Why did you resist India signing the Regional Comprehensive Economic Partnership (RCEP)?
Dairy is a source of livelihood for 100 million farmers in India, while in other countries in Europe, it is a business. In the case of New Zealand, there are about 6000 farmers. And they have thousands of acres of free pasture land for grazing cows and milking them. Our average farmer with two or three cows/buffaloes cannot compete with rich business farmers of New Zealand.

RCEP opens the border for economy. We say economy has three things: capital, resources and human power. If you want, then open everything, including human power. We will allow dairy products from New Zealand as long as you allow one lakh farmers from Gujarat to migrate to New Zealand. Coming to China and Europe, they don’t allow dairy products from India. But we allow from Europe. When it comes to agriculture, every country has non-tariff barriers. Coming to competitiveness, when you give Rs 50 for milk in India today, Rs 40-42 goes back to the farmers in India, 80-85 per cent in Amul. In Europe, the farmer gets just 38 per cent while the in-between suppliers get one third each. So, ours is competitive and efficient. You can bring your capital, business expertise, knowledge but, please, buy milk from the 100 million farmers in India.