Amul Emerges As World's Largest Pouched Milk Brand

Anand, Gujarat, India

The Gujarat Co-operative Milk Marketing Federation Ltd. (the marketing body of Amul), the apex marketing federation of 13 district milk unions of Gujarat, having a membership of 26 lakh milk producers, has crossed another milestone. During the financial year 2006-2007, GCMMF registered a 13.4 per cent growth to reach a record turnover of Rs 4277.84 crores (Rs. 42.77 Billion), making it a billion $ organisation.

Disclosing this at the 33rd Annual General Body meeting held at Anand on June 14, GCMMF Chairman, Shri Parthibhai G. Bhatol said this is an extremely impressive growth when viewed against the ban on exports of skimmed milk powder and the massive loss suffered by our farmers due to floods during the monsoon season specially in Surat district.

In spite of the adverse weather conditions, total milk procurement by the member unions during 2006-07 averaged 67.25 lakh kgs. per day representing a growth of 4.5 per cent over 64.38 lakh kgs. per day achieved during 2005-06. The highest procurement was recorded during January 2007 at 84.09 lac kgs. per day.

Analysing the business performance of GCMMF during the year, Shri Bhatol informed that the Federation had done remarkably well in most of the value added products. Sales of Amul milk in pouches have grown by 40 per cent in value terms. Similarly, sales of ghee in Amul and Sagar brands have grown by 28%. UHT milk has shown an impressive value growth of 25%. With the highly successful launch of Amul Kool cafe, sales in the flavoured milk saw an exponential increase of 55%. Amul reaffirmed its status as the undisputed leader in the ice-cream segment. In line with the policy of continuous innovation, pro-biotic and sugar free ice-creams were launched to cater to the growing health conscious segment. In the health spread category, Amul Lite and Delicious Margarine had a combined growth of 58 per cent in sales value. Cheese, Butter, and Milk Powder managed to register double digit value growth despite intense competition in these categories.

During the year, the member unions took a revolutionary step in integrating liquid milk marketing operations in all districts of Gujarat under the common Amul brand. This has enabled all member unions to benefit immensely from the substantial investment made by the Federation in advertising Amul milk on national media. Amul has now possibly emerged as the largest milk brand in the world.

Commenting on the state of the Indian economy, Shri Bhatol said that with our GDP surpassing one trillion $, we have emerged as the eleventh largest economy in the world. Paradoxically, we continue to languish at the 126th rank among 177 countries on the Human Development Index. With more than 70 per cent of our population residing in rural areas, no strategy can be successful if it does not place adequate emphasis on rural India. If our nation is to witness true development, then our dairy cooperatives will have to play a vital role in transforming the socio-economic landscape of rural India.

Shri Bhatol said "Cooperatives have played a significant role in promoting agricultural and rural development. The Amul model of dairy cooperatives has contributed immensely to the fact that India has progressed from a milk deficit country to emerge as the largest milk producing nation in the world. The dairy cooperative movement has resulted in a significant improvement in quality of life parameters which form a part of UNDP's Human Development Index. "

The ban on exports adversely affected the export performance of GCMMF. During the year the export turnover of GCMMF decreased from Rs. 134 crores during 2005-06 to Rs. 60 crores this year. Shri Bhatol said "the ban on exports would definitely be considered a retrograde step. Since the ban in February this year, the international skim milk powder (SMP) prices have increased from US $3000 per MT to US$ 5000 per MT. Our milk producers are obviously sustaining an opportunity loss of US$ 2000 per MT in terms of additional realization that they could have obtained and its consequent impact on the whole range of products". He added further "the move to ban exports is hurting us since India shall not be able to export part of surplus at the prevailing international prices that are better than the current domestic prices."

Under the new world trade regime ushered in by WTO, only cooperatives can protect the poor farmer and the consumer from the adverse effect of free world trade. Unbridled privatization is likely to have an adverse effect on the weaker sections of milk producing population in terms of reduced employment opportunities and higher cost of input. Shri Bhatol said "it is quite apparent that only producers' cooperatives which have the benefit of enlightened leadership and professional management are capable of promoting socio-economic development in the country".

The Amul model came into existence to protect the farmers from economic exploitation by middlemen. Recently, dairy farmers in Europe went on strike because they were not getting sufficient price for their milk from large retail chains. The experience from western world clearly demonstrates that large retail chains may not serve the interest of farmers. If due care is not taken, even the Modern Format Stores will end up exploiting the rural producers as middlemen have done in the past. Across the world it has been observed that the farmers' share in the consumers' rupee keeps on declining due to the rising bargaining power of super market chains. This phenomenon will definitely take place in India within the next few years. To counter this GCMMF has decided to set up Amul Preferred Outlets across the country. GCMMF ventured into organized retailing in 2002 with a view to get closer to the consumer and provide him with the complete brand experience. The entire expansion drive is based on the franchisee route adopted by GCMMF which means an employment opportunity for thousands of enterprising Indians. The retailing operations would not only help farmers and small time entrepreneurs to counter the onslaught of Modern Format Stores, but would also help consumers to completely relish the Amul brand experience.

Shri Bhatol concluded that, "We have been serving as the role model for dairy cooperatives across India for more than half a century. We need to ensure that we continue to inspire other dairy cooperatives in a manner which will enable them to play a lead role in socio-economic development of their respective regions. A strong dairy cooperative movement in the country will generate a momentum so powerful that it will propel Indian economy and society to occupy centre stage in the global scenario."

Source: Amul (Business Wire India)

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