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Harish Damodaran

MILK shortages in cities make news, more so when they occur in the capital of a country that prides itself as the world's leading milk producer. But if there is something that the current milk supply crisis in Delhi really exposes, it is the deep fissures that have developed in the dairy cooperatives movement. And, at the heart of this conflict are the two very organisations that catalysed India's White Revolution — the National Dairy Development Board (NDDB) and the Gujarat Cooperative Milk Marketing Federation (GCMMF or Amul).

That the capital's milk crisis has a lot to do with the NDDB-Amul spat, which, in turn, is a reflection of the complete breakdown of the cooperative spirit behind the `movement', is borne out by the following facts. First, the drying up of liquid milk supplies has little to do with "the cumulative impact of three years of drought".

Total milk procurement by cooperative dairies has risen from 165.04 lakh kg per day (LKPD) in 2000-01 to 175.96 LKPD in 2001-02 and 180.13 LKPD in 2002-03. And in Gujarat and Rajasthan — the worst affected States — procurement levels have gone up from 45.76 LKPD to 47.32 LKPD and 52.35 LKPD and from 8.87 LKPD to 11.04 LKPD and 12.48 LKPD, respectively.

The trend is not surprising because drought years typically see livestock and sale of milk emerge as the primary income source for farmers, leading to higher collection by dairies. Second, even assuming procurement has been affected, it ought to have mainly hit sale of products and not liquid milk per se. In times of decline in procurement, seasonal or otherwise, cooperatives usually maintain fluid milk supplies by curtailing their production of butter or ice-cream.

But in the present episode, the NDDB-owned Mother Dairy Foods Ltd (MDFL) has not been able to deliver consumers their daily quota of milk.Moreover, even situations of drought-induced shortages are often addressed by dairies through anticipatory planning and stocking up of powder and fat during the flush months (October-March), to take care of lean or festival season demand. In this case, MDFL, instead, chose to launch its butter in January and, in order to take on competition (read Amul), it began selling 500 gram packs for Rs 53-Rs 10 below market price. This scheme continued till July, by which time wholesale ghee prices had crossed Rs 140 per kg.

All this eventually boils down to poor planning, undermined further by misplaced "cooperative rivalry". Till last year, MDFL was sourcing one lakh litres per day (LLPD) of milk (going up to two LLPD during summer months), besides around 18,000 tonnes of powder and white butter from Amul.

From January 1, however, this arrangement was discontinued, even as MDFL also stopped buying 40,000-odd litres of milk daily from the Bihar Federation, for reasons not known.

Predictably, when crisis struck — the proximate reason being the crackdown on "synthetic" milk manufacturers, causing disruption in supply of even "normal" loose milk from Uttar Pradesh — MDFL was caught napping. With milk threatening to "do an onion" to the ruling Congress (I), the Delhi Chief Minister, Ms Shiela Dixit, was forced to approach the Amul Chairman, Dr V. Kurien, who readily agreed to supply daily 20 tonnes of powder and 50,000 litres of full-cream milk. It is a different matter though that the supply is being made not to MDFL, but to the state-owned Delhi Milk Scheme!

This is not to say that NDDB has been solely responsible for the present situation, where cooperatives are battling each other more fiercely than their traditional multinational and private sector rivals. Amul, in recent months, has started hawking its milk in markets such as Mumbai, Pune, Nashik, Nagpur, Jodhpur, Indore and Raipur, belonging to other State federations. The Maharashtra Federation and Rajasthan federations, in retaliation, are now selling milk in Ahmedabad.

Amul has further launched its ice cream in MDFL's original territory of Delhi. There is now talk of MDFL buying the Akluj Union's Shivamrut dairy in Vashi to launch its milk in Mumbai, even as Amul plans to shortly enter Delhi's liquid milk segment.

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