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Tuesday, May 28, 2002

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US co-ops: More value, less addition

Harish Damodaran


During 2000-01, India's milk output was estimated at 81.43 million tonnes (mt), making it the world's number one producer. As against this, the US produced 165.34 billion pounds or nearly 75 mt during 2001.

But the difference arises in the scale of operations. India's 81 mt plus milk production comes from a milch herd of around 100 million (60 million cows and 40 million buffaloes) and 70 million dairy farmers. Contrast this to the US, where the milch animal population (entirely cows) was assessed at 9.11 million in 2001, with the number of dairy farmers being a mere 0.11 million!

The contrast is also reflected in the operations of the Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF or Amul) vis-a-vis the Dairy Farmers of America, Inc (DFA) — the largest dairy farmer-owned marketing coop in the US. During 2000-01, GCMMF's milk unions procured 1.67 mt of milk from its 2.16 million farmer-members, of whom probably only half consisted of regular, day-to-day suppliers. As against this, DFA marketed and processed 45.6 billion pounds or 20.7 mt of milk from its 25,499 members in 2001.

For those sceptical about the role of cooperatives, it may be useful to note that DFA handled close to 28 per cent of the milk produced in the US last year. DFA's sales stood at $7.9 billion, compared to GCMMF's annual turnover of around Rs 2,500 crore or $500 million.

The average price paid by DFA to its producers in 2001 was $15.22 per hundredweight or Rs 16.9 per litre, which again was much higher than the Rs 9.5-10 per litre received by GCMMF farmers. And to be sure, not all of this higher realisation was due to superior `value addition'. As much as 75 per cent of DFA's product sales came from fluid milk, which is actually much higher than that GCMMF's corresponding figure of 50 per cent.

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