‘The challenge is to get Gen-Next interested in dairy farming’

What started with two villages and 250 litres of milk a day in the 1940s is now a Rs 13,765-crore dairy major. After becoming a national brand, Amul, owned by Gujarat Cooperative Milk Marketing Federation (GCMMF) is facing a new challenge – of meeting the increasing demand from across the country.

In an interview with Business Line , GCMMF Managing Director R. S. Sodhi outlines the strategy to increase milk procurement and processing to keep pace with market requirements.

What is the biggest challenge for Amul today?

With rising disposable incomes, there is growing demand for milk and milk products.

To meet this, we need to expand our network of dairy farmers rapidly. The challenge is to get the next generation of dairy farmers interested in this occupation. Children of dairy farmers are educated and do not want to get up early in the morning to take out milk and repeat the process in the evening all days of the year, with no holidays. They prefer employment in factories with a fixed pay and holidays. To get them to work for us is the biggest challenge.

How will you meet this challenge?

In the last four years, we have increased the prices paid for one kg milk fat by 68 per cent to Rs 485.

High remunerative milk procurement price to farmers has helped us win back their interest in milk production. We are also helping the next generation to get into commercial and scientific dairy farming.

Commercial dairy farms typically have over 30 cows or buffaloes where machines are used for works like milking the animal.

We are also providing training to farmers about advanced technology used in breeding and healthcare. More than 5,000 dairy farms have come up in Gujarat in the last three years due to these initiatives. Making dairy farming more glamorous and vibrant is the way to keep Gen-Next interested in the business.

Is commercial dairy farming more remunerative, and enough to sustain Gen-Next’s interest?

Yes. If farmers own the land, they can earn more than Rs 40,000 a month after meeting all expenses in a commercial dairy farm with 30 animals.

Since processes are scientific, both productivity and profitability is better compared with farmers who own just 3-4 animals.

We also give bulk milk coolers to commercial farms and collect milk from them directly rather than routing it through the cooperative. This saves time and effort. The payments to them, however, are made through the cooperatives.

So far, Amul has been a national brand with a regional hub - Gujarat. Why move out of the State now?

We are marketing milk outside Gujarat in all major cities. The demand now is much more than what Gujarat can feed. (Within Gujarat, 116.71 lakh kg milk was procured a day in FY13). So we are going to Haryana, Rajasthan, Uttar Pradesh, West Bengal, Bihar, Maharashtra and Madhya Pradesh for milk procurement. We have roped in 5 lakh farmers outside Gujarat and are ramping up our processing capacities at these new places.

Will you be able to maintain quality standards outside Gujarat?

Yes, it is essential to ensure that we maintain the same standards. We are using automated milk collection technology.

We have also put up 50 quality control personnel at newer destinations to maintain consistency.

Besides this, to remain close to places of milk procurement, we are setting up new plants in Kolkata, Kanpur, Lucknow and Delhi. We will invest Rs 2,000 crore in the next one-and-a-half years on expanding processing capacities both within and outside Gujarat.

Your branding and advertising strategy has remained unchanged for the last half-century. Any plans to do it differently?

Over the years, we have not changed what Dr (Verghese) Kurien started – give the best product using the latest technology and maintain consistency in communication. We have given full independence to our advertising agencies Draftfcb Ulka and DaCunha Communications. They never need to take any approvals from us.

Amul believes in umbrella branding and it is a big asset for us. Our advertising spend is never more than one per cent of GCMMF turnover (Rs 13,765 crore in FY13) and it won’t change too.

How do you see revenues growing in five years from now – both in India and from exports?

Our exports are growing fast. We reported Rs 95 crore revenues in FY12 and hope to close FY14 with Rs 300 crore export income. But our focus is going to be India, where we want to be the biggest dairy company.

On an overall basis, we have been growing at 20 per cent in the last five years. By 2018-19, our turnover should be Rs 30,000 crore at this rate.

>rashmi.p@thehindu.co.in

COMMENT NOW