Agri Business

Utterly bitterly in Delhi

Harish Damodaran New Delhi | Updated on March 12, 2018 Published on August 27, 2014

NCR’s lucrative milk market becomes a battleground for Amul co-ops

A milk war is simmering in the National Capital Region involving dairy unions of the Gujarat Cooperative Milk Marketing Federation (GCMMF), better known for its Amul brand.

At loggerheads in India’s biggest organised liquid milk market, with sales of 60 lakh litres per day (LLPD) worth ₹9,000 crore annually, are the Mehsana District Cooperative Milk Producers’ Union and two other GCMMF member-unions of Banaskantha and Sabarkantha.

Mehsana was GCMMF’s sole supplier for Delhi-NCR between 2003 and 2008. Sabarkantha started supplying in 2009 and Banaskantha two years later.

While Mehsana union Chairman Vipul Chaudhary doesn’t mind others supplying, he says, “It cannot be at the expense of the huge processing capacities we have established in NCR; it is we who seeded this market.”

The GCMMF unions sell 26-27 LLPD in the NCR. The National Dairy Development Board-owned Mother Dairy does similar volumes; together they control 90 per cent of the market.

Of the total Amul milk sold in Delhi-NCR, roughly half (13.5 LLPD) is being supplied by Mehsana and the balance 6.5 LLPD each by Banaskantha and Sabarkantha. In 2004, the Mehsana union set up a 10 LLPD dairy at Manesar near Gurgaon. In 2012, it commissioned another 15 LLPD plant at Dharuhera, about 25 km from Manesar. The union says it has spent ₹283 crore on this facility, which is expandable to 30 LLPD.

“We have borrowed at over 10 per cent from HDFC and ICICI Bank to create this new state-of-the-art plant. It is operating at one-third capacity, even while the other two unions are processing their milk in privately-owned dairies,” he rues.

The Mehsana union now supplies 8.5 LLPD from Manesar and 5 LLPD from the Dharuhera unit.

‘No sole right’

GCMMF’s Managing Director RS Sodhi’s counter to Chaudhary is that no union can claim sole right in supplying to Delhi-NCR. After all, as many as five unions – Kaira, Valsad, Panchmahal, Surat and Bharuch – contribute to the 13 LLPD of Amul milk sold in Mumbai.

According to him, the Mehsana union had put up its Dharuhera dairy without taking the GCMMF board into confidence: “They never sought our approval for this fresh capacity over and above that in Manesar. And they now expect the entire Amul milk for Delhi-NCR to be processed at their dairies.” Sodhi admits that milk from the Banaskantha and Sabarkantha unions is being processed by private plants.

“But these dairies are only doing pasteurisation and packing on a job work basis at the rate of ₹1.10/litre. The ownership of the milk is with the unions; even the insulated tankers, the crates and the plastic film belongs to them,” he notes.

Banaskantha’s Managing Director Sanjay Karamchandani claims his union had initially approached Mehsana to do similar job work for it at Dharuhera and Manesar:

“It would have helped improve their capacity utilisation. Instead, they wanted us to supply our milk, which they would process and sell under their own name to GCMMF. This was obviously not acceptable.”

The issue of ‘ownership’ of milk is important because it influences voting power at GCMMF. Unlike in primary village societies and district unions – where the traditional cooperative principle of one member-one vote is followed – voting at the federation (GCMMF) level is based on patronage.

Milk votes

Thus, unions supplying more milk to GCMMF – Banaskantha, Mehsana, Kaira or Sabarkantha – have more voting power than those selling less, such as Valsad, Amreli or Kutch. “Why should we become contract suppliers to Mehsana, which only increases their voting power at our cost?” asks Karamchandani.

The conflict between the Mehsana and Banaskantha/Sabarkantha unions in India’s most lucrative and growing milk market is likely to intensify, as the latter set up their own dairies in the NCR dispensing with the need for private job-work processing.

Sabarkantha’s 10 LLPD plant at Rohtak in Haryana is expected to be operational in the next 10 days, while Banaskantha’s similar-sized facility at Faridabad will be ready in nine months.

Political colour

Chaudhary lends a political colour to the controversy, drawing attention to the fact that Prime Minister Narendra Modi, Gujarat Chief Minister Anandiben Patel and also BJP President Amit Shah have their roots in Mehsana: “All the three are from here. I will make sure they understand the treatment being meted out to our milk producers.”

But as a dairy industry expert familiar with cooperative politics in Gujarat points out: “This inter-union rivalry does not augur well for the future of Amul. Unfortunately, there isn’t anybody of the stature of a Verghese Kurien today who can force a compromise between the warring sides.”

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Published on August 27, 2014
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