Free Press Journal

National Milk Day 2017: A milestone and not a destination…


For a country documented in ancient history as the land of milk and honey, India was in a pretty embarrassing position at the time of Independence. Its milk production in 1950 stood at 17 million tonnes and it had to rely on imports, a costly proposition for a young forex-starved country. Daily per capita consumption of milk across the 42 crore population stood at a measly 132 grams.

Fast forward to today, where the domestic milk production was clocked at 156 million tonnes in 2016. Per capita daily consumption for India’s 125 crore population in 2016 was 340 grams. To give some perspective, over a seven-decade period where the population tripled, India’s milk availability per capita of population has also nearly tripled. This is what the nine-fold rise in milk production signifies. India is not quite there yet to become the land of milk and honey, but is getting there.

Value of milk

This increase in milk production is significant in so many ways. India has traditionally had a strong vegan presence in its diet and all local cuisines reflect milk usage quite on a strong basis. Improved access to a food item has greater social significance. On the supply side, milk production is a valuable diversification and income support to the agricultural sector. For the individual family, a bovine would not be expensive in terms of capital outlay, running expenses and labour requirement. However, all this potential was not getting translated into actual growth. In over two decades of Independence, India’s milk production had grown to just 23.2 million tonnes in 1973. It is already evident that a market existed. What was required now was stability of offtake (translating to demand also being met on sustained basis) and a fair remunerative price for producers which would still render milk affordable to consumers.

Days after Operation Flood

This is where a vision emerged— strong enough to scale up and simple in its execution. Operation Flood, launched in 1970, was the largest dairy sector development programme anywhere in the world. The idea was to create a grid mechanism wherein milk supply could be collated from individual producers using the hub-and-spoke model and the same would then be fed into the grid which would then supply the same to consumers across 700 towns. The architect of this vision was Dr Verghese Kurien, an engineer by qualification who was handpicked and given overseas exposure to understand the milk processing industry. This fructified in the creation of the National Dairy Development Board (NDDB), responsible for organised procurement of milk and processing to powder and other products. The vision had enough political blessing to ensure that the usual vested interests could not stop the roll-out. The first plant was set up in Anand, Gujarat.

Powder could be reconstituted into milk so that supply would not be disrupted in lean periods. NDDB managed to make skim milk powder and condensed milk from buffalo milk, considered impossible till then. This was a major breakthrough for the movement, because the bovine population of India predominantly consists of buffaloes. This was key to solving the supply visibility issue, and enabled the scale-up. The ‘Anand’ model was then replicated in neighbouring districts and gradually across the state. Today, NDDB has presence in other states beyond Gujarat, and is a model for other co-operatives as well.

The agriculture sector has for long seen the middleman phenomenon impact producer’s returns and very often affect consumers’ pricing as well. NDDB adopted the co-operative model rather than the corporate model, which in economic parlance was the game-changer. Producers became members of the co-operatives and the principle was low-operational costs; stringent control on quality of supply; a sense of ownership and redistribution of significant portions of profits back to the producer members. Gujarat Co-operative Milk Marketing Federation (GCMMF), the marketing arm of Operation Flood and owner of the Amul brand, was set up in 1973. Its mission was to ensure steady supply at affordable rates and totally eliminate layered procurement to maximise producer remuneration. Today, GCMMF estimates that around 86 per cent of the sale price goes back to the producer. By any yardstick, this is a humungous proportion. Fair pricing and assured offtake – Operation Flood set out to achieve both aims and has been successfully doing so. Production by the masses, rather than mass production, was the bedrock on which milk production scaled up. 

Milk co-operative bodies

The same thought process—steady supply for the consumer and protecting the producer on a low-cost operations base— has been adopted by co-operatives across the nation and this is manifesting itself in many different ways. In 1980-81, Indian milk co-operative bodies had 1.75 million members and this has grown almost nine-fold to 16.28 million in 2016-17. Further to this, the regularity of offtake helped economic stability and encouraged further enterprises among the producer families. NDDB data reveals that average daily milk procurement per producer stood at 1.47 litres in 1980-81 and in 2016-17 this had jumped to 2.63 litres. This two-pronged rise has seen the dairy co-operatives sector increase their daily milk procurement from 2.56 million kg in 1980-81 to 42.85 million kg in 2016-17, a seventeen-fold rise in a 35-year period. Simultaneously, co-operatives have been investing in processing facilities as well. Today dairy co-operatives can process 67.49 million litres of milk daily, a figure which stood at 3.59 million litres in 1980-81.

Evolution of milk consumption

Even from the consumption viewpoint, there has been a tectonic shift. Prior to the co-operative movement, milk was actually perceived as a protein source for the elite and was treated as such, even down to cartelised supply in some cities. Milk as a protein resource for the masses was made possible due to Operation Flood. Data from different government bodies shows a steady rise in milk consumption in both rural and urban areas. Data from sample survey rounds from the National Sample Survey Office shows a steady increase in the number of households, both rural and urban, who report milk consumption. About 89 per cent of urban households are milk consumers in 2011-12, up from 80 per cent in 1987-88. The rural shift is much more significant in this period, from 66 per cent to 82 per cent. The importance of this statistic is enhanced when we reflect that two-thirds of India’s population is in rural areas.

If one were to look at the supply growth, it is growing well even on a large base –from 94 million tonnes in 2006; domestic milk production has gone up to 156 million tonnes in 2016. Clearly, the merits of the movement are getting more and more appreciated. Adding to NDDB’s long-term goal is initiatives in support areas like animal nutrition and health guidance, which are a great support to individual producers. Indeed, the different impacts of this movement add up in a very significant manner. It is no surprise, therefore, that the Operation Flood movement is recognised as a case study in significant management institutes and universities worldwide.