ASIAN CASE RESEARCH JOURNAL, VOL.

11, ISSUE 2, 293–326 (2007)

ACRJ
This case was prepared by
Harish Chawla as a basis for
class discussion rather than
to illustrate either effective
or ineffective handling of an
administrative or business
situation.
Please address all correspon-
dence to Harish Chawla,
B-183, Lane #2, Majlis Park,
New Delhi, 110033, India.
E-mail: harish@alum. wpi.edu.
Amul India: A Social
Development Enterprise
Cooperatives are a rather strange and unlikely enterprise.
Their success depends on all that is good in our people.
We must invest, not to obtain a speculative return, but
to build an enterprise that will benefit us and our grand-
children, our neighbours and their grandchildren. Co-
operatives require wise and honest leaders; they require
capable and committed professionals. Amul is evidence
that all those ingredients can be found [in India] and in
good measure.

— Dr. Verghese Kurien, Founder/Chairman

Gujarat Cooperative Milk Marketing Federation
(GCMMF)1

The pioneering cooperative commenced with two villages

in the state of Gujarat, with fewer than a hundred members
and collected approximately 250 kg of milk per day. Over
the course of its 50-year journey, the cooperative has
progressed through the three life stages of an enterprise:
startup, growth and maturity. Leaps in growth were
observed as Amul adapted new technology, diversified into
new markets, or when it replicated its model across India.
Today, Amul Cooperative boasts of more than 600,000
members with collection approximating to six million kg
of milk daily. From a major importer of milk and dairy
products, as of 2003 India had become the largest producer
of milk worldwide.

1Speech delivered on the occasion of Amul Dairy’s 50th anniversary, 1996.

© 2007 by World Scientific Publishing Co.

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 294 ACRJ

Dr. Verghese Kurien reflected upon his long

involvement with the cooperative movement in dairy.
Progressive challenges guided the development of Amul that
began as a small movement to overcome the exploitation of
the rural farmers. Farmers were satisfied due to the progress
that had been feasible through the trials and tribulations,
efforts and accomplishments of Amul. Consumers across
India were pleased with the widespread availability of
dairy products at reasonable prices. This effort eliminated
the abusive intermediaries, provided appropriate benefits to
the farmers, which led to rural development and altered the
very nature of this business and village dynamics.
What led to this revolutionary transformation? What
were the characteristics of this cooperative that defined
its success? The three phases of evolution offered new
challenges, trials and tribulations, while revealing new
opportunities prospects and potential. What were the
critical elements of its sustained success over the course of
its journey? How did leadership respond to the changing
dynamics of the industry and the cooperative? Moreover,
what was the secret of amicable human relations amongst
the farmers and management? How can a cooperative
become the catalyst for social change and rural development?
In brief, what was the rationale of its success?

IDEOLOGICAL LEADERSHIP

The rural folk appealed to Sardar Vallabhbhai Patel for his

assistance against the detrimental and exploitative Polson.
His recommendation for the cooperative was pursued and
Tribhuvandas Patel was appointed chairman. Over the
course of the developments, Sardar Patel resolutely repeated
an indispensable question for Tribhuvan as the metric for
progress, “Are the farmers happy?” With the same passion
and spirit, Tribhuvandas and Kurien led the cooperative to
decimate competition and overcome numerous challenges,
ensuring that the farmers are happy and benefiting.
The year was 1946. India was soon to become
independent of British rule. India was searching for a model

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 295

that would integrate economic prosperity with the imminent

political freedom. Espousing a deep-rooted love and under-
standing of rural India, Sardar Vallabhbhai Patel, son of
a farmer, had an appreciation for the evolved structures
and systems that define village life. His knowledge of the
economics of farming combined with his native sagacity
provided him with an unrivalled comprehension of the
workings of the Indian peasant’s mind.
Indian village structures and systems exemplified
resilience and social integrity that withstood foreign inva-
sions and social disruptions. Sardar Patel committed that
for democratic republic of India to thrive it must be rooted
in its organic continuity instead of following the concept
of industrialization. Raised in a village community himself,
Sardar Patel understood the trials and tribulations, concerns
and challenges of rural societies. He desired an evolutionary
change in the rural communities that would not upset its
solidarity.
A prominent element of Vallabhbhai Patel’s strategy
was to organize producer cooperatives to augment rural
income while developing local industry. There was con-
tinuous exploitation of the farmers, and Vallabhbhai believed
that cooperation was the desired and optimal solution. He
initiated his experiment in the district of Kaira, the region he
knew and loved most. He recognized the need for someone
to lead the cooperative, as his aging physical strength could
not complement his aspirations for a free India.
Cooperative societies do not emerge without visionary
leadership. Furthermore, they are imperiled with selfish
desires of individuals within and without the cooperative.
Tribhuvandas, a young freedom fighter, was identified and
asked to instigate the cooperative movement.
Tribhuvandas Patel was influenced by many altruistic
and devoted fine men since a young age. These men
depicted moral courage to fight for their beliefs, challenged
status quo, and in this course sacrificed their lives. Mahatma
Gandhi himself was a role model for young Tribhuvan, who
attended many of his public meetings.
The visionary zeal and enthusiasm of Sardar Patel
caught Tribhuvan in 1938. The latter was overwhelmed by

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Sardar Patel’s ideals for rural development. Sardar Patel

instructed Tribhuvan to return to his village of Anand and
work for the people. Over the course of his activities that
had included Civil Disobedience and Quit India movements,
Tribhuvan had proven himself as a worthy leader. He was
nothing if not tenacious once convinced of his rightness of
action. Without any selfish or vested interests, Tribhuvan
accepted the responsibility to organize the milk producers
cooperative in 1946. Thereon, working with the cooperative
remained his goal as India struggled for freedom and
economic prosperity. He was unaware of the intricacies of
dairy technology, thus he sought the assistance of Kurien.
Verghese Kurien, a Malyali Christian, was looking
for a career in engineering, with intentions of inhabiting
the metropolis of India. Destiny brought him to Anand
in return for a government scholarship he had received to
study abroad. Self-confident and determined, his versatility
allowed him to engineer a comfortable living on his own
accord. His independent spirit, creativity and drive for
perfection persistently clashed with the submissive behaviour
of the other government employees at the creamery. Though
Kurien found himself placed in this unhappy situation, he
was determined to find productive pursuits. “This is what
anyone with a good education would do; otherwise the
so-called good education is worthless”,b he contended.
Tribhuvan offered young Kurien the opportunity
to be part of the cooperative that was much in need of his
professional expertise. Tribhuvan, an exceptional man with
tremendous integrity and commitment to the cause of the
farmers, was a difficult man to refuse. His vision motivated
Kurien to contribute his services to build the farmers’
cooperative. He was delighted to get the opportunity to
work with Tribhuvan, and in 1950 accepted the position
of general manager of the cooperative. The challenges
of the cooperative consumed the young engineer. This
denoted his lifelong commitment to this movement for rural
development.

bI Too Had A Dream, p. 22.

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 297

Kurien was initially focused on the operations of

the plant, which was followed by comprehending market
dynamics and establishing relationships with potential
customers. Tribhuvan gradually involved him deeper into
the internal functioning of the cooperative. Kurien de-
veloped skills to listen and communicate, accept criticism
and suggestions from the farmers, while assisting to develop
a profitable cooperative. He resonated with the vision
of Tribhuvandas and Sardar Patel — to bring economic
independence to the dairy farmers of Kaira.

DAIRY KING OF KAIRA

Pestonji Dalal (Polson) built his enterprise during the war

footings, initially supplying coffee followed by butter and
cheese to the British army. Recognizing the benefits of
establishing his plant closer to where cream was collected
brought Polson to Kaira, the region where milk was
overflowing. His model dairy was setup in Anand in
1930, modern, well equipped and highly automated. With
limited alternatives for the housewives, ‘Polson’ became
synonymous to butter, as ‘Xerox’ is interchangeable to
‘photocopy’.
Polson had established a milk collection network
in Kaira district. With the end of World War II, milk was
diverted from butter and cheese to supplying pasteurized
milk to the bustling city of Bombay, through the Bombay
Milk Scheme (BMS).c Over the years, the plant capacity
of the dairy enterprise grew, as it was handling the
requirements of the army, government and high-income
customers. To ensure consistent supply to Bombay, Polson
obtained an executive order sanctioning monopolistic
practices in Kaira, i.e. only Polson, the shrewd businessmen,
would be allowed to purchase milk from 14 villages
surrounding Anand. Hereon, Polson would set the purchase
price of raw milk and the selling price to the market,

cThe Bombay State Government established BMS to ensure a steady supply of milk
for its residents.

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 298 ACRJ

practically reigning as the Dairy King of Kaira. The dejected

farmers received a small part of the selling price, while
Polson and his contractors pocketed the lion’s share.
Polson’s iniquitous and cunning practices resulted in
the ill treatment of the dairy farmers. Unscientific methods
were employed to determine fat-content and quality of
produce for payment practices. Polson would pay less for
the milk claiming it to be sour. Lack of alternatives and his
monopoly over procurement rights became unbearable for
the producers and small traders. They voiced their troubles
to Sardar Patel, who reiterated his recommendation of the
cooperative society. Collaboration had become the means
for self-defense against the unjust practices of Polson.
Tribhuvandas Patel, under the guidance of Sardar Patel, led
a 15-day boycott where no milk was supplied to Polson’s
agents. Succumbing to the pressure, BMS withdrew its
earlier order, eradicating the monopolistic practices. This
was the first victory of the Milk Producers’ Cooperative.
The signs of change were evident, and the cooperative was
establishing itself in Kaira district.

AMUL: SERVING FARMERS

Following the proposal of Sardar Patel, multiple village milk

cooperatives were established. The overarching producer’s
cooperative owned and operated a milk-processing plant to
challenge Polson’s dominance and eliminate intermediaries.
Kaira Milk Cooperative expanded its functions to include
procuring, processing and selling dairy products to Bombay,
a close and vibrant market. January 1946 marked the birth of
the milk cooperatives in India, and on October 7, 1946 milk
collection began in the first two registered villages. This was
the beginning of rural renaissance in Kaira.
“A cooperative is an autonomous association of persons
united voluntarily to meet their common economic, social and
cultural needs and aspirations through a jointly owned and
democratically controlled enterprise.”d The common need

dThordarson, Bruce, The Lessons of Amul for Cooperative Development.

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 299

to fight the abusive practices of Polson was the primary

force for establishing the cooperative. From the outset, it
was expected to be an autonomous organization with no
interference from the government. The spirit of democracy
was at the helm with the belief of joint ownership by the
farmers. Finally, entrepreneurial in nature, the cooperative
was expected to function as an efficient enterprise.

Objectives/Principles

The ideology of Sardar Patel was the source of inspiration

for the emerging milk cooperative. Economic liberation from
the exploitation of moneylenders and intermediaries was
the primary objective for establishing this enterprise. This
system would provide control over their resources, thus
developing economic and social sovereignty.
The ideological commitment, the fundamental prin-
cipal of the cooperative was to ‘Serve the Farmers’. This
was a way of life for the members and workers of the
cooperative, encompassing values of modesty, diligence,
perseverance, and frugality. Farmers were the primary
stakeholders. Consumers were equally important in this
structure, as without a market the cooperative would not
exist. Belief in fairness towards the producers and con-
sumers ensured that the cooperative kept prices low and
quality high. This led to the second principle: ‘Quality
Takes Precedence’. Quality control had the final decision.
Democracy and fairness were at the helm, the
ideological value that penetrated the organization structure
in its daily affairs. This was reinforced by transparency at all
levels, with the principal that ‘audit can access the Chairman
any time it considers necessary’.

The Anand Pattern

True to its belief, the organizational structure was estab-

lished with the farmers at the helm, the owners and primary
stakeholders of the cooperative. Pursuant to the federal

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system of representation, Amul established a three-tier

structure that comprised village cooperative societies, district
level dairy unions and state-level federations (Exhibits 3 & 4).
The Village Dairy Cooperative Society (VS), the
primary tier, comprised of milk producers, residents of the
village who have committed to sell to the cooperative at a
mutually determined price. Nominal membership of Rs.10
was their equity stake in this enterprise. Annually, the VS
members elected a managing committee, which thereon
voted for a chairperson for each VS. In 2004 there were
1017 village cooperative societies registered in the state of
Gujarat.
To ensure freshness and quality of raw milk, the
market came to the village doorsteps in the form of village
milk collection centers. Producers delivered milk twice a day
to the collection centers, which was then transported to the
union dairy plant. Collection centers scientifically tested the
milk for fat content and weight, and accordingly paid a fair
price to the producers. Villlage Societies are profit centers
that derive earnings from the sale of milk to the union.
The second tier in this structure was the district union
processor, which collected, processed and marketed the milk.
The district union board is composed of the chairperson
representing each Village Society. These board members
elected a chairman and vice-chairman and appointed a
managing director who administered the operations of the
milk union. Each district had an independent milk union.
Kaira Union was one of 12 district unions in Gujarat (1998).
Gujarat’s district unions banded together in 1973 to
form the apex marketing federation, the Gujarat Cooperative
Milk Marketing Federation (GCMMF). This was the third
tier of the Amul Structure. It was established to operate its
own marketing and distribution network for the Cooperative
dairy products across India under a single brand name —
Amul. “The word came from the Sanskrit word ‘amulya’
which means ‘priceless’ and denoted and symbolized the
pride of swadeshi production.”e By 2004 India boasted 22
state federations across the country.

eI Too Had A Dream, p. 55.

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 301

The system had internal controls and measures to

ensure quality and fairness. Payment was made on the basis
of fat content, a disincentive to adulterate. The VS milk was
further tested when it reached the union plant, and if found
contaminated or spoilt, the whole society suffered through
lost payment for the milk. These measures complemented
by community supervision, restrained and disciplined each
member without external controls. On the positive side, fair
prices, ownership of the enterprise and a transparent system
were incentives for the farmers to increase production and
partake in the profits and annual bonuses.
Confidence in the efficiency, honesty, transparency
and fairness of the system brought these humble villagers
to the cooperative. The policies and procedures remained
transparent and endeavored to provide benefits to the
village producers. Bringing the marketplace to their villages
and accepting all the milk produced are examples where the
cooperative exemplified its values, objectives and focus on
the farmers.

DIVERSIFICATION

Membership in the Kaira cooperative was increasing, while

milk production was also on the rise. Surplus milk collection
in the winter needed to find new markets or be directed
towards new products. The urban middle and upper class
residents of Bombay were unable to change their demand
based on ever-increasing and fluctuating supplyf. Kurien
recognized the need to diversify operations. With the
support of HM Dalaya, the dairy technologist, they decided
to venture into manufacturing butter and milk powder,
vertically integrate into dairy products.
In 1953 UNICEF proposed to donate eight lakh
rupees (Rs.800,000) to the Bombay government in return
for distributing 12 lakh rupees (Rs.1,200,000) of free milk to
undernourished children. The finance minister of Bombay

fCattleproduce more milk in the winter compared to the summer, thus fluctuations
in supply.

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 302 ACRJ

approached Kurien and asked for his consideration and

response. The farmer-members recognized the challenge
of surplus milk, while also looking for additional means
to augment their income. The terms of the proposal were
accepted and Kaira Cooperative decided to venture into
producing milk powder with the provided funds.
The Milk Commissioner of Bombay, Khurody, was not
too friendly towards the cooperative. He had equal interest
in the funds proposed by UNICEF for establishing milk
production facilities in Bombay. During discussions with
Sabin, the senior UNICEF personnel, Khurody insisted that
milk powder could not be produced from buffalo milk.g
His tenacious argument was anchored on the fact that
developed countries produce milk powder from cow’s
milk. Furthermore, Khurody obtained feedback from dairy
professionals, William Riddet of New Zealand and HD Kay
of U.K., supporting his stand.
Kurien found himself cornered. Was Khurody
undermining the cooperative’s ground? UNICEF would
not provide the funds for the milk powder equipment if
Khurody’s statement were true. Nevertheless, the dairy
technologists, Kurien and Dalaya, believed it possible to
produce milk powder from buffalo milk. They would have
to demonstrate the same in a conclusive manner.
Taking calculated risks, they borrowed spray-drying
equipment from Larsen & Toubro’s factory in Bombay.
The group consisting of the UNICEF men, Khurody,
Kurien and Dalaya, gathered around the laboratory table
in Andheri, Mumbai. The tension was palpable as Dalaya
poured skimmed milk into the feed vat and threw on the
power switch. The humming of the machinery disrupted
the silence before the first snowy flakes of powder milk
entered the glass-receiving chamber. This was the moment
of vindication for the cooperative. Yet unsatisfied, Khurody
insisted on testing its solubility and taste. “It has now
been proven that milk powder can be produced from

gMilk was primarily produced from buffaloes, as they were more dominant in
numbers. Buffalo milk is much higher in fat quantity, thus the challenge of producing
dairy products in India.

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 303

buffalo milk. UNICEF will assist Kaira Union to set up the

powder plant,”h an excited Sabin announced. The Bombay
government finally approved the project. The cooperative
was victorious yet again. It had identified profitable markets
for surplus milk. Kurien contemplated that at times — expert
advice can be biased towards the economic interests of advanced
nations, not for the needs of developing economiesi.
On 31 October 1955, which is Sardar Patel’s birth
anniversary, then Prime Minister Pandit Jawaharlal Nehru,
inaugurated the country’s most technologically advanced
dairy plant. As they demonstrated production of milk
powder, Pandit Nehru praised the efforts, “Kurien, I’m so
glad that our country has people like you — people who
will go ahead and achieve that which seems unachievable.”j
Amul’s growth had picked up, as diversification into
other products was rising. Market research and market
analysis activities led to additional product introductions.
Kurien recognized the high demand for baby food and
cheese. Manufacturing of cheese and baby food from
buffalo milk was also unheard of by the developed dairy
industries, and refuted by the experts. Amul, nevertheless,
pioneered this technology through persistent research and
experimentation. An FAO expert, Dr. Wilster, assisted in this
project and Amul cheese was made available to the market
in 1963–1964. Production leaped to 41,000 kg within one
year.
Glaxo had market dominance in baby food, entering
that market niche appeared daunting. Kurien, with his
proficient and adept management skills, approached the
Government of India requesting the cancellation of Glaxo’s
unused import licenses. The socialist government was
well disposed towards Kurien, trusting his judgment and
reputation. Glaxo licenses were cancelled and Amul was
able to enter this niche. Yet another vindication for the
professional management and Amul’s credibility. Research,
development and technology enabled leap in growth, a real-
life illustration that ‘success begets success’.
hI Too Had A Dream, p. 45.
iRefer to Robin, Broad, “Washington Consensus Meets the Global Backlash”.
jI Too Had A Dream, p. 53.

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STAGED PROGRESSION

During the establishment of the cooperative, sale of

liquid milk was the primary focus, the profit center. Kaira
Cooperative attempted to maximize production and sale
of milk to Bombay through the BMS. This policy required
arduous competition against predominant rivals. There
appeared no apparent reason to invest in new technology,
capital, research and training, thus innovation was on hold.
Establishment of the system and basic survival defined the
first stage.
The government had kept the price of milk stable
while prices of dairy products soared. This became an
incentive for transitioning into the manufacturing of dairy
products. The Cooperative built a dairy to manage the
surplus production of milk while enhancing its profits from
sales of dairy products. Basic dairy products such as butter
were initially produced that did not require considerable
innovation. Product diversification was the second stage of
the cooperative effort.
The third stage led to extensive innovation, as the
Kaira Cooperative embarked on a range of new products
during the 1950s. Processing facilities were expanded, new
technologies researched and processing activities broadened.
The production of dairy products was initially
to balance and find new sources for the surplus milk.
Marketing activities of the fourth stage played a central
role in dairy development due to its unexpected success.
Demand was booming from various segments. Defense
services also procured their requirements from Amul.
Kaira Cooperative intended to utilize its plant to
capacity and provide for the increasing demand, which
required a significant rise in milk production. In 1961–
1962, Kaira Cooperative initiated a program to double milk
production in the district. Rupees four crore were marked
for this investment directed towards improving cattle feed,
cattle health care and hygiene and improved breeding.
The effort did not provide the results within the
expected duration. In 1964 a cattle feed factory was
commissioned to provide better nutrients and concentrate

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 305

feed to the cattle. Earlier, cattle were primarily fed straw and
feed concentrate in the form of cottonseed. This assumed
60–70% of the total cost of milk. As the price of cottonseed
was on the rise, a substitute was required; otherwise it
would have a depressive effect on milk production. The
Cooperative sought a balanced feed manufactured from
nutrients and grains available locally.
Feed-grains were ground and mixed with local
supplies, while accounting for price, availability and a
balanced nutrition for the cattle. The cooperative established
the factory producing composite cattle feed, Amuldan, which
was provided to the farmers at cost price and available
throughout the year. This met the producers’ need perfectly
and resulted in a gradual increase in milk production
within the district. Prime Minister Lal Bahadur Shastri
commissioned the cattle feed factory on October 31, 1964.

NATIONAL DAIRY DEVELOPMENT BOARD

Within 20 years of its establishment, the Kaira cooperative

attained national eminence and recognition for its work in
Gujarat. Anand had gained a reputation as a place where
something ‘different’ was happening in the dairy industry.
Various awards and recognition were bestowed upon Dr.
Kurien and Amul, which included the Magsaysay Award,
and Padma Bhushan to mention a few.
The Indian government had established a few
cooperatives in different parts of the country, but none of
them enjoyed the success comparable to Amul. Puzzled,
Shastri desired a first-hand perspective. He requested Kurien
to organize his stay in one of the cooperative villages,
without the fanfare and security. Analyzing the farmers
and farm conditions in its natural condition was essential.
For that one night, Shastri had deep conversations with
the villagers, asking questions and listening attentively. He
learnt about their lifestyle, their farmlands, buffaloes, milk
production, incentives to increase production and their
relationship with the cooperative. Shastri was impressed
to learn about this system that provided additional income

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to the farmers and raised their standard of living. To his

surprise, this all was done without any direct financial
assistance from the government. Though government
facilitation through public-private partnership was funda-
mental and critical in the growth and expansion phases.k
It was a taxing but an informative evening for the Prime
Minister.
The following afternoon, Shastri, still perplexed, asked
Kurien why this particular dairy succeeded while all others
in India had failed. He iterated his observations. The soil
was good, but not as good as the Indo-Gangetic plains. The
climate was similar to most other parts in India — cold in
the winter, very hot in the summer with thirty inches of
rainfall during the three months of monsoon, just like other
parts of the country. The buffaloes were healthy, but not as
good as the ones found in Uttar Pradesh, which were able
to provide more milk. The farmers were good people, but
not as hardworking as the farmers in Punjab. “I can’t find
a single reason why Anand is such a great success,” the
mystified Prime Minister questioned.
While Shastri was able to observe and comment on the
apparent observations, the subtleness of the Anand structure
was overlooked. The solitary, yet most vital difference
between Anand and the other cooperatives was that Amul
dairy was owned by the farmers. The elected representatives
from among the farmers managed it. These elected
representatives had employed Kurien as the professional
manager to run the dairy, who was thus an employee of
the farmer. Ownership of the cooperative and the farmer-
professional management relationship provided the impetus.
This was a dairy sensitive to the needs and responsive to
the demands of the farmers. He further explained that there
could be an Amul because Bombay was not too far away.
Impressed and satisfied, Shastri requested Kurien to
work not just for Anand, nor only for Gujarat, but for the
whole of India. An Anand should be established in every
state of India. This led to the creation of the National Dairy
Development Board (NDDB) in September 1965. Its objective

kReinventing Government by Osborne & Gaebler.

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 307

was to establish milk production, procurement, processing

and marketing in the country by making available the
needed support services — technical, manpower, consultation
etc. NDDB developed audacious plans of genetic upgrading
of milch cattle, scientific breeding processes, and significant
increase in milk production. Organization of dairy programs
across the country would cost a whopping Rs.650 crore
(Rs.6.5 billion). Funding from the Government of India
would come with many demands and strings attached,
making the whole effort bureaucratic and slow. Thus, an
alternate source of funding was required.

GUJARAT COOPERATIVE MILK MARKETING

FEDERATION

Over the course of Operation Flood, district unions (tier 2

of Amul structure) multiplied within the state of Gujarat:
Baroda, Surat, Banaskantha, Sabarkantha, Bharuch, Valsad,
Rajkot and others. Each district union was independently
responsible for its production, marketing and sale of dairy
products. Kurien recognized that there could arise a situa-
tion where the milk cooperatives would compete with each
other. This was not acceptable, and countered the objectives
of cooperation.
Kurien suggested developing agreements where all
dairies in Gujarat would employ a common distributor
and a common brand name. Thus, instead of competing
with each other, the district cooperatives would integrate
forces and expand markets while saving on advertising and
brand building. This led to brand-integration and formation
of the marketing federation, the third tier in the coopera-
tive structure. The Gujarat Cooperatives Milk Marketing
Federation (GCMMF) was established in 1973, and Kurien
was elected as the first Chairman and Managing Director
of the federation, at which time he quit his position as the
General Manager of Amul.
GCMMF brought about economic and political
benefits to its cooperative members, specially benefiting the
small ones, further encouraging growth of more cooperative

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societies. Concentrating on developing and implementing

marketing initiatives, the federation ensured full utilization
of capacity, formulated production priorities, standardized
systems and ensured greater consumer acceptance by
strengthening the brand image. GCMMF was required
to accept all the milk produced, assuring the members of
stability and long-term growth. This effort was an important
achievement of Operation Flood, borne out of the need for
integration.
In 2005, GCMMF was India’s largest food products
marketing organization with an annual turnover of Rs.30
billion. Twelve district cooperative unions, 2.12 million
producer members, 10,411 village milk societies comprise
this organization. The average daily milk collection of
the GCMMF was about 4.5 million liters. This effort of
integrating the cooperative unions was merely an extension
of the cooperative philosophy, of bringing value to the
farmers through mutual collaboration. The federation
had ensured remunerative returns to the farmers while
providing consumers with high quality products under the
brand names of Amul and Sagar. Exhibits 6 and 7 illustrates
the growth of the federation over the years. The federation
concerted in marketing and sales activities, developing
new markets and determining higher valued products.
Sales revenue leaped and Amul entered another level of
expansion, the second phase of the enterprise lifecycle, the
‘growth’ phase.

TEAMWORK

Tribhuvandas Patel, unselfish, sincere and unassuming,

promoted the cooperative structure and challenged Polson’s
dominance. He was a benign, thoughtful and a serious
observer with strong links to the farmers as he was one of
them himself. Tribhuvandas was a man of steadfast loyalty
and integrity, with a relaxed style that got results with
deceptive ease. Over the course of his journey throughout
Kaira, the growth of cooperatives and their relationship
with GCMMF is an indication of his abilities to effectively

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 309

manage people. Tribhuvandas had the charisma to mobilize

rural milk producers and convince them of the power of the
cooperative, its democratic principles and the overwhelming
vision of rural development. His unimpeachable personality
and integrity earned him the affection and trust of the
farmers. “Here was a leader who had wielded power
through the strength of his ideals and an example of his
service to his fellow men. He is the kind of person that
makes you feel happy to be a fellow human being.”l
Initially taking pride in the engineering and
technology aspects of the dairy business, Kurien became
gradually involved in all aspects of Amul, to the point where
it became an integral part of his life. Kurien, the extrovert,
was appointed General Manager of Amul, who learnt to
share and appreciate the belief that he was an employee
of the farmers. He strategized the battle against Polson
butter, innovated the manufacturing of milk powder and
condensed milk from buffalo milk and found other means
of using the surplus produced by the cooperative. Schooled
in adversity, challenged at every stage of the progression of
the cooperative, Kurien’s creativity and ingenuity always
found a way out of the prevalent tribulations. As the tough-
minded and innovative manager of Amul’s development, he
championed the producers’ cooperative against threats from
the urban bureaucracies and politics.
Amul was, after all, a for-profit business enterprise,
thus he needed professionals to run the factories effectively.
Recognizing the need for a dairy technologist, Kurien re-
quested HM Dalaya, a college friend from Michigan, to
participate in this dream. The drive for changing society
and village communities, the idealism and commitment of
the other two led Dalaya to stay with Amul till his retire-
ment. This brilliant dairyman innovated on dairy production
techniques and methods to meet the need of the Kaira
cooperative. He was tasked to work while Kurien did the
talking.
These three men, with clear objectives and a
disciplined attitude, formed a formidable team where rights

lThe Amul India Story, p. 277.

00094.indd 309 3/7/2008 4:51:51 PM

 310 ACRJ

and responsibilities were tacit yet shared. They maintained

a compliant countenance without challenging another in
public. Private discussions were the opportunity to argue
and learn to iron out uncertainty and possible differences.
Each had their set of expertise, where they were not
challenged, but allowed to work independently. Mutual
trust that each is focused towards the collective objective
increased motivation, cultivated better communication and
understanding amongst the team. Respect for the others was
a fundamental force, which enabled them to work effectively
and achieve impossible heights.
The shared vision and commitment towards a
larger cause ensured that the principal of economic rural
development is preserved.
“… when you work merely for your own profit, the
pleasure is transitory; but if you work for others, there
is a deeper sense of fulfillment and if things are handled
well, the money, too, is more than adequate.”m

DEVELOPING PEOPLE

The primary objective of the Amul dairy is the well-

being and development of its owners, the milk producers
themselves. The dairy is the means and not the end in itself.
The primary philosophy of the Anand model is to connect
the producers directly to the consumers, ensuring that the
largest share of the customer’s rupee is transferred to the
producer. This provides an incentive for the farmer-producer
to increase the quantity and quality of their production.
The Anand pattern coalesces the power of the people with
professional management in the integrated cooperative
structure. The farmer is the owner and intimately involved
in the production. Thereon, he also becomes involved in the
process of development through observations and working
with professional management. The democratic system of
the Cooperative provides the underpinnings for democracy
in the country. A visiting economist in the 1960s commented,

mI Too Had A Dream, p. 28.

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 311

“Democracy seems to be growing here as fast as the milk

supply.”
The producers have been able to develop managerial
skills and familiarity with technology through their ob-
servations, association with professional management and
experience with the managing committees of primary co-
operatives. As milk cooperatives are established, producer
members tend to sell more milk. They benefit from the
better price and swift monetary distribution, while realizing
that the cooperative must be financially viable in order to
succeed. For the villagers of Gamadi, milk sales provided
a steady and increasing income, which significantly helped
in the support and development. Traders, who earlier did
not provide them credit, extended them support for seeds
and fertilizers. The banks loaned them money to buy cows
and buffalos. As villagers worked harder and prospered,
alcoholism declined. Hope and self-respect enlightened
their lives as they found more opportunities for growth and
development.
Another shining example of the effects the cooperative
system can be found in the village of Khadgodhara, about
72 km from Anand. This village was two km away from a
collection center, thus did not have a cooperative society
of its own. The women would trudge the distance twice a
day, against the wishes of their husbands. When a women
sarpanchn was elected, she organized the women to form
a cooperative society in their village, requesting Amul
headquarters to take note of their effort. The women were
disciplined and developed self-confidence. Within the
first year they boasted annual revenue reaching Rs.1.5
lakhs (Rs.150,000) one and a half times the earnings of the
entire village through farming. With the women heading
this effort, schools were established in the village, better
homes constructed, electricity was brought and other rural
developments were observed. The need for family planning
was recognized, as education had become a necessity.
The battle against apathy, suspicion to change, and
undesirable traditional practices continue, though the

nHead of Village Community.

00094.indd 311 3/7/2008 4:51:51 PM

 312 ACRJ

villagers have become more aware and receptive. Positive

change is apparent as the growth and development of the
people is observed. The village cooperative societies have
become dynamic institutions that have led to economic and
social welfare activities, stimulating educational, health and
integrative development of their community.
Kurien repeatedly stated that the underlying goal is
not the development of dairies or cows, but the development
of people and rural neighborhoods.

LOOKING AHEAD

The illustrious journey of Amul began some sixty years ago

in a small shady town of Gujarat. Its overarching objective
of serving the farmer and catering to the consumer had
remained unaffected through the course of its evolution.
For the farmers, Amul reflected the power to direct their
destinies, secure a stable livelihood through assured employ-
ment, empowerment for the village folk, most specifically
for the women. For the girl, Amul implied education and
consequent emancipation. Amul represented high quality for
the consumers, a name they could trust and depend on, an
assurance of wholesome milk. India takes pride in Amul as
a successful model for self-reliance and rural development, a
model depicting that hard work, management expertise and
capable leadership could achieve miracles.
Amul Member Unions procured an average of 5.9
million kg of milk per day in 2004–2005, which rep-
resented a growth of about 15% from the previous year.
Sales reached Rs.29.22 billion, where most dairy products
indicated an increase, depicting the strength of the Amul
brand nationwide. Distribution network expanded into
smaller towns as the emergence of markets in smaller towns
was observed. As of 2005, there were about 1059 village
societies as part of the Amul network, comprising 600,000
members.
Since its inception in the late 1940s, Amul had ex-
perienced the different stages of an enterprise lifecycle. The
establishment marked the initiation, which was followed

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 313

by growth through diversification and employing new

technology. Innovation, structural change, replication of the
model and renewing its vigor has enabled Amul to soar
its growth instead of stagnating into maturity. Exhibit 9
illustrates the periods of growth, including its most current
challenge of direct sales and marketing, i.e. widening its
distribution network and establishing Amul outlets across
the country. The consistent growth indicates the visionary
leadership that is in constant pursuit of expansion, aligned
to its mission of ‘serving the farmer’.
While Dr. Kurien reflects on the successes of Amul,
he realized that the effort and task at hand are ongoing.
Business opportunities are expanding with the growth of
the Indian economy. Disposable income at the hand of the
consumers is keeping pace. The challenge ahead of GCMMF
is to reach the most remote markets with innovative
products and services such that more consumers benefit. To
achieve this challenge, Gujarat cooperatives need to increase
production and productivity, requiring better management
practices in the village.
An incessant initiative of Amul had been vertical
integration of the value chain. Member unions added value
by moving from procurement and processing towards
branding and marketing. The predominant need was direct
contact with the customer, practically to their doorsteps.
This was also in accordance with the Amul philosophy —
to eliminate intermediaries between the producer and con-
sumer. Amul faced this competitive challenge through a
foray into retailing and e-business. Amul envisions opening
up retail outlets across the major cities in India, bringing the
range of Amul products directly to the consumer. Providing
the branded dairy products under one roof was their attempt
to broach themselves even closer to the valued customer.
While Amul has enjoyed decades of success, the
challenges continue with the fast changing marketplace. Dr.
Kurien, nevertheless, does not overlook the strength which
has brought Amul so far.
“We are in the business of development; not just
marketing. Development, be it of products, people or
processes. The spirit of development can be seen and

00094.indd 313 3/7/2008 4:51:51 PM

 314 ACRJ

felt in everything we do. Marketing is simply our tool to

achieve our ultimate objective — Human Development.”o

PERSISTENT CHALLENGES

This system was not flawless, Managing Director Mr. Vyas

reminded. It encompassed real challenges within the system
and in relation to the external world. As in any democracy,
if the voting members were not informed but ignorant the
entire elections process becomes a farce or the elections
could be hijacked. This had been observed in the past at the
Village Society level elections. Education of the members,
solidarity and integrity would enable to keep the members
informed and thus reduce the potential of ignorant voting.
Another commonly observed pattern was conflicts
between the farmer-members and professional managers.
As each adopted a different perspective, and as their
sophistication of comprehension differed, these groups
were unable to communicate effectively, lending to greater
confusion and misunderstanding. Though all had the same
objective in mind, the lack of leadership skills burnt bridges.
The conviction and leadership were what the founders
portrayed, which appeared to be absent in the current
generation of professional managers. The farmer-manager
relationship was equally essential for the system to progress
and expand.
During its early startup and growth phase, the
government bureaucracy was critical for the success of
Amul. Various services and favors were forwarded as
the objectives of the socialist government and Amul were
aligned. As India transitioned towards open capitalism,
there was a growing splinter between the two philosophies.
Constant pressure to introduce government representatives
on the Anand Dairy board was observed. Other forms of
interference were equally vulnerable for the institutions.
India had decreased its tariff structures after the 1991
liberalization process, and considered reducing it further.

oAmul Annual Report 2000.

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 315

This would be detrimental for the milk industry, as it would

not ensure an equal playing field for all dairy economies.
When the White Revolution was ongoing in the
1980s, critics, skeptics and opponents were voicing their
apprehension. They did not appreciate the manner in which
Kurien handled the expansion of the industry. General belief
amongst the critics was that milk grant would be the better
alternative, not assuming the milk powder for sale. Kurien’s
plans were termed the White Lie. The media carried out
significant coverage of both sides of the story, and it had
become an internal crisis for Amul. Though Amul came out
of this with stronger determination and courage, challenges
from the external environment were another threat to their
existence.
While it is easier to create a manager, developing a
leader is a much more complex process. This is true at the
grassroots level as well as at a professional managerial level.
Amul’s focus had been in developing managers, not leaders.
This aspect challenged the system, with limited innovation
in their product line, systems and processes in the last 5–
10 years. Leaders could think differently, plan differently,
and strategize differently. NDDB was in the process of a
transition in 2005 as Dr. Kurien resigned and appointed
his apprentice as chairperson. Transition of leadership in
GCMMF would be observed in the near future also. What
are the associated challenges with transitioning of leadership
in a social enterprise? Is it possible to sustain the cooperative
objectives after the original/founding leadership shifts to
other pastures? Or should the objectives change with a new
breed of leaders? Amul is facing these challenging questions
today, and is unsure of the parameters/characteristics in
determining and preparing for new leadership. Is leadership
transition actually possible in an ideology based, for-profit
organizations?

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 316 ACRJ

RESOURCES

Carter, Thomas, “They Shaped AMUL”, Senior FAO Advisor,

NDDB, Amul 50th Celebration Address, 1996.
Halse, Michel, “Talent and Character: Sources of effective
management at Amul”, Amul 50th Celebration Address, 1996.
Heredia, Ruth, The Amul India Story, Tata McGraw-Hill
Publications, 1999.
Kurien, Verghese, I Too Had A Dream, Lotus Collection, India, 2005.
Mittal, S.P., “The Eventful 50 Years”, Amul 50th Celebration
Address, 1996.
Patel, Tribhuvandas, “Cooperative movement and its role in the
dairy industry of India”, Speech, 1963.
Thordarson, Bruce, “The Lessons of Amul for Cooperative
Development”, Amul 50th Celebration Address, 1996.
Amul Annual Report, 1996 & 2000.
Kaira District Cooperative Milk Producers’ Union Limited, Anand,
Annual Report, 2004–2005.

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 317

Exhibit 1
Location of Anand, Gujarat in India

00094.indd 317 3/7/2008 4:51:52 PM

 318 ACRJ

Exhibit 2
Amul India Timeline

1900

1930 First dairy plant in Kaira established

1944 Polson’s model dairy established in Anand

Govt. creamery in Anand reopened for research work
Polson establishes a plant to process & transport milk to Bombay
1945 Executive order from Bombay giving Polson monopolistic powers
1946 First disorganized strike by farmers fails
Sardar Patel suggestion — 2nd 15-day boycott.
Oct. 7, 1947 Govt. withdrew exec. Order. Tribhuvan appointed chairman

Dec. 14, 1946 First milk collection fro Hadgud village

1948 KDCMPUL registered

Inaugurated first processing plant
EXPERIMENT BEGINS
May 1949
IN 1946
1950 Kurien arrives in Anand
Kurien becomes General Manager of Kaira Union. Sardar Patel passes away
1951
Dalaya joins as assistant manager, dairy technologist
1952
Oct 1952 - Kaira Union receives exclusive distribution from BMS
April 1953
Kurien studies dairy technology in Australia & NZ
1953 P H A S E -- O N E
UNICEF proposal for milk powder donation received.
1954 Dalaya sent to Denmark to study dairy technology
PM Nehru inaugurates new dairy plant for milk powder manuf.
1957 START UP
Amul brand name registered
1958
1961 Manuf. Condensed milk from buffalo milk
Cheese added to product line
1964
Cattle feed factory commissioned by PM Shastri
1965
NDDB Registered with Govt. of India
1968
EEC Surplus stock offered as free aid
1970
WFP accepts Kurien’s proposal. Billion Liter Idea launched. OF I initiated
1973
GCMMF Established
1973 - 1989

1975
New Product Innovations continue GCMMF ESTABLISHED
1979 Tribhuvandas Foundation established
1981 IRMA Established P H A S E -- T W O
1985 Phase II Operation Flood commences
1994 Phase III Operation Flood commences G R O W T H
1996 Tribhuvandas Patel passes away
Operation Flood successfully completes
1998
Kurien resigned from NDDB OPERATION FLOOD COMPLETES

26-Mar-06 24-Sep-06
P H A S E -- T H R E E

MATURITY

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 319

Exhibit 3
Amul Cooperative Structure

AMUL MODEL

SALES SALES
REVENUE REVENUE
GCMMF in
Gujarat 22 State
Fedns. in
India

176 District
Unions in India
12 District ADDL. RURAL
Unions in BONUS PRICE CATTLE
HEALTH
Gujarat DIFF. FEED
SCHEMES
DIVIDEND
ON
SHARES VET. & AH
SERVICE

11,615 Villages 1,08,574

in Gujarat Villages in India

2.4 million in 12 million in

Gujarat India

00094.indd 319 3/7/2008 4:51:55 PM

 320 ACRJ

Exhibit 4
From the Farmer to the Consumer

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 321

Exhibit 5
Salient Features of Operation Flood

Features OF–I OF–II OF–III

Period 1970–1981 1981–1985 1985–1996
# of milksheds covered 39 136 170
# of Amul Pattern Centers setup (‘000) 13.3 34.5 72.7
# of Members (millions) 1.8 3.6 9.3
Average milk procurement (million kg 2.6 5.8 10.9
per day)
Processing capacity in rural dairies 3.6 8.8 19.2
(million ltrs per day)
Drying capactiy (MTS per day) 261 508 842
Liquid milk marketing (million ltrs 2.8 5 9.9
per day)

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 322 ACRJ

Exhibit 6
Gujarat Cooperative Milk Marketing Federation
GCMMF: Mission Statement

We, at GCMMF, endeavour to satisfy the taste and nutritional requirements of the customers of
the world, through excellence in marketing by our committed team.

Through co-operative networking, we are committed to offering quality products that provide
best value for money.

GCMMF: Business Philosophy

• To serve the interests of milk producers

• To provide quality products to consumers
• Value for money

GCMMF Sales Turnover Rs (million) US $ (in million)

1994–95 11140 355
1995–96 13790 400
1996–97 15540 450
1997–98 18840 455
1998–99 22192 493
1999–00 22185 493
2000–01 22588 500
2001–02 23365 500
2002–03 27457 575
2003–04 28941 616
2004–05 29225 672

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 323

Exhibit 7
GCMMF/India Trends in Milk Production & Cooperative Societies

GCMMF Member Village District Coop Societies GCMMF Milk Producer Members (Million)

11400 11615 2.4

12000 10852 11200 2.5 2.22 2.27 2.36
10180
10000 8690
2 1.67
8000 6240
5580
1.5 1.23
6000
1
4000 1
2000
0.5
0
0
5

02

03

04

05
-8

-8

-9

-9

1-

2-

3-

4-
84

88

93

97

'0

'0

'0

'0

89

03

05
-8

-9

-0

-0
-

2-

4-
84

93
88

3
'0

'0
'0

'0
GCMMF: Average Milk Procurement
(Million kgs. per day)

5.2 5.7
6 5.1
4.6
5 4
4 3
2.5
3 1.7
2
1
0
5

5
-8

-9

-9

-9

-0

-0

-0

-0
84

89

93

97

'01

'02

'03

'04

Milk Production: India (Million Metric Tons)

100 88 91
84
90 78.1
74.3
80 70.8
66.3
70
53.9
60
50
40 31.6
23.2
30 20 21.2
17
20
10
0
1950 1968 1980 1995 1997 2002 2004

Phase I Phase II Phase III

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 324 ACRJ

Exhibit 8
Amul Support Services
Animal Breeding — Amul owned a semen production center with
high-pedigreed buffalo, the Holstein-Friesian. Amul provided
artificial insemination, which enabled it to control the supply
surplus and deficit. A cluster of villages had available AI sub-
centers. This crossbreed bull enabled the increase of the quality and
milk productivity of the members’ herds.
Veterinary Services — In 1950 the concept of veterinary services
were introduced to the cooperative. Farmers were not educated in
this respect, and on many occasions would simply commiserate the
illness or loss of their buffalo. A team of dedicated veterinarians was
assembled who visited every village twice a month to treat the sick
animals free of charge. Moreover, the vet services were available
on call for immediate attention. In 1997, Amul operated 16 mobile
veterinary dispensaries with radio telephones, providing emergency
services on call. Subsidized medicines were also provided within
the village society first-aid offices.
Cattle Feed — Nutritious cattle feed developed from local produce
lends to improved milk quality and productivity. Amul setup its
first cattle feed plant in 1964, and its second in 1981. Balanced cattle
feed is sold to the villagers at cost. The village collection centers are
the point of sale, facilitating and encouraging the farmers to use the
nutritious cattle feed.
Value Addition & Marketing — As milk production increased, Amul
had to find new methods of utilizing the produce. New dairy
products were introduced, though branding was the solution that
differentiated Amul from competition. Vertical integration into
processing, packaging and marketing was followed. GCMMF was
established to develop the markets and provide the services to the
cooperatives. By 1980, Amul was the most recognized brand in
India, primarily due to its slick, snappy and contemporary billboard
commercials.
Education — Amul performed educational and training activities
to ensure that its cooperative members exercised their rights and
responsibilities prudently. Women members were provided special
attention, as they were typically responsible for the animals in the
house while the men tended the farms. The constant interaction
with the members ensured that Amul remained responsive to the
needs of the farmers.
Institute of Rural Management, Anand — As a professional himself,
Kurien observed the growth in rural enterprises without a parallel
increase of professional managers capable of serving the rural

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 AMUL INDIA: A SOCIAL DEVELOPMENT ENTERPRISE 325

poor. He found that too many managers had “knowledge without

values; intellect without wisdom; understanding without empathy;
information without communication; skills and techniques without
practice; and work without commitment”. Recognizing the immense
need for relevant management education and a training ground
for professionals, IRMA was established in 1979. The professional
graduates would pursue rural based opportunities. IRMA was also
training managers to lead the Amul system into the future.
Rural Health — As Dr. Rajendra Prasad, the President of India,
inspected the veterinary van in 1950, he was amazed and impressed
by the large, spanking new van, gleaming with modern equipment.
Round-eyed, he exclaimed “In Bihar we don’t have anything
like this for humans! Yet you have it for your cattle.”p This was
the impetus, which led to the endeavor of the Tribhuvandas
Foundation, providing healthcare programs for the villagers,
especially for the women and children. This program initiated
integrated rural development activities across India as part of the
cooperative efforts.

p
The Amul India Story, p. 247.

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 326 ACRJ

Exhibit 9
Growth and Expansion Phases — Amul
The diagram below illustrates the growth and expansion phases of Amul over its last 60 years of
illustrious journey.

Growth Phases due to technology, marketing or operational improvements/innovations.

Technology Upgrades
1990's

G
R
O Product Diversification
W 1980's
T
H

&

E
X GCMMF Established
P 1973
A
N
S
I
O Amul Brand Name
N Selected -- 1957

Milk Powder Prod’n

STARTUP 1952
1946

TI ME

00094.indd 326 3/7/2008 4:51:58 PM