Answer of 37 19bsp3787_prabhat kumar

In India, dairying is recognized as an instrument for social and economic development. The
nation's milk supply comes from millions of small producers, dispersed throughout the rural
areas. These farmers maintain an average herd of one or two milch animals, comprising cows
and/or buffaloes. The animals' nutritional requirements are largely met by agricultural waste
and byproducts (Gupta, 1987). Ample labour and a small land base encourage farmers to
practice dairying as an occupation subsidiary to agriculture. While income from crop production
is seasonal, dairying provides a stable, year-round income, which is an important economic
incentive for the small farmer to take to dairying.
Undoubtedly, the major challenge for the dairy sector in any developing nation is to increase
milk production in order to meet the increasing demand resulting from the almost inevitable
expansion of population and, presumably, growth of income. To meet this challenge, policies
must become more market-oriented. The adoption of appropriate technologies for production,
procurement, processing and marketing - after the unique environmental, social, economic,
political and cultural environment of the individual country has been considered - is an
important aspect of dairy development. Those national governments and international
institutions for whom the dairy sector is a major concern should accept the challenge and
formulate policies that integrate and buttress the major functions of dairy development.
Most of the significant developments in dairying in India have taken root in this century. The
history of the dairy development can be broadly classified into two distinct phases: pre- and
post-Operation Flood. On examining the developments made during both phases, it can be
concluded that the difference lies in the basic approach to solving the problems facing the dairy
sector.
Amul and the evolution of the Anand model
Milk procurement from the rural areas and its marketing in the urban areas was the major
problem in Indian dairying at the time India gained independence. In one of the earliest urban
milk supply schemes, Polsons - a private dairy at Anand - procured milk from milk producers
through middlemen, processed it and then sent the milk to Bombay, some 425 km away
(Korten, 1981). Bombay was a good market for milk and Polsons profited immensely. In the
mid-1940s, when the milk producers in Kaira asked for a proportionate share of the trade
margins, they were denied even a modest increase. The milk producers went on strike, refusing
to supply milk to Polsons. On the advice of Sardar Vallabhbhai Patel, a leader in India's
independence movement, the milk producers registered the Kaira District Cooperative Milk
Producers' Union, now popularly known as AMUL, in 1946. The Kaira union procured milk from
affiliated village-level milk societies. This was the genesis of organized milk marketing in India, a
pioneering effort that opened a new vista for dairy development in the country (see Box).
Between 1946 and 1952, AMUL's policy was directed towards obtaining monopoly rights for the
sale of milk to the Bombay milk scheme. In 1952, it succeeded in achieving its purpose after the
Government of Bombay cancelled the contract with Polsons and handed over the entire
business of supplying milk from the Kaira district to AMUL. However, as the Bombay milk
scheme was committed to purchasing all the milk produced by the Aarey Milk Colony in
Bombay, it would not take AMUL's milk during the peak winter months. The disposal of this
surplus milk posed difficulties for AMUL, forcing it to cut down on purchases from its member
societies, which affected members' confidence. The answer was the production of milk
products: in 1955, a new dairy plant was set up at Anand to produce butter, ghee and milk
powder.
A second dairy was built in 1965, and a product manufacturing unit was established in 1971 to
cope with increasing milk procurement. In 1993, a fully automatic modern dairy was
constructed adjacent to the original AMUL dairy plant at Anand.
AMUL formed the basis for the Anand Model of dairying. The basic unit in this model is the milk
producers' cooperative society at the village level. These cooperatives are organizations of milk
producers who wish to market their milk collectively. Membership is open to all who need the
cooperative's services and who are willing to accept the responsibilities of being a member.
Decisions are taken on the basis of one member exercising one vote. No privilege accrues to
capital, and the economic returns, whether profit or loss, are divided among the members in
proportion to patronage. Each cooperative is expected to carry out the continuing education of
its members, elected leaders and employees. All the milk cooperatives in a district form a union
that, ideally, has its own processing facilities.
All the unions in a state are normally members of a federation whose prime responsibility is the
marketing of milk and milk products outside the state. There is also a fourth tier, the National
Cooperative Dairy Federation of India (NCDFI), which is a national-level body that formulates
policies and programmes designed to safeguard the interests of all milk producers. Each tier of
the Anand organizational structure performs a unique function: procurement and services by
the cooperative; processing by the union; marketing by the state federation; and advancing the
interests of the cooperative dairy industry by the national federation. Thus, the Anand Model
has evolved into an integrated approach to systematic dairy development.

Facts about the Kaira District Cooperative Milk Producers' Union (AMUL)
· Established in 1946 - two societies collected 250 lures of milk
· Competed with Persons to supply milk to Bombay
· 1952 - Bombay Government terminated Persons contract and signed with AMUL
· 1955 - dairy and milk powder plant was established with aid from the United Nations
Children's Fund (UNICEF)
· 1960 - AMUL pioneered production of milk powder and baby food from buffalo milk
· AMUL - meets producer demand for critical inputs, veterinary services, artificial insemination
and feed
· Today AMUL members supply more than 1 million lures of milk per day
· AMUL sells 400 tonnes of cattle feed every month

Operation flood
The strategy for organized dairy development in India was actually conceived in the late 1960s,
within a few years after the National Dairy Development Board (NDDB) was founded in 1965. It
rested on the Operation Flood programme, which was conceived by the NDDB and endorsed by
the government.
Operation Flood is a unique approach to dairy development. During the 1970s, dairy
commodity surpluses were building up in Europe, and Dr Verghese Kurien, the founding
chairman of NDDB, saw in those surpluses both a threat and an opportunity. The threat was
massive exports of low-cost dairy products to India, which, had it occurred, would have tolled
the death-knell for India's staggering dairy industry. The large quantities that India was already
importing had eroded domestic markets to the point where dairying was not viable. The
opportunity, on the other hand, was built into the Operation Flood strategy. Designed basically
as a marketing project, Operation Flood recognized the potential of the European surpluses as
an investment in the modernization of India's dairy industry. With the assistance of the World
Food Programme, food aid - in the form of milk powder and butter oil - was obtained from the
countries of the European Economic Community (EEC) to finance the programme. It was the
first time in the history of economic development that food aid was seen as an important
investment resource. Use of food aid in this way is anti-inflationary, it provides a buffer stock to
stabilize market fluctuations and it can be used to prime the pump of markets that will later be
supplied by domestic production. The overriding objective of all aid is, or rather should be, the
elimination of the need for aid. The use of food aid as an investment is the most effective way
of achieving this objective.
Operation Flood is a programme designed to develop dairying by replicating the Anand Model
for dairy development, which has stood the test of time for almost half a century. The first
phase of Operation Flood was launched in 1970 following an agreement with the World Food
Programme, which undertook to provide as aid 126000 tonnes of skim milk powder and 42000
tonnes of butter oil to finance the programme.
The programme involved organizing dairy cooperatives at the village level; creating the physical
and institutional infrastructure for milk procurement, processing, marketing and production
enhancement services at the union level; and establishing dairies in India's major metropolitan
centres. The main thrust was to set up dairy cooperatives in India's best milksheds, linking them
with the four main cities of Bombay, Calcutta, Delhi and Madras, in which a commanding share
of the milk market was to be captured. In achieving that goal, the first phase of Operation Flood
laid the foundation for India's modern dairy industry, an industry that would ultimately meet
the country's need for milk and milk products.
The second phase of the programme was implemented between 1981 and 1985. Designed to
build on the foundation laid in the first phase, it integrated the Indian Dairy Association-assisted
dairy development projects being implemented in some Indian states into the overall
programme. About US$150 million was provided by the World Bank, with the balance of project
financing obtained in the form of commodity assistance from the EEC.
The current, third phase of Operation Flood aims at ensuring that the cooperative institutions
become self-sustaining. With an investment of US$360 million from the World Bank,
commodity and cash assistance from the EEC and NDDB's own internal resources, the
programme envisages substantial expansion of the dairy processing and marketing facilities; an
extended milk procurement infrastructure; increased outreach of production enhancement
activities; and professionalization of management in the dairy institutions.
National dairy development board
In October 1964, on the occasion of the inauguration of AMUL's cattle feed plant, the then
Prime Minister of India, Lal Bahadur Shastri, spent the night as the guest of a village milk
cooperative society near Anand. Impressed by the socio-economic changes brought about by
the milk cooperatives, he expressed the desire for a national-level organization to replicate
Anand Model dairy cooperatives throughout the country and to make available
multidisciplinary, professional dairy expertise to dairies in the public and cooperative sectors.
Thus, in 1965, NDDB was registered under the Societies Registration Act, the Charitable Trust
Act and the Public Trust Act. Consistent with its model and mandate, NDDB headquarters were
established at Anand.
Conclusions
Operation Flood may be considered the central event of twentieth-century dairying in India. An
analysis of the lessons learned through the implementation of the programme should be useful
for those involved in formulating dairy development policies and programmes for the
developing nations of Asia and Africa.
The network of cooperative institutions created through the Operation Flood programme now
comprises 70000 dairy cooperative societies in 170 milksheds, encompassing 8.4 million milk-
producer families (Figures 1 to 3). Average milk procurement by these cooperatives has now
reached some 12.3 million kg per day (Figure 4), of which 8.2 million litres are marketed as
liquid milk, while the remainder is converted into products such as milk powder, butter, cheese,
ghee and a wide range of traditional milk products. Milk-processing capacity of approximately
15.6 million litres per day, chilling capacity of 6.5 million litres per day and milk powder
production capacity of 726 tonnes per day have been established through the programme.
One of the challenging aspects of dairy development in a tropical or subtropical country is the
movement of milk over long distances. In Operation Flood, this has been made possible through
the operation of about 140 insulated rail milk tankers, each with a capacity of 40000 litres,
supplemented by another 25 rail tankers of 21000-litre capacity. Approximately 1000 other
insulated road milk tankers operate throughout the country as well. This has enabled the
operation of a national milk grid, balancing regional fluctuations in milk procurement and
demand-and-supply gaps resulting from concentrated production of liquid milk in selected
milksheds. To balance seasonal variations in milk supply and demand caused by low milk
production during the summer months, a large milk powder storage capacity has been created
for buffer stocking.
The investment and achievements in modernizing the Indian dairy industry have had a major
impact on milk production. Annual production, which had stagnated to between 20 million and
22 million tonnes during the 1960s, has steadily increased to around 59 million tonnes (Figure
5), an annual growth rate of about 7.8 percent. Per caput availability of milk, which had
declined consistently during the two decades between 1951 and 1970, dropping to 107 g at the
start of Operation Flood, is now 187 g per day (Figure 6), despite a substantial increase in
population. Had family-planning programmes achieved the same success as Operation Flood,
the per caput consumption rate would be comparable to all but those of the leading dairying
nations.