Distribution Channel

 Amul has an excellent distribution system in place. Distribution channel has made
Amul even more popular. As milk is a perishable product, proper distribution
network is critical for the success of entire business
 Amul manages four different distribution blocks viz ambient products (like milk
powder, ghee), chilled products (butter, cheese, shrikhand), frozen products (ice-
cream and paneer) and fresh items (fresh milk, curd, yoghurt)

Products Agent Wholesaler

Consumer Retailer

 It is similar to three level distribution channel. The final product (milk) is transported
from processing facilities via agents who are just facilitators in the entire network.
The products change hands for three times before it reaches to the final consumer.
 Further, it is sold to wholesale dealers who then further sell it to retailers and the
product finally reaches consumers. It is the basic chain how we receive the milk at
our end (prevalent one)
 Being an organization of revenue more than Rs 52000 cr, it ensures distribution is
done efficiently and manages itself. There are four types of outlets present across
India
 Amul Preferred outlets- such outlets are private shops who keep entire
product range of Amul but agree not to keep any competitor brands in the
outlets. Also, they can any other product in the non-competitor category
 Amul parlours – Generally locations are different gardens across different
cities, fully owned by Amul
 On the move – Available at the railway stations and state bus depots across
different cities
 Centre of excellence – Available at places which has class of excellence of its
own
 Amul products are available in over 500,000 retail outlets across India through its
network of over 3,500 distributors
 Supply Chain at AMUL

 As shown in the figure, the supply chain of Amul starts

off with farmers providing milk to Village Cooperative Societies (VCS) which
subsequently send it to the Gujarat Cooperative Milk Marketing Federation,
marketing entity for unions.

 Given the boom of e-commerce in recent years, milk is available on various

platforms such as supermart(flipkart), grofers etc
Government policies related to trade in domestic market
During 1950s and 1960s, milk production in India was stagnant. The annual production
growth rate was negative for many years. During that period, imports comprised 50 to 60%
of total dairy industry’s requirement. In 1970, per capita consumption of milk in India was
only 107 grams per day. It was below the minimum recommended nutritional standards and
one of the lowest in the world. Even though India had the largest cattle population in the
world, the milk production was low.
Operation Flood
National Dairy Development Board (NDDB) was created in 1965. NDDB launched Operations
Flood in 1970. It was the world’s largest dairy development program. Operations Flood was
based on Amul’s Anand pattern of dairy co-operatives. Verghese Kurien, founder of Amul,
was the chairman of NDDB. Operations Flood was implemented in three phases. Phase I
started in 1970 and Phase III ended in 1996.
Before launching Operations Flood, milk production in 1968 was only 21.2 million tonnes
(MT). In 1979, it increased to 30.4 MT and in 2001 it was 84.6 MT. Operations Flood helped
India to transform from a milk-deficient nation into the world’s largest milk producing
nation. In 2019, India’s milk production is 176.4 MT, which is 20% of the world milk
production.
Operations Flood program helped to provide quality milk to consumers across 700 towns
and cities through National Milk Grid. It reduced the number of middlemen. Thus, seasonal
price variations decreased. Due to cooperative structure, farmers were able to produce and
distribute milk themselves.
Government followed three policies till mid 1990s:
1. To shield the dairy sector from competition of cheaper imports, all the dairy imports
were channelised through NDDB till 1994
2. Government allowed imports only for ‘food aid’. Proceeds from the sale of these
imported products were appropriated exclusively by NDDB. It used these proceeds
to finance the cooperative development initiatives.
3. The Industries (Development and Regulation) Act, 1951, restricted competition from
domestic private players. A license was required to enter the dairy industry.
In 1991 the government exempted the dairy industry from the Industries (Development and
Regulation) Act. Thus, private entrepreneurs were able to enter the dairy industry. Within a
year more than 100 dairy processing facilities were established in India. Most of these
facilities were producing higher value-added products.
As the number of dairy processing plants increased, there was a criticism that the private
companies were also operating in the areas where the cooperatives were operating. There
were complaints regarding the quality of milk supplied by the private players. So, the
government promulgated the Milk and Milk Products Order (MMPO), 1992, under the
Essential Commodities Act (ECA) to regulate the production of milk and milk products.
The MMPO again introduced licensing system. According to the MMPO act, private players
had to set up their own zones for milk procurement or milk-sheds that were not associated
with cooperatives. This provision was made to safeguard the milk-sheds of cooperatives.
Due to liberalisation policies, the government again amended the MMPO in 2001. State
governments were granted the authority to grant a one-time license to the private sector. It
abolished the need for renewal of licenses. In 2003, restrictions on setting up milk
processing plants was eliminated by the government. As a result of these amendments, now
the quantity of milk processed by the private sector is higher than that of the cooperatives.

Status of Processing and Value addition

Milk is processed for the subsequent two reasons:
1) To extend the standard of the milk
2) Kill all the pathogenic micro-organisms present in raw milk
Milk process additionally depends on intended use in the next stage of food chain and
expected self-life.
In India, Milk generally undergoes
 High Temperature Short Time (HTST) Pasteurisation
 Ultra-High Temperature (UHT) Sterilization
High Temperature Short Time (HTST) Pasteurisation: Milk is heated at 72 ° C for 5 seconds
and cooled immediately below < 4 ° C to destroy bacteria and extend shelf life. The
pasteurised milk is then verified for key quality parameters to assure correct food quality
and safety before sanitary packaging/filling.
Ultra-High Temperature (UHT) Sterilization: Milk is heated between 135 ° C to 145 ° C for
1-2 sec and cooled afterwards to Room Temperature. The sterile milk is crammed in
appropriate packaging material beneath sterile condition and sent once quality and safety
check is done.
To ensure safe and good quality milk, these are the 5 approaches used by world class
organisations:
1) Keep Clean: It includes prevention of contamination and ensuring effective cleaning
and sanitation practices in place. Subsequent care is taken while choosing
equipment and design to prevent contamination while processing.

2) Separate Raw and Cooked products: Dedicated storage & transfer line to keep raw,
pasteurised milk & milk products separate. Dual sensing systems and positive
 pressure mechanism is maintained in pasteuriser and valves to prevent mixing of
raw milk with pasteurised milk.

3) Cook Thoroughly: Milk processing firms ensure that each particle of milk is
effectively pasteurised by keeping heating coil of adequate length and design. Flow
control device is kept at milk inlet point to monitor the milk flow rate during
pasteurisation.

4) Keep Food at Safe Temperature: The temperature of milk is maintained below 4° C

throughout the operation. During transportation adequate cold chain is maintained.

5) Use Safe Water and Raw Material: Raw milk is tested to any or all adulteration like
Sugar, Salt, Urea, maltodextrin, detergent, starch, vegetable oil etc. Portable water is
used for standardisation process and for final rinse cleaning including clean in place
(CIP) of tanks, equipment’s and transfer lines.
Milk is processed in the following stages:

 QC testing  Separation
Whole Milk
 Cooling  Pasteurization
 Storage  Standardisation

 Drying  Coagulation
 Storage  Washing Skim Milk Cream
 Distribution  Separation

 Evaporation  Pasteurisation
Casein Powder  Blending  Cooling
Raw
 Homogenisation  Tempering
Whey

 Drying  Churning
 Ultrafiltration  Storage  Storage
 Evaporation  Distribution  Distribution
 Ultrafiltration

Skim Milk Cream

 Drying
Powder Butter milk
 Storage
 Distribution

Whey Powder
Types of Milk:

 Toned milk  When full-fat buffalo/cow milk/ mixture of both is diluted with
skimmed milk and water to reduce fat present in the milk, toned milk is obtained.
 Standardised milk (Pasteurised, flavoured and sterilized)  Milk has been
standardised to fat and solids-not-fat percentage
 Full-cream milk  Milk from which cream isn’t removed and has 3.5% of fat content
present in it.
 Mixed milk (Raw, pasteurised, boiled, flavoured and sterilised)  Milk prepared by
combining milk of cow, buffalo, goat etc.
 Recombined Milk (Pasteurised, flavoured and sterilized)  Prepared from milk fat,
non-fat-milk solids and water.
 Skimmed Milk (Raw, boiled, pasteurised, flavoured and sterilized) milk fat has
been removed

Sustainability Issues on Environment and challenges faced by milk

industry:
The milk industry is facing primarily three challenges:

 The need to produce more milk because of the rise in population

 To produce better milk keeping environment in mind
 Climate change because of the methane produced by cows

Negative impacts of milk production:

1. Use of land: Livestock raising and rearing requires grazing land and cropland which is
dedicated towards the feed production.
Approximately it might require 70% of all agricultural land.
2. Climate change and gaseous emissions: Green-house gases or GHGs are one of the
major issues in the milk industry
Emissions arise due to feed production which is because of deforestation for feed
crops, chemical fertiliser, cultivation of feed crops, feed transport etc.
3. Depletion of water resources: Livestock requires a huge amount of water usage,
specifically utilised for feed crops.
Also, water quality gets affected by livestock as they release pathogens into
waterways, mainly due to the intensive livestock operations.
4. Erosion of Biodiversity: Livestock impact biodiversity in numerous and varied ways.
Livestock and Wildlife interaction might lead to transfer of animal diseases to wild
animals.
 Water pollution and ammonia emissions, primarily because of industrial livestock
production impacts waterways and thus biodiversity in rivers/ponds.
5. Soil: Main impact on soil integrity is because of fertilisers, feed additives, more
concentrated use of manure kind of products.
Also, soil has the ability to retain them.
6. Air: De-nitrification impacts environment negatively due to methane, ammonia and
carbon dioxide. Methane generation is particularly higher in low input system as
compared to highly intensively managed chains like Amul.
7. Manure: It has always stayed as the biggest cost problem in the livestock.
Social sustainability issues such as slurry spreading and manure creations garner
issues such as community complains due to the high amount of bad odour emissions.
8. Genetics: There is genetic uniformity which is because of low level of genetic
diversity. A commercial animal is extremely similar over a location due to a lack of
international breeds or cross breeding.
More than 90% is the amount of local breeds in India which poses the risk of
extinction on a large number of breeds.
Thus the major problems Confronting Sustainable Dairy production includes
biodiversity and ecology, agro-climatic condition, and socio economic and cultural
background of people, types/breeds of dairy cattle reared.
References:
1. FICCI paper on Development of Dairy Sector in India, July 2020
2. https://economictimes.indiatimes.com//industry/cons-products/fmcg/amul-kicks-
off-largest-distribution-exercise/articleshow/7714890.cms?
utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
3. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4764701/
4. http://www.isca.in/rjrs/archive/v2/iISC-2012/9.ISCA-ISC-2012-1AFS-33.pdf
5.