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Transformational Journey of Amul: A Case Study

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 Review of Management, Vol. 10, No. 3-4, December 2020

Review of Management
Vol. 10 No. 3-4, December 2020 pp. 10-15
ISSN: 2231-0487

Transformational Journey of Amul: A Case Study

Srirang K Jha* and Tanya Gupta**

ABSTRACT
Amul was established in 1946 under the aegis of the Kaira District Co-operative Milk
Producers Ltd. which eventually led to the formation of Gujarat Cooperative Milk Marketing
Federation (GCMMF) in 1973. Over the time, Amul has epitomized how a cooperative society
can transform the quality of life of its core stakeholders while staying highly profitable and
ahead of competitors including some of the top MNCs operating in the country. Amul has
emerged as a household name in India with tremendous brand equity. Secret sauce of success
for Amul has been its readiness to change with the times. At the same time, Amul has
meticulously augmented the prosperity of over 3 million members of GCMMF. So far, there
has been no scandal or case of financial embezzlement which indicate that business in
cooperative sector can be managed with due diligence, integrity and competitiveness without
compromising on profitability or interests of the core stakeholders. This case study presents
a transformational journey of Amul that can inspire leaders and managers of other
cooperative societies in the country which are reeling under losses and need intervention
strategies to turn around their fortunes.

KEYWORDS: Dairy Farming, Amul, Cooperative Society, India

*Associate Professor & Head, General Management Area, Apeejay School of Management,
New Delhi E-mail: jha.srirang@gmail.com
**Student, Post Graduate Diploma in Management Program (2020-22 batch), Apeejay School

of Management, New Delhi

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 Review of Management, Vol. 10, No. 3-4, December 2020

ABOUT THE ORGANIZATION

Amul was set up in 1946 under the aegis of the Kaira District Co-operative Milk Producers Ltd.
which eventually led to the formation of Gujarat Cooperative Milk Marketing Federation
(GCMMF) in 1973. Amul was established to streamline the dairy farming in cooperative sector
and protect the dairy farmers from the manipulative middlemen who always kept them at
the receiving end. The Kaira District Co-operative Milk Producers Ltd. was founded by the
disgruntled farmers who wanted a fair treatment and a reasonable price for milk. Founding
members of the Kaira District Co-operative Milk Producers Ltd. were highly inspired by leaders
such as Sardar Ballabh Bhai Patel, Morarji Desai and Tribhuvandas Patel. Initially, dairy
cooperative societies of only two villages were part of the Kaira District Co-operative Milk
Producers Ltd. True, GCMMF has been attributed for ushering the white revolution in the
country under the leadership of Tribhuvandas Patel who was founding chairman and
Verghese Kurien who joined the organization in 1950-51 as general manager.

Amul became quite successful as a result of its inclusive structure. Dairies were owned by the
farmers who elected their representatives to run the cooperative societies at village and
district levels with the help of professionals. District unions are members of GCMMF. AS such,
GCMMF is quite responsive to the needs of farmers. Amul model spearheaded by GCMMF
has enabled the country to become largest producer of milk in the world. It has also catalysed
dairy farming in the cooperative sector across the country. Impact of Amul model can be seen
all over the country. There are vibrant dairy cooperative societies in over 220 districts spread
over 28 states duly supported by over 16 million members as mentioned on the website of
Amul (Amul, n.d.).

GCMMF is said to be the largest food product marketing company. GCMMF in its current form
was established in 1973. Turnover of the organization in 2019-20 was US$ 5.1 billion (Amul b,
n.d.). The organization procures approximately 24.6 million litres of milk from 3.64 million
members through 18600 village-level milk cooperative societies every day (Amul b, n.d.). The
village-level cooperative societies are affiliated to 18 member unions spread across 33
districts of Gujarat. The organization has a huge marketing network comprising 71 sales
offices, 10,000 dealers, 1 million retailers (Amul b, n.d.). Products of Amul includes milk, milk
powder, health beverages, clarified butter, butter, cheese, pizza cheese, cottage cheese, ice-

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 Review of Management, Vol. 10, No. 3-4, December 2020

cream, chocolates and traditional Indian sweets (Amul b, n.d.). GCMMF has received several
awards for its phenomenal work in cooperative sector such as Excellence in Crisis: Crisis
Superheroes Award 2020 from IMC Ramkrishna Bajaj National Quality Award Trust, Marketer
of the Year (FMCG Food) Award 2019 from India chapter of International Advertising
Association, and World Dairy Innovation Award 2018 from Global Dairy Congress in Poland.
So far, GCMMF has remained apolitical which has added to its growing competitiveness.

GCMMF provides following services to the dairy farmers:

• breed improvement and animal healthcare programmes;
• extension activities;
• supplies of balanced cattle feed on a no profit–no loss basis;
• quality fodder seed distribution at subsidized cost;
• a network of artificial insemination centres aimed at genetic upgrading of the animals
using frozen semen of pedigree bulls; these centres are managed by educated
unemployed rural youth who provide breeding services to the farmers;
• frozen semen, liquid nitrogen and other consumables;
• 24-hour mobile veterinary services for emergencies.

ISSUES AND CHALLENGES

Over the years, Amul has grown as a national brand and household name that is trusted by
all. It is not only competing with regional cooperative federations but also a number of MNCs
such as Nestle. At the same time, the organization has tough time holding the core
stakeholders i.e., the dairy farmers who form the backbone of the GCMMF. While the older
dairy farmers are happy with their traditional vocation, the younger population in the villages
are more interested in unorthodox callings mainly in urban locations. Dairy farmers are worst
hit by low levels of earnings due to rising cost of cattle feed. Probably this is the reason why
most of the youth in the villages are reluctant to take up dairy farming as a means of
livelihood. Dairy farmers of Gujarat are doomed as they have not received any subsidy or
support from the government for buying fodder or cattle feed despite the drought declared
by the state (Pandey, 2019). Quoting Manish Doshi, Congress Spokesperson, Pandey (2019)
writes:
“In Gujarat, farmers are affected by the drought and many are trying to survive by doing
dairy farming and keeping cattle. But not only are they unable to get cattle feed, the

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 Review of Management, Vol. 10, No. 3-4, December 2020

common land for grazing has slowly been handed over to industrialists by the BJP
government. In as many as 1,900 villages, common land has disappeared. The district
milk unions are also mostly headed by the BJP, and they ensure prices are not increased.
The state government has been asking for votes using the cow, but gaushalas are not
being helped at all”. (Pandey, 2019)

True, rapid industrialization has led to shrinkage of grazing grounds which affect the dairy
farming. Woes of dairy farmers have augmented with shortage as well as rising prices of
feed/fodder. Santra (2018) has rightly observed:
“There is an excessive number of unproductive animals which compete with
productive dairy animals in the utilization of available feeds and fodder. The grazing
area is being reduced markedly every year due to industrial development resulting in
shortage of supply of feeds and fodder to the total requirement. Ever increasing gap
between demand and supply in feeds and fodder limits performance of diary animals.
Moreover, provision of poor quality of forage to dairy cattle restricts animal
production system. The low capability of purchasing feeds and fodder by the small and
marginal farmers and agricultural labourers engaged in dairy development result in
inadequate feeding. Non-supplementation of mineral mixture results in mineral
deficiency diseases. High-cost feeding reduces the profits of the dairy industry.”
(Santra, 2018)

Availability of good quality cattle feed with affordable price is the most pressing challenge
faced by members of GCMMF. Even R S Sodhi, Managing Director, GCMMF, has admitted in
interview that productivity has been hit hard as the animals are raised on low input, a scenario
which can be reversed by improving feeding and breeding practices in a big way (Bahadur,
2020). Besides, there are issues related to quality of cattle feed, breeding and innovations in
dairy technologies.

However, the most potent threat to the survival of GCMMF comes from low tariff on import
of milk powder and allied products. Advanced countries not only provide subsidies and
minimum support price to encourage the dairy farmers, but also benefit from lower import
duty to the tune of 15% offered by Government of India (Amul c, n.d.). On the other hand,

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 Review of Management, Vol. 10, No. 3-4, December 2020

Indian dairy farmers hardly get any support from the central or the state governments. Thus,
there is no fair play in business of milk so far as competition in dairy sector is concerned. It is
highly skewed in favour of the foreign players. Despite all such odds, GCMMF is ahead of most
of the competitors with its flagship brand Amul. On a level playing field, Amul can attain its
full potential and become numero uno, spreading the taste of India across the globe.

THE WAY FORWARD

GCMMF is a progressive and forward-looking organization that invests 600-800 crores every
year to add new facilities within and outside Gujarat (Bahadur, 2020). The organization
focuses on multi-site production capacity, multi-product portfolio and service multiple
segments and a multi-channel operation across general trade, e-commerce, and others.
Quoting Sodhi, Bahadur (2020) mentions that GCMMF plans to increase daily milk processing
capacity from 3.6 crore litres a day to 4.4 crore litres a day in next two-three years. Sodhi is
also concerned about retaining the second-generation educated dairy farmers and trying to
reposition dairy as a commercial, modern, cool, contemporary (Bahadur, 2020). In spite of
the reassurance provided by top functionary of GCMMF, some of the questions remain wide
open for discussion:
• How can GCMMF ensure payment of appropriate prices to dairy farmers at village
level so that they are able to have enough margin to survive while taking good care
of their cattle?
• How can GCMMF keep the diary farmers motivated?
• What should be done by GCMMF to increase yield of milk at the level of individual
dairy famers based in villages?
• Will GCMMF be able to retain second-generation dairy farmers without removing the
constraints faced by dairy sector?

REFERENCES
Amul a. (n.d.). About us. www.amul.com/m/about-us
Amul b. (n.d.). Organization. www.amul.com/m/organisation
Amul c (n.d.). A note on achievements of dairy cooperatives. https://www.amul.com/m/a-
note-on-the-achievements-of-the-dairy-cooperatives

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 Review of Management, Vol. 10, No. 3-4, December 2020

Bahadur, S. (2020). Interview: Amul grew bigger during lockdown, but there are challenges
ahead for industry, says Sodhi. Indo-Asian Commodities:
https://www.indoasiancommodities.com/2020/08/11/interview-amul-grew-bigger-
during-lockdown-but-there-are-challenges-ahead-for-industry-says-sodhi/
Pandey, N. (2019). In Gujarat, the land of Amul, dairy farming has become a huge Lok Sabha
poll issue. The Print: https://theprint.in/politics/in-gujarat-the-land-of-amul-dairy-
farming-has-become-a-huge-lok-sabha-poll-issue/222844/
Santra, S. (2018). Challenges faced by the Indian diary sector. Franchise India:
https://www.franchiseindia.com/wellness/challenges-faced-by-the-indian-dairy-
sector.11159

Suggested Readings
Ajwani, D. (2015). Cow to consumer: Beyond profit for Gujarat Cooperative Milk Marketing
Federation. Forbes India.
Asthana, A. K. (2012). Amul: Evolution of an international brand. Indian Journal of
Marketing, 42(1), 23-28.
Bhattacharyya, J., Krishna, M. B., & Premi, P. (2020). Amul Dairy (GCMMF): expanding in the
USA, leveraging the e-commerce advantage. International Journal of Management and
Enterprise Development, 19(2), 149-163.
Heredia, R. (1997). The Amul India story. New Delhi: Tata McGraw Hill.
Manikutty, S. (2002). Gujarat Co-operative Milk Marketing Federation Ltd.(GCMMF). Asian
Case Research Journal, 6(02), 205-239.
Palsule-Desai, O. D. (2015). Cooperatives for fruits and vegetables in emerging countries:
Rationalization and impact of decentralization. Transportation Research Part E: Logistics
and Transportation Review, 81, 114-140.
Parekh, M. A. (2011). GCMMF: Preempting Competition with an Innovative Business
Model. Indian Journal of Marketing, 41(8), 24-27.
Subrahmanyam, N. (2004). An Integrated Approach for Effective Supply Chain Management
A Case Study of Amul. Paradigm, 8(1), 7-14.

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