After Gloom, Gujarat is Milking its Cows again

March 7, 2020February 28, 2020 by Project Manager

Ahmedabad — For two consecutive years, the dairy co-operatives of Gujarat had witnessed an unprecedented glut of milk. It was for the first time in the history of Gujarat, the cradle of India’s White Revolution, that procurement price paid to farmers had plummeted by 10-15% in 2017-18 and 2018-19. This was happening in a state which prides itself on paying the highest procurement price to dairy farmers. But improvement in domestic skimmed milk powder (SMP) prices coupled with an increase in demand for dairy products has once again put the dairy co-operatives on a growth trajectory.

“The final price which farmers in Gujarat got for milk fat last year was Rs 690 per kg. This year, this price is likely to be 10 to 15 % more,” said a top official of the Gujarat Co-operative Milk Marketing Federation (GCMMF) – the apex body of all the milk co-operatives of Gujarat that markets dairy products under the brand Amul. The SMP price in India had crashed to Rs 150-160 per kg in 2018-19 which has currently recovered to Rs 325 per kg. This financial year, GCMMF, which has now turned into an 18-member milk co-operatives body, is expecting to touch the Rs 40,000 crore mark, a 20% growth compared to Rs 33,000 crore annual turnover mark, which it had clocked in the last financial year. ‘Taste of India’ had got a billion-dollar tag in 2007 when the home-grown dairy giant had become the country’s largest food business by clocking Rs 4,300 crore turnover. GCMMF’s managing director R S Sodhi is predicting that within the next five years (by 2025), Amul will be a Rs 1 lakh crore enterprise.

“For this, we (GCMMF) and our member unions will be adding capacity to process 120 lakh litres per day (LLPD) of milk taking up our total milk processing capacity to 500 LLPD with nearly Rs 5,000 crore fresh investment,” Sodhi told TOI.

Last year, Prime Minister Narendra Modi had urged the home-grown dairy giant to emerge as one of the world’s top three milk processors by 2022.

Plan of New Dairies

Milk cooperatives of Gujarat have already left footprints across the country – be it Manesar in Haryana or Kolkata in West Bengal. GCMMF and its member milk cooperatives currently run 84 dairy processing plants inside and outside Gujarat. And all of them are currently on expansion mode. “Projects are being planned for setting up dairies at Pune, Kolkata, Punjab, eastern and western Uttar Pradesh, Ujjain, Madhya Pradesh by our member unions in addition to expansion projects for milk and milk products at the dairy plants within Gujarat,” a top official of GCMMF said. Liquid milk still brings in nearly 92% of the revenue. “But growth is also coming from newer segments. We believe that the segments which are witnessing 2% growth will see 10% growth in the next five years,” said Sodhi.

Worst fears gone

In October last year, millions of farmers in Gujarat had faced their worst fears. As the government was in the final stages of the proposed Regional Comprehensive Economic Partnership (RCEP), women milk producers from Gujarat had sent 15 lakh postcards urging Prime Minister (PM) Narendra Modi’s intervention. RCEP, proposed free-trade agreement (FTA) between ten member states of the Association of Southeast Asian Nations (ASEAN) and its six FTA partners – China, India, Japan, South Korea, Australia and New Zealand, would have meant dumping of foreign surplus milk in India impacting domestic milk prices. It would have proven suicidal for India’s dairy sector, both Amul and the National Dairy Development Board (NDDB) – had said. In November, much to the relief of farmers, the PM announced India is pulling out from RCEP.TRQ abolished, BCD now at 40%

Big relief for dairy cooperatives in Gujarat has come in the form of the Centre’s Budget announcement to abolish tariff rate quota (TRQ) and restoring basic customs duty (BCD) on imported dairy products from 30% to 40%. “Developed countries will no longer be able to dump their surplus milk and dairy products at cheap rates in India,” said a field expert.

The article is extracted from The Times of India, February 9, 2020.