Government Policies:

Vendors and milk dealers dominate the informal market where the former generally procures milk from producers and sells them to urban households, while the latter supplies to private processing units. Of the milk that enters the formal and informal market, almost 45 percent is consumed in the raw form while the remaining is processed to produce ghee, khoa, butter, curd, milk powders, cottage cheese, etc.

Liberalisation of the Dairy Sector, the cornerstone of India’s milk revolution, has been the cooperative dairy sector which was protected from cheap subsidized imports through quantitative restrictions and by strict control over exports and imports through the State-owned Indian Dairy Corporation. The competition from private sector was controlled through licensing under the Industrial Development and Regulation Act of 1951, which discouraged new entrants into the dairy processing sector. A suitable price-environment was created and is considered as a key for the impressive growth in this sector. All this changed in the early nineties when major financial and trade policy reforms were initiated in all sectors of the Indian economy including the dairy sector. The first step was to encourage private participation and the dairy industry was de-licensed in 1991. That dairy is a lucrative business became obvious when within a year of de-licensing, more than 100 privately-owned milk processing plants came up in the major milk producing states. Despite their numerical strength, the cooperative sector did not have the capacity to compete against these private players flush with capital and fortified with modern technology. Realising this, the government had to step in again and the Milk and Milk Products Order (MMPO) was issued in 1992 under the Essential Commodities Act (ECA) to regulate production of milk and dairy products. The MMPO reintroduced licensing and also required private players to set up their own zones of procurement (milk- sheds) that were beyond the existing milk-sheds of cooperatives. This was done to check private players from poaching on milk-sheds of the cooperative sector. However, swept by the wave of liberalization, the government again amended the MMPO in 2001 and allowed State governments to grant a one-time license to the private sector, and also abolished renewal of license. In 2003, restrictions on setting up milk processing and milk product manufacturing plants and also the concept of milk-sheds were eliminated. The amended order emphasized sanitary, hygiene, quality and food safety of milk and milk products.


JPEG ImageSome critics of the project argue that the emphasis on foreign cow breeds has been instrumental in the decimation of Indian breeds. Foreign breeds give higher yields, but require more feed and are not suited to Indian conditions. Critics also argue that the focus on the dairy sector during this period came at the expense of development, research, and extension work in other areas of Indian agriculture. It is relevant here to point out the fact that the farmers and the agriculturists, who form the backbone of both the Green Revolution (read about it here) and White Revolution made both the Revolutions a success with their supreme sense of responsibility and co-operative endeavour for ensuring the very existence of India's people. It is these virtues, rooted in their ancient wisdom, much more than using foreign breeds for high yields of milk, that led to the efficacy and success of the Revolutions. There is also the criticism that the product from the White Revolution, namely milk and dairy products is qualitatively, not exactly 'technically', inferior to the product obtained employing traditional methods and practices geared to smaller population levels which had only to be 'scaled up' for larger populations. Indian research and development might have failed to look at this superior option.

Other Players:

Amul has been able to withstand the onslaught of private and foreign players in the dairy industry and has also been able to export products in limited quantities. The success of Amul resulted in similar organizations being setup by state governments throughout India, most of which had reasonable success. Examples are Milma in Kerala, Vijaya in Andhra Pradesh, Aavin in Tamil Nadu ,K.M.F ( Nandini ) in Karnataka, Sudha in Bihar and others.

JPEG ImageJPEG ImageOther co-operative rivals of Amul include National Dairy Development Board (NDDB) (with its Mother Dairy and Sugam brands). The government adopted this successful model and set up the National Dairy Development Board (NDDB) in 1965 which prepared a blueprint for a milk revolution across the country. Known as Operation Flood, this programme began in 1970 and was implemented across the country. It was also one of the largest rural development programmes in the world which ran for 26 years and helped India to emerge as the world’s largest milk producer in 2003-04 with a record output of 88.1 million tonnes. The production continued to rise and in 2006-07 India produced more than 100 million tonnes of milk.

With Amul entering the sports drink market, its rivals now include Coca Cola and PepsiCo.

Sankalp Unit