Inception of Amul

About some 100 kms from Ahmedabad lies a small city named Anand. The city is known as the Milk Capital of India due to presence of the famous Amul Dairy there. Amul – one of the most famous Dairy brands of our country came into existence in 1946. During that time there was only one dairy in the district of Anand and in Gujarat known as Polson Dairy which had been established in 1930. Polson Dairy was providing superior quality dairy products to up-market consumers. However it was involved in the exploitation of Indian farmers by not providing sufficient amount to them for milk and also not allowing them to sell milk to other vendors. Indian national leader Sardar Patel along with agitated farmers of that area initiated a non-cooperation movement against this process in the year 1946 and this lead to the foundation of Amul on 14^th December 1946. Initially it supplied milk and other dairy products without any formalized distribution network or any supply chain in place. The brand name Amul had not been adopted at that time and it was called KDCMPUL (Kaira District Cooperative Milk Producer’s union Limited). It started initially with two dairy co-operative societies and 247 liters of milk only.

Dr. Verghese kurien and Amul

It was on 13^th May 1949, a young engineer who had just completed his Masters Degree in Dairy Engineering arrived at Anand to serve the bond period against the government scholarship for his education. His name was Mr. Verghese Kurien, later to be known to the whole world as Dr. Verghese Kurien. At the start of it all, he served there just to complete his required period and was ready to leave Amul after that but he was persuaded to stay back at Amul by Mr. Tribhuvandas Patel – the founder of KDCMPUL. He along with Mr. Patel started developing co-operatives in the Kheda district. The role of co-operatives was to procure the milk from the farmers and to pay the farmers their appropriate amount according to the quality of milk. Further detailed operation cycle of the co-operatives is explained in the following section. Mr. Kurien however wanted to give KDCMPUL a unique name which could be easily pronounced by all and which could also help in growth of the union. Suggestions were asked from various employees and farmers for an appropriate name. Soon, a quality control supervisor recommended the name “Amulya” which is derived from a Sanskrit word meaning priceless and implies unmatchable excellence. The name was modified to “Amul” to make the union also a part of this name and hence brand AMUL- Anand Milk Union Limited, came into existence.

Operation of Co-operative Model

Amul formed several co-operative societies for a group of villages. These co-operative societies had the task of collecting milk from the village farmers twice a day. The payment was made to the farmers according to the fat content in the milk. Sufficient steps (such as standard fat measurement machine, surprise checks, educating farmers etc.) were taken to prevent malpractices and enhance the overall process.  These milk cans were then transferred to nearby Milk Chiller Unit on the same day. It was kept in storage there for few hours then they were transferred for the pasteurization and finally to the cooling and packaging unit. After that milk was delivered to the wholesale distributor and then to the retailers and finally to the consumer thus following two-level distribution marketing channel.  The upstream supply chain was entirely designed by Dr. Kurien and Mr. Tribhuvandas Patel – as a result of which the co-operative mechanism kept getting better and by the end of 1960 Amul had become a success story in Gujarat.

Fig 1. Flow Diagram of Amul Co-operatives Operation

Operation Flood – The white Revolution

The year was 1964 when our Prime Minister Mr. Lal Bahadur Shastri was invited to Anand to inaugurate the new cattle-feed plant of Amul. He was supposed to return back by end of the day but after reaching Anand he insisted to stay there to learn about the success of the co-operatives. He visited almost all the co-operatives with Dr. Kurien and was impressed with the process with which Amul was sourcing the milk from farmers and at the same time helping them to improve their economic condition. Later, he returned to Delhi and asked Dr. Kurien to replicate the Amul pattern across the country. The combined effort resulted in creation of the National Dairy Development Board (NDDB) in the year 1965. Dr. Kurien took charge of NDDB and began the herculean task of replicating the overall pattern of the working at Anand to other parts of the country. By this time the demand for milk was growing at a faster rate than the supply of milk. India could have easily become the largest importer of milk like Sri Lanka were, had sufficient steps not been taken at that time by the Indian government and NDDB. Money was the biggest problem faced by NDDB during that period and was a critical resource needed to revolutionize the milk industry. To deal with it, NDDB tried to pursue World Bank for loans and other grants with no conditions at all. When the President of World Bank came to India in 1969, Dr. Kurien told him – “Give me money and forget about it”. A few days later, World Bank approved the loan for NDDB without even a single condition. This help was part of an operation, later known as Operation Flood – which was done to replicate the Anand working pattern across India. Operation Flood was subsequently implemented in India in three phases adding around 0.1 million co-operatives and 5 million milk producers. Dr. Kurien also took several other measures such as developing milk powder, developing several varieties of dairy products, emphasis on the health of cattle and development of vaccines etc. In 1973, he also set up GCMMF (Gujarat co-operative milk marketing federation) – an individual marketing unit of Amul to sell the Amul as a brand in India as well as abroad. He also founded IRMA – Institute of Rural Management Anand in 1979, to pass on the gained knowledge to future generations and to place rural India on the front map.

As a result of these combined efforts, Amul currently boasts of 15 million milk producers pouring their milk in 1,44,246 dairy co-operative societies across the country – a huge chain that has resulted in us being  the largest milk producing country today.

This has been the story of a young engineer who was born in Calicut and was later known as the father of White Revolution and was honored with some of the most prestigious Government awards like Padma Vibhushan, Ramon Magsaysay and Krushi Ratna etc. He took his last breath on 9^th December 2012 but he will always be remembered for his immense contribution to the farmers, to the Amul Brand and to the millions of consumers of dairy products.

Chintan Parekh

Batch of MBA 2014

References:

1. www.amul.com