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World Affairs
Operation Flood — Milk: India's Food Security
by Verghese Kurien
The organisation of milk producers' cooperatives in Gujarat has not only contributed towards making India one of the largest milk producers in the world, but has also brought welfare to millions of people in the backward rural communities.
India's quest for food security in milk began on October 31, 1968, a day that commemorated Sardar Vallabhbhai Patel's birth anniversary. Working from an office in the small town of Anand in Gujarat, a team of experts finalised a proposal that aimed at increasing domestic milk production in an economically sound and socially desirable manner. It was more than a coincidence that the finalisation of the proposal was on a day that marked the Sardar's birth anniversary at a location close to the Sardar's birthplace. In the late 1940s the Sardar had played an important role in creating a milk producers' cooperative in Anand. Twenty years later, the success of this cooperative in Gujarat – that began with two cans of milk, a few milk producers and a brand name called "Amul" – became the driving force behind the launch of a national programme to increase milk production.
In 1950-51, the average per capita consumption of milk in the country was 124 grams per day. By 1970 this figure reached its nadir at 107 grams per day. Not surprisingly, the government quickly realised the enormity of the problem, overcame its earlier indifference and approved the proposal to enhance milk production on a national scale through the cooperative method. The objective of the proposal was not only to stem the alarming decline in the consumption of milk but also to reverse the trend to the advantage of both consumers and milk producers. The plan was to use donated milk products from overseas to help protect high-yielding cattle, resettle the cattle kept in cities and obtain a commanding share of the market through liquid milk schemes in four major cities. This project came to be referred to as the "billion-litre idea" and was formally named "Operation Flood".
The High-Yield Tragedy
During the 1960s, the destruction of high-yielding milch cattle had become a part of the milk supply system in our major cities. In Mumbai and Kolkata especially, the number of cattle kept in the city had increased dramatically over the earlier three decades. Cattle keepers had to go farther and farther afield for supplies of green fodder and concentrates. Therefore, they had to use only the highest-yielding cattle in order to reap profit from their high-cost milk production and they found it unprofitable to freshen a milch cattle when its lactation ended. Instead, it was sent to the butcher and destroyed.
The process of destruction was two-fold. First, a majority of high-yielding milch cattle that were brought into the cities were those that had just calved. The calf accompanied its mother to encourage the rapid let down of milk. As soon as the mother was trained to let down her milk without suckling the calf, the calf was destroyed frequently by inhuman starvation or drowning. Second, six to eight months later, at the end of its lactation, the mother was also destroyed, and thus its high-yielding genetic resource was lost to the nation forever.
In the late 1960s and subsequently every year, some 100,000 of India's best milk producing cattle and their progeny entered the cities in this manner. In a wide arc – stretching from Gujarat, through Punjab and Uttar Pradesh – the best reserves of milch cattle were thus robbed of their high-yielding genetic material, as cows and young calves were herded into the city for one short lactation prior to butchery.
Before its premature death, of course, each milch animal contributed waste dung and urine to the city's already overloaded sewage system. Truck loads of cattle feed and fodder contributed to the increasing overload of the city's road and railway system. Each khatal (or pen) contributed dirt and filth to the already endangered environment in which the city's human population struggled against the danger of disease.
What's more the milk thus produced did not afford citizens much protection. Despite the frequent use of milk extracting methods (too disgusting to elaborate here) the milk producer in the city found that his herd's milk production barely covered his costs plus the extortionate interest charged by his money-lender. Therefore, he would resort to diluting the milk with water (usually impure), so that the consumer would end up getting milk that was both diluted and highly priced.
The newly set up liquid milk schemes did not have the capacity to serve the city's entire need. Also, as modern dairies, they could not indulge in the pernicious system of dilution. For some time, when imported milk powder was cheap and the government had the foreign exchange to spare, dairies used imported powder to subsidise their operations and increase their meagre supplies of milk to some extent. Even so, few milk schemes covered more than one-third of their city's requirement. By depressing prices with the use of imported milk powder, they discouraged the supply of local milk production. On the other hand, efforts by most liquid milk schemes to increase their prices only led to private vendors raising their prices also so much so that, aided by dilution, the latter could continue to outbid the milk schemes for procuring rural milk from the city's milk-shed areas.
The ultimate loser was the common man and infants. Milk got thinner and more expensive each year, as the city got filthier and more unhealthy to live in. In the countryside, the ordinary milk producer saw his best milch cattle going to the city for premature slaughter while the milk that was produced from the remaining, lower-yielding milch cattle was only a small share of the rupee that the consumers in the city paid for that milk.
A Mission Unfolds
The national proposal for milk cooperatives sought to reverse this negative dairy development cycle, beginning with the use of milk products donated abundantly from abroad. The world glut of milk products during the late 1960s offered an opportunity to do this – an opportunity that was unlikely to come again because it was unlikely that the developed countries would repeat the costly errors of producing such large surpluses of milk products. These surpluses were used in three strategic ways to speed up sustained milk sufficiency for India's development: a) The donated milk products were reconstituted in order to provide liquid milk schemes in the major cities with enough milk to obtain a commanding share of their markets; b) The funds realised from reconstitution and sale of donated products were used to resettle city-kept milch cattle and permit their progeny to multiply, so as to increase organised milk production, procurement and processing; c) The entire operation was directed towards stabilising the position of major liquid milk schemes in their markets.
Marketing, in fact, was the dominant feature of the entire project. Past experience had indicated that the keeping and slaughter of city-kept cattle could not be prevented by new laws or police action alone nor could the dilution of milk. As long as keeping cattle in cities and diluting milk remained more profitable than the organised marketing of milk, these practices would continue, along with the attendant evils of premature slaughter of high-yielding milch cattle, highly priced and diluted milk for urban citizens, and a deteriorating city environment posing a threat to the common man's health.
The Development Of A Mission
Before Independence, I was selected by the Government of India to study in the United States. That was long before the mass emigration of our engineering students to that country and other parts of the world. I felt quite fortunate to have had the opportunity to strengthen my ability to serve my soon-to-be-independent country. The next turning point came when, instead of sending me to study subjects that I felt were far more important to India, such as nuclear physics and metallurgy, the government sponsored me to study dairy engineering. When I returned to India, the government decided that I should be a dairy engineer in the dusty western Indian town of Anand. Thereafter, two crucial events shaped my life. In December 1950, Tribhuvandas Patel asked me to stay on in Anand for a few months, and since then I have never left. Second, in 1964, our then Prime Minister Lal Bahadur Shastri visited Anand and asked me to work towards transplanting the spirit of Amul in other parts of India pursuant to which I became the Founder Chairman of the National Dairy Development Board (NDDB) in 1965. There was never any looking back thereafter.
The vision of Sardar Vallabhbhai Patel was a source of great inspiration. He was one of the giants of our Independence movement and the first deputy prime minister and home minister of India. But there was another side to Sardar Patel, one that was perhaps even more important. He knew that independence was more than a political task; that our rural people could not become really free until they were freed from the exploitation of money-lenders and from the burden of caste and class. Sardar Patel believed that the way to address these problems was to build rural institutions that would serve the farmers' economic interests as well as institutions that promoted research and teaching. These institutions would respond to the needs of rural people and would enable succeeding generations to carry these same institutions into the future. To help in this task he selected people like Tribhuvandas Patel, who was asked to build cooperatives that would give dairy farmers the control over the resources they created. Tribhuvandas Patel was quick to motivate professionals like me to contribute their services to build farmers' cooperatives.
When I joined Amul in 1950, we were a newly independent nation. Our cooperative was involved in bringing economic independence to the dairy farmers of Kaira district. There were many things to do, many challenges to overcome, and many opportunities to seize. Part of our motivation was the sense that what we were doing was important to our farmers and to the nation and part was the reward that comes when farmers, whose lives depended on our efforts, appreciated what we were doing. Helping to shape a cooperative of milk producers, owned and managed by them through their elected representatives and with the help of professional managers employed by them, remains a reward unto itself.
During my years in the Kaira cooperative, I happened to read some of the works of the famous economist Barbara Ward. She had a remarkable career, which included advising two US Presidents, Lyndon B Johnson and John F Kennedy. During the last nine years of her life she, perhaps more than anyone else, helped to map out an international agenda for alleviating poverty, tackling its causes and promoting a sane and sustainable management of the world's resource base. Barbara had examples to show how sustainable development can be achieved, virtually eliminating the spectre of poverty and famine and greatly reducing the vast and unnecessary suffering that came from inadequate diets, contaminated water, lack of health care and poor housing. Barbara believed that "with an equal social and economic emancipation," poverty can be tackled within the limits imposed by ecology and the availability of resources.
Barbara Ward also perceived that there is only one constraint preventing a solution to the twin problems of poverty and environmental degradation that may prove insolvable – the perceptions of the rich and the poor. That is, "whether the rich and fortunate are imaginative enough, and the resentful and underprivileged poor patient enough, to begin to establish a true foundation for better sharing, fuller cooperation and joint planetary work." So, since my early days in Anand, I have tried to make some modest contribution through my work and action towards fulfilling the visions of Sardar Patel and Barbara Ward. I think we have made some fairly good progress with cooperatives for milk producers, oilseed growers and fruit and vegetable farmers. We have also created the Institute of Rural Management, Anand, that trains managers to serve rural people and their institutions.
I would like to believe that I am part of a mission to prove that the ultimate end of developmental programmes is not the more or less mechanical modernisation of the production of a given food, such as milk, but rather the beginning of the process whereby our rural majority can gain command over their future and build themselves a richer and more satisfying community.
Professional And Human Factors
I was just 28 years old when I became the chief executive officer of Amul. At that age one believes nothing is impossible; one is ready to face problems and prepared to do anything, as one does not have any reputation to lose. Therefore, I believe that professionals should be entrusted with responsibilities at an early age, and I have encouraged them to take initiatives, not penalised them if things went wrong and corrected, not condemned them.
In order to have an excellent record of being able to get work done, it is important to have the right people. And, in selecting the right people, first and foremost what is essential is integrity. Second comes loyalty, and complete commitment, not to an individual but to the institution. Individuals come and individuals go. But if one is employed in a particular institution but does not have a commitment to the ideals that it stands for then one has no right to be there. Thus, in choosing my colleagues, I ensure that they have loyalty to the institution and to the principles for which it stands. Whether a person is intelligent or knowledgeable is not as important as whether he possesses integrity and loyalty.
I would say that while integrity and loyalty are necessary values, and therefore core values, there are other values that are considered "sufficiency conditions" for achieving success in any field. For example, the leader has to set a personal example and make others understand in what way "change" is going to be useful. I believe that professionals must have a desire for an unending pursuit of mastery of their subject. There is also a need to have clarity of mind. I have always emphasised that large endeavours are only the sum of many small parts and therefore we must keep in mind not just where we are going but how we are going to reach our goal successfully. I also believe that a person or a professional who does not have respect for time and does not have a sense of timing can do very little. To help our employees foster these values in our organisations we give them challenging jobs, enough freedom to perform those jobs and lastly, adequate opportunities to prove themselves.
However, in course of time most institutions become bureaucratic. This occurs when employees begin to think that an institution exists for them and they do not contribute towards its goals and ideals. Bureaucracies exist not only in governments; any institution, given time and allowed to grow big, becomes bureaucratic. And that is the tragedy. The revolutionary in me will demand that such an institution be broken down and built anew. Lastly, while I forgive mistakes, I do not forgive corruption. Integrity and loyalty are qualities that are very difficult to acquire and these are the first elements that we seek in our employees.
Future Of The Milk-Cycle
It is now nearly a decade since India embarked upon the path of liberalisation and globalisation. Most of our cooperatives have learnt to cope with three distinct disadvantages that a liberalising economy has conferred on them. First, our cooperatives have learnt to develop without the benefits that were earlier available to them in a mixed economy. Second, our cooperatives have learnt to perform in the marketplace even though the shift to a free market economy has mainly benefited large capital, whether Indian or foreign. Third, even though the labyrinth of rules and controls that regulate cooperatives remain generally unchanged, our cooperatives are finding innovative strategies to achieve their goals. Essentially, our dairy cooperatives are becoming pro-active and learning new ways of adapting to change, even as they wait for that logical stage of liberalisation when they will have a level playing field with their competitors. I can only say that our cooperatives are able to perform and deliver in an environment that is still quite adverse, so imagine what will happen when they are permitted to carry out their business with the same freedom and flexibility that is already being enjoyed by their competitors.
Milk production in India has grown at a healthy rate of 4.8 per cent during the last twenty years. The milk production assessed for 1999-2000 was 78.1 million metric tons. India has become the largest milk producer in the world in the past few years. Today, milk availability per capita is 214 grams per day, exactly double what it was in 1970. About 66 per cent of rural households and 90 per cent of urban households consume milk. On an average 50 per cent of milk production is retained in our rural areas for consumption. The per capita household consumption of milk has increased by 23 per cent and 15 per cent in rural and urban areas, respectively between 1987-88 and 1993-94. The cost of milk production in India is nearly five per cent lower than the corresponding figures for the European Union and the USA and compares very favourably with Australia and New Zealand.
There is no doubt that India's dairy industry has come a long way. But the mission is still far from over. Dairying in India should now rapidly progress in quality and should be able to retain its relevance as the country's largest rural employment programme. This is both a challenge and a threat given that in this new era of an integrating world economy the rules for international trade in milk and milk products are written by developed nations who believe in "mass production" and not "production by the masses". We also have to find ways and means to counter the ability of these developed nations, who specialise in dairying, to continue subsidising their milk production and exports even after they have fulfilled their WTO commitments to roll back such subsidies. Through a collaborative process with our dairy cooperatives, the NDDB has set the future agenda of our cooperative dairy industry through a programme called "Perspective 2010". The objective is to increase milk procurement by cooperatives to 33 per cent of the marketable surplus in the "Operation Flood" areas, that is, 488 lakh kg per day. In addition, the intention is to increase liquid milk sales to 365 lakh kg per day, thereby achieving more than 60 per cent of the market share in our metros and an average of close to 50 per cent in Class 1 cities served by our cooperatives.
To achieve these overriding goals, the NDDB has identified four thrust areas:
Technology And The Market
Insofar as exports of milk products from India are concerned, we enjoy a natural advantage in the South Asian region. All the countries neighbouring India are basically milk-deficient and would continue to remain so for quite some time. Therefore, it is only logical that India's surpluses of Skimmed Milk Product (SMP), butter and other branded milk products should be exported to its neighbours. I do hope that the SAARC arrangement will soon encourage easy and free trade of milk and milk products between member countries. I am sure this would be a major advantage to the Indian dairy industry.
The future of India's dairy industry will have to be built on quality and quality alone. I understand there are currently about 33 dairy plants owned by our dairy cooperatives that have ISO 9002 certification. Most of these plants also have HACCP certification. The Kaira District Cooperative Milk Producers' Union has obtained the ISO 9001 certification; it is perhaps the first dairy to achieve such a distinction, not just in India but in South Asia. This was possible because the Kaira Milk Union has research and development facilities and has done pioneering work in being the first dairy to ever manufacture milk powder and sweetened condensed milk from buffalo milk. There are also nearly half-a-dozen cooperative cattle feed plants that have obtained ISO 9002 certification.
Our dairy cooperatives are beginning to do three things. First, they are acquiring and equipping themselves with the latest and modern technology for milk processing and product manufacture. Second, they are defining the standards necessary to achieve and maintain world class quality. Third, and most importantly, they are putting in place systems that will ensure that they consistently achieve the standards they have set for themselves.
Lastly, we must make renewed efforts with the central and state governments – to reverse the anti-dairy development cycle where the best of milch cattle and their calves are brought to the cities for one short lactation before destruction. Mechanisation and development of lease markets for draft power would reduce the need for females to produce unproductive bullocks and thereby make available feed and fodder for higher milk production. Culling of the national herd to remove unproductive animals would raise animal productivity, but such an option is not acceptable given the moral and religious sensitivities on the matter. Animals often turn unproductive owing to disease. A National Animal Diseases Act, which is yet to be passed by Parliament, coupled with well-enforced disease control programmes would go a long way in making our animal population much more productive.
I would end by mentioning that each of us has a responsibility, as a member of our nation's privileged elite, both to be critical and to suggest corrective measures. We must take responsibility for our nation's future and hold ourselves accountable for that future. We must act not only as individuals but also as members of our society, which means that in all that we do, we must be aware of its effect on the greater good. India's efforts to transform its dairy industry to a fully modernised and developed one well before 2050 will undeniably be a pursuit of that greater good.