Nandini-Amul Saga: Corporatisation of Cooperatives

Through a joint policy of centralisation of cooperative societies and increased focus on export of dairy products, the government is able to integrate local producers and milk markets into India’s corporate dairy agribusiness.

Amul Vs nandini
The Gujarat Cooperative Milk Marketing Federation has announced that it plans to sell Amul milk and curd through quick commerce platforms in Bengaluru. Image: Onmanorama

Amul, a dairy brand under Gujarat Cooperative Milk Marketing Federation (GCMMF), announced on April 5 that it would sell its products in Karnataka, resulting in widespread protests in the state. In December 2022, Union Home Minister Amit Shah declared in Mandya that Amul would work with the Karnataka Milk Federation (KMF), whose dairy brand Nandini is the second-largest milk procurer in the country (after Amul) and largest milk supplier in Bengaluru.

Farmers’ groups, opposition leaders, Hotel Associations, and general citizens voiced their dissent against this move by taking to the streets, releasing statements, and through social media campaigns online. 

N Jagadish Gowda from Karnataka Rakshana Vedike (KRV) told Deccan Herald that – “The central government only sees Gujarati farmers, not Karnataka farmers who depend on selling to Nandini for their livelihood. This merger will hit local farmers the hardest. We oppose this mentality. We don’t need Amul here.” Indeed, Nandini has already been lurching towards a crisis due to the pandemic, lack of price revisions, rising input costs, cattle diseases, fierce competition from private dairies, and corruption allegations. However, rather than a parochial blame on Gujarati farmers, one must turn their attention to the larger developments in the dairy sector and the centralisation of state-level initiatives as a means towards corporatisation and privatisation. The outcome is not a replacement of Kannadiga farmers with Gujarati farmers, but a replacement of the cooperative structure with a corporate one, disenfranchising both farmers and consumers across the country for the private gains of a few. 

karnataka Rakshana Vedike, a pro-kannada group protests against Amul merger with nandini in Bengaluru and Bagalkote

Amul: Cooperative or Corporation?

According to the International Cooperative Alliance (ICA), cooperatives are people-centred enterprises jointly owned and democratically controlled by and for their members to realise their common economic, social and cultural needs and aspirations. Article 43B of the Constitution says that “states shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies”.

However, following the deregulation of the dairy industry in 1991, the cooperative laws were amended such that cooperatives could run on commercial lines to enable them to compete better in an open market environment. Both Amul and Nandini function within this ‘privatised’ cooperative structure. 

Amul has already monopolised milk markets in most Indian states and ranked 8th among the top 20 global dairy processors as assessed by the IFCN Dairy Research Network in 2020. It is also the largest exporter of skimmed milk powder (SMP). In fact, as Sagari Ramdas points out, several dairy companies on the top 20 ranking are ‘cooperatives’ in name and have become large producers through the exploitation of land, labour and resources, and through the destruction of millions of ‘non-member’ dairy farmers and traders. 

Amul too, when faced with price slumps in the export market, turns to local markets to dump its excess production. As the Amul-Nandini row continues in Karnataka, a KMF official himself admitted that production of milk is low from March-May making the period before May important for Amul. While BJP leaders scramble to paint a picture of two large cooperatives ‘working together’ to meet the needs of the people and bring profits to dairy farmers, it is clear that Amul’s entry into Karnataka is driven by nothing other than the opportunity to divert excess milk to Karnataka’s markets.

Centralisation As Means Towards Corporatisation

The Farm Laws of 2020 sought to liberalise the agricultural market and facilitate the involvement of corporates in procurement of produce, as well as through investments of infrastructure and technology in the agrarian sector. Following its repeal after widespread protests, corporatisation continues to be brought in through different avenues. The Union government’s focus is now on using the cooperatives as a base for collection and distribution of milk, while corporations take over marketing and exports, with private participation at the apex level. 

In October 2022, Shah announced that Amul will be merged with five other cooperative societies to form a multi-state cooperative society (MSCS). In December 2022, amendments were proposed to the Multi-State Cooperatives Act (2002) such that any cooperative society can merge with existing MSCSs, allowing Amul’s newly formed MSCS to further eat up local co-operatives and expand on its corporate production model. The amendments also empower the central government to conduct and oversee the administrative functioning of the cooperative societies, including in matters pertaining to the redemption of their shareholding, further restricting cooperative autonomy. 

Amit Shah visits KMF plant in Bengaluru

Shah directly made the link between the MSCSs and global trade by saying, “We have a huge opportunity to deliver milk to countries like Bhutan, Nepal, Bangladesh, and Sri Lanka. To explore this world market, the government is setting up a multi-state cooperative which will act as the export house.”

Privatizing profits and socializing losses

In March 2023, NITI Ayog member Ramesh Chand announced that India needs to find a market for milk in foreign countries as its production is growing by 6% every year. During 2020-21, India exported 54,762.31 million tonnes of dairy products worth `1,491.66 crore (USD 201.37 million). The logic of dealing with overproduction through increased exports makes domestic markets susceptible to global trends, and small farmers take the fall. For example, In 2014, a price crash in Europe led to low procurement prices due to which Amul’s SMP was outpriced in the global market, leading to a huge domestic build-up of stocks. As a result of this, Amul entered the Hyderabad dairy market to dump the excess milk that had reconstituted from SMP, driving down procurement prices in Hyderabad and harming local farmers. 

In the price slump period of 2015-2019, Amul, like all other top corporate dairy players, drew enormous profits. Meanwhile, the losses were passed down to small farmers, many of whom were forced out of dairying or forced into enormous debt. Amul also sustained profits of over 16% throughout the lockdown of 2020, while dairy farmers in Gujarat suffered losses at the same time.

To increase exports, more private investment is needed. The Dairy Processing and Infrastructure Development Fund (AHIDF) of INR 15,000 crore has been set up to support breed multiplication farms and breed improvement technology, manufacturing of milk testing and dairy equipment, and manufacturing of feed supplements/ feed additives. It is available to multi-state dairy cooperatives, milk producer companies, self-help groups and Farmer Producer Organizations (FPOs), which will be vertically linking them to integrated dairy companies like Amul. The latter integration is taken care of by the recent MSCS amendments, but the former technological interventions require enormous capital, to which players like Reliance become key. In April 2023, Former Amul managing director RS Sodhi joined Reliance Retail in an advisory role, which many speculate could be a hint into Reliance’s future plans to foray into India’s dairy sector. 

While the Farm Laws have been repealed following popular protest, the agenda of corporatisation and privatisation is still very much alive and being pushed through other avenues. Through a joint policy of centralisation of cooperative societies and increased focus on export of dairy products, the government is able to integrate local producers and milk markets into India’s corporate dairy agribusiness. Ultimately, this is an existential threat to small producers in the country.

Inputs by Swati Krishna. 

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