The Birth of Amul
The Birth of Amul
The Birth of Amul
It all began when milk became a symbol of protest Founded in 1946 to stop the exploitation by middlemen Inspired by the freedom movement The seeds of this unusual saga were sown more than 65 years back in Anand, a small town in the state of Gujarat in western India. The exploitative trade practices followed by the local trade cartel triggered off the cooperative movement. Angered by unfair and manipulative practices followed by the trade, the farmers of the district approached the great Indian patriot Sardar Vallabhbhai Patel for a solution. He advised them to get rid of middlemen and form their own co-operative, which would have procurement, processing and marketing under their control. In 1946, the farmers of this area went on a milk strike refusing to be cowed down by the cartel. Under the inspiration of Sardar Patel, and the guidance of leaders like Morarji Desai and Tribhuvandas Patel, they formed their own cooperative in 1946. This co-operative, the Kaira District Co-operative Milk Producers Union Ltd. began with just two village dairy co-operative societies and 247 litres of milk and is today better known as Amul Dairy. Amul grew from strength to strength thanks to the inspired leadership of Tribhuvandas Patel, the founder Chairman and the committed professionalism of Dr Verghese Kurien, who was entrusted the task of running the dairy from 1950. The then Prime Minister of India, Lal Bahadur Shastri decided that the same approach should become the basis of a National Dairy Development policy. He understood that the success of Amul could be attributed to four important factors. The farmers owned the dairy, their elected representatives managed the village societies and the district union, they employed professionals to operate the dairy and manage its business. Most importantly, the cooperatives were sensitive to the needs of farmers and responsive to their demands. At his instance in 1965 the National Dairy Development Board was set up with the basic objective of replicating the Amul model. Dr. Kurien was chosen to head the institution as its Chairman and asked to replicate this model throughout the country. GCMMF is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat, which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing affordable quality products. GCMMF markets and manages the Amul brand. From mid-1990s Amul has entered areas not related directly to its core business. Its entry into ice cream was regarded as successful due to the large market share it was able to capture within a short period of time primarily due to the price differential and the brand name. It also entered the pizza business, where the base and the recipes were made available to restaurant owners who could price it as low as 30 rupees per pizza when the other players were charging upwards of 100 rupees.
The Organization
Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), is India's largest food product marketing organization with annual turnover (2011-12) US$ 2.5 billion. Its daily milk procurement is approx 13 million lit (peak period) per day from 16,117 village milk cooperative societies, 17 member unions covering 24 districts, and 3.18 million milk producer members. It is the Apex organization of the Dairy Cooperatives of Gujarat, popularly known as 'AMUL', which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. Its success has not only been emulated in India but serves as a model for rest of the World. It is exclusive marketing organization of 'Amul' and 'Sagar' branded products. It operates through 47 Sales Offices and has a dealer network of 5000 dealers and 10 lakh retailers, one of the largest such networks in India. Its product range comprises milk, milk powder, health beverages, ghee, butter, cheese, Pizza cheese, Ice-cream, Paneer, chocolates, and traditional Indian sweets; etc GCMMF is India's largest exporter of Dairy Products. It has been accorded a "Trading House" status. Many of our products are available in USA, Gulf Countries, Singapore, The Philippines, Japan, China and Australia. GCMMF has received the APEDA Award from Government of India for Excellence in Dairy Product Exports for the last 13 years. For the year 2009-10, GCMMF has been awarded "Golden Trophy' for its outstanding export performance and contribution in dairy products sector by APEDA.
For its consistent adherence to quality, customer focus and dependability, GCMMF has received numerous awards and accolades over the years. It received the Rajiv Gandhi National Quality Award in1999 in Best of All Category. In 2002 GCMMF bagged India's Most Respected Company Award instituted by Business World. In 2003, it was awarded The IMC Ramkrishna Bajaj National Quality Award - 2003 for adopting noteworthy quality management practices for logistics and procurement. GCMMF is the first and only Indian organization to win topmost International Dairy Federation Marketing Award for probiotic ice cream launch in 2007. The Amul brand is not only a product, but also a movement. It is in one way, the representation of the economic freedom of farmers. It has given farmers the courage to dream. To hope. To live.
GCMMF - An Overview
Year of Establishment Members No. of Producer Members No. of Village Societies Total Milk handling capacity per day Milk Collection (Total - 201112) Milk collection (Daily Average 2011-12) Milk Drying Capacity Cattle feed manufacturing Capacity Sales Turnover -(2011-12) CRISIL Rating for GCMMF 1973 17 District Cooperative Milk Producers' Unions (16 Members & 1 Nominal Members) 3.18 Million 16,117 13.67 Million litres per day 3.88 billion litres 10.6 million litres (peak 13 million) 647 Mts. per day 3690 Mts. per day Rs. 11668 Crores (US $2.5 Billion)
Cheese Range
Fresh Milk UHT Milk Range Milk Powders Milk Drink Health Drink Brown Beverage Curd Products Pure Ghee
Sweetened Condensed Amul Mithaimate Milk Mithaee Range (Ethnic Amul Shrikhand, Amul Mithaee Gulabjamuns, Amul Basundi,Avsar Sweets) Ladoos Ice-cream Chocolate & Confectionery Sundae Range, probiotic,,sugarfree and probiotic Amul Milk Chocolate, Amul Fruit & Nut Chocolate, Amul Chocozoo, Amul Bindass, Amul Fundoo
Responsible for Marketing of Milk & Milk Products Responsible for Procurement & Processing of Milk Responsible for Collection of Milk Responsible for Milk Production
Village Dairy Cooperative Society (VDCS) The main functions of the VDCS are as follows:
Collection of surplus milk from the milk producers of the village & payment based on quality & quantity Providing support services to the members like Veterinary First Aid, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, conducting training on Animal Husbandry & Dairying, etc. Selling liquid milk for local consumers of the village Supplying milk to the District Milk Union
Thus, the VDCS in an independent entity managed locally by the milk producers and assisted by the District Milk Union. District Cooperative Milk Producers Union (Dugdh Sangh) The main functions of the Milk Union are as follows:
Procurement of milk from the Village Dairy Societies of the District Arranging transportation of raw milk from the VDCS to the Milk Union. Providing input services to the producers like Veterinary Care, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, etc.
Conducting training on Cooperative Development, Animal Husbandry & Dairying for milk producers and conducting specialized skill development & Leadership Development training for VDCS staff & Management Committee members. Providing management support to the VDCS along with regular supervision of its activities. Establish Chilling Centers & Dairy Plants for processing the milk received from the villages. Selling liquid milk & milk products within the District Process milk into various milk & milk products as per the requirement of State Marketing Federation. Decide on the prices of milk to be paid to milk producers as well on the prices of support services provided to members.
State Cooperative Milk Federation (Federation) The main functions of the Federation are as follows:
Marketing of milk & milk products processed / manufactured by Milk Unions. Establish distribution network for marketing of milk & milk products. Arranging transportation of milk & milk products from the Milk Unions to the market. Creating & maintaining a brand for marketing of milk & milk products (brand building). Providing support services to the Milk Unions & members like Technical Inputs, management support & advisory services. Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions. Establish feeder-balancing Dairy Plants for processing the surplus milk of the Milk Unions. Arranging for common purchase of raw materials used in manufacture / packaging of milk products. Decide on the prices of milk & milk products to be paid to Milk Unions. Decide on the products to be manufactured at various Milk Unions (product-mix) and capacity required for the same. Conduct long-term Milk Production, Procurement & Processing as well as Marketing Planning. Arranging Finance for the Milk Unions and providing them technical know-how. Designing & providing training on Cooperative Development, Technical & Marketing functions. Conflict Resolution & keeping the entire structure intact.
Today, there are around 176 cooperative dairy Unions formed by 1.25 lakh dairy cooperative societies, having a total membership of around 13 million farmers on the same pattern, who are processing and marketing milk and milk products profitably, be it Amul in Gujarat or Verka in Punjab, Vijaya in Andhra Pradesh or a Nandini in Karnataka. This entire process has created more than 190 dairy processing plants spread all over India with large investments by these farmers institutions. These cooperatives today collect approximately 23 million kgs. of milk per day and pay an aggregate amount of more than Rs.125 billion to the milk producers in a year.
is has multi-dimensional impacts importance of getting government out of commercial enterprises importance of market failure in agriculture power & problems of participatory organizations importance of policy correct
Amount
10,00,000 3,00,000 2,50,000 3,00,000 3,50,000 2,00,000 2,50,000 1,50,000 1,00,000 50,000 1,00,000 1,50,000 1,84,500
Total Cost
33,84,500
FACTORY/WORK COST Office & Administration Overheads: Employee Cost Other Expenditure: Computer Telephone Taxes Carriage Outward COST OF PRODUCTION/OFFICE COST Opening Stock (-)Closing Stock COST OF GOODS SOLD Selling & Distribution Expenses: Advertisement Delivery Vehicles Petrol Packaging Rates COST OF SALES PROFIT SALES 2,00,000
50,39,500
64,29,500
PVR = C/S = 2671750/9256250 = 28.86% BEP (in Rs.) = FC/PVR = 2195000/28.86 = Rs.760568.26 BEP (in units) = FC/C = 2195000/2.67175 = 821558.9 = 821559 MOS = Profit/PVR = 476750/28.86 = 16519.404
Determination of SP:
Amul Ice Cream has marked the selling price of their product roughly 20% above the cost price. This implies that they are making a profit on each unit of output that is sold. These profits can be ploughed into the business again to create more output.