Karnataka Milk Federation: Ensuring Rural Prosperity

The Karnataka Milk Federation (KMF) has strived hard to create a supportive
and conducive environment for the holistic growth of dairy cooperatives as
autonomous economic and social institutions. This has significantly
contributed to creating a self-reliant and vibrant rural economy in Karnataka.
The Karnataka State Government is also according top priority through milk
price incentive and financial support to dairy infrastructure and other
programs.

Dr V. Kurien, Father of Indian dairying, once said “When I witness the pace at which the
dairymen of Karnataka are progressing, I fear that they may overtake our Amul. But, I
also ardently desire that they surge ahead”. Karnataka Cooperative Milk Producers’
Federation Limited (KMF) is almost there, having achieved second position after Gujarat
Cooperative Milk Marketing Federation Ltd (GCMMF) in terms of milk procurement and
total turnover. In four decades, Karnataka has turned from a milk-deficit into a milk-
surplus state based on strong cooperative dairy movement. Although Karnataka stands
third position in milk production amongst southern states and 11th among the states in
India, in cooperative milk procurement, it stands second at the national level and leading
in South India. Today the milk producers of Karnataka get the best milk price for the milk
supplied to cooperatives and consumers get milk at very competitive prices. More than
82% of the consumer rupee of milk is transferred to producers. Achievements of the
KMF are summarized in Table 1.

Table 1: KMF - Key performance parameters.

2015- 2018-19
1975-
Particulars
76
1995-96 2005-06 16 2016-17 2017-18 (upto
Jan’19)

24.6
Farmer members
0.03 13.87 18.10 23.51 23.94 24.60 5
(lakhs)

Annual average 75.8

procurement (lakh 0.66 12.07 29.64 64.88 65.51 70.81 2
kgs/day)
Annual average 34.7
sales (lakh 0.64 11.44 17.14 34.38 34.01 34.72 6
liters/day)
Annual average 4.5
curd sales(lakh 0.03 0.11 1.20 3.96 4.16 4.39 9
kgs/day)
Total turnover (in ` 11779 13133 13550 -
3.94 535.59 1,753
crores)
Genesis of cooperative dairy development
The cooperative dairy development activity in Karnataka started during 1975 with
financial assistance from International Development Agency. Karnataka Dairy
Development Corporation (KDDC) was formed for implementing the dairy development
program under the technical guidance of National Dairy Development Board (NDDB).
Initially, cooperative dairying was implemented in eight districts in southern Karnataka. In
1984, KDDC was converted into the Karnataka Cooperative Milk Producers’ Federation
Limited (KMF) and dairy development was extended to all districts of the state, under
Operation Flood-II and III. As of now, the KMF has 14 District Milk Unions covering all
the 30 districts of Karnataka.

KMF and its Unions have producer-elected boards of directors to manage the activities.
Similarly, the village cooperatives also have elected management committees.
Effectively, the milk producers are democratically governing the entire federal
cooperative structure of KMF. This has helped the higher tier organizations to
understand needs of the lower levels so as to serve them better. The effective
functioning of all the three tiers helps in flowing the financial gains to the milk producers.
In short, the instruments of dairy development of the state are effectively in the hands of
the farmers themselves.

Milk Procurement
Over the four decades, KMF has been successful in reaching over 2.4 million farmer
families in 22908 villages, thereby covering more than 80% of the villages in the State.
There are 14471 Dairy Cooperative Societies (DCS) of which 3,814 are Women DCS.
More than 96% of the DCS are in profit. They have been able to bring about such
changes as to be successfully creating productive employment, overcoming poverty and
achieving social integration. The average milk procurement during the year 2018-19(upto
Jan’19) was 75.82 lakh kgs per day (LKPD), with peak reaching up to 84.44 LKPD( JUNE’18) .
During the year 2017-18, KMF has registered a CAGR of more than 9% in procurement
growth, during the last ten years. KMF Vision-2025 document has projected to procure
about 133 LKPD, with peak reaching up to 153 LKPD by 2025.
To support milk production and improve productivity of animals, KMF has implemented
efficient and effective producer-responsive technical input services such as genetic up
gradation of bovines, control of diseases, providing timely veterinary health care and
first-aid facilities, accelerating fodder development, implementation of artificial
insemination program, supply of balanced cattle feed, inculcation of modern animal
husbandry practices among farmers and other production enhancement activities.

Producer empowerment
The KMF has made large investments in member education and training. It has one
central training institute and strategically located two regional training centres. These
training centres have state-of-the-art facilities, competent trainers and well-equipped
hostels to conduct wide range of need-based training programmes to farmers, DCS staff,
DCS management committees, officers of the Unions and Federation. Due to these
training programmes, today the milk producers of Karnataka are better informed about
technologies and economics of more efficient and quality milk production and are
motivated for higher achievements in dairying. Regular interactions with the farmers at
different levels have helped KMF to understand the needs of farmers and to fine-tune its
developmental efforts.

Business strategy
To give remunerative price to producers and to give value for money to customers, KMF
is striving to excel on three critical factors of business – Quality, Cost and Delivery.
• QUALITY – Under the concept of “Quality excellence from cow to consumer”,
KMF has implemented best quality practices at all stages of procurement,
processing and marketing. This has resulted in best quality milk and milk
products being supplied to consumers.
• COST – Constant and sustained efforts are being made to minimize price spread
between the purchase price to producers and selling price to consumers.
Although KMF gives, one of the best price in the country for the purchase of cow
milk to farmers (excluding Govt subsidy to farmers), the selling price to
consumers is one of the least in the country. More than 82% of the consumer
rupee is being passed on to producers.
• DELIVERY – Nandini milk in the state is known for prompt and assured delivery,
at any time and at any place in the state. The hallmark of Nandini milk is that, it
 has never missed its early-morning appointment with consumers in all these
years. It is on-time every-time.

Leveraging quality for business competitiveness

Of late, KMF is giving greater emphasis for procurement of quality milk from DCSs. It
has adopted the theme “Quality Excellence from Cow to Consumer.” Many Clean Milk
Production (CMP) initiatives have been implemented at all the stages of procurement,
processing and marketing. Among these CMP initiatives, noteworthy is the setting up of
Community Milking Parlours in villages. This system has several advantages such as
prevention of mastitis in milch animals and improvement of productivity. The milk from
milking machines, collected through Automatic Computerised Milk Collection Units is
chilled directly in Bulk Milk Coolers. This chilled raw milk, untouched and unadulterated
by human hands, has very high microbiological quality, comparable to international
standards. This high quality milk is being utilised for manufacturing high quality value
added milk products.

Other Clean Milk Production (CMP) Initiatives include:

• Providing Electronic Weigh Scales, Automatic Milk Collection Units and Bulk Milk
Coolers to DCSs;
• Training of milk producers on hygienic management of animals, milking methods
and handling of milk;
• Providing SS-304 pails to producers;
• Providing antiseptic solutions for udder cleaning on pre and post milking;
• Training to DCS staff on CMP;
• Replacing aluminium milk cans and collection vessels with SS-304;
• Posters, documentary films and booklets on Clean Milk Production.

Milk processing and marketing

KMF is creating necessary milk processing facilities, cattle feed plants and other
infrastructure from time to time in the state. Some notable facilities, including the Mega
Dairy and Mother Dairy at Bangalore, Hi-tech Product plant at Channarayapatna,
incorporate the latest state-of-the-art-technology in milk processing and product
manufacturing. Several infrastructure projects such as milk products manufacturing
facilities, milk powder conversion facilities, UHT and Flexi plants, new generation cattle
feed plants, etc are under implementation.

Cost competitiveness is another important factor for continued viability of milk unions
and to ensure that its producer members received the highest possible share of the
consumers' rupee. The gap between the producer and the consumer price of milk is
being reduced by improving efficiency in processing, and reducing costs in collection,
processing and distribution of milk and milk products. These efforts are benefiting both
the producers as well as consumers. One such noteworthy initiative towards achieving
cost competitiveness is the implementation of Total Energy Management Programmes
by the Unions of KMF, conducted with the assistance from NDDB and IRMA. This has
resulted in huge savings in energy and water consumption. In recognition to these stellar
efforts, the Milk Unions of Karnataka are being regularly conferred with Energy
Management Awards by Bureau of Energy Efficiency of Government of India.

The value addition at procurement and processing stages can be realized by the
cooperatives only through better control over marketing. Hence, KMF is making all out
efforts for marketing of milk and milk products, and is successful in garnering a
significant market share of more than 65% in liquid milk in the state, which is considered
to be one of the highest by a cooperative brand. KMF marketed 7.77 LLPD (lakh litres per
day) of milk during 1990 which has increased to 34.75 LLPD during 2018-19(upto Nov’18).
KMF is market leader in selling curds to the tune of 4.65 LKPD , which is highest in the
country.

A marketing chain consisting of nearly 3,000 retail outlets, across the state ensures
timely availability of Nandini milk and milk products to consumers. Nandini with its brand
motto of “Spreading wealth of health” has become synonymous with assured quality and
timely supply of milk and milk products at competitive prices.

KMF has introduced wide range of milk and milk products, across all categories catering
to various consumer age groups and taste profiles at varied price points. Now, under
Nandini brand, over 65 different milk and milk products in more than 250 SKUs (Stock
Keeping Units) are being marketed. KMF believes that a loyal consumer is key to
growing the brand image and hence making all-out continuous efforts to delight
customers by offering wide range of high quality products at highly competitive rates,
unmatched by any competitor in the market.
KMF is also exporting skimmed milk powder, whole milk powder, UHT milk and other
milk products to Nepal, Oman, Madagascar, Myanmar, Bangladesh, Pakistan,
Singapore, Thailand, Philippines, Russia, etc. Recently, several indigenous sweets were
exported to USA. UHT milk is also being supplied to the defence forces.

Support from Karnataka Government

Government announced this scheme during the year 2008-09 with the objective to
encourage rural farmers to take up dairying by giving Rs.2/- per litre as incentive.
Government with effect from 14.5.2013 enhanced this incentive to Rs.4/- per litre.
About 8.4 lakhs milk producers are being benefitted by this scheme. This scheme
has resulted in enormous increase in milk procurement as a result post
implementation of Rs 4/ Litre incentive. Government of Karnataka raised the incentive
from Rs.4/- to Rs.5/- (from Dec’16) for every litre of milk supplied by producer to
cooperatives

Ksheera Bhagya Scheme - The Ksheera Bhagya Scheme was launched on 1 st Aug
2013 by GOK in co-ordination with KMF to provide nutritious food with protein and fat
which is essential for healthy growth and all-round development of School Children
as well as Anganwadi in the State. Under this scheme 150 ml of Nandini milk is
being distributed freely to more than 1 crore children, five times a week. This
program is not only assisting in eradication of prevailing malnutrition in children of
the state, but also facilitating disposal of around 8 Lakh litres of surplus milk of our
farmer members.

The Government of India is also supporting cooperative dairy development in Karnataka

through Rashtriya Krishi Vikas Yojana (RKVY), National Program for Dairy
Development(NPDD) and National Dairy Plan.

KMF has demonstrated that with appropriate policy environment and supporting
infrastructure and services, Dairy Cooperative Societies can become engines for the
growth of rural sector and help to contribute towards reduction in poverty. As a testimony
to this, the World Bank experts have noted in an assessment study of villages with DCSs
in Karnataka that “There is a positive impact on those who are at the lower end of the
economic ladder”.