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GCMMF
45th Annual General Body Meeting on 28th May 2019
Fun @ amul
Madam and Gentlemen,
Dairy News
Almost a century ago, Mahatma Gandhi said, “The soul of India lives in its
villages”. More than 70 years later, with 70% of our citizens residing in rural Careers
India, this statement still stands true and agriculture remains the backbone of
the Indian economy. Currently, our national GDP is surging ahead at the rate of Amul for India
7.0-7.5% p.a. and the economy is pegged at the USD 2.9 lakh crore (USD 2.9
trillion) mark. B2B
The Indian economy has been developing continuously over the past seven
decades and has achieved an extremely positive and vibrant growth in
agriculture, manufacturing and the services sector. Our policy makers
understood the importance of the contribution of agriculture to nation building
and were thus able to design a trajectory for the advancement of the nation
through successful planning. Effective planning and execution successfully
scripted for India and its people a growth story with important turning points in
the course of the narrative.
The Green Revolution ensured food security for the increasing population of a
developing nation; and ensured self-sufficiency for coming decades. Similarly, in
the same period of the Operation Flood programme led to the White Revolution,
which generated, at that time, a subsidiary income source for rural farmers.
This enabled our country to be self-sufficient in milk production, while other
Asian countries are still dependent on import of milk products. All such policies
acted as a catalyst in strengthening the agriculture sector leading to India
becoming one of the fastest growing large economies of the world. At present,
India ranks sixth in terms of nominal GDP and is poised to become the third
largest economy by the year 2050-51.
At the time of Independence, India had a GDP of about USD 2,000 crore (USD
20 billion) and a population of around 36 crores (360 million). Of these, 75%
depended on agriculture for their livelihood. Agriculture accounted for about
70% of the GDP; while cultivable land available then, was around 17 crores
(170 million) hectares. In 2018, the figures were: a GDP of USD 2.9 lakh crores
(USD 2.9 trillion); a population of 135 crores (1.35 billion); with about 58% of
the population dependent on agriculture for their livelihood. The population
depending on agriculture has a per capita income of INR 35,000 (USD 500) as
opposed to INR 2.1 lakh (USD 3,000) per capita income of those not dependent
on agriculture (1:6); whereas immediately post-independence, it was at a near
parity (1:1) level. In spite of the increasing income disparity over the years,
however, Indian farmers still work hard to contribute to the nation’s self-
sufficiency in agricultural produce. As a result, we are the number one producer
of milk, banana, mango; and number two in wheat and rice production. But
there is a need to generate a positive interest as well as create a
transformational impact for the vast majority of our rural citizens to keep this
growth momentum going in the years to come. Out of an agricultural economy
worth around INR 28 lakh crores (USD 400 billion), around 28% i.e. INR 7.7
lakh crores (USD 110 billion) is contributed by dairy and animal husbandry
activities.
After Operation Flood, the Indian dairy and animal husbandry sector which
currently contributes to around 4.2% of National GDP, emerged as a primary
source of income for about 70 million rural households—most of them are either
landless, small or marginal farmers. India has been the largest milk producer
country of the world for the last 21 years. Current milk production of India
stands at around 176 million metric tonnes per year which is around 20% of
world milk production. Milk production in India has been growing at a
Compounded Annual Growth Rate (CAGR) of 4.5% over the ast 20 years,
compared to less than 2% CAGR of the world. Total value of milk production in
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India is around INR 7 lakh crores (USD 100 billion) which is more than the total
value of all pulses and grain put together. India is not only the largest milk
producer of the world but also the largest consumer of milk globally. It is also
one of the fastest growing markets for branded dairy products. India’s per
capita milk availability is around 370 gm/day/person which is higher than the
world average of less than 300 gm/ day/person.
However, the dairy scenario of India was not an attractive one during the early
70’s. Farmers in most parts of the country were not receiving the remunerative
returns due to the long chain of middlemen and almost no market access. The
scenario changed after implementation of Operation Flood I, II and III and
replication of the “Amul Model” of cooperatives across the country under the
guidance and leadership of Dr. Verghese Kurien—the Father of the White
Revolution of India.
Going forward, to align with the goal of our Hon. Prime Minister to double
farmers’ income by the year 2022-23 over the base year 2015-16, the annual
growth rate required is 10.4% in farmers’ income over this period. Currently,
the 14.3% growth rate in income from livestock shows a high promise of
attaining this goal. The backbone of the successful Amul Cooperative Movement
has been the involvement of the dairy farmers and the supply chain innovation
with the use of technology across the entire value chain. The dairy farmers own
this movement entirely and their round-the-year involvement is the key to
sustainable development of the dairy sector. The investment in technology, on
the other hand, has aided in enhancing milk production and milk productivity.
The setting up of technologically advanced processing centres of milk and milk
products has improved product availability; and designing of SAP-backed
systems for the distribution throughout the country has helped Amul reach a
billion consumers. This ‘cow-to-consumer’ IT-backed value chain has
empowered all members with information and technology. All of these factors
have enabled us to increase the milk procurement price of our dairy farmers by
105%; and to increase milk procurement by 153% in just nine years. As a
result, dairy farmers are encouraged to invest in their dairy business through
increasing herd size as well as milk productivity.
The demand of milk and milk products in India is increasing very rapidly
because of urbanisation, convenience demanded by customers and shifting of
consumers from loose to packaged dairy products.
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members produce 1 lakh litres of milk per day and supply the same through
organised players to consumers then approximately 6,000 people can get
employment throughout the year. In the next 10 years, India’s milk production
in the organised sector is estimated to increase from current 9 crore litres per
day (33 million metric tonne per year) to 30 crore litres per day (110 million
metric tonnes per year) which will result in an increase of employment by 1.2
crores (120 million) jobs. It is not just the absolute employment numbers, but
also the potential for growing employment opportunities in rural India, that is
heartening. The dairy sector is the only such activity where milk producer
members, particularly the women, earn their livelihood with dignity. Rural milk
producers would therefore not feel the need to migrate to urban areas to seek
employment in order to improve their social status. A burgeoning market,
however, poses some threats as well. Domestic private players have increased
the availability of cheaper dairy substitutes, thus depriving the Indian consumer
the benefits of milk. On the other hand, developed dairy nations continuously
try to do dump milk products in the Indian market through the Free Trade
Agreement (FTA) thus potentially affecting the income of the Indian dairy
farmers. However, Indian dairy farmers can look forward to golden days ahead
with dairy commodity prices firming up over the last four months. For
comparison, the farm gate prices for milk producer members of New Zealand
increased by 4% in the last 10 years. On the other hand, the prices to the milk
producer members of Gujarat increased by 132% in the same period because of
focus on brand building and consumer marketing. This was possible because of
the support from the Government of India and the Government of Gujarat. Last
year, with the timely help from the Government of Gujarat and MEIS support by
the Government of India, Amul exported more than 29,200 metric tonnes of
milk powder. This resulted in the increase in price of Skimmed Milk Powder in
the domestic market and an increase in milk procurement prices. To put it in
perspective, around INR 15,000 crore (USD 2.2 billion) was the benefit earned
by the milk producer members of India in the year 2018-19. Dairying is not only
a major economic activity but also an integral part of our social and cultural
heritage. Its uniqueness lies in its unifying power, in the fact that no other
industry touches the lives of millions of farmers. “Man power without unity is
not a strength unless it is harmonised and united properly—then it becomes
spiritual power.” said Sardar Vallabhbhai Patel. I now present to you, our
Federation’s Annual Report and the Audited Accounts for the Financial Year
2018-2019.
REVIEW OF OPERATIONS
Milk Procurement
The total milk procurement by our member unions during the year FY 2018-19
averaged 230.08 lakh kilograms (23 million kg) per day, representing a growth
of 9.3% over 210.42 lakh kilograms (21.04 million kg) per day achieved during
2017-18. The highest procurement was recorded during February 2018 at 268
lakh kilograms (26.8 million kg) per day. Over the last nine years our milk
procurement has witnessed a phenomenal increase of 153%. This enormous
growth was a result of the high milk procurement price paid to our farmer-
members which has increased by 105% in this period. The highly remunerative
price has helped us retain the farmers’ interest in milk production; and better
returns from dairying have motivated them to enhance their investments in
increasing milk production. Our initiative in promoting the concept of
commercial, scientific, cooperative dairy farming is also helping to attract the
next generation of dairy farmers to remain in the business.
Sales
During the financial year 2018-19, your Federation registered a turnover of INR
32,960 crore, translating to a nearly four-fold expansion, during the last nine
years, with 17% CAGR in this period. In spite of facing competition our
Federation has achieved 12% volume growth in consumer products during FY
2018-19. We took giant leaps forward in our journey of product innovation—as
many as 101 new products from Amul’s portfolio were launched in the last four
years.
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Our superlative performances for the year 2018-19 were led by fresh product
categories. Amul Masti Dahi posted 33% volume growth, leveraging on rapid
expansion in our fresh products distribution. Similarly, Amul Buttermilk
registered 27% volume growth, while Amul Milk in pouches, which is the largest
category in our overall business, grew confidently by 5% in absolute terms and
maintained market leadership in all major markets.
Distribution Network
In keeping with the new tax regime, we have realigned the territories of the
branches purely based on logistical reasoning. Working ahead on our aim of
being closer to the consumers and also to encash upon the added infrastructure
availability, GCMMF has added 1,574 more Wholesale Dealers (WDs) and Area
Delivery Agents (ADAs) in the current year—a growth of 15% over last year.
We are happy to inform you that your Federation has successfully completed
eight years of operations on SAP ERP. Besides AmulFed Dairy, Vidya Dairy and
your Federation, a total of 17 member unions are deriving benefits of using SAP
for business transactions. Your Federation has also made commendable
progress on the implementation of the Amul Automatic Milk Collection System
(AMCS) application at Village Dairy Cooperative Societies. A total of 11,000
village societies are covered in the project thus far. The application has helped
integrate the Cow-to-Consumer (C2C) IT Value Chain. On a daily basis, more
than 11 lakh messages (SMS) are being sent to milk producers sharing
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information on the quality and quantity of milk poured. The mobile applications
are deployed for milk producer members, society management and the
supervisory team to access AMCS data at their convenience.
Exports
During the year, we have provided technical, managerial and marketing support
to the Jamnagar milk union for the establishment of the dairy cooperative
structure in their district. We have continued to provide support to milk unions
of Saurashtra and Kutch region to organise farmers to build and develop
cooperatives and increase milk production and procurement. We have also
developed a dedicated initiative to improve animal health services by
conducting health camps and veterinary routes in these two regions. In the last
19 years, our member unions have been implementing the Internal Consultant
Development (ICD)programme for promoting leadership among member
producers. Till date, 11,292 Village Dairy Cooperative Societies (VDCS) have
prepared their Mission Statement and Business Plan under the Vision Mission
Strategy (VMS). During the year, 538 Dudh Utpadak Mandali Sanklit Vikas
Ayojan Karyakram (DIVA) programmes have been conducted and 36,263 milk
producers have drawn up their action plan. Every year, on Independence Day,
the milk producers of Gujarat Dairy Cooperatives conduct a mass tree plantation
drive. In the last 12 years they have planted more than 688 lakh trees.
Entrepreneurship Development
Programme:
Young and educated milk producers are trained in commercial dairy farming and
management under the Entrepreneurship Development Programme (EDP). We
have conducted 39 sessions and trained 2,587 milk producers during the year.
Ethnoveterinary Preparations
Programme:
Our member unions have planned to implement the Ethnoveterinary
Preparations (EVP) programme as an alternative medicine; taking into
consideration its cost, availability of ingredients at farm level and effectiveness
in treatment of various diseases/conditions at the field.
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Consultant staff of Milk Unions acts as a vital link between Milk Unions and
Village Dairy Cooperative Societies to ensure Standard Operating Procedure for
milk procurement. Hence we have initiated the SEPDCSC programme with the
focused objective of strengthening and upgradation of existing knowledge and
skill of consultant staff of our milk unions. We have conducted eight
programmes and trained 197 consultant staff members of milk unions during
the year.
The Government of India provides ‘Ready to Cook’ Take Home Ration (THR) to
young children, adolescent girls, and pregnant and lactating mothers, through
its Integrated Child Development Scheme (ICDS). GCMMF has taken up the
opportunity for the production and supply of THR to these beneficiaries and has
entered into a tripartite agreement with the Government of Gujarat and the
three member unions— Kaira, Banas, and Surat—each of which established
plants of 200 MT/day. GCMMF has started the supply of THR from these plants
to anganwadis of Gujarat.
During the last nine years, your Federation’s turnover has increased nearly four
times, at a CAGR of 17%. With a group brand turnover of INR 45,000 crore,
which represents the unduplicated value of products sold under brand Amul by
the Federation and its constituent member unions, we are already the largest
food and FMCG organisation in India. While we have surely made huge progress
and come a long way, this is just the beginning of what promises to be an
exciting and meaningful onward journey. With the rapid increase in milk
procurement, we have already upped our total milk processing capacity to 360
lakh litres per day and planned for a 400 lakh litres per day expansion within
the next two years. In Gandhinagar, Gujarat, AmulFed Dairy’s capacity
expansion from 35 lakh litres per day to 50 lakh litres per day further underlines
its status as the largest dairy in India. Several brand new dairy plants have
already been commissioned in different parts of India in the last couple capacity
at Himmatnagar. Our new chocolate factory has boosted our production capacity
to 1,300 MTs per month,enabling us to launch several new and unique flavoured
chocolates which have been attracting huge interest from chocolate lovers and
being received favourably by consumers. Innovation is in our DNA. In tune with
our culture of continuous transformation, we have unveiled as many as 101 new
products in the last four years, with 48 products being revealed in just the last
two years, exceeding our target of launching two new products every month.
Many of these new innovations such as single origin chocolates, dark
chocolates, a range of kulfis, Cake Magic Ice Cream, etc. have already created
ripples in the market. Rapidly evolving consumer behaviour and preference are
also leading to swift transformation of retail channels, from the traditional
retailers to organised modern retail chains; and, now, to online e-commerce.
While we are aware that only the most customer-centric and most cost-effective
way of of years. These include, two eight lakh litres per day capacity plants—
one at Taloja, Navi Mumbai; and the other at Navapura near Ahmedabad—and
another two lakh litres per day capacity plants in Junagadh and Porbandar. We
are also expanding our milk powder manufacturing servicing market demand
will thrive, eventually, we are also aligning our business processes to ensure
maximum reach with a presence in all channels.
We have taken concrete steps to plan for the next wave of growth, which we
feel will come from ‘out of home’ consumption. With evolving lifestyles and
changing family structures, the culture of ‘eating out’ is leading to rapid and
aggressive growth in the food services segment which caters to restaurants,
fast food joints and chains, hotels, cafes, caterers and institutional canteens.
Another important thrust area is to expand our footprint in the international
market, taking our value-added consumer products not only to the Indian
diaspora spread across the globe but also to consumers of other nationalities as
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well. With the warm wishes, love, blessings, and support of consumers,
farmers, and fellow citizens from every walk of life, we hope to take the ‘Taste
of India’ to the entire world,in the near future.
Acknowledgements
Before closing, I would like to thank all those who have helped to make our
Federation’s operations successful. We are extremely grateful to the Hon’ble
Prime Minister of India and Hon’ble Chief Minister of Gujarat for their constant
support and guidance. We would also like to thank the Government of India for
the immense support received from various departments, specifically from the
Department of Animal Husbandry and Dairy Development. We convey our
special thanks to NCDC (National Cooperative Dairy Corporation) for providing
valuable support to our village cooperative dairy societies. We are thankful too,
to the Government of Gujarat, especially the Department of Animal Husbandry
and Cooperation, for their very supportive and facilitating role. The National
Dairy Development Board (NDDB) has played a role in our growth and
development. We are extremely grateful to the Chairman, NDDB, for his
continuous support to our organisation.
The National Cooperative Dairy Federation of India has been providing us with
invaluable support in coordination with other agencies and organisations. We
are much obliged to them. The Institute of Rural Management, Anand (IRMA),
as always, has contributed to the perspective building and professionalisation of
the management of the cooperative sector. We express deep gratitude for their
support. We are indebted to Vidya Dairy for having organised training
programmes on dairy technology for our employees. We are also much obliged
to Anand Agriculture University and SMC College of Dairy Science, Anand, for
strengthening the dairy cooperative sector by providing technically-skilled
manpower.
We also express our sincere thanks to the College of Veterinary Science and
Animal Husbandry, Anand. Our advertising agencies, bankers, insurers,
management consultants, suppliers, and transport contractors have been of
great help to us in managing our growth and are our partners in success.
We are grateful to them for their guidance, support and cooperation without
which we would not exist. Lastly, we thank the officers and staff of our
Federation for their continued perseverance, loyalty and unflinching efforts
devoted to our cause.
Thank you.
Ramsinhbhai P. Parmar
Chairman
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