Unit 3: Dairy Co-operatives

Dairy Co-operatives in India

Place of Dairy Co-operatives in the Indian Economy

Dairy cooperatives play a major role in India’s rural economy because:

• India is the world’s largest milk producer (contributing ~24% of global output).
• Dairy is the largest agri-sector—bigger than wheat and rice combined.
• 70% of milk producers are small and marginal farmers or landless labourers.
• Dairy co-operatives provide regular income, even when agriculture fails.
• They create employment in rural areas—collection, chilling, processing, transport, veterinary, etc.
• Dairy co-operatives reduce the role of middlemen and help farmers earn fair and stable prices.

Example: AMUL alone impacts 36 lakh farmers through its cooperative system.

Structure of Dairy Co-operatives (Three-Tier AMUL Model)

India follows the famous three-tier cooperative structure known as the AMUL Pattern.

Diagram – Dairy Co-operative Structure

                     NATIONAL LEVEL
     (National Cooperative Dairy Federation of India - NCDFI)
                                 |
                         STATE LEVEL
       (State Milk Federations – e.g., GCMMF, RCDF, HAFED)
                                 |
                        DISTRICT LEVEL
        (District Milk Unions – e.g., Anand Milk Union)
                                 |
                       PRIMARY LEVEL
     (Primary Village Milk Producers’ Cooperative Societies)
                                 |
                          MILK PRODUCERS

NDDB – National Dairy Development Board

Established: 1965
Headquarters: Anand, Gujarat

Objectives

• Improve milk production and productivity
• Strengthen dairy cooperatives
• Implement Operation Flood & National Dairy Plan
• Provide technical, financial, and managerial assistance
• Promote new dairy technologies

Functions

• Provide training, consultancy, veterinary services
• Develop chilling plants, processing units, and packaging
• Implement research for breeds, cattle feed, disease control
• Introduce IT systems for milk procurement
• Support state governments in dairy policy

The AMUL Pattern

The AMUL model (Anand Milk Union Limited) is considered the most successful dairy cooperative system in the world.

Key Features

• Farmers are the owners of the cooperative
• Milk is collected twice a day at village societies
• Payment is based on fat content and SNF (Solids Not Fat)
• Transparent digital systems for testing & payments
• Value-added products (cheese, butter, ghee, ice cream)
• Strong marketing and branding (AMUL, “Taste of India”)
• Surplus profits are distributed back to farmers

Outcome: Created the White Revolution in India.

Working and Functions of Dairy Cooperative Institutions

A. National Cooperative Dairy Federation of India (NCDFI)

Functions

• Coordination of state dairy federations
• Marketing of milk and milk products
• Price stabilization
• Procurement of bulk ingredients (sugar, packaging)
• Managing e-market platforms like NCDFI e-market
• Training and research support

B. State Cooperative Milk Producers’ Federations

Examples: GCMMF (Gujarat), KMF (Karnataka), HAFED (Haryana)

Functions

• Process milk collected from district unions
• Marketing and branding at the state level
• Quality control labs
• Chilling centers, packaging units
• Financial and technical support to districts
• Coordination of distribution network

C. District Cooperative Milk Producers’ Unions

Functions

• Collect milk from primary societies
• Maintain chilling plants and processing centers
• Produce value-added products
• Provide veterinary services, cattle feed, AI (Artificial Insemination)
• Transport milk to state federations
• Train village societies

D. Primary Cooperative Milk Producers’ Societies

(Located at village level)

Functions

• Collect milk from members
• Conduct fat testing and SNF testing
• Pay farmers daily/weekly
• Provide cattle feed, fodder seeds
• Offer vet services (first aid, vaccination, AI)
• Record keeping for procurement
• Promote women participation

Operation Flood – The White Revolution

Launched: 1970
Implemented by: NDDB
Funding: World Food Programme (WFP) & European Economic Community (EEC)

Phases of Operation Flood

Phase I (1970–1981)

• Set up milk grids
• Connected villages to urban markets (Bombay, Calcutta, Delhi, Madras)

Phase II (1981–1985)

• Expansion of dairy cooperatives
• Strengthening milk processing infrastructure
• Veterinary and AI services

Phase III (1985–1996)

• Productivity enhancement program
• Expansion of dairy products
• Increased self-sustainability

Outcome

• India became the world’s largest milk producer
• Farmers received better prices
• Modern dairy infrastructure created
• AMUL became a national model

Recent Developments in Dairy Co-operatives

Modernization

• Digital milk testing machines
• Mobile apps for milk procurement
• Online payment to farmers

Value Addition

• Increase in production of cheese, paneer, flavored milk, yogurt
• Start of organic milk and A2 milk branding

Technology Adoption

• IoT-based cattle monitoring
• Automatic milk collection units (AMCU)
• Bulk milk coolers (BMCs)

Women Empowerment

• 30–40% membership now includes women in several states

Export Growth

• India exports skimmed milk powder, ghee, processed cheese

Problems Faced by Dairy Cooperatives

Problem	Description
Management Issues	Lack of trained managers in rural cooperatives
Political Interference	Elections and leadership become politicised
Milk Quality Issues	Adulteration, improper chilling, contamination
Financial Constraints	Limited funds for infrastructure & expansion
Competition	Private dairies and multinational brands
Seasonal Variations	Surplus in flush season → wastage, losses
Low Productivity	India’s cow/buffalo productivity is still low
Technology Gap	Many societies lack modern testing/chilling equipment

Summary Table for Quick Revision

Topic	Key Points
Place in Economy	Largest milk producer; rural income; employment
Structure	National → State → District → Primary
NDDB	Technical support, Operation Flood, NDP
AMUL Pattern	3-tier model, farmer-owned, value addition
NCDFI	Coordination, marketing, e-market
State Federations	Processing, branding, quality control
District Unions	Collection, processing, vet services
Primary Societies	Milk procurement, testing, payments
Operation Flood	White Revolution; 3 phases
Recent Trends	Digital systems, IoT, value addition
Problems	Management issues, competition, finance