Professional Documents
Culture Documents
ACRJ
This case was prepared by
Harish Chawla as a basis for
class discussion rather than
to illustrate either effective
or ineffective handling of an
administrative or business
situation.
Please address all correspondence to Harish Chawla,
B-183, Lane #2, Majlis Park,
New Delhi, 110033, India.
E-mail: harish@alum. wpi.edu.
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IDEOLOGICAL LEADERSHIP
The rural folk appealed to Sardar Vallabhbhai Patel for his
assistance against the detrimental and exploitative Polson.
His recommendation for the cooperative was pursued and
Tribhuvandas Patel was appointed chairman. Over the
course of the developments, Sardar Patel resolutely repeated
an indispensable question for Tribhuvan as the metric for
progress, Are the farmers happy? With the same passion
and spirit, Tribhuvandas and Kurien led the cooperative to
decimate competition and overcome numerous challenges,
ensuring that the farmers are happy and beneting.
The year was 1946. India was soon to become
independent of British rule. India was searching for a model
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Objectives/Principles
The ideology of Sardar Patel was the source of inspiration
for the emerging milk cooperative. Economic liberation from
the exploitation of moneylenders and intermediaries was
the primary objective for establishing this enterprise. This
system would provide control over their resources, thus
developing economic and social sovereignty.
The ideological commitment, the fundamental principal of the cooperative was to Serve the Farmers. This
was a way of life for the members and workers of the
cooperative, encompassing values of modesty, diligence,
perseverance, and frugality. Farmers were the primary
stakeholders. Consumers were equally important in this
structure, as without a market the cooperative would not
exist. Belief in fairness towards the producers and consumers ensured that the cooperative kept prices low and
quality high. This led to the second principle: Quality
Takes Precedence. Quality control had the nal decision.
Democracy and fairness were at the helm, the
ideological value that penetrated the organization structure
in its daily affairs. This was reinforced by transparency at all
levels, with the principal that audit can access the Chairman
any time it considers necessary.
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DIVERSIFICATION
Membership in the Kaira cooperative was increasing, while
milk production was also on the rise. Surplus milk collection
in the winter needed to nd new markets or be directed
towards new products. The urban middle and upper class
residents of Bombay were unable to change their demand
based on ever-increasing and uctuating supplyf. Kurien
recognized the need to diversify operations. With the
support of HM Dalaya, the dairy technologist, they decided
to venture into manufacturing butter and milk powder,
vertically integrate into dairy products.
In 1953 UNICEF proposed to donate eight lakh
rupees (Rs.800,000) to the Bombay government in return
for distributing 12 lakh rupees (Rs.1,200,000) of free milk to
undernourished children. The nance minister of Bombay
fCattle
produce more milk in the winter compared to the summer, thus uctuations
in supply.
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STAGED PROGRESSION
During the establishment of the cooperative, sale of
liquid milk was the primary focus, the prot center. Kaira
Cooperative attempted to maximize production and sale
of milk to Bombay through the BMS. This policy required
arduous competition against predominant rivals. There
appeared no apparent reason to invest in new technology,
capital, research and training, thus innovation was on hold.
Establishment of the system and basic survival dened the
rst stage.
The government had kept the price of milk stable
while prices of dairy products soared. This became an
incentive for transitioning into the manufacturing of dairy
products. The Cooperative built a dairy to manage the
surplus production of milk while enhancing its prots from
sales of dairy products. Basic dairy products such as butter
were initially produced that did not require considerable
innovation. Product diversication was the second stage of
the cooperative effort.
The third stage led to extensive innovation, as the
Kaira Cooperative embarked on a range of new products
during the 1950s. Processing facilities were expanded, new
technologies researched and processing activities broadened.
The production of dairy products was initially
to balance and nd new sources for the surplus milk.
Marketing activities of the fourth stage played a central
role in dairy development due to its unexpected success.
Demand was booming from various segments. Defense
services also procured their requirements from Amul.
Kaira Cooperative intended to utilize its plant to
capacity and provide for the increasing demand, which
required a signicant rise in milk production. In 1961
1962, Kaira Cooperative initiated a program to double milk
production in the district. Rupees four crore were marked
for this investment directed towards improving cattle feed,
cattle health care and hygiene and improved breeding.
The effort did not provide the results within the
expected duration. In 1964 a cattle feed factory was
commissioned to provide better nutrients and concentrate
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feed to the cattle. Earlier, cattle were primarily fed straw and
feed concentrate in the form of cottonseed. This assumed
6070% of the total cost of milk. As the price of cottonseed
was on the rise, a substitute was required; otherwise it
would have a depressive effect on milk production. The
Cooperative sought a balanced feed manufactured from
nutrients and grains available locally.
Feed-grains were ground and mixed with local
supplies, while accounting for price, availability and a
balanced nutrition for the cattle. The cooperative established
the factory producing composite cattle feed, Amuldan, which
was provided to the farmers at cost price and available
throughout the year. This met the producers need perfectly
and resulted in a gradual increase in milk production
within the district. Prime Minister Lal Bahadur Shastri
commissioned the cattle feed factory on October 31, 1964.
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TEAMWORK
Tribhuvandas Patel, unselsh, sincere and unassuming,
promoted the cooperative structure and challenged Polsons
dominance. He was a benign, thoughtful and a serious
observer with strong links to the farmers as he was one of
them himself. Tribhuvandas was a man of steadfast loyalty
and integrity, with a relaxed style that got results with
deceptive ease. Over the course of his journey throughout
Kaira, the growth of cooperatives and their relationship
with GCMMF is an indication of his abilities to effectively
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DEVELOPING PEOPLE
The primary objective of the Amul dairy is the wellbeing and development of its owners, the milk producers
themselves. The dairy is the means and not the end in itself.
The primary philosophy of the Anand model is to connect
the producers directly to the consumers, ensuring that the
largest share of the customers rupee is transferred to the
producer. This provides an incentive for the farmer-producer
to increase the quantity and quality of their production.
The Anand pattern coalesces the power of the people with
professional management in the integrated cooperative
structure. The farmer is the owner and intimately involved
in the production. Thereon, he also becomes involved in the
process of development through observations and working
with professional management. The democratic system of
the Cooperative provides the underpinnings for democracy
in the country. A visiting economist in the 1960s commented,
mI
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of Village Community.
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LOOKING AHEAD
The illustrious journey of Amul began some sixty years ago
in a small shady town of Gujarat. Its overarching objective
of serving the farmer and catering to the consumer had
remained unaffected through the course of its evolution.
For the farmers, Amul reected the power to direct their
destinies, secure a stable livelihood through assured employment, empowerment for the village folk, most specically
for the women. For the girl, Amul implied education and
consequent emancipation. Amul represented high quality for
the consumers, a name they could trust and depend on, an
assurance of wholesome milk. India takes pride in Amul as
a successful model for self-reliance and rural development, a
model depicting that hard work, management expertise and
capable leadership could achieve miracles.
Amul Member Unions procured an average of 5.9
million kg of milk per day in 20042005, which represented a growth of about 15% from the previous year.
Sales reached Rs.29.22 billion, where most dairy products
indicated an increase, depicting the strength of the Amul
brand nationwide. Distribution network expanded into
smaller towns as the emergence of markets in smaller towns
was observed. As of 2005, there were about 1059 village
societies as part of the Amul network, comprising 600,000
members.
Since its inception in the late 1940s, Amul had experienced the different stages of an enterprise lifecycle. The
establishment marked the initiation, which was followed
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PERSISTENT CHALLENGES
This system was not awless, Managing Director Mr. Vyas
reminded. It encompassed real challenges within the system
and in relation to the external world. As in any democracy,
if the voting members were not informed but ignorant the
entire elections process becomes a farce or the elections
could be hijacked. This had been observed in the past at the
Village Society level elections. Education of the members,
solidarity and integrity would enable to keep the members
informed and thus reduce the potential of ignorant voting.
Another commonly observed pattern was conicts
between the farmer-members and professional managers.
As each adopted a different perspective, and as their
sophistication of comprehension differed, these groups
were unable to communicate effectively, lending to greater
confusion and misunderstanding. Though all had the same
objective in mind, the lack of leadership skills burnt bridges.
The conviction and leadership were what the founders
portrayed, which appeared to be absent in the current
generation of professional managers. The farmer-manager
relationship was equally essential for the system to progress
and expand.
During its early startup and growth phase, the
government bureaucracy was critical for the success of
Amul. Various services and favors were forwarded as
the objectives of the socialist government and Amul were
aligned. As India transitioned towards open capitalism,
there was a growing splinter between the two philosophies.
Constant pressure to introduce government representatives
on the Anand Dairy board was observed. Other forms of
interference were equally vulnerable for the institutions.
India had decreased its tariff structures after the 1991
liberalization process, and considered reducing it further.
oAmul
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RESOURCES
Carter, Thomas, They Shaped AMUL, Senior FAO Advisor,
NDDB, Amul 50th Celebration Address, 1996.
Halse, Michel, Talent and Character: Sources of effective
management at Amul, Amul 50th Celebration Address, 1996.
Heredia, Ruth, The Amul India Story, Tata McGraw-Hill
Publications, 1999.
Kurien, Verghese, I Too Had A Dream, Lotus Collection, India, 2005.
Mittal, S.P., The Eventful 50 Years, Amul 50th Celebration
Address, 1996.
Patel, Tribhuvandas, Cooperative movement and its role in the
dairy industry of India, Speech, 1963.
Thordarson, Bruce, The Lessons of Amul for Cooperative
Development, Amul 50th Celebration Address, 1996.
Amul Annual Report, 1996 & 2000.
Kaira District Cooperative Milk Producers Union Limited, Anand,
Annual Report, 20042005.
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Exhibit 1
Location of Anand, Gujarat in India
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Exhibit 2
Amul India Timeline
1900
1930
1944
1945
1946
Oct. 7, 1947
Dec. 14, 1946
1948
May 1949
EXPERIMENT BEGINS
IN 1946
1950
Kurien becomes General Manager of Kaira Union. Sardar Patel passes away
1951
1952
Oct 1952 April 1953
1953
1954
P H A S E
1957
START UP
1958
-- O N E
1961
1964
1965
1968
1970
1973
1973 - 1989
GCMMF Established
New Product Innovations continue
1975
1979
1981
IRMA Established
1985
1994
1996
1998
24-Sep-06
GCMMF ESTABLISHED
P H A S E
-- T W O
G R O W T H
OPERATION FLOOD COMPLETES
P H A S E
-- T H R E E
MATURITY
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Exhibit 3
Amul Cooperative Structure
AMUL
SALES
REVENUE
GCMMF in
Gujarat
MODEL
SALES
REVENUE
22 State
Fedns. in
India
176 District
Unions in India
12 District
Unions in
Gujarat
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BONUS
DIVIDEND
ON
SHARES
ADDL.
PRICE
DIFF.
CATTLE
FEED
RURAL
HEALTH
SCHEMES
VET. & AH
SERVICE
11,615 Villages
in Gujarat
1,08,574
Villages in India
2.4 million in
Gujarat
12 million in
India
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Exhibit 4
From the Farmer to the Consumer
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Exhibit 5
Salient Features of Operation Flood
Features
OFI
OFII
OFIII
19701981
19811985
19851996
39
136
170
13.3
34.5
72.7
# of Members (millions)
1.8
3.6
9.3
2.6
5.8
10.9
3.6
8.8
19.2
261
508
842
2.8
9.9
Period
# of milksheds covered
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Exhibit 6
Gujarat Cooperative Milk Marketing Federation
GCMMF: Mission Statement
We, at GCMMF, endeavour to satisfy the taste and nutritional requirements of the customers of
the world, through excellence in marketing by our committed team.
Through co-operative networking, we are committed to offering quality products that provide
best value for money.
GCMMF: Business Philosophy
To serve the interests of milk producers
To provide quality products to consumers
Value for money
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Rs (million)
US $ (in million)
199495
11140
355
199596
13790
400
199697
15540
450
199798
18840
455
199899
22192
493
199900
22185
493
200001
22588
500
200102
23365
500
200203
27457
575
200304
28941
616
200405
29225
672
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Exhibit 7
GCMMF/India Trends in Milk Production & Cooperative Societies
GCMMF Member Village District Coop Societies
12000
8690
10000
2.5
2
6240
1.23
2000
0.5
05
4'0
-0
4
'0
3
03
2'0
-0
2
'0
1
84
-8
5
93
-9
4
04
05
'0
4-
03
'0
3-
02
'0
2-
'0
1-
-9
8
-9
4
97
93
-8
9
88
-8
5
0
84
1.67
1.5
4000
2.4
2.36
2.27
2.22
89
6000
5580
11400 11615
10852 11200
88
-
8000
10180
6
5
4
3
2
5.7
5.1
2.5
1.7
5.2
4.6
-0
4
-0
5
'04
'02
'03
-0
3
-0
2
'01
97
-9
4
93
-9
0
89
-9
84
-8
100
90
80
66.3
70
50
40
20
74.3
78.1
88
91
53.9
60
30
70.8
84
17
21.2
20
23.2
31.6
10
0
1950
1968
Phase I
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1980
1995
Phase II
1997
2002
2004
Phase III
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Exhibit 8
Amul Support Services
Animal Breeding Amul owned a semen production center with
high-pedigreed buffalo, the Holstein-Friesian. Amul provided
articial insemination, which enabled it to control the supply
surplus and decit. A cluster of villages had available AI subcenters. This crossbreed bull enabled the increase of the quality and
milk productivity of the members herds.
Veterinary Services In 1950 the concept of veterinary services
were introduced to the cooperative. Farmers were not educated in
this respect, and on many occasions would simply commiserate the
illness or loss of their buffalo. A team of dedicated veterinarians was
assembled who visited every village twice a month to treat the sick
animals free of charge. Moreover, the vet services were available
on call for immediate attention. In 1997, Amul operated 16 mobile
veterinary dispensaries with radio telephones, providing emergency
services on call. Subsidized medicines were also provided within
the village society rst-aid ofces.
Cattle Feed Nutritious cattle feed developed from local produce
lends to improved milk quality and productivity. Amul setup its
rst cattle feed plant in 1964, and its second in 1981. Balanced cattle
feed is sold to the villagers at cost. The village collection centers are
the point of sale, facilitating and encouraging the farmers to use the
nutritious cattle feed.
Value Addition & Marketing As milk production increased, Amul
had to nd new methods of utilizing the produce. New dairy
products were introduced, though branding was the solution that
differentiated Amul from competition. Vertical integration into
processing, packaging and marketing was followed. GCMMF was
established to develop the markets and provide the services to the
cooperatives. By 1980, Amul was the most recognized brand in
India, primarily due to its slick, snappy and contemporary billboard
commercials.
Education Amul performed educational and training activities
to ensure that its cooperative members exercised their rights and
responsibilities prudently. Women members were provided special
attention, as they were typically responsible for the animals in the
house while the men tended the farms. The constant interaction
with the members ensured that Amul remained responsive to the
needs of the farmers.
Institute of Rural Management, Anand As a professional himself,
Kurien observed the growth in rural enterprises without a parallel
increase of professional managers capable of serving the rural
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Exhibit 9
Growth and Expansion Phases Amul
The diagram below illustrates the growth and expansion phases of Amul over its last 60 years of
illustrious journey.
Growth Phases due to technology, marketing or operational improvements/innovations.
Technology Upgrades
1990's
G
R
O
W
T
H
Product Diversification
1980's
&
E
X
P
A
N
S
I
O
N
STARTUP
1946
GCMMF Established
1973
TI ME
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