November 26, 2021 is the date on which much of India will celebrate the 100^e anniversary of the birth of Verghese Kurien, the Milk Man of India. He transformed India as radically as the Tatas and Birlas did in that country’s industrial landscape. Just as India would be terribly handicapped without the contributions of people like the Tatas and Birlas, this country would have been abjectly poorer without Kurien.

He had several beliefs – which he implemented, unlike most politicians. He had a strategic vision for India. It needs constant reiteration today.

Strategic vision

He believed that in agriculture, the farmer was the most important part of the entire food cycle. Without the farmer, there would be no role for the processor, market maker and distributor. Therefore, it is expected to get the highest share of the milk market price. It was blasphemy against the milk processing companies. Globally, the farmer got only a third of the market price, the processor got another third, and the rest went to marketing and distribution.

Kurien started with the premise that the farmer should get at least 50% of the market price of his products. When global processing and marketing companies refused to accept his formula and help him, he set up his own processing facilities. To ensure that processing machines were available at reasonable costs for Indian products, he established a separate division for manufacturing dairy equipment. It did so with feed, artificial insemination centers, cattle vaccines and the whole range of services a dairy industry needed. Today, each of these activities is profitable and market leader.

He also firmly believed that in India agriculture, especially the dairy sector, should be based on mass production, not mass production.

To make all of the above beliefs a reality, he needed a market-making entity, which Lal Bahadur Shastri, then Indian Prime Minister, agreed to let him set up. It was the NDDB or the National Dairy Development Board. Its primary function was to promote the formation of dairy cooperatives. Its corollary function was to protect milk prices for farmers and to boost the milk market. He did so by first urging the government to channel all imports of milk and dairy products (even gifts and aid) through the NDDB. This would then be released to the market at market rates, thus ensuring that the market price of milk for farmers was not adversely affected. The excess of the purchase price and sales were used by the NDDB to promote the dairy sector. It was a brilliant strategy to ensure that the dairy sector does not depend on government support or allowances. In addition, since the development fund was not a government grant, it did not violate any World Trade Organization standards.

Grants, for Kurien was a dirty word. He rewarded the ineffective and crippled the effective. He made beggars proud farmers who could stand on their own feet. Politicians didn’t like it. They still don’t.

Promote cooperatives

On the milk production side, he promoted dairy cooperatives, the most important of which are those of the Gujarat Milk Marketing Cooperative Federation (GCMMF). It sells milk and dairy products under the Amul brand. Today, Amul is the market leader in India and even Asia, and its farmers get over 80% of the price of milk in the market. He had turned the concepts of the world market upside down. It was a triumph of the Kurien model – something the developed world could not fight against.

The price of milk is determined based on the fat content of the product, which is collected twice a day at approved collection centers.

Thanks to better offspring (artificial insemination plays a big role), better feeds for livestock and good breeding practices, the dairy farmer can gain, within the framework of cooperatives and milk-producing companies of world class like Hatsun, profiting at least Rs. 100 per cattle per day for 300 days per year. The farmer receives this money every day (in some places he receives it once a week) directly into his account. No agricultural product provides guaranteed cash flow to the farmer on a daily / weekly basis, like milk.

What the NDDB does, often in consultation with the GCMMF and other major milk producers, is to ensure that the price of milk is rising steadily, year after year, in very small doses. Thus, the customer does not feel the pinch of a higher milk process. Thus, the prices of milk do not fluctuate as strongly as those of other crops. The farmer is assured of a price support mechanism, and India has established itself as the world leader in dairy production.

Kurien knew that India was destined to be a world leader – it had strategic advantages that no other country enjoys. He knew that India would also remain the cheapest milk producer in the world. And he made sure that in any case, the farmer remained at the center of the whole milk market.

Today, the dairy sector feeds around 10 million families (or 50 million people). It is a sector which employs the largest number of people. It accounts for a share of GDP of around 5%, which is larger than any other agricultural crop (even larger than rice and wheat combined). It is the backbone of rural prosperity which occupies more than 50% of the Indian population. It has continued to grow, as has the demand for milk. The two feed on each other.

Obviously, the stronger the dairy sector, the greater the chances of rural prosperity. Conversely, the more damage this sector suffers, the greater the loss for the nation as a whole.

It’s a lesson many demagogues forget.

Destroy Kurien’s Legacy

Policy makers have recently started to undermine the independence of farmers (the three farm laws had to be abolished. They were not in the best interests of farmers, as this author has repeatedly said.

The government allowed the (limited) importation of milk and dairy products – not through the NDDB – something Kurien strongly opposed. He almost sold the Indian dairy sector to New Zealand. Fortunately, a huge wave of protest has made politicians back down.

They reintroduced the concept of milk subsidies, which will only hurt the efficient and promote the inefficient. In this way, the industry is now politicized. Predictable trouble.

NDDB, the nodal organization created by Kurien, has been without a full-time president for almost a year now – two short-lived interim presidents have led it since the previous president retired. It is not a good sign.

In other words, the government tried to erode the independence of the farmer. A rude politician even dared to point out that Kurien actually wanted to promote Christianity and had to go back on his words and back down in the face of public outrage.

Out of its 100^e birth anniversary we hope that the best sense guides our decision makers:

• Let them not destroy the enormous wealth and dignity that Kurien brought to the dairy sector and tried to do with other agricultural products – especially vegetables and fruits.

• That they understand that the Kurien method of creating a large market maker for each agricultural product, independent of government control, is crucial for the welfare of farmers, whether through a federation of agricultural producers. (FPO) or a farmer-owned organization.

• This NDDB is allowed to remain the central body that can guide policies that are good for the whole agricultural sector.

• Let him guarantee a minimum purchase price for milk of 26 rupees (depending on the fat content), and not exploit and impoverish them as has been done in Uttar Pradesh.

• That it protects the interests of consumers, without harming the interests of farmers. Imports of agricultural products should only be done through an organization like NDDB (FPO federations are good possibilities) so that the price for the farmer is not depressed. Already, domestic production of edible oil and mustard has been affected by imports at lower prices.

Kurien’s legacy has helped India realize that it can become the most important player in the dairy sector. Its principles and strategies apply equally to all other agricultural products. This is what the three agricultural laws were regressive. They would have politicized agriculture more, something Kurien was strongly against.

The author is a consultant editor at the FPJ

Posted on: Wednesday November 24th, 2021 08:53 IST