19 C
New Delhi
Thursday, February 22, 2024

The Economics behind Amul vs Nandini Row in Karnataka

Amid a political slugfest, the Gujarat Cooperative Milk Marketing Federation (GCMMF) Ltd, popularly known as Amul, is facing opposition from the ruling party and the Karnataka Cooperative Milk Producers’ Federation Limited (KMF), which sells milk under the ‘Nandini’ brand in Karnataka. The conflict arose when Amul tweeted about its upcoming launch in Bengaluru, which the opposition parties saw as a threat to KMF’s dairy brand ‘Nandini’.

Economics over Politics

The leaders of the ruling Bhartiya Janata Party (BJP) have stated that Amul’s decision to not enter Karnataka is more of an economic decision than a political one. This is because KMF, which is the second-largest dairy cooperative in the country and the first in South India in terms of procurement and sales, sells milk at much cheaper prices than Amul. For instance, a litre of toned milk in Bengaluru costs ₹39 under the Nandini brand, while Amul sells one litre of toned milk for ₹52 in Gujarat and ₹54 in Delhi. Additionally, a kg of curd under the Nandini brand costs ₹47 per kg, while it costs around ₹67 for per kg of curd under Amul. KMF can sell its products at such low prices because it receives subsidies from the government, which has given around ₹12,00 crore incentives annually.

KMF’s Success Story

Karnataka Dairy Development Cooperation (KDDC) started the first-ever World Bank/ International Development Agency funded Dairy Development Program in the country on co-operative lines by organising Village Level Dairy Co-operatives in 1974. The AMUL pattern of dairy co-operatives started functioning in Karnataka from 1974-75 with financial assistance from World Bank/IDA, Operation Flood II & III.

The three-tier organisation structure of KMF includes Dairy Cooperative Societies at the village level, District Milk Unions at the district level to take care of procurement, processing, and marketing of milk and provide technical input services for enhancing milk production at the producer’s level, and a Federation at the state level to co-ordinate the growth of the sector in the State. KMF is one of the few federations in the country that have converted dairying from a subsidiary occupation into an industry. It has 16 Milk Unions covering all the districts of the State, which procure milk from Primary Dairy Cooperative Societies (DCS) and distribute milk to consumers in various towns, cities, and rural markets in Karnataka.

The conflict between Amul and KMF is primarily driven by economic factors rather than political ones. While Amul has faced opposition from the ruling party and the opposition parties, KMF’s low prices have made it difficult for Amul to enter the state. KMF’s success story is based on its well-structured three-tier organisation, which has made dairying a self-sustaining rural economy based on cooperative dairying.

Recent posts