Sukhdev Prasad, a dairy farmer in a village of Badaun in Uttar Pradesh, who owns six buffaloes, as he produces 15 to 18 liters of milk twice in a day. He pours the milk at the collection centre, which is managed by a villager, called sahayak, from the same place. The sahayak makes payments to him on a daily basis. The sahayak brings the milk to the nearby chilling centre which is located at Bisauli.
This is how the things roll out across 12 districts of western Uttar Pradesh around which Mother Dairy collects milk through producers’ institutions (PI). The milk producing organisation has organised dairy farmers into PIs in the villages where it collects the milk from. The dairy farmers pour the milk at the collection units of the producers’ institutions having weighing machines and testing facilities. The sahayaks, who are appointed by the farmers, collect milk from them at collection centres, collect payments from the bank and distributes to the dairy farmers. He is the interface between Mother Dairy and works as intermediary. As compensation, the sahayaks get a certain commission or a fixed salary.
Interestingly, every village where dairy farmers are the members of producers’ institutions, Mother Dairy has installed chilling centres, in case of its absence, the sahayaks take care of the milk up to the nearby bulk coolers. The whole process of procurement from farmers to chilling centers takes 3-4 hours. Meanwhile at the bulk coolers, the dairy organisation has storage tanks, the milk is recharged there and the tanks get emptied and cleaned every day. Thereafter the milk is brought up to the chilling centres, where it is re-chilled. Through insulated containers, milk is brought to the processing unit. However, it takes almost two hours from chilling centres to the processing unit, depending upon what is the distance around them. If it is located very far away places like Raebareli in Uttar Pradesh, it takes eight hours. If it is very near like Badaun or Aligarh, it takes lesser time.
While talking about the essence of milk procurement, the Business Head of Mother Dairy’s Milk Division, Amitava Mukherjee said, “procurement has been developed into a science, which is the backbone of our system. Britannia and Nestle have failed, because they did not understand the science of procurement. We perhaps have the most well established procurement system in the country. In fact, the farmers and sahayaks are the unsung heroes of this business.”
Mukharjee further elaborated on the milk procurement as he said “there are two kinds of fields, green fields and brown fields, Brown field is the contract farming and we more often procure milk on brown fields. Without this expertise, one cannot be in this business,”
The milk is highly perishable in nature. And therefore, from farmer’s doorstep to the chilling centres, ideally it should not take more than four hours. At chilling centres, the milk gets chilled to 4 degree Celsius and temperature is maintained between four to seven degree Celsius. And it is transported in the insulated containers, which preserves the temperature to the processing unit where it is pasteurised, whereby all germs are killed. The process of heating milk to a specific temperature for a certain length of time and then instantly cooling it after removing from heat is called pasteurisation. The process slows spoilage due to microbial growth in the food. Apart from milk, the process is also applied in other liquid food contents.
The milk marketing organisation collects milk from 12 districts of western Uttar Pradesh, some districts of central Uttar Pradesh such as Raebareli and Sultanpur, Sangrur in Punjab, Jaipur, Ajmer and Bhilwara in Rajasthan and Mewat in Haryana. Apart from this geographical expanse, Mother Dairy collects milk from as distant as Chittor district of Andhra Pradesh to some parts of Maharshtra. The organisation has an arrangement with the Government of Andhra Pradesh to develop the milk shades and uplift the livelihoods of the farmers in the state. The dairy firm collects processes and sells this milk in the state and surplus milk is brought to the National Capital Region and fulfills the need of Delhi-NCR.
However, the northern parts of India is considered a buffalo concentrated region. And therefore, the milk production in the summers goes drastically down in the region. On the contrary, the requirement in the rural areas goes higher in the wedding season during the summers. And therefore, the availability of milk in the summers during May to August remains very low. The demand goes up during the festive season as well. “In order to meet that deficit, we have to tap the areas which have round the year surplus. For this we procure milk from other regions like Maharashtra, Andhra Pradesh or elsewhere which is considered to be the cow-belts”, said Mukherjee.
The milk procured in Maharashtra and surplus of Andhra Pradesh are brought to Delhi through fast trains. The trains have insulated tankers to preserve the milk for longer time which is around 30 hours before it reaches Delhi. Mother Dairy however has to meet few challenges before it gets the supply of milk from distant places like Andhra and Maharshtra. In order to reduce the transportation cost the ‘Dairy’ gets the heat treatment of the procured milk on site. During the process the fat and solid contents of the milk rise many fold as it goes up to 24 percent from normal. After this volumetric arrangement, the milk undergoes cold treatment.
Normally, a rail tanker can carry 40 kiloliter of milk, but due to this arrangement, more volumes of milk can be transported in the same tanker. The process reduces the transportation cost as well. On the volume of sales Mukherjee stressed “Mother Dairy sells 30 lakh liters of milk everyday in Delhi-NCR. We are present in Mumbai, Hyderabad, Thirupati, Chennai, Kanpur and Lucknow also. We are expanding our national footprint.”
Around 22 tests are conducted before the milk leaves the Mother Dairy factory. Big quantum of milk is sold openly in the Mother Dairy booths through Bulk Vending Milk (BVM) system. In order to check adulterants and fat content, the quality assurance team collects thousands of samples every month from the booth. “We rigorously collect samples from each and every Mother Dairy booth on a regular basis to put a check on the quality. I think no other FMCG company has this kind of checks on their products. The reports directly go to the board of directors”, affirmed Mukherjee. Each booth goes through cleaning in place (CIP) operations at least once in a day. Every day the booths undergo cleaning and sanitising process and standard operations procedures. All concessionaires are Ex-Army jawans, they are appointed considering their high level of integrity. Continuous training and development of concessionaires happen regularly.
In Gujarat, 30 lakh dairy farmers produce one crore liters of milk every day, they not only sell high fat milk, but also buy low fat milk from Gujarat Milk Marketing Federation for their own consumption. Today consumer goods companies are selling the highest per capita consumption in Gujarat, because of the milk economy. “Milk is perhaps the only business, in terms of Maximum Retail Price, 80-82 per cent goes directly to the farmers. The gestation period between production and payments is very low for milk industry and therefore milk producers are coming ahead in this business. In no other farming activities the return is so quick”, said Mukherjee.
Mukherjee further said, “National Dairy Development Board had predicted in the early 70s that India would be the largest producer of milk. The generation we belong to, we did not have milk, we did not see milk, we saw powdered milk, and especially people living in the eastern part of the country like Kolkata, Guwahati, always maintain stock of powdered milk. Today India is the largest producer of milk in the world.” Notably in India, dealing with milk is considered to be dealing with the cash economy, as it generates cash every day. For the millions of marginal farmers, producing milk is the only source of livelihood. Mother Dairy provides them the assured source of income and in turn, empowering them. However, each farmer who is the member of producer’s institutions and pours on an average of 4.5 liters of milk a day, the Mother Dairy purchases their entire stock every day on cash payment.
SHOWING THE WAY
The modus operandi under which the ‘Mother Dairy’ operates and as it has strengthened the rural economy by enriching the real producers of milk, it seems to have led by the example. ‘The system’ has minimised the role of middlemen that has empowered people at the either side of spectrum- the producers and the consumers. This business model, many believe could be replicated in other FMCG sectors and in commodity trading as well. The policy makers need to take a call to reduce innumerable hurdles across the supply chain for goods and services. FDI in retail can be a way forward where consumers can get commodities at reasonable prices while the producers (farmers) get their dues fairly.