Protect the Anand model

India's milk revolution is still incomplete

The chief of the massive co-operative structure that comes under the Amul umbrella has raised issues that have long been central to India's dairy sector but still remain relevant. R S Sodhi, managing director of the Gujarat Co-operative Milk Marketing Federation, which owns the Amul brand, has cautioned the government against making concessions in the free trade agreement (FTA) being negotiated with the European Union (EU). He fears that such concessions would undermine the model that has worked successfully for over four decades now. While a successful resolution to the negotiations of an EU-India FTA is essential, Mr Sodhi's point deserves the negotiators' attention. After all, the task the country set out to achieve when Lal Bahadur Shastri asked Verghese Kurien to replicate the highly successful Anand experiment all over the country has been only partly achieved. India is today the largest milk producer in the world and per capita milk availability is going up steadily, if slowly. Some African countries survive on artificially priced imported milk powder, unable to grow their own healthy dairy sector in the face of import competition.

Anand-type co-operatives have thrived by being able to collect huge quantities of raw milk from farmers spread over large areas, with many of them individually producing only a few litres of milk. Not only is this milk (a highly perishable commodity) marketed successfully in large urban centres and also converted into value-added products such as butter and ice cream, the farmer gets a higher share of what the customer pays than what private producers can match. At the core of this operation lies a massive logistical effort and unmatched veterinary extension service. Not only have co-operatives created "operation flood", they have also made a significant dent in rural poverty. The small amount of milk that a farmer sells can give him an additional 25 per cent income. It is important to remember that the whole business model could succeed because it received tremendous policy support that did not let subsidised imports prevent a grass-roots effort from growing and prospering. True, since the 1980s, the EU has greatly reduced the support that it extends to its dairy sector; yet it still continues to do so, and subsidised imports would challenge this successful indigenous model that keeps costs low, dents poverty and meets new demand created by growing incomes.

There are, however, two issues, also raised by Mr Sodhi, on which he cannot be supported wholeheartedly. He has argued that the phytosanitary (health) standards deployed by the EU prevent Indian dairy products from being exported to the EU. It is up to the government to establish if this is becoming a non-tariff barrier and take the matter to the World Trade Organisation if needed. Also, the need to meet strict health standards for exports can also drive standards for domestic consumption. Mr Sodhi is also unhappy with the geographical indications (GI) being used by the EU so that, for example, Amul cannot export Gouda cheese - which it makes rather well - to the EU by calling it so. India has in recent years extensively put in place GIs, like for Darjeeling tea, and all countries are free to play by the same rules of the game.