In an interview with IANS, Dr. R S Sodhi, Managing Director, Gujarat Co-operative Milk Marketing Federation (GCMMF) says that Amul is procuring 15 per cent more milk every day as other private and dairy players are not procuring that much.
Sodhi added that since people have been at home during the lockdown, consumption of milk and dairy products has gone up. The opportunities for Amul in the post lockdown period will go up as demand for hygienic and good brands is rising and consumption of loose milk is going down, Sodhi said.
He said the Rs 15,000 crore dairy infrastructure fund announced as part of the stimulus package will create a capacity for five crore litres of more milk and 30 lakh jobs. The Rs 10,000 crore scheme for micro entrepreneurs can also tackle the problem of migration by creating dairy entrepreneurs in milk deficit states.
GCMMF had a turnover of Rs 38,500 crore in FY 20 and has a revenue target of Rs 43,000 crore in the current year, Dr Sodhi said. GCMMF is India’s largest food product marketing organization and in FY20, it daily milk procurement was 23 million litres per day.
How did Amul ensure supply of milk during the lockdown?
In the lockdown as far as Amul supply chain is concerned there has been no interruption and disruption. It continues right from farmer to the consumer.
You do not stop consuming milk or milk products during a lockdown. Right from day one, milk was declared as a essential product. So there was no major problem in the supply chain.
No doubt we had had to take the precautionary and safety measures right from the village level in the classification, processing and distribution of milk and milk products.
How has milk procurement gone up?
Coming to the procurement part, procurement has gone up by 15 percent because smaller players, private players, small dairies ice cream dairies, they are not procuring milk as much. That much will keep coming extra. That is not just the case with Amul. Cooperatives all over India are taking 15-30 percent more milk because cooperatives continue to pay good price also.
We are able to handle extra milk. We have the capacity for it. We are converting the extra milk into commodities like skimming powder or white butter.
Consumption of milk and milk products has seen an uptrend?
Coming to the consumption side, milk consumption initially reduced by 15 percent because of closure of hotels, restaurants, mithai shops but within one week we recovered. And now our sales is the same or higher. Metro cities like Delhi, Mumbai is higher than pre-COVID phase of last year.
Mainly, because I believe that when people are at home they are consuming more milk and milk products. Same is the case with consumption of all our dairy products, paneer, ghee, cheese, 10-30 percent increase is there. Because when people are not eating out, they are eating at home, eating good ingredients at home.
When you are eating at home, you will go for real, cheese, butter, ghee. Naturally, people will go for a good brand like Amul. Demand for good, branded products has increased.
We sorted out problems in the supply chain during lockdown. We had given lot of incentives to our supply chain partners, like labour, transporters, employees to motivate them in a difficult time.
In consumer products, our growth will be 15-17 percent more. Reason is simple that we are getting 15-17 percent more milk so we have to process it. You can’t keep it. Commodity sale is little less now, later on we will sell it.
Extra milk we convert it into commodities like skimmed milk powder or white butter, which can be stored for one or two years. We will sell it in time to come.
What are the revenue projections for GCMMF in the current year?
Last year, the revenue was Rs 38,500 crore, with a growth of 15 percent it will be Rs 43,000 crore in the current year. If you see Amul brand as a whole, last year it was Rs 53,000 crore, this year it will be Rs 58,000 crore.
What are your views on “Vocal for Local” campaign?
You see, what Prime Minister has said is Atmanirbharta and Vocal for Local. In the foods category, Indian brands are more than 50 per cent. If you take other categories like durables, it is mostly global.
No Indian will buy an Indian brand because of the nationality. People will buy Indian brand or any brand for that matter because of the desired benefits and excellence. This means best quality, best technology at affordable price.
Prime Minister has given a challenge to Indian brands to reach global standards because India is the largest market and fastest growing market in the world.
If I take you back to the 70s, this was the same situation in the dairy sector. We were importing, production was low and we were dependent on imports. That time farmers of India, policy makers and political leadership decided we have to become self sufficient.
It was decided that the successful Amul model be replicated and within 20 years we became not just self sufficient but the largest producer of milk.
Within 20 years we not only became self sufficient but world’s largest producer of milk. In the 70s, we were producing milk, one eighth of Europe and one third of USA.
Now, we are double than that of USA and more than 25 per cent of what Europe produces. Milk production has jumped by nine times.
In any organization or company, what is the biggest asset? It is not the plant. It is the brand value.
Till you are selling in the local market, it will get appreciation and brand value. Foreign brands in India, even if they are made here and sold here..Billions of dollars are being given in royalty, R&D. If US, Europe foreign brands are being sold in India, these companies get valuations.
If Indian brands are sold in Middle East, Europe, even it is made there, Indians will get the benefit. You can’t become global leader unless you are a leader in the Indian market. India has huge opportunity, a democratic set up, skills and a large market is there.
What will be post lockdown opportunities?
There are emerging opportunities after the lockdown. People are preferring safe and hygienic products with immunity boosters. Branded products, reputed brands which are affordable will be preferred and Amul meets all the criteria. People are buying less of loose milk.
What about the Delhi market?
In Delhi, Amul has been the number one milk brand. We don’t have booths in Delhi, we are growing through the shops.
What are your views on the dairy sector package announced as part of the stimulus by the central government?
The Finance Minister has announced a very required to boost the dairy sector. This package was much required. There has been talk that nothing has been done for generating demand and that there is only focus on investment. It is being said how will demand be generated.
There are four major measures. Dairy farmer can access Kisan Credit Cards for taking credit. Four major things Dairy farmers also get Kisan credit cards..they can take credit
The cooperative sector procuring 15-30 percent more milk. We have more of commodity stock. Our working capital is blocked. The government has allowed interest subvention of four per cent so we will not make desperate sale of commodities. We will keep it so that farmers get better valuation.
In addition, government announced Rs 15,000 crore of dairy infrastructure fund to attract more investment in cooperative and private sector. This will create capacity of five crore litres more milk and will generate 30 lakh jobs. These 30 lakh jobs will create more income and also more demand in rural areas. That much will be coming into their hands. The wheel of economy will be running.
For disease control and vaccination, Rs 13,000 crore has been given. We had a loss of Rs 80,000 crore of milk due to disease.
Also, Rs 10,000 crore has been given for two lakh micro entrepreneurs have been given. This will give opportunities for dairy entrepreneurs and food processing at the village. This can create lot of employment.
These are very positive measures and will create job opportunities. Especially for the migration of labour, that is happening to Uttar Pradesh, Bihar, Jharkhand, these are all milk deficit states. There is a market and opportunity, they can start dairy farming activities.