[India Today]

Published date: 15th Dec 1981

Large advertisements in Delhi newspapers-last fortnight announced that Mother Dairy was being forced to dilute the fat content of milk supplied to the capital’s citizens to 3 per cent from 4.5 per cent so that the sale price could remain Rs 2.20 per litre. At ‘Mother Dairy booths, lengthening queues were often turned away because stocks had run out. As liquid milk procurement from the feeder cooperatives dwindled to a trickle, Mother Dairy pushed in more and more skimmed milk powder and butter oil gifted by foreign donors. At fortnight’s end, these recombinants had risen to 65 per cent of the milk.
The advertisements also claimed that “there has been a substantial increase in the price of luxury milk products such as ghee and sweets. Private traders in such products offer higher prices to the producers than the cooperatives and are able to divert liquid milk from the cooperatives … ”
Uneconomical Prices: Delhi’s plight was narrowly avoided by dairies in Calcutta and Madras, each of which raised sale prices by 30 paise per litre to Rs 3 and Rs 2.80 respectively. Clearly, liquid milk inflows into the cities were being endangered because of pricing policies that could not guarantee producers a remunerative return. Not that there was a milk famine: the problem lay in the uneconomical prices being charged from city milk consumers. As more and more producers turned from the cooperatives to private purchasers, one of Operation Flood’s fundamental objectives.-to capture a large enough share of the market from private dairies and dictate quality and price-was being negated. Delhi’s problems, in particular, showed up the Government’s penchant for pampering the capital.
While Mother Dairy milk is selling for an uneconomical price, the Delhi Milk Scheme (DMS) price is pegged even lower-at Rs 1.80 per litre, the lowest in India. DMS prices are decided by the Union Cabinet. When he took over the DMS four years ago, says Dr Verghese Kurien, 61, its milk was selling at an astonishingly low price of Rs 1.30 per litre. Kurien managed to get this raised to the present level, but there has been no increase since 1977. As a result, Kurien quit DMS in disgust last year.
Nor was Kurien allowed to raise Mother Dairy prices this summer-because, he says, the Agriculture Ministry told him producers would then desert OMS. Says Kurien: “Our pricing is unrealistic. It needs to be far more remunerative for the producer. Instead, political considerations and not economics appear to dictate prices. Pricing is now being used as a weapon against the scheme.”
Common Problems: The DMS is unique among &11 the nation’s city milk schemes because it is directly run by the Agriculture Ministry, with the Union Cabinet making policy decisions. Mother Dairy, on the other hand, is an autonomous plant financed by the Indian Dairy Corporation (me). Both DMS and Mother Dairy, however, depend on the same producers’ cooperative federations in neighbouring states for their supplies.
Both dairies jointly distribute about eight lakh litres of milk a day. But 51 private dairies continue to supply three lakh litres at higher prices. Everywhere, small milk producers in the hinterland cooperatives are clamouring for higher prices, or defecting to the private trade. Procurement levels have dropped alarmingly in the four states that supply Delhi: Rajasthan, Punjab, Haryana and Uttar Pradesh.

So far this year, Mother Dairy’s procurement averaged 1.9 lakh litres a day. In order to maintain supplies at an average 4.6 lakh litres a day, Mother Dairy was obliged to recombine freshly procured milk with an average of 27 tonnes of milk powder and eight tonnes of butter oil each day. Sources said that the DMS went even further, with almost 90 per cent of its milk output consisting of recombinants.
Dependence on gifted milk powder and butter oil was, therefore, being perpetuated. Imports during 1980 exceeded 20,000 tonnes; this was clearly not foreseen by planners, who had predicted that all imports would stop by 1975. Operation Flood, which was supposed to make the country totally self-sufficient in milk, was being hamstrung.
Official Incompetence: Kurien, when INDIA TODAY met him, showed signs of strain at trying to make performance match precept. “The producers say, ‘Why should we give milk to you, when we get much more for our milk in Ludhiana or Jaipur'” he lamented. “I know a few key officials in the ministry are deliberately hitting me, Operation Flood and my colleagues.”
Between August and October this year, the managing directors of the Pradeshik Cooperative Dairy Federation (PCDF) in Uttar Pradesh, the Punjab State Cooperative Milk Producers’ Federation (PSCMPF) and the Rajasthan Cooperative Dairy Federation (RCDF) all wrote to DMS and Mother Dairy asking for substantial increases in procurement prices and held out the possibility of a total stoppage of liquid milk flow “if something.is not done soon”.
Each executive warned that his procurement was being dangerously eaten into by private purchasers. Although every cooperative offers tempting services to its members-free artificial insemination, free veterinary aid, training in first-aid and animal husbandry, and cross-breeding facilities, as well as an annual ‘bonus’ from profits-membership rosters have remained stagnant over the last few years.
Future Scenario: Large producers, particularly, prefer to convert milk into ghee, which is fetching Rs 50 per kg in the northern states. “Milk is selling at a higher price than in Delhi, Punjab, Haryana and Uttar Pradesh towns,” says Amrita Patel, executive director of the National Dairy Development Board. Deepak Tikku, 32, general manager of Delhi’s Mother Dairy, says his liquid milk inflow has been consistently dismal this year, in both lean and flush seasons. Yet, Mother Dairy is proceeding with an expansion to a six lakh litre capacity. and under Operation Flood’s Phase II (scheduled to end in 1985) a third milk plant at Okhla is on the cards.
This isn’t the only paradox. By skillfully using huge quantities of gifted milk powder and butter oil, Mother Dairy has made consistent profits since 1977, and accumulated surpluses which were Rs 6.4 crore on March 31 this year. This included a price fluctuation reserve of Rs 2 crore, an investment reserve of Rs 55 lakh, a development reserve of Rs 20 lakh, and a depreciation reserve of Rs 3.25 crore. Profits during 1980-81 were Rs 40.75 lakh. Inexplicably, Mother Dairy has not so far dipped into its. price fluctuation reserve to cushion producers’ demands for higher procurement prices. In dismal contrast with this, DMS last year suffered losses of Rs 2.65 crore.

Mother Dairy has reportedly asked for Rs 2.70 a litre for toned milk (3 per cent fat content). And a crippling milk famine has barely been averted by utilising increasing stocks of milk powder and butter oil. “After all this,” sighs Kurien, “I’ve been told that the Agriculture Ministry is thinking of rais­ing prices. But decisions always come too late.”

Cooperatives
Udder Failure

Rohtak is a prosperous community 75 km from Delhi by road. This pre­ dominantly agricultural district (area: 3,843 sq km) is the home of the famous Murrah buffalo, highly productive animal sought by milkmen. all over the country, and of the equally good Haryana and Hissar cows. Yet Operation Flood has managed to recruit only 17,356 farmers out of 2 lakh.
The milk is collected twice a day from about 175 villages along 20 routes, each 250 km long, and is brought to the factory-a feeder balancing plant installed in 1976-where it is pasteurised. The bulk of the milk is then transported to Delhi, where Mother Dairy processes it. Although the Rohtak plant can handle l lakh litres a day, it processes much less-only 42,217 litres on November 15According to G. P. Mathur, general manager of the plant, procurement dropped to as little as 1,000 litres a day last summer.
Why Operation flood is a trickle here is mainly due to a deep-rooted reluctance on the part of the local Jats, to sell milk, which is a symbol of respectability. Doodh becha to pooth becha (selling milk is like selling your own son) is a common saying here. Also, milk is a substantial part of the Haryanvi’s diet-he consumes. 440 grams a day, as compared to the Rajsthani’s 90 grams Milk is also, converted into ghee, and farm families and labourers drink the leftover lassi.
High Costs: Recently, OMS and Mother Dairy agreed to pay the Rohtak farmers Rs 2.81 per litre of 6.5 per cent fat milk, but local producers say that this is far from remunerative. And according to Mathur, he has to spend an average of 19 paise per litre on transportation-in the flush season. In- the summer the cost’ shoots up to as much as Rs 2 a litre. No wonder that the Rohtak plant will,: this year, suffer losses of Rs 40 Iakh.
The best cooperative in the district is in: Kahnour,a village. 25 km from Rohtak. Collection last month averaged 1,100 litres a day; up from 500 litres in summer. Rajaram Katyal, cooperative chairman, says that collection would be higher if prices were higher-Katyal him­self holds back a substantial portion of the produce from his seven buffaloes for family consumption.
Even during the flush season, only about 200 of the society’s 450 members actually bring in their milk; most are poor labourers with one or two milch animals each. Complaints centre on the. prices, , and the lack of fodder-the cooperative pays them according to the fat content of their milk and, as, most animals are fed on. coarse grass, fat content is not very high.
Some of the producers spend a lot of money on cottonseed feed, which raises the fat content but is not profitable.
So the cooperative loses even its staunchest adherents. Chaudhry Mangeram, a rich Jat, was one of the founding members. He bought 10 buffaloes especially for the purpose, but low prices drove him and his buffaloes away. Now he has a stable of 40 buffaloes and cows, converts most of his milk to ghee, which sells for Rs.50 a kg. Mangeram also rears calves on his milk, and sells these for fabulous profits.
Dim Prospects: The cooperatives have also failed to crack the stranglehold of the dudhias (milk traders). A cooperative gives each of its members pass books, and they are paid cumulatively every 10 days. A dudhia, on the other hand, exploits the villager by lending him large sums of money in times of need. Repayment is in milk, at rigidly fixed rates, irrespective of the season or the fat content-the going rate in Lahli, a small village close to Rohtak with a cooperative of its own, was Rs 88 per maund, which works out to Rs 2.20 a litre. The dudhia’s musclemen ensure that the villager stays in line.
Even with dim prospects, Mathur is optimistic. He estimates that Rohtak town itself can absorb between 10,000 and 12,000 litres a day. But his plant sells only 2,000 litres a day. The reason of course is that with fresh milk available at home, no one is too keen to buy the dairy blend. However, Mathur is going ahead with a plan to market his milk in sachets.