The Gujarat Co-operative Milk Marketing Federation (GCMMF), owner of the Amul brand, is breaking up for the first time in over four decades. The GCMMF’s fourth largest member Mehsana Dairy, which accounts for over 10 percent of its revenue, has decided to break away and chart its own path nationally with ‘Dudhsagar’ brand.
The Mehsana dairy was one of the founder members of GCMMF in 1973 and until a decade ago procured the maximum quantity of milk for the cooperative. However, over the years Mehsana’s milk procurement has stagnated at 18 lakh litres a day, while Banaskantha has become the most productive with a procurement of 50 lakh litres per day.
Recently, the dairy has been struggling under a debt of about Rs 1,500 crore because of stagnant milk procurement as well as excess capacity. It procures 1.8 million litres per day while it has a capacity of 7.3 million litres per day. On Monday, Mehsana Dairy, which is the fourth largest dairy union of GCMMF, announced that it would break away and register itself as a multi-state cooperative.
Amul MD, R.S. Sodhi, said, “The exit of Mehsana Dairy would not impact Amul and could actually give other dairy unions an opportunity to be part of GCMMF.”
A senior dairy industry expert considers said, “Earlier, most of the dairy unions were backed by Congress and and when BJP came to power, they were forced to switch allegiance to BJP. The Mehsana episode is triggered by political parties (particularly the Congress) so that there is confusion during election time. I won’t be surprised if other dairy unions also revolt (most dairy unions of GCMMF have traditionally been backed by Congress). This certainly won’t be good news for brand, Amul.”
To be parted away from Amul will certainly not be easy, as dairy is a difficult business and most of the newer dairy companies haven’t been too successful.
Sodhi shared his vision about Amul dairy and said, “The cooperative’s focus has largely been milk procurement. They are happy if their procurement goes up by 15-20 percent as their turnover increases. The brand is secondary for them.”