Even as Uttar Pradesh roiled by slaughterhouse row, Amul plans to raise milk purchases 20x in 24 months

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Published: April 4, 2017 7:22:44 AM

Despite being the country's biggest milk producing state, UP has been largely untapped by the country's largest dairy products processor so far.

Amul, Yogi Adityanath, Milk firm, GCMMF, ParagDespite being the country’s biggest milk producing state, UP has been largely untapped by the country’s largest dairy products processor so far. (Source: Reuters)

Even as the new Uttar Pragesh government headed by Yogi Adityanath has cracked down on illegal abattoirs in the state, Gujarat Cooperative Milk Marketing Federation (GCMMF), popularly known as Amul, is all set to increase its milk procurement and processing capacities in the state manifold. Despite being the country’s biggest milk producing state, UP has been largely untapped by the country’s largest dairy products processor so far.

At present, because of lack of procurement by cooperatives, farmers in Uttar Pradesh sell their milk mostly to urorganised-sector players and the state’s milk producers are deprived of remunerative prices. In the last one year or so, Amul has set up processing facilities at Kanpur, Lucknow and Varanasi in UP. However, it procures just 5 lakh litres daily (183 million litres annually) from around one lakh farmers in the country’s most populous state. For a comparison, it purchased more than 177 lakh litres of milk daily (6460 million litres annually) from 36 lakh farmers in Gujarat in 2016-17.

Amul is aiming at doubling daily milk procurement in UP in the next one year and to 100 lakh litres y in the next couple of years. It has made inroads into Punjab, Haryana, Madhya Pradesh, Rajasthan, Maharashtra, Madhya Pradesh and West Bengal in the last few years. Uttar Pradesh is biggest milk producer among Indian states with output of 26,380 million litres in 2015-16. Gujarat’s milk output was 12,260 million litres in the year.

“Uttar Pradesh provides a huge potential in increasing milk procurement and we will be gradually increasing our processing capacities in the state,” RS Sodhi, MD of GCMMF, told FE. However he added that it would not be easy to replicate the Amul model in Uttar Pradesh overnight. “We need to bring professional management into entire value chain from farmers to consumers,” Sodhi said. Besides Amul, Pradeshik Cooperative Dairy Federation-Uttar Pradesh (known as Parag), a state cooperative, procures only around 4 lakh litres of milk daily in the state.

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“At present, we are investing around Rs 600-800 crore annually in UP. We aim to invest about Rs 3,000 crore annually in states other than Gujarat by 2020,” Sodhi noted. Meanwhile, Amul has reported a provisional turnover of Rs 27,085 crore in FY17 which is an increase of 18% from the 2015-16. According to an official statement, the turnover of GCMMF has increased by 3.5 times in last seven years and aiming at achieving a turnover of Rs 50,000 crore by 2020-21.

Although many states where Amul has presence have their own dairy cooperatives, a majority of the farmers are yet to be covered under the milk procurement system. “Our experience in northern states shows that wherever we have entered, the local cooperatives have become efficient,” Sodhi said. Amul’s turnover has been steadily growing over the past six years due to higher milk procurement, continuous expansion by adding new markets, launching new products and adding new milk processing capacities across India. It is entering Jharkhand, Bihar, Odisha and Assam over the next couple of years, as they are a huge untapped market for milk and dairy products.

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