Amul, the country’s top dairy brand, is in the centre of a controversy for the second time in a month, following its move to procure milk from Tamil Nadu (TN). Last month, Amul, which is marketed by the Gujarat Co-operative Milk Marketing Federation (GCMMF), had stirred up a storm after it entered the Bengaluru market, which is dominated by local brand Nandini from the Karnataka Milk Federation.
While in TN, Amul has been selling its products for some time through local outlets, the move to procure milk from the state, using its multi-state co-operative licence is a first.
Fearing that Amul’s entry in TN would be detrimental to local brand Aavin, state’s chief minister MK Stalin on Thursday asked Union home minister Amit Shah, who also holds the co-operative portfolio, to ask the dairy major to cease milk procurement in the state.
“It has come to our notice that the Kaira District Cooperative Milk Producers’ Union (Amul) has utilised its multi-state co-operative licence to install chilling centres and a processing plant in the Krishnagiri district. It has planned to procure milk through farmer producer organisations (FPOs) and self-help groups in and around Krishnagiri, Dharmapuri, Vellore, Ranipet, Tirupathur, Kancheepuram and Tiruvallur districts in our state,” Stalin said in a letter to Shah.
This, he said, could hurt Aavin as it would result in an unhealthy competition between the co-operatives. “Regional co-operatives have been the bedrock of dairy development in the states. They are better equipped to interact with and support producers, as well as to protect consumers from arbitrary price increases,” he said, adding that cross-procurement was against the spirit of the co-operative movement.
When contacted, Jayen Mehta, MD, GCMMF, said there was no threat to local brands with their milk procurement in TN. “I don’t know what the issue is about. But the idea is to co-exist, not compete with co-operatives,” he said.
Speaking to FE, Ashwin Chaudhary, senior manager, milk procurement, project and vigilance, Dudhsagar Dairy, which is one of the 21 district milk cooperatives of GCMMF, said there was no issue of unhealthy competition.
“How can the increasing number of players in an industry create unhealthy competition? Rather it will give the farmers the opportunity to choose the cooperative which is giving them a better price. And as I get it, this is what is called healthy competition,” he said.
Mehta had reiterated a similar point last month in a conversation with FE with regard to its entry into Bengaluru, saying that Amul had no intention to compete with Nandini at all.
“We are only looking at e-commerce/quick commerce channels right now. We are not looking at general trade. For that, we will need to bring down price points. There is no such plan currently. And a modern trade entry of Amul in Bengaluru will happen only six months later,” Mehta had said over Amul’s approach in the Bengaluru market.
Harish Bijoor, brand expert and CEO of Bengaluru-based Harish Bijoor Consults, said that Amul could face a challenge from Aavin, much like it did from Nandini and its base of consumers in Karnataka last month.
“I don’t think regional brands such as Aavin or Nandini will allow Amul to take away their market easily. Most milk co-operatives carve out competence geographies. Milk is a fresh product, best supplied locally. While criss-crossing markets is fine, it may not be the best strategy from a fresh milk perspective,” he said.
Aavin is the state’s apex co-operative marketing federation and there are around 9,673 milk producers’ co-operative societies under its ambit in rural areas. They procure 35 lakh litres of milk per day from about 4.5 lakh pouring members, according to the state government. Under this arrangement, the milk producers are assured of remunerative and uniform prices throughout the year by the cooperative societies, it said.