A milk-war-like situation is building up in Punjab. With Amul’s starting processing from its Danish-component plant at Batala in border district Gurdaspur, the state’s indigenous brand, Verka, is feeling the heat.
From a humble beginning of 10,000-litre daily collection from 17 villages, Gujarat Co-operative Milk Marketing Federation Limited, which owns brand Amul, targets to go up to 1.25 lakh litres by end of the financial year. “Amul is also building a plant at Khamano, which will be one of its many across the state in future,” said JS Punjrath, who heads Amul’s operations in Punjab. He is the former managing director of Punjab State Co-operative Milk Producers’ Federation Limited (Milkfed) that owns brand Verka.
“Five years down the line, the target turnover is Rs 2,000 crore,” said Batala’s Congress legislator Ashwini Sekhri, whose family plant worth Rs 15-crore will process milk for Amul. The products will be for the market in the Majha and Doaba region, besides parts of Himachal Pradesh and Jammu and Kashmir.
Milkfed claims there are some ethics of running a co-operative that Amul is not following in Punjab. “But we are not worried,” said Milkfed MD Dilraj Singh. The worry, however, is clear. Milkfed and top officials of the state animal husbandry department have put their heads together and planned to confront Amul with old agreements among the country’s milk co-operatives.
Invasion a breach of agreement: Milkfed
“They (Amul) can’t enter our territory without our consent,” said Dilraj Singh, referring to a decision that the co-operatives took at a meeting in August 2011. “The operations have to be defined clearly with mutual consent; if a milk federation enters another state, it has to inform the competitor there in advance for an agreement on milk price,” said the Milkfed MD.
“Amul, so far, has not registered any milk co-operative in Punjab and its profit from the state will go to the co-operatives outside,” added Dilraj Singh. “No problem, we are an inter-state co-operative and we are free to function in Punjab also,” replied Punjrath, clarifying that Amul was not in competition with anyone and its presence “will only make Verka function better”.
Battleground Gurdaspur: Moves, counter-moves
If a big fight between Amul and Verka is inevitable, Gurdaspur will be the first battleground. Spotting it to be a weak area, Milkfed has decided to push more men and money into the district to leave Amul no scope of milk procurement.
Amul, on the other hand, is building 25 bulk chilling plants in the area to speed up milk collection and cultivate relations with producers. “At these plants, we have milk-testing laboratories that Verka doesn’t have,” said Sekhri. In a counter-move, Verka plans to come out with milk that has a shelf life of 30 days. In cities, when shops run out of Verka stock, the vendors offer customers 30-day Amul milk.
Milkfed is worried that its competitor is cash-rich, with an annual turnover of Rs 22,000 crore and the capacity to process 1.8-crore litres of milk every day in facilities across the country.
At Rs 2,150 crore, the Verka turnover is a tenth of Amul’s. And by processing just 13.7-lakh-litre milk a day, it can’t pump as much money in the market as the rival can. “For procurement, they offer producers Rs 550 per kilo of fat rate. We offer less (Rs 520 per kilo fat) but with guarantee of procurement in the dry and in flush seasons,” said the Milkfed MD, implying that Amul can’t support Punjab farmers as Verka does.
“Offering producers a better price would jack up the cost of milk and milk products, and disturb the market dynamics,” said Dilraj Singh to justify the Milkfed objections. “Amul would always support the farmers of Majha and offer quality products to its consumers in the region,” said Sekhri, denying that Amul would start a price war.
Verka procures only about 5.5% of milk produced in the state. Of the 45% available for commercial market, it procures only 12%. Small dairies, sweetshops and smaller processing entrepreneurs procure the rest.