Milk Cooperatives in India – Shunning Social Obligations

This is the post excerpt.

Milk Cooperatives – Nothing Social but “Collective Loot”

The concept of cooperative milk societies which was borne out of adversity (milk shortages after independence) and set up under the guise of “support to small and marginalized dairy farmers” is increasingly being trumped by economic and shall we say political considerations.

In an over democratized country like India – Politics nay bad politick seeps into each and every noble enterprise and milk cooperatives are a glaring example of this.

Dairy Cooperatives

Concept of Co-operation which means a group of persons (society) having one or more common economic needs, and who voluntarily agree to pool all resources for larger mutual benefit through an enterprise democratically managed by them.

This was the founding principle of milk cooperatives in India in early fifties and further to be supported by NDDB – which was set up in 1965 to replicate “Anand Model” of dairy development. Around 16 – 17 large Dairy Cooperative Federations operate under the aegis of National Cooperative Dairy Federation of India at this moment.

Dairy co-operatives and their federations of today are trouncing these cooperative principles with impunity by colluding to raise consumer milk prices disproportionately higher than increase in milk procurement prices.

It’s a classic case of both robbing the consumers and cheating farmers, in name of “co-operation”

Milk Price Increases – Cooperative “Collusion”

The latest round of price increases was started by Amul raising consumer milk prices by Rs 2 per liter from 4th of March 2017. This was immediately followed by a number of other federations including Verka in Punjab which also raised consumer milk prices by Rs 2 per liter for standard milk from Rs 44 per liter earlier to Rs 46 per liter now.

Little do consumers realize that such increases in milk prices are not fully passed on to dairy farmers in whose name these repeated price increases by dairy cooperatives are initiated in first place. Consider the following data from Maharashtra Milk Cooperative Federation:

COW MILK Buffalo Milk
3.5/8.5 22.00 22.00 6.0/90 31.00 31.00
3.6/8.5 22.30 22.30 6.1/90 31.30 31.30
3.7/8.5 22.60 22.60 6.2/90 31.60 31.60
3.8/8.5 22.90 22.90 6.3/90 31.90 31.90
3.9/8.5 23.20 23.20 6.4/90 32.20 32.20
4.0/8.5 23.50 23.50 6.5/90 32.50 32.50
4.1/8.5 23.80 23.80 6.6/90 32.80 32.80
4.2/8.5 24.10 24.10 6.7/90 33.10 33.10
4.3 /8.5 24.40 24.40 6.8/90 33.40 33.40
4.4/8.5 24.70 24.70 6.9/90 33.70 33.70
7.0/9.0 34.00 34.00
7.1/9.0 34.30 34.30
7.2/9.0 34.60 34.60
7.3/9.0 34.90 34.90
7.4/9.0 35.20 35.20
7.5/9.0 35.50 35.50
* Permission to purchase Aarey shakti cow milk (3.8% fat / 8.5% SNF) on basis of outreach supply at rate of Rs. 28 per Litre in lean season and Rs.27 per Litre  in flush season (30 paise for extra fat point) from Co-Op Sangh.


1 Internal transport 1.10
2 Can expenditure 0.05
3 Management expenditure 0.30
4 Chilling expenditure 0.35
5 Total Commission to Sangh (1+2.+3+4) 1.80
6 Commission to Society 0.70
7 Total Commission (5+6) 2.50


Based on above data and from news reports on current procurement price of Rs. 600 – 610 per kg fat being paid by Amul –     for a liter of standard (4.5% Fat/8.5%SNF) milk, dairy farmer gets paid only Rs. Rs. 27 – Rs. 28 at best. You and I as consumers pay Rs 46 – Rs. 48 per liter for this standard milk resulting in a minimum of Rs. 19 – 20 per liter differential for appropriation under various “heads” by dairy cooperatives. So much for “social” objectives


Lofty Promises

Dairy cooperatives in India are beyond purview of any scrutiny and neither any politician or consumer group has raised this demand so far. Being co-operative enterprise, all ills are ignored or “swept under the carpet”.

Consider the statement of Sh T. Nanda Kumar – Chairman NDDB, wherein he encourages consumers to support dairy farmers and promises that a minimum of 75% of consumer price should reach dairy farmers. Considering this statement – a consumer price of standard milk of Rs. 46 per liter should translate into a minimum of Rs. 34.50 per liter as procurement price to be paid to dairy farmer. While in reality dairy farmer barely receives Rs. 27 per liter translating into ~59% of consumer price as against promised 75%

Harsh Summer – Pressure on Production

Country may witness “normal” monsoon in 2017 but rising temperatures are set to adversely impact milk production during peak summer months.

Consumers may have to brace for yet another price hike in coming months while dairy farmers are staring at increased milk production costs on account of rising prices of animal feed and fodder with little hope of any improvements in milk procurement prices.

When state agencies keep robbing consumers and producers – in name of cooperative movement – hope is also not enough.