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Stirring up a storm in a milkshake

By Ashok V Desai
June 03, 2003 17:29 IST
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Gujarat Cooperative Milk Marketing Federation Chairman Verghese Kurien Verghese Kurien has been making news. He is generally not boring; but recently he has been going on and on about the same thing for  too long.

His bugbear is Milma Foods, a company that Mother Dairy Foods Limited, a subsidiary of National Dairy Development Board, formed with Kerala Cooperative Milk Marketing Federation. This company has taken over the marketing of milk and milk products for the Federation.

What is Kurien's grouse?

First, that NDDB is owned by the central government; with this joint venture it has encroached on the independence of a cooperative milk marketer. He believes that cooperatives should be independent of government.

Second, that NDDB has taken a majority share in the joint venture. So it will be in control; KCMMF, which is supposed to be a marketing federation, will have no marketing to do.

Third, NDDB or its subsidiary, MDFL, knows no marketing, and therefore cannot add value.

The last charge will surprise many outside Gujarat, for they will have bought milk from Mother Dairy kiosks, and vegetables from Safal shops.  Just selling something does not mean that the seller knows marketing.

But KCMMF's milk collections have fallen from 700 to 500 kilolitres a day. It is unlikely that milk production has fallen; it is just that the milk producers are selling less to KCMMF. It may be that to get more milk, KCMMF needs to give the producers a better return than the 42 branded private milk marketers in Kerala do.

So -- KCMMF is losing market share, and is threatened with extinction. It needs help. But why from NDDB? What marketing expertise does it have? All it has done is to recruit someone who worked in the marketing setup of Hindustan Lever into MDFL. That is another of NDDB's sins.

For Kurien, multinationals are diabolic; taking people from them is ultimate pollution. But the devil may know a trick or two. Maybe that is what bothers Kurien. If MDFL is such a dud and the joint venture is going to fail, KCMMF will go further down the drain, and Kurien can say, "I told you so!"

But just in case the joint venture succeeds -- I think that somehow worries Kurien.

Kurien is also against NDDB's taking a majority share -- effectively, management control -- in the joint venture; that to him is encroaching on KCMMF's freedom. But KCMMF has enjoyed this freedom all these years; it has not done it much good.

Under its agreement with MDFL, it can walk out of the joint venture any time: all it has to do is to buy back MDFL's equity at cost. Whether their shares should be 51:49 or 49:51 is a quibble.

It is not a quibble to Kurien because NDDB is Government; cooperatives should be independent of the governments. However, if KCMMF is not to take NDDB's help, where can it turn? Hindustan Lever? Nestle? Goodness no; they are multinational devils. Keventer? Vijaya? Oh, no! They are capitalists.

Gujarat Cooperative Milk Marketing Federation? GCMMF would be more than happy to assist. Its chairman is Verghese Kurien. Everyone knows it by its brand, Amul, and its products -- Amul Snowcap Softy Mix, Sagar whitener, Mithaimate condensed milk, mishti doi (no, it is not masti dahi; it does not make you masculine), Shahi Badam Kulfi Bar, Dhara Fit-n-Fine Refined Soyabean Oil, etc.

Amul is India's foremost brand in food products, and would gladly brand other states' milk products and sell them.

So it would seem to me that this is a fight over turf disguised in pseudo-issues. The impression is reinforced by Kurien's tactics. He has met ministers in the central and state governments. He has talked volubly to the media. He organised a seminar in the Indian Rural Management Institute -- another of his satellite institutions. He said once that it would produce 50 Kuriens a year.

What is wrong with a seminar? Surely public discussion is the way to thrash out issues. I think Amrita Patel was wrong in refusing to attend the seminar; in her place, I would have loved to go and beard the lion in his den.

But I would not have expected to thrash out issues in a seminar with Kurien. For I have sparred with him on other things once. One cannot discuss with him. He always knows his mind, he keeps repeating obdurately and vehemently whatever he has to say; he never listens to any other point of view, and never concedes anything.

Amrita Patel worked with him for decades. So she may be more convinced of the futility of debates with him.

I think, myself, that there is a dichotomy between Kurien and his public image, which public debates could expose. In the public eye, he is a dedicated philanthrope who has brought prosperity to hundreds of thousands of milk producers. To me, he is the single-minded lobbyist with an extremely narrow agenda.

Kurien is a fanatic about cooperatives. For him, it is cooperatives ueber alles; everyone else comes last. In his chairman's speech to the GCMMF annual meeting last June, he boasted that the government was thinking of reducing the import duty on butter oil from 35 to 30 per cent. Kurien went and lobbied the Prime Minister so well that the government raised the duty to 40 per cent.

He is not only against imports; he is against imported enterprise. He fought a bitter battle against the entry of multinationals into the marketing of milk and milk products. Thanks to him, they even now have to enter the market indirectly -- keep a cooperative or a private Indian firm between the producer and themselves. That adds to their costs, and helps -- you have guessed it -- Amul.

He is against private firms. His most repeated story is about how Kaira Milk Cooperative Union, his first employer, drove Polson out of the market. But in the past decade, private brands have come up everywhere. Vadilal, the Gujarati ice cream brand, is as reputable as Amul.

Outside Gujarat, private firms have made even greater inroads into markets in competition against cooperatives. No one is compelled to sell milk to private dairies. So they must be giving something to milk producers that cooperatives cannot. That is KCMMF's problem; that is the problem NDDB proposes to help it with.

Finally, Kurien is against the consumer. He is against competition (he is for cooperatives as long as they do not compete); he is against prices coming down. In the 1980s, the central government ran a racket at the Indian consumer's cost.

It operated a monopoly of edible oil imports, kept domestic prices far above import prices, and pocketed the difference. GCMMF shared in the loot; the Dhara brand was created to market some of the imported oil, which the government passed on to GCMMF.

Kurien is also scrupulously honest; and he has brooked no corruption in GCMMF, which he has now been chairman of since its formation in 1973. He has been completely and selflessly devoted to the interests of Gujarat's milk producers. However, perfection makes one self-righteous; and when self-righteousness meets fanaticism, the combination is bizarre.

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