The Bharatiya Janata Party has never been as unsuccessful in selling its hidden agenda with milky words as in the case of the proposed joint partnership of Amul, the Gujarat milk co-operative with Nandini, the Karnataka milk co-operative.
When Amit Shah, the Union home minister and cabinet incharge of the newly created Ministry of Co-operation, made public his intention of merging Nandini with Amul in December 2022 at Mandya in Karnataka, it was met with huge opposition not only by farmers of the state but also from political parties. Completely isolated politically, the BJP government gave quick clarifications denying any such proposal of a merger and said that Shah had only called for cooperation between the top two milk cooperatives of the country.
While no one bought the ‘clarifications’, the issue slowly faded.
But a Twitter advertisement by Amul on April 5, declaring the arrival of fresh Amul milk and curd in the Bengaluru market, has triggered talk on the matter and exposed what appears to be the ‘double engine’ BJP government’s agenda.
Now, people of Karnataka are convinced that the Union government is determined to destroy the state-grown Nandini by either merging it with Amul or creating a parallel network of Amul in Karnataka – a model it has tried to follow in other states too.
The state of Karnataka is not adjacent to the state of Gujarat. Nor are there any milk trains between Gujarat and Bengaluru. Hence, unlike other packaged and processed dairy products which have been in the Karnataka market for a long time, the official declaration about the sale of fresh Amul milk and curd in the Bengaluru market has strengthened apprehensions. It has raised serious questions about the real intentions of the Amit Shah-led Ministry of Co-operation, which is systematically facilitating such internal expansion and takeovers one co-operative by the other, completely contrary to the spirit of co-operation itself.
That the BJP government in Karnataka is seeking shelter in the logic of the free market and the inherent strength of Nandini against Amul is feeding the fire. In fact, the conduct of the BJP government both at the state and the Union is questionable since they conceal more than they reveal.
Nandini, the brand name of the Karnataka Milk Federation (KMF) is a robust federation of 16 vibrant district milk cooperatives providing reliable income and employment to more than 25 lakh farmers in the state. As a dairy unit, it is next only to Amul in the country with a turnover of around Rs 25,000 crore in 2021-22. Amul has registered a business of around Rs 65,000 crore in the same period.
Recent studies suggest that the dairy business in the country amounts to a staggering Rs 15 lakh crores, of which hardly 10% is in the organised sector. Thus, there have been proposals by organised corporate bodies to evolve a hybrid model of business involving private capital and the edifice of the cooperatives. The BJP government after its second electoral victory in 2019, has been accelerating this module in various unorganised and co-operative sectors, to facilitate private capital in reaping maximum profits.
This goes deeper than Amul and Nandini.
Since co-operatives come under the State List under Schedule 7 of the Indian constitution, and co-operatives are envisaged as the third sector autonomous of both state and private capital, they are run by the people having common interests, where each person irrespective of his capital clout, would possess only one vote unlike in private corporate entities.
Thus any agenda of attracting big capital to the co-operative sector would entail brining large cooperatives working in different states under the direct administrative supervision of the Union government and provisions private capital stakes in the cooperative business. While the first was attempted by the United Progressive Alliance government through the 97th amendment, the Supreme Court struck it down but allowed the setting up of ‘multi-state co-operative societies’ under the Union government’s supervision.
But the corporatisation – direct or indirect – of the co-operatives had to wait till the Modi government returned in power for the second time to implement policies to bulldoze co-operatives’ autonomy.
One such blatant attempt was made in the three farm bills which provided for the formation of corporate mediated or controlled Farmers Producers Organisations. Even though these three farm acts were repealed due to the historic agitation of the farmers, such provisions do exist at state-level farm laws and the Modi government has evolved many innovative ways to circumvent farmers resistance against corporatisation of other farmers’ co-operatives, including milk cooperatives.
A cursory look at the chronology, keeping this background in mind, would unravel the real story behind Amul’s expansion to other territories and the penetration of private corporate capital through it.
1. RCEP negotiations
The process can be traced from the times of negotiations for duty-free market access in the multi-nation Regional Comprehensive Economic Partnership or RCEP during 2019, immediately after the return of Modi.
One of the important contentions in the RCEP negotiations was the zero-duty market access in the dairy sector by global dairy giants like New Zealand and Australia. While Indian big businesses were inclined towards such organised entry, farmers staged militant resistance against it all over the country. Moreover, the US was reluctant to allow its allies to become members of a China-dominated global trade body. All these culminated in the withdrawal of India from RCEP to the dislike of big businesses.
2. Renewed Interest of CII and FICCI in dairy sector
Despite the RCEP setback, big businesses nurtured their interest in the expanding dairy sector and the possibility of exploiting the same.
The Federation of Indian Chambers of Commerce and Industry (FICCI) came out with its paper in 2020 titled “Development Of Dairy Sector in India” in which it argued that private capital should be allowed to play its role in harnessing the export potential of milk markets by facilitating private capital mediated or controlled collectives.
The Confederation of Indian Industries (CII), another important body of Indian big businesses, in 2022, argued, “To give an additional impetus, a targeted approach ensuring higher public-private partnership would be needed. Access to concessional institutional credit to farmers and greater participation of the private corporate sector may help in enhancing private investment in the dairy vertical. Strong tie-ups between farmers and processing players along with enhanced uptake of new technology would be key to ensure efficient farm management.”
3. Separate ministry formed
The co-operative division, till 2021, was another insignificant department in the agriculture ministry. But all of a sudden, the Modi government elevated the co-operative department to an independent ministry in the charge of a cabinet minister. It was significant that this minister would be the second-in-command in the cabinet, home minister Amit Shah.
But the true spirit of “co-operation” was missing, considering that the Modi government never cared to discuss the farm laws with states, under whose list agriculture falls. It did not consult people or the states before bringing the National Education Policy or the New Electricity bill.
The co-operative federalism promised by the Modi government has turned into coercive federalism.
4. Private investment accelerator
With in a span of two weeks after the formation of the co-operation ministry, the Modi government declared the setting up of a private investment accelerator “with a view to provide dedicated focus towards promoting and facilitating investments in the Indian Dairy sector, has setup Dairy Investment Accelerator under its Investment Facilitation Cell.”
“This Investment Accelerator is a cross functional team constituted to serve as the interface with investors,” the government said.
5. Bill facilitating central control
Next on the anvil was the formation of Union-controlled co-operatives which would provide ease of business to investors at the national level and also facilitate formation of national aggregators in the supply chain. Thus the new co-operation minster introduced a new Multi-State Co-operative Societies (MSCS) Bill which had provisions for the nomination of three administrators from the Union government, creation of a separate electoral authority by the Union to conduct elections for the MSCS and also placed auditing powers with the Union government.
Thus, the MSCS effectively strangled the voices of the states. Just a few months prior to the introduction of the Bill in the parliament, Shah had announced in Sikkim that a Multi-State Milk Cooperative, with the merger of five milk co-operatives has been formed.
6. Call for the merger of AMUL and Nandini
Thus when Amit Shah gave a call for the merger of AMUL and Nandini, the two top milk co-operatives in the country, in Mandya, in December 2022, it was not for a mutually beneficial cooperation between the two but for a Multi State Cooperative Milk Society which would be centrally governed and presumably augmented by the interest of the big private capital.
Thus even though the local BJP chieftains wanted to underplay and sanitise the home minister’s statement about the merger, the people of Karnataka were skeptical.
7. Formation of export-oriented MSCS
Further, in a bid to accelerate the process of capturing the global milk market through corporatisation of the milk co-operative sector, the Modi government announced the formation of three export-oriented, national-level, Multi-State Co-operative Societies or MSCS dedicated to export promotion on January 11, 2023.
And on January 19, 2023, the Modi government designated Amul as the promoter of the milk export society.
The two important objectives for the promoter was to ensure 33% share in global milk exports and attract investment in processing and export trade to achieve the same.
8. Formation of 2 lakh panchayat level milk unions
In continuation of the same strategy, Amit Shah on March 10, 2023, in an annual function of the Indian Dairy Association in Gujarat, declared that the government is going to set up independent dairies at two lakh panchayats in the country. And this would be tied to MSCSs’ exports, led by Amul.
Thus Shah made it clear that either an existing milk co-operative become part of the Amul empire catering to the export market or else the government would establish an Amul-controlled milk union independently, which would be, for example, parallel and detrimental to Nandini in Karnataka.
9. AMUL announces modern trade in Bengaluru
Continuing this strategy, Mehta, the Amul managing director, announced on April 5 that Amul would enter the fresh milk and curd sector in the Bengaluru market. Even though he underplayed this later, in an interview given to the Financial Express on April 9, he made it categorically clear – a modern trade entry of Amul in Bengaluru will happen in only six months.
‘Modern trade’ entails complete trade with forward and backward linkages with its own supply chains. This would mean that Amul is mulling the idea of milk unions independent of Nandini. And hence it is encroaching upon Nandini.
The above chronology makes it amply clear that the apprehension of Karnataka farmers are real. And also that it is not simply a question of just ‘Amul-ing’ Nandini but a complete centralised and corporate take over of milk co-operatives.
While in the beginning a milk producer might get a little more income, the whole milk economy will be now subservient to the free market global milk economy without state protection or insurance. This will devastate rural India which is already reeling from a severe agrarian crisis. The only saving grace was the cooperative milk economy which sustained farmers’ families.
This will hamper not only the lives of the 25 lakh farmers in Karnataka but also 10 crore farmers across the country, including Gujarat’s milk producers. Only a real co-operative which listens to farmers’ collective interests can save Amul, Nandini and India.
Shivasundar is a columnist and activist in Karnataka.