Rs 15,000 cr for dairy could lead to White Revolution 2.0: Amul's RS Sodhi

RS Sodhi, MD, Gujarat Cooperative Milk Marketing Federation

Q. How did you ensure that milk was supplied daily even in these times?

We had no option but to ensure milk was supplied since we are a source of livelihood for about 3.6 million farmers. We have a robust supply chain, driven entirely by technology. It is cow-to-consumer and there are around 1 lakh supply chain partners working to maintain it. After the lockdown was announced, we communicated to all our supply chain partners—from farmers to retailers—that ‘milk and milk products are essential, and your role in maintaining this supply chain is important. Besides being your rozgar (source of employment), it is now your national duty. Like doctors and the police, you too are a Covid warrior because you are a part of this fight as well’. Our partners were understanding and made no demand for a price hike. For all our workers—transporters, cleaners or labourers—we arranged for free meals as everything was shut. We also made living arrangements for them.

Q. What kind of hiccups did you experience when the lockdown was initially announced?

When the lockdown was first announced, instead of us approaching authorities, we got calls from everybody, including the ministry of home affairs and the chief secretaries of various states. Since Amul is a major milk collection centre and supplier, they wanted our supply chain to remain uninterrupted. While the top authorities were helpful, down the line there were some issues like empty trucks being stopped and lack of packing material supply for which we had to seek government intervention. Another issue that cropped up was since banks were shut, we had to make cash arrangements for our farmers. We started getting 15 percent more milk, because small players such as dairies and shops stopped buying milk from dairy farmers. We are converting this extra milk into commodities like milk powder and white butter. So while we were running our plants at 100 percent capacity since day one, in the middle of the lockdown we had to hire four extra plants to handle the extra milk.

Q. Were there any new distribution channels added?

In many parts of Mumbai and Pune, there were strict guidelines where societies were not allowing residents to leave their homes. We got a request from a Resident Welfare Association (RWA) in Mumbai asking us to directly supply to them. We sent them our product list with prices and they gave us the society's collective order. After that, we connected them to the nearest distributor and the order worth over Rs 1 lakh was delivered. As word spread, we started getting more requests. Now we are supplying to more than 500 RWAs across seven cities. An average order from an RWA is close to Rs 80,000 to Rs 1 lakh. Through this channel, we are also selling ice cream, which had seen a dip in sales.

Q. What are the consumption patterns that you have noticed?

We have three major categories of products: Fresh (milk, curd, buttermilk), dairy, including butter, cheese and ghee, and lastly ice cream. The fresh products saw a slight dip initially due to the HoReCa (hotels, restaurants, cafes) segment, but over a week, it was balanced by the consumption increase from households. There has been a 10-15 percent increase in consumption of dairy products, but our ice cream category suffered the most. In the last week of March, it was down by 95 percent and now it is around 50 percent. In South India, where we only have dairy products, we have seen a growth in consumption by 20 percent.

Q. Your views on the stimulus package offered by the government...

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One of the key announcements was to include dairy farmers as part of the Kisan Credit Card Scheme, which had only agriculture farmers earlier. Second, all cooperatives across India are procuring about 15-35 percent more milk, which is being converted to commodities like milk powder. As we are holding these products, it is putting a lot of pressure on our working capital. So the government has announced the interest subvention scheme for cooperatives at 4 percent. This is to ensure cooperatives don't make desperate sales or reduce prices for farmers. Also, the announcement of Rs 15,000 crore for dairy infrastructure, if used judiciously, can help build processing, procurement and distribution facilities for an extra 50 million litres of milk per day, in addition to our current capacity of 110 million litres a day. This could give livelihood to 3 million rural families. If this is put at the disposal of the National Dairy Development Board, it could lead to White Revolution 2.0.

Q. How will this help in creating opportunities for migrant labourers?

A lot of migration is happening to states like Uttar Pradesh, Bihar, Jharkhand, Orissa etc. A number of these are milk-deficient states… for the migrated labour, animal husbandry is the best and most stable form of livelihood. This package offered by the government, if used correctly, could help in creating 3 million jobs.

Q. Are there new products that you have launched after the lockdown?

We started promoting milk as an immunity booster. We launched haldi doodh and will be launching tulsi doodh and ginger doodh soon.

Q. What have been your learnings from this phase?

One of the biggest learnings has been the advantage of relationship-building during such a time. In the first week of the lockdown, I had one-on-one video calls with 450 supply chain partners since many bottlenecks had to be sorted out. Another learning was constantly communicating with your stakeholders. We doubled our advertising spend to reach out to our customers. What worked well for Amul was having a diversified product portfolio and multi-channel distribution.

Q. How will things change in the future?

Consumers are conscious about safety and nutrition. They want branded, packaged food, from a trustworthy brand, like Amul, which is both accessible and affordable. We will have to work on improving our distribution penetration.