Verghese Kurien, the man behind the milk revolution in India, always believed that India was destined to become the world’s largest producer of milk. He succeeded in translating this belief into reality by creating (with the support of Tribhuvandas Patel) the milk cooperative movement which changed India from being a milk importing country into a milk exporting nation. This faith in India’s destiny is echoed by B.M. Vyas, managing director, Gujarat Cooperative Milk Marketing Federation, or GCMMF, better known for its range of products sold under the Amul brand.

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The logic behind the faith of Kurien and Vyas is simple. India has a population of more than one billion. These people must be fed, and that will always remain the foremost concern of any government. Moreover, with a majority of India’s population employed in farmlands, farming will continue to remain critically important, both politically and socially. Moreover, since Indians consume rice, wheat or maize as their primary intake, these crops will be grown in abundance. Finally, as each kilo of grain produces 3-5 kg of chaff, food for cattle will always remain a by-product. Q.E.D: The cost of feeding cattle will always be cheaper in India than in any other country. Except, maybe China, because Chinese too are largely consumers of rice, and there are more Chinese than Indians. Luckily, most Chinese do not consume milk—partly because of habit, but also because many Chinese reportedly find it difficult to digest lactose which is found in all milk.

“Other countries will need to grow food for cattle," Kurien often says. “Not India."

Not surprisingly, by 1998, India overtook the US as the world’s largest milk producer.

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Kurien was largely responsible for this, with the establishment of dairy cooperatives through the National Dairy Development Board (NDDB) under the programme named Operation Flood. He helped create a formidable marketing machine, which he described as “A massive network collecting milk from almost 12 million farmers, testing it, grading it, transporting it twice a day from 100,000 villages over 10,000 routes to about 200 dairy plants, processing it, packing it and sending it to the market in almost 800 big and small towns every single day of the year."

Close on the heels of domestic marketing there was also a surge in exports. Within a span of four decades India became a milk exporter as well. In his “Chairman’s Address" at GCMMF in 2005, Kurien remarked, “We have become the first Indian dairy products exporter to achieve a mark of Rs100 crore in revenues. The year ended with an export turnover of Rs115 crore, more than trebling our export turnover compared with the previous year.

The reduced subsidies in the EU have given us excellent opportunities for export of SMP (skimmed milk powder) and FCMP (full cream milk powder). We have shown that if a level playing field is granted, Indian dairy products would be successful in the global market. We have also grown by 40% in consumer pack exports and consolidated our exports of ultra high temperature (UHT) milk (which goes into tetrapaks), ghee (cooking butter) and paneer (cottage cheese) in particular."

But this complacence got a rude shock in 2006, when the Chinese government took the decision to promote milk as an important part of a young person’s diet. And China has 1.3 billion people—745 million in the countryside and 555 million in the cities. Ever since then, milk production in China has soared. There are today about 14 million dairy cows in China (in 2003, these produced about 34 million tonnes of milk (India, in contrast, had 185 million cattle, according to the NDDB, producing 86mt). Notwithstanding this production, China also continues to import dairy products mainly from the US, EU, Australia and New Zealand. But it has also begun exporting, making clear its intention of grabbing export markets as well.

Could that explain why GCMMF has remained silent about exports during the past two years? No replies were forthcoming from GCMMF on this subject.

Unfortunately for India, China does pose a very big threat to this country’s milk markets. But it got a breather a couple of months ago, when the melamine crisis came to light, with some children dying, and over 17,000 being hospitalized. Milk exports and consumption in China have ground to a virtual halt. Dairy production has consequently been badly hit.

China could have trounced India as the biggest producer of milk. It probably could still do that, if it succeeds in remedying the image of its milk products. India suddenly faces a grave challenge. Will it lose its advantage to China?


Hard facts behind livestock rearing

At first blush, nothing appears unusual. But a closer look shows how, during the past 80 years, but more particularly in the past three decades, much of the ownership of cattle in the milk-producing areas of Gujarat, Maharashtra and Madhya Pradesh has slipped from Hindus to Muslims. Most Hindus remain merely carriers of milk—going from house to house and delivering milk. Suddenly, the state in which Krishna, the cowherd god of the Hindus, is supposed to have tended to his cattle, rearing cows and buffaloes is witness to these animals being abandoned by the god’s followers. Instead, this job has been taken up quite avidly by Muslims.

And therein lies a tale of how blind pursuit of religion sometimes distorts society, livelihoods and even business practices. Cattle rearing—the “Hindu" way— makes sense only if (a) there is a large community willing to pay for the care of an ailing cow or buffalo after it has stopped lactating, or (b) there are large grazing grounds where cattle can graze and die.

In many ways the economics of cattle rearing is no different from most livestock rearing, be it poultry, pork or fish. Cattle rearing and poultry rearing have an additional advantage. Both give rise to by-products—milk and eggs—which make the entire business of rearing more profitable. With tending for ageing cattle becoming increasingly expensive, and with community grazing lands becoming scarce, anyone who rears cattle must necessarily allow it to be taken to the slaughterhouse once it has ceased to produce milk.

Since most Hindus dislike cattle slaughter, and also because the Hindu stance has become shriller with each passing year, most Hindus have opted to give up rearing cattle altogether. True, there are Hindu cattle-rearing families even today in Kaira district of Gujarat, the birthplace of Amul and the largest milk production centre in India. But these families prefer not to talk about what happens to cattle after they cease to lactate. Old cattle are spirited away in the dark, and nobody talks about this.

The vacuum was filled up by Muslims who took to cattle rearing, and gradually this led to the community also taking over the veterinary trade. Over time, this community also became an extremely important player in the trade of all chemicals along the Western coast of India. It was not that the Muslims were smarter than the Hindus, or vice versa. It was just that religion helped destroy a centuries’ old practice through a distorted understanding of what should be appropriate.

Another classical case that people forget is how the Singhanias of Raymond Ltd announced with great fanfare in 1981 that they had set up at Jalgaon, Maharashtra, one of the finest sheep-rearing farms in India. To ensure it got good quality wool at reasonable prices, Raymond began cross breeding Merino sheep with Indian stock. The farm was amazingly well planned, and was meant to make Raymond climb up the value chain.

A couple of years later, however, the Singhanias (who are Jains) realized that they could not keep this sheep farm economically viable without allowing old sheep to be sent to the slaughter house. This disturbed the family, and it decided to donate the farm to a government agency. The farm today languishes for want of commercial vision and business integration. Nobody at Raymond is willing to talk about this any more.

All this has a lesson for the whole of India. If cattle slaughter is banned, milk production will plummet. And India could end up becoming a milk importer once again.


Other disturbing trends

Kurien’s constant refrain was to “allow the milk producer to earn more". If his earnings are good, he will produce more. If he earns more, others will emulate him. And that will help him prosper, help his family get milk and milk products. That will improve the health of the entire family, eventually leading to economic prosperity for the entire country. The truth is that milk prices have not been allowed to keep pace with other prices .

There are some other disturbing signs as well. Annual growth in milk production during 1995 and 2006 has hovered around 3.9% (though it is up from 2% a year during 1968-69) . But, more alarmingly, consumption of milk and milk products has been growing at 8-15% a year (different rates for different milk products), spurred on by the improving economic fortunes of India’s urban population. However, thanks to an increasing population, per capita consumption has been crawling along at just 1.5% per annum. It is only a matter of time before the demand for milk products will exceed milk supply, unless milk prices are allowed to increase a bit more and producers are allowed to earn more.

At the same time, the shrill cries of religious chauvinism will need to be stilled—with logic and with administrative controls. Unless both are done, India could end up shooting itself in the foot. That could put an end to a dream that so many people worked for. It could also severely dent India’s quest for food security.

Graphics by Ahmed Raza Khan / Mint