Dairy Development Programme - Cooperation.

(Part 3, Transfer of Technology for Livestock Development, VAHEE) 

Topic: Dairy Development Programmes: concept of cooperation, Rochdale principles of Cooperation, objectives of Cooperation, Amul Pattern of Dairy Cooperative System.

Dairy Development Programme - Cooperation.

by Dr. Debasish Saha, Department of VAHEE, F/O-VAS, of WBUAFS.

Dairy Development Programme.

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Concept of Co-operation 

Co-operation has been defined as a form of organization in which persons voluntarily associate together on the basis of equality for the promotion of their economic interest. Those who have come together have a common economic aim, which they cannot achieve because of their economic weakness this element of individual weakness is overcome by the pooling of their resources, by making self-help effective through mutual help. 

A co-operative organization is an association which furnishes an economic service with entrepreneur profit and which is owned and controlled on a substantially equal basis by those for whom the service is rendered. 

A co-operative society is an enterprise formed and directed by an association of users, applying within itself the rules of democracy and directly intended to serve both its members and the community as a whole.

Objectives of Co-operation 

 Economic objective 

  • Co-operative as an institution caters to the members needs based on self-help. 
  • It needs the mutual cooperation of the members and workers for their own benefit and consequently for that of the community as a whole. 
  • The overall economic objective of the cooperatives is the welfare of the members of the society through supply of cheap credit, development of banking habits, secure better price for farm produce, eliminating exploitation by middle men and creation of storage facilities for the produce until sold at appropriate time. 

 Social objective

  • It is to develop democratic leadership and to motivate people to opt for voluntary participation and group action. Individuals are treated equal without any discrimination. 
  • It also aims at industry, self-reliance and mutual help. It fosters a sense of responsibility and integrity. It brings a sense of security and harmony among the members. 

 Educational objective 

  • It is to bring about knowledge of cooperatives to its participants and to develop responsibility and honesty among the members.

Principles of Co-operation

The co-operative principles are guidelines by which co-operatives put their values into practice. Cooperative movement made its first appearance in England. 

It was started to give relief to persons exploited by middlemen during the Industrial Revolution. About 28 poor weavers of Rochdale came together with the capital of one pound each to open a small retail shop in 1844. 

They adopted a set of rules, which was later known as Rochdale Principles and was accepted worldwide as the cooperative principles.

Rochdale Priciples of Co-operation 

The Rochdale principles of co-operation are 

  • Democratic control 
  • Open membership 
  • Limited interest on capital 
  • Distribution of the surplus to the members in proportion to their transactions 
  • Cash trading 
  • Political and religious neutrality 
  • Promotion of education

Revised Co-operative Principle 

With the eventual growth in science and technology and diversification in cooperative business, it was felt that the Rochdale principles needed some modification, clarifications and adjustments. 

Consequently the International Cooperative Alliance (ICA) appointed a subcommittee in 1934 for this purpose. 

The committee in its report (1937) classified these principles into two broad groups as follows:

Essential principles -  Non essential principles 

Open membership -  Political and religious neutrality 

Democratic management - Cash trading 

Limited interest on capital  -  Education to members 

Payment of dividend in proportion to transaction 

These principles did not leave enough scope for interpretation and understanding. Accordingly, the ICA again appointed a commission in 1964 and this commission submitted its report in 1966. It had two characteristic features. 

Firstly it did not classify the principles as essential and non-essential and secondly the principles were explained as accurately as possible. These principles were again revised by the ICA which was adopted at the 1995 Congress and General Assembly of the International Co-operative Alliance, held in Manchester to celebrate the Alliance's Centenary. 

The reformulated principles were as follows :

 Voluntary and open membership 

  • o Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. 

 Democratic member control 

 Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making 

  • Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. 
  • Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. 
  • Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership. 

 Autonomy and independence 

  • Co-operatives are autonomous, self-help organisations controlled by their members. 
  • If they enter to agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy. 

 Education, training and information 

  • Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. 
  • They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation. 

 Co-operation among co-operatives 

  • Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures. 

 Concern for community 

  • Co-operatives work for the sustainable development of their communities through policies approved by their members.

Earliest Attempts at Dairy Development in India

The earliest attempts at dairy development can be traced back to British rule, when the Defence Department established military dairy farms to ensure the supply of milk and butter to the colonial army. 

The first of these farms was set up in Allahabad in 1913; subsequent facilities were established at Bangalore, Ootacamund and Karnal. These farms were well maintained and even in the early stages, improved milch animals were raised. 

As animals were reared under farm conditions, some herd improvement was made using artificial insemination. This approach did not have any impact on the supply of milk to urban consumers, which was of major concern to civilian authorities but less important to the military. 

With the growth of the population in urban areas, consumers had to depend on milk vendors who kept cattle in these areas and sold their milk, often door-to-door. 

As a result, several cattle sheds came into existence in different cities. This was not an environmentally sound approach. As the main objective of the milk vendors was to maximize profit, they started increasing the lactation period. In the process, these high-yielding cattle developed sterility problems, which considerably reduced the number of calvings. 

Once the cattle became unproductive, they were sold to slaughter houses. This practice systematically drained the country of its genetically superior breeds. 

To some extent, the Second World War gave impetus to private dairies with modestly modernized processing facilities. In the cities of Bombay, Calcutta, Madras, Delhi and even in some large townships, processed milk, table butter and ice cream were available, though not on a large scale. Polsons, Keventers and the Express Dairy were some of the pioneer urban processing dairies. These dairies were not concerned with improving the breed of milch animals reared in rural pockets but instead were content with contracting milk supplies through middlemen or their own staff. 

Milk producers as well as consumers were exploited. These early modern systems did not bring about significant shifts in milk production, nor did they develop quality milch animals. To a large extent, despite modernized processing facilities, dairying remained unorganized. 

With the initiation of India's first Five-Year Plan in 1951, modernization of the dairy industry became a priority for the government. The goal was to provide hygienic milk to the country's growing urban population. Initial government action in this regard consisted of organizing "milk schemes" in large cities. 

To stimulate milk production, the government implemented the Integrated Cattle Development Project (ICDP) and the Key Village Scheme (KVS), among other similar programmes. In the absence of a stable and remunerative market for milk, milk production remained more or less stagnant. During the two decades between 1951 and 1970, the growth rate in milk production was barely one per cent per annum, while per capita milk consumption declined by an equivalent amount. 

During the 1960s, various state governments tried out different strategies to develop dairying, including establishing dairies run by their own departments, setting up cattle colonies in urban areas and organizing milk schemes. 

Almost invariably, dairy processing plants were built in cities rather than in the milk sheds where milk was produced. This urban orientation to milk production led to the establishment of cattle colonies in Bombay, Calcutta and Madras. These government projects had extreme difficulties in organizing rural milk procurement and running milk schemes economically, yet none concentrated on creating an organized system for procurement of milk, which was left to contractors and middlemen. 

Milk's perishable nature and relative scarcity gave the milk vendors leverage, which they used to a considerable advantage. This left the government to run dairy plants for use in large quantities of relatively cheap and commercially imported milk powder. The daily per capita availability of milk dropped to a meagre 107 g during this time. High fat buffalo milk was extended with imported milk powder to bring down the milk price, which resulted in a decline in domestic milk production. 

As the government dairies were meeting nearly one-third of the urban demand, the queues of consumers became longer while the rural milk producer was left in the clutches of the trader and the moneylender. All these factors combined left Indian dairying in a most unsatisfactory and low level of equilibrium. 

The establishment and prevalence of cattle colonies emerged as a curse for dairying as it resulted in a major genetic drain on the rural milch animal population, which would never be replaced. City dairy colonies also contributed to environmental degradation, while the rural producer saw little reason to increase production.

Amul and the Evolution of the Anand Model 

Milk procurement from the rural areas and its marketing in the urban areas was the major problem in Indian dairying at the time when India gained independence. In one of the earliest urban milk supply schemes, Polsons - a private dairy at Anand - procured milk from milk producers through middlemen, processed it and then sent the milk to Bombay, some 425 km away (Korten, 1981). 

Bombay was a good market for milk and Polsons profited immensely. In the mid-1940s, when the milk producers in Kaira asked for a proportionate share of the trade margins, they were denied even a modest increase. The milk producers went on strike, refusing to supply milk to Polsons. 

On the advice of Sardar Vallabhbhai Patel, a leader in India's independence movement, the milk producers registered the Kaira District Cooperative Milk Producers' Union, now popularly known as AMUL, in 1946. 

The Kaira union procured milk from affiliated village-level milk societies. This was the genesis of organized milk marketing in India, a pioneering effort that opened a new vista for dairy development in the country. Between 1946 and 1952, AMUL's policy was directed towards obtaining monopoly rights for the sale of milk to the Bombay milk scheme. 

In 1952, it succeeded in achieving its purpose after the Government of Bombay cancelled the contract with Polsons and handed over the entire business of supplying milk from the Kaira district to AMUL. However, as the Bombay milk scheme was committed to purchasing all the milk produced by the Aarey Milk Colony in Bombay, it would not take AMUL's milk during the peak winter months. The disposal of this surplus milk posed difficulties for AMUL, forcing it to cut down on purchases from its member societies, which affected members' confidence. The answer was the production of milk products. 

In 1955, a new dairy plant was set up at Anand to produce butter, ghee and milk powder. A second dairy was built in 1965, and a product-manufacturing unit was established in 1971 to cope with increasing milk procurement. In 1993, a fully automatic modern dairy was constructed adjacent to the original AMUL dairy plant at Anand. 

AMUL formed the basis for the Anand Model of dairying. The basic unit in this model is the milk producers' cooperative society at the village level. These cooperatives are organizations of milk producers who wish to market their milk collectively. Membership is open to all who need the cooperative's services and who are willing to accept the responsibilities of being a member. Decisions are taken on the basis of one member exercising one vote. Whether profit or loss, are divided among the members in proportion to patronage. Each cooperative is expected to carry out the continuing education of its members, elected leaders and employees. 

All the milk cooperatives in a district form a union that, ideally, has its own processing facilities. All the unions in a state are normally members of a federation whose prime responsibility is the marketing of milk and milk products outside the state. 

There is also a fourth tier, the National Cooperative Dairy Federation of India (NCDFI), which is a national-level body that formulates policies and programmes designed to safeguard the interests of all milk producers. 

Each tier of the Anand organizational structure performs a unique function: procurement and services by the cooperative; processing by the union; marketing by the state federation; and advancing the interests of the cooperative dairy industry by the national federation. Thus, the Anand Model has evolved into an integrated approach to systematic dairy development.

Facts about Kaira District Co-operative Milk Producer's Union (AMUL) 

  • Established in 1946 - two societies collected 250 litres of milk. 
  • Competed with Polsons to supply milk to Bombay. 
  • 1952 - Bombay Government terminated Polsons contract and signed with AMUL.
  • 1955 - dairy and milk powder plant was established with aid from the United Nations Children's Fund (UNICEF). 
  • 1960 - AMUL pioneered production of milk powder and baby food from buffalo milk. 
  • AMUL - meets producer demand for critical inputs, veterinary services, artificial insemination and feed. 
  • Today AMUL members supply more than 1 million litres of milk per day 
  • AMUL sells 400 tonnes of cattle feed every month.

Three Tier System in Anand Pattern of Dairy Co-operatives 

The three tiers in the Anand model of dairy co-operatives are 

  1. Primary Milk Producers co-operative Society at village level 
  2. District Co-operative Milk Producers Union 
  3. State Milk Producers Co-operative Federation

Primary Milk Producers Co-operative Society 

It is the first and basic unit in the three tier system of Anand pattern dairy co-operatives established at village level.


The functions of the society can be broadly classified into managerial, operational and input services. 


  • All the members form the general body, which has supreme powers. The society has a managing committee of 11 members elected among them. The managing committee in turn elects the president. The committee decides the policy, forms the guidelines and employs paid staff such as secretary and assistants for the efficient running of the society. The committee holds the meeting every month. 


  • Every society has a milk collection center and collects milk brought by the producers every morning and evening. The quantity of the milk supplied is measured properly. 
  • A sample is taken from each producer / pourer for testing the milk for fat percent. The entire milk is pooled and a sample is drawn for testing solids non-fat. 
  • Every morning and evening a truck from the Union comes to the society for milk collection. Necessary entries are made in the truck sheet. The empty cans are unloaded for the next collection. 
  • The payment is done on the basis of two axis pricing policy (Fat and SNF %). The producers are paid in cash on a weekly basis. The entries of payment are made both in producer’s passbook and society records. 
  • The job of accounting starts right from the time the producer supplies the milk to the society. Most of the registers are posted twice a day. The accounts reflect the financial standing of the society at any time. A society prepares its balance sheet on a yearly basis. 
  • Daily cleaning of all equipments in the society is done to avoid contamination and spoilage of milk. 
  • Apart from the regular payment for the milk, the society at the end of each year pays bonus to the members based on the profits and dividends to shares. 
  • The society also performs activities such as disposal of sample milk, local sale of milk, standardization of equipments and chemicals, etc. 

Input services 

  • o The services include AI, veterinary first aid, selling cattle feed, providing quality fodder seeds, organizing meetings, arranging educational tours, cattle insurance, etc.


Organization and registration of milk producers cooperative society :

The first and foremost step is the survey of the village. The villages are graded based on the milk potential. 

A milk procurement officer/supervisor from the Union visit the selected village and arranges a meeting presided by a socially respected person. The officer/supervisor explains the advantages of organizing a milk society. Once the decision is taken to start a society, a chief promoter is selected from amongst them. Then the Gram Sabha is organized. 

A general body meeting of the members is called to elect the president of the society and to pass resolution regarding the area of operation, constitute an adhoc managing committee comprising 11 directors for a proposal. 

Procedure for Registration :

The proposed milk cooperative society is allowed to function as such for three months. Then the union supervisor puts forth the proposal for registration. The proposal is recommended by the milk procurement section’s head and forwarded to the competent authority in the Dairy Development department. Before registering the society 

  • The application form should be filled as per the acts and rules. Specimen of the form is available in the Act book. 
  • All the members of the society should sign the application as promoters. 
  • The application should be submitted along with seven copies of bylaws signed by the chief promoters, a list of members with number of shares held by each of them, one copy of all the resolutions passed at the society’s organization meeting, a copy of accounts for the period it has worked as a proposed society and a certificate regarding jurisdiction of the respective village panchayat. 

The registrar after satisfying that the proposed society is in conformity with the rules and regulation in force and the principles and philosophy of cooperation and the proposed society has a reasonable chance to succeed, appoints a chief promoter who is authorized to collect the share money of Rs.10/- along with Re.1/- as entrance fee for all the members. The amount is then deposited in the bank. 

The society is considered to be registered only when a registration certificate with a registration number is issued by the registering authority. 

After registration, the secretary in consultation with the president of the society calls for a general body meeting to consider certain agendas such as accepting the registered bye-laws, election for a managing committee, regularization of membership, affiliation of the society with the milk producers union and the district cooperative banks and appointment of local auditors for processing of the accounts.

District Co-operative Milk Producer's Union 

The second tier is the District Dairy Cooperative Union at the district level. In some cases, two or three districts may come under one milk union. 

Each and every village milk cooperative society becomes a member of district dairy cooperative union with a share capital and an entrance fee.


The union carries out the following five important functions 

  • Procurement of milk 
  • Processing and marketing of milk amd milk products 
  • Providing technical inputs such as animal health, artificial insemination, feeds and fodder development o Strengthening of milk cooperative movement 
  • Organization of extension activities and rural development. 

The district dairy cooperative union owns and operates a dairy plant for processing of milk and other byproducts, a cattle feed plant for mixing feed and selling to the farmers at cost price, operation of bull mother farms, semen collection banks and a headquarter center for animal husbandry activities.


Organization and registration of District Co-operative Milk Producers Union 

The district level milk producers union comprises of minimum 25 organised and registered village societies, which form the basic unit of the union. The organizational function is regulated by the approved byelaws of the District Registrar of the cooperative societies at district level. 

In some cases the implementing agency (Government/Corporation/Federation) may nominate the union directors to organize the societies. The application for registration is made on the prescribed form available with the District Registrar along with 7 copies of bye-laws duly signed by promoter and members along with a copy of the minutes of the organization meeting, bank balance certificate, etc. 

After the registration, the chief promoter must issue an agenda indicating the date, time, purpose and place of the meeting to all the eligible member societies for holding the first general body meeting of the union. 

The meeting’s agenda should be the selection of president, acceptance of registered byelaws, election of regular board, approval of accounts, fixing the borrowing limits of the union and other works. The office bearers are elected according to the norms prescribed in the bye-laws/ Rules and Acts of the state. 

The dairy cooperative union is controlled by a board of directors of 17 members of which 12 are elected representatives of the village societies. The remaining 5 members comprise the managing director, an official of the union as a member secretary, a representative of the registrar of cooperative societies, a representative of the state federation and one or two representatives of financial institutions. These 5 members are not eligible in contesting for the post of the chairman. 

The general policy of the union is framed by the board. The board employs the managing director. While the board determines the number, type and scale of the post, it is the managing director who appoints the staff.

State Milk Producer's Co-operative Federation 

The third tier is the Cooperative Milk Marketing Federation operating at state level. The district dairy unions become members of the federation by subscribing at least the minimum prescribed share capital. 

The federation is responsible for the implementation of the policies of cooperative marketing, product price, provision of services (AI, health cover, etc.) and cooperative marketing of technical inputs to the members.


The federation controls the centralized technical input programme (Milk production enhancement programme), which covers the essential activities such as animal health, artificial insemination, feed and fodder development and extension activities.


The board of the federation consists of the elected chairman of all the cooperative unions and managing director. 

Other members are the representatives of the registrar of cooperative societies, a representative of financing agency, nominee of NDDB and one nominee of the state government. 

These members elect a chairman of the board and the board evolves the federation’s policies on all its functions. 

The federation’s managing director is the committee’s chairman and the general manager its secretary. 

The committee meets once in a month and implements policies and plans.

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Dairy Development Programme - Cooperation.