The success of the Amul model based on cooperative society structure
After the inception of Cooperatives in India in 1904, it was implemented in different areas like production, processing, marketing, money lending and others. It not only changed the face of rural India, but also became instrumental to the socioeconomic development of our country. It is difficult not to talk about Amul when we discuss the cooperative movement in India. Amul is a success story which has inspired and impressed many others with its impeccable model and dedicated team. So what is the secret behind a name which started as a small cooperative and changed into a brand name?
Amul’s success is a product of pure hard work, professionalism and dedication which come from a sense of belonging. In corporate organizations, shareholders do not participate actively, but with the Amul model, the members actively participate in the progress of the cooperative as its owners.
The Dairy cooperative works in three tiers; The Village Society, which is the procurement unit, The Union, which makes the processing unit, and the Federation, which deals with the marketing of products.
Every unit is interconnected with the other, giving purpose and direction to individual responsibilities. To maintain efficiency, each unit is managed by professionals who are appointed as per hierarchy, like any corporate organization. The managing directors of these units are selected by the board of directors. The board of directors consists of farmers, who are members of the respective societies. According to this model, producers are a part of decision making at each level, which inculcates the feeling of ownership in them.
What is different about Amul?
As compared to other co-operatives, the Amul model is more independent and professional. There are various factors that govern the independence of a co-operative. Most Dairy co-operatives work on a similar pattern, but the managing director of the cooperative is the appointed IAS officer. The managing director of a cooperative is the supreme power, but in such cases, neither he is permanent nor an integral member of the co-operative because of which there is no feeling of ownership which governs the success of a co-operative. In many cooperatives, the government has a share, because of which their representatives become a part of the board of directors, thereby influencing decisions. There is considerable political interference which impacts the efficiency of these cooperatives.
Like any corporate organization Amul maintains its own Human Resource team, which hires professionals following a recruitment pattern, unlike other milk co-operatives, where there hasn’t been any recruitment in many years. The recruitment in these co-operatives depend on government.
Amul was the first cooperative to introduce a model where the producers get the direct benefit of their produce without the involvement of middlemen. The key purpose of co-operatives is to maximize the returns for producers. Purpose governs the model and hence every member is encouraged to participate actively. Proactive participation leads to better returns. The overall profit of the business is also distributed to each participating member in the form of bonuses, according to the value and quality of commodity supplied. This ensures active participation and quality of the product as well.
According to the Anand Pattern, Amul producers are the key policy makers because of its independent structure, which facilitates hiring professionals to suggest and implement policies. They also get the opportunity to manage the operations as per the new policies.
Logistics at AMUL
Increased milk production is the lifeline for any dairy co-operative. At Amul every aspect of improvement in the milk production is taken care for and farmers are aided with quality cattle feed, mineral mixture powder and readily available veterinary services as well. Amul has also invested in breeding through artificial insemination, ensuring better volume and quality of milk produced. This investment resulted in total increased volumes from 41.42 lakh ltrs to 64.38 lakh ltrs and stupendous growth of 55.42% in the last 10 years. Village societies in Gujarat have benefitted tremendously and have raised fund schemes which are used to build schools, hospitals, etc. further encouraging people to become a part of it.
Amul was the first cooperative to embrace the internet, effectively decreasing the distance between the end user and manufacturers. Amul is the first co-operative with its own website www.amul.com with cyberstores functioning in 120 cities throughout the country. Amul has created an IT network, which connects the production centers with dealers and sales offices through VSAT and email.
Over the years AMUL has become a powerful brand. It is not only because of its remarkable model, but also because of its super smart marketing campaigns and being true to their consumers. This was handled by GCMMF formed in 1974. It became the key marketing unit of organization that helped in centralized marketing of all products made by the cooperative, except for liquid milk. AMUL also exports its products and has received the APEDA award for excellence in export of dairy products.
Starting as a small co-operative AMUL changed the definition of co-operatives, as a brand which stood true to its quality. AMUL- The Taste of India.