40th Annual General Body Meeting held on 15th May 2014
40th Annual General Body Meeting held on 15th May, 2014
With immense pride, I am glad to inform you that our Federation has registered highest ever growth of 32.1%, to achieve turnover of Rs. 18143.46 crores during 2013-14. This is an extremely impressive growth, especially since our organization has achieved consistent 23% cumulative average growth rate over the last 6 years. In fact, during the last four years, 59% increase in milk procurement price to our farmer-members has resulted in 46% growth in our milk procurement. By continuously offering most remunerative price for milk to our dairy farmers, we have incentivized them to enhance their investment towards increasing milk production. In the coming years, we will continue to progress with the same passion and commitment, with same values of integrity, efficiency and honesty which our founder Chairman, Dr. Kurien had instilled in our organization.
In the next five decades, as the world population reaches 9.5 billion, ensuring adequate availability of food will be the biggest challenge facing our human race. In fact, due to the growing rate of urbanization across the world, urban population will be much higher than rural population in another fifty years, implying that there will be fewer hands to produce foods and more hungry mouths to consume food. With rising income levels across the world, per-capita calorie consumption is also increasing in all regions, with the sharpest rise projected to take place in developing countries.
In the coming decades, growth in global food demand will be led by Asia, especially India and China. As income level grows, consumption of fat and protein has increased and there is distinct reduction in dependence on cereals for carbohydrates. It is therefore no surprise that the highest increase in dairy consumption during the last 20 years is also from developing countries. In the coming decades, we anticipate high global growth in demand for dairy products.
In the next fifty years, population of India will cross 170 crores and our economy in PPP terms will be the second largest in the world, after China. India will be poised to take full advantage of its demographic dividend as proportion of working age population in our total population will exceed that of China by a wide margin. In order to realize this demographic dividend, we must ensure adequate availability of food to feed our growing population. In another five decades, 56% of Indian population will reside in urban areas and only 44% in rural areas. This clearly indicates that India will also face the problem of ‘mouths to feed’ growing much faster than ‘hands to produce’.
Food still accounts for highest share of monthly household expenditure in India at 31%. With number of urban Indian households growing by more than three times in the next 50 years, we anticipate sharp rise in demand for branded, packaged, nutritious food products which are easily available and offer value-for-money as well as convenience. Affordability and easy availability, along with wellness, convenience and taste will define food consumption trends in coming years. Within food, milk and dairy products account for the highest share of expenditure (after cereals) for an average Indian household.
Milk and dairying is one critical dimension of our nation’s food security, in which India has managed to achieve self-sufficiency, thanks to Amul cooperative movement and the Operation Flood Programme. Today, apart from being the largest milk producing nation in the world, India is also the largest milk consuming country in the world. Milk is now the largest agricultural crop in India in value terms, with annual farm-gate value of Rs. 3.4 lakh crores. Thanks partly to higher per capita milk availability, the life expectancy of Indians has doubled from just 32 years in 1947 to 67.3 years today.
Rising income-levels and rapid urbanization will ensure that per-capita demand for milk which is 300g per day currently, will increase to at least 800g per day in the next five decades, which is equal to that of developed countries. Combined with increasing population, this implies that total demand for milk and dairy products in India, which is approximately 139 MMTs per annum currently, will increase almost four times, by the year 2060. This is indeed a golden phase for us. While demand for high quality milk and dairy products from reputed brands is rising sharply, at the same time, our milk procurement has increased substantially, in last few years.
In order to take full advantage of this situation, we have planned rapid expansion across our entire value-chain. In fact, expansion has been our mantra and will remain so in the coming years. While our Member Unions are enhancing their respective processing and manufacturing capacities, our Federation has been rapidly expanding its distribution network to ensure that our products reach our loyal customers, even in the remotest corners of the country.
In line with increase in our milk procurement, our processing capacities across all Member Unions have also been enhanced from 170 lakh litres per day to 232 lakh litres per day, in the last three years. Our new dairy projects in Amreli, Bharuch, Surendranagar, Kutch and Bhavnagar will help to further enhance our capacity. In view of continuously soaring popularity of our flagship brand Amul Butter, we have recently started our new state-of-the-art butter manufacturing plant with capacity of 40 MTs per day at Gandhinagar. To fulfill the rising demand for milk powders in India, our manufacturing capacities have been further enhanced with our new milk powder plant of capacity 100 MTs per day at Palanpur in north Gujarat, which will soon commence production.
New dairy plants at Virar (near Mumbai) and Ujjain have already commenced operations. In the pipeline are new dairy projects at Rohtak, Faridabad, Kanpur, Lucknow and Kolkatta. Once all these new plants are commissioned, our combined processing capacity will be enhanced by another 60 lakh litres per day. These new dairy plants will enable us serve more customers with fresh dairy products such as liquid milk, dahi, buttermilk, lassi and paneer, apart from enhancing production capacities of our long-life products.
In line with our culture of continuous innovation at Amul, we have recently launched entire range of Amul milk beverages in highly customer-friendly PET bottles. Using cutting-edge technology, our high-speed PET bottle filling plant can pack more than five lakh bottles every day. In an effort to ensure that our loyal customers are able to enjoy their favorite Amul cheese with world-class packaging features, we have installed multiple high capacity cheese packaging lines using the best technology available in the world. To help our customers save time and effort in preparing desserts and confectionary, we have also significantly enhanced production capacities for sweetened condensed milk. While we are continuing to move ahead on the path of innovation, we remain conscious of our responsibility to ensure that our customer get maximum value for their hard earned money, by providing them with highest quality of milk and dairy products at most reasonable prices.
We have also enhanced our distribution reach to ensure widespread availability of Amul products across the length & breadth of our country. We have recently added five new full-fledged branches. In an effort to reach even the remotest corner of India, our distribution network has expanded rapidly to add 2300 new distributors in last three years. In order to increase the efficacy of coverage in rural and semi-urban markets, our augmented ‘Hub and Spoke’ model has expanded availability of Amul products to additional 3000 smaller towns through 160 Super Stockiest. In a major technological leap, our information systems network is being extended forward to seamlessly integrate all our distributors with our own SAP system. We have been able to increase and efficiently manage traffic on our four distribution highways for chilled, frozen, ambient and fresh products. Our network of exclusive Amul Parlors has also been expanding at the rate of three parlors per day and we now have the largest single brand retail chain in India.
This year, we took giant strides in expanding our presence in International markets. Our presence on Global Dairy Trade platform in which only the top six dairy players of the world sell their products, has earned us respect and recognition across the world. By selling milk powders on GDT, we could not only realize better prices as per market demand but it also firmly established us in the league of top dairy players in world trade. We enhanced our image as a reputed global supplier and we could connect to several new buyers and markets for the first time. Leveraging on the superior quality of our products and favorable market conditions, we managed to achieve export turnover of Rs. 530 crores in 2013-14. We will strive to make brand ‘India’, a formidable force in global dairy market.
The most critical part of our expansion drive is to ensure maximum growth in milk procurement from our farmer members. Integral to Amul cooperative model is the fact that control of the entire value chain remains firmly in the hands of the farmers. Through supply-chain efficiency, we ensure that maximum share of consumer’s rupee flows back to the farmers. Value-chain innovations leveraging on technology have also helped in enhancing milk production, with increasing use of milking machines at farm level as well as bulk milk coolers and automatic milk collection systems. We have intensified our efforts to enhance productivity of milch animals through scientifically designed programs such as Calf Rearing program, Pure Breeding program, Total Mixed Rations program and Productivity Enhancement Program. A specially designed program to encourage Commercial dairy farming is also helping to attract next generation of dairy farmers to remain in the business. Footprint of Amul cooperative now covers almost the entire state of Gujarat with inclusion of Porbandar District Cooperative Milk Producer’s Union as a part of Amul family.
I now present to you, our Federation’s Annual Report and the Audited Accounts for the year 2013-2014.
REVIEW OF OPERATIONS
Total milk procurement by our member unions during the year 2013-14 averaged 135.73 lakh kilograms (13.57 million kg) per day, representing growth of 3.6 per cent over 131.03 lakh kilograms (13.10 million kg) per day achieved during 2012-13. The highest procurement was recorded during February 2014 at 169.44 lakh kilograms (16.94 million kg) per day.
During the year, sales of our Federation registered an highest ever, record growth in sales of 32.10 per cent to reach Rs.18143.46 crores (Rs.181.43 billion). Last year, our turnover was Rs. 13735.15 crores (Rs. 137.35 billion).
I am also pleased to note that our Federation has done remarkably well in most of the value added consumer packs. Amul long-life UHT Milk has shown an impressive value growth of 40%. Sales of Amul Cream in long-life UHT packaging also increased by 37% in value terms. Our entire value-added milk beverages range registered quantum value growth of 25%.
In Ghee category, we achieved spectacular value growth of 46%. We also extended the reach of Amul ghee by developing and launching variants customized for specific regions. Our flagship brand, Amul Butter remains an eternal favorite of Indian consumers. In 2013-14, we achieved 21% value growth in Amul Butter, which is over and above 18% value growth achieved last year. Our new advertising campaign designed to increase butter consumption by popularizing its usage among young children, was a huge success. Amul Cheese range retained its dominant share of Indian cheese market with impressive value growth on 22%. In fact, Amul Cheese has seen consistent and highly impressive growth over the last several years.
Sales of Amul fresh milk in pouches once again grew by 23%. We launched Amul Milk in Goa and Gwalior markets and our brand received enthusiastic welcome from consumers in these markets. Our babyfood brand Amulspray, which is also one of the largest food brands in India, registered impressive 18% value growth. In sweetened condensed milk category, we achieved 22% growth in 2013-14, over and above 27% growth last year.
AMUL Ice Cream posted a growth of 13.2%, over last year. Once again we consolidated our position as No. 1 Ice cream brand in India leaving a wide gap with the nearest competitor. This year was the year of “Makeover for AMUL Ice Cream”. The brand changed over to an attractive new design.
GCMMF has a very unique model of distributing its ambient, chilled, frozen and fresh products range through four distribution highways. This unique feature of managing distribution through four highways keeps us ahead of competition in servicing the market. With the objective of managing the inbuilt complexity of four distribution highways in the same markets, we need to be as close to the market as we can. Working on these lines, we have opened five new branches during the year. We have also been expanding our distribution network by adding new distributors, every year. Moving ahead on our objective to provide exposure to our channel partners about the co-operative institutions with whom they are associated, we had arranged for visit of our distributors and their salesmen as well as Amul parlour franchisees to Anand.
COOPERATIVE DEVELOPMENT PROGRAMME
GCMMF family welcome one more milk union namely, Junagadh District Cooperative Milk Producers' Union Limited as ordinary member. We now have 17 ordinary members of GCMMF. During the year, we have provided technical, managerial and marketing support to Porbandar Milk Union for establishment of dairy cooperative structure in the district. We have also continued to provide support to Milk Unions of Saurashtra and Kachchh region, to organize farmers to build and develop cooperatives and increase milk production and procurement. We have also developed a dedicated initiative to improve animal health services, by conducting health camps and veterinary routes in Saurashtra and Kachchh region.
Stepping up our efforts in cooperative development
During the year, Member Unions continued to implement the module on Vision Mission Strategy (VMS) for primary milk producer members & Village Dairy Cooperatives under ICD programmes. Specially trained consultants facilitated around 1148 Village Dairy Cooperative Societies (VDCS) and have conducted their VMS workshop, prepared their Mission Statements & Business Plans for next five years. Till date, 8506 VDCS have prepared their mission statement and Business plan under the initiative. During the year, 2366 VDCS have also reviewed their business plan under annual revisit of VMS and have prepared action plan for next year to propel the momentum gained through VMS.
Strategic Productivity Enhancement :
GCMMF and Milk Unions have identified the gaps which are hindering the efforts of improving milk productivity and therefore have envisioned integrated intervention to achieve objective of higher milk productivity and production, titled Strategic Productivity Enhancement Programme.
The concept of this programme is designed with an aim to develop a genetically improved animal with high productivity. It initiates with the selection of elite animals, to develop pure bred cows and buffaloes with high genetic potential by adopting Pure Breeding Programme. Accordingly, 14968 Superior animals having high productivity have been identified under the programme and their better progeny will be obtained by using 100% pure bull semen. In line with our objective, during the year we have received the first lot of imported progeny tested 100% Pure HF semen doses. To further develop the genetic potential of these calves we have planned the Calf Rearing Programme. Around 45730 calves have been registered under Calf Rearing Programme. Activities of Strategic PEP and FIP are being monitored through a dedicated system on www.amul.org.in .
Entrepreneurship Development Programme for Dairy Farmers :
We are certainly well beyond a ‘one size fits all’ approach and so to identify the gaps and meet the needs of member milk producers, we conduct door to door Animal Census every 5 years for all our 3.3 million members across Gujarat. Such survey helps us in analyzing the problem areas of the animal husbandry practices being followed by the milk producers. Through analysis of such survey, it was discovered for the development of the farmers to the next level, we need to segment the member milk producers as per the herd size and productivity of animals as need of the milk producers varies across such groups, with respect to the Animal husbandry practices being followed by them. Based on detailed analysis, it is learnt that milk producers having herd strength of 30 and above animals have comparatively better understanding of animal husbandry practices and have different training needs. Such milk producers would be trained, through interactive group workshops to better understand farm economics and develop management plans for increasing income and reducing operating costs.
Contributing to sustainable ecological development:
Milk Producer members of Gujarat have been celebrating the nation's Independence Day in a novel manner by planting millions of saplings across Gujarat. The milk producers of Gujarat Dairy Cooperatives are conducting mass tree plantation drive every year on Independence Day for last seven years and have planted more than 441 lakh trees and demonstrated their commitment towards preserving and contributing to improvement of the environment and making Gujarat Green. For the tree plantation activity we received seven consecutive Good Green Governance award from Srishti during 2007 to 2013.
INFORMATION TECHNOLOGY INTEGRATION
We are glad to inform you that your Federation has moved a step further towards integrating Cow-to-Consumer (C2C) IT Value Chain with implementation of “Common WD Software”, popularly known as Distributor Management System (DMS). This application is supported with Mobile based order booking application (Sales force automisation – SFA) for Wholesale Distributors salesmen.
Your Federation has also rolled-out Mobile Application based Order Booking for Fresh products across branches. This is very helpful to our 2000+ Milk distributors in sending order directly from the market, monitoring transactions and credit limits.
The Path of Innovation…..
The culture of innovation is ingrained in the DNA of Amul cooperative movement. The genesis and history of Amul chronicles several mega-innovations such as pioneering breakthrough in manufacturing milk powder and cheese out of buffalo milk. Cumulative impact of these innovations propelled Indian dairy industry to a position of eminence on global dairy map. Series of technological and marketing innovations have provided benefits of market access, financial linkages and value-addition, directly to 33 lakh farmer members of Amul family.
In marketing terms, our innovation has been to redesign the entire imagery of milk from a plain white commodity to a wide range of trendy beverages in contemporary packaging formats. Our wide network of exclusive Amul parlors is a pioneering innovation in FMCG industry and helps to bring our brand closer to our customers, besides giving us a platform to showcase the entire Amul range. Through our innovative ‘Eat Milk’ campaign, we have been trying to enhance dairy consumption among our urban youth, educating them about the nutritional goodness of milk and dairy product. Our highly creative marketing communication initiatives in digital and social media have helped to strengthen our bonding with youngsters. For these innovations, we have received AIMA-RK Swamy High Performance brand award 2013 and CNN-IBN Innovating for better tomorrow award, in recent months. This adds to the long list of honors and accolades already received by Federation, in its glorious history.
Moving further ahead on the path of innovation, we plan to enhance & widen our product portfolio, based on demand and expectations of our loyal consumers. Using insights from consumer research and learning from the experience of dairy industry across the world, we will introduce innovative products customized as per requirement of specific segments of consumers. In terms of process innovations, we will continue to leverage heavily on information technology across the entire value-chain of dairy business, seamlessly linking our farmer members in 17000 villages of Gujarat to millions of consumers across the country. Another dimension of technological innovation that we plan to emphasize on will be to enhance productivity per animal, with the ultimate objective of increasing milk production as well as reducing cost of milk production.
During the year 2014-15, we plan to continue with our growth trend and will target at least 21% growth to exceed turnover of Rs. 22000 crores. We also plan to further expand our milk procurement network to cover almost the entire region of Saurashtra. We acknowledge and appreciate the tremendous trust that Indian consumers have placed in us, over the last six decades. We are confident that we will succeed in our endeavor, with blessing and support from all quarters.
Before closing, I would like to thank all those who have helped to make our Federation’s operations successful.
We are grateful to the Government of India for immense support received from various departments and specifically from the Department of Animal Husbandry and Dairy Development. We convey our special thanks to NCDC for providing valuable support to our village co operative dairy societies. We are also thankful to the Government of Gujarat for all the help and cooperation, extended to our organization.
National Cooperative Dairy Federation of India had been providing us with invaluable support in coordination with other agencies and organizations. National Dairy Development Board had played a role in our growth and development. We are very grateful to them.
We express our deep gratitude to Dr. Amrita Patel, former chairperson of National Dairy Development Board, Anand, who had been a long-standing member of Federation board and has recently stepped down from this role. We are extremely indebted to her for the guidance and support that she has provided to us over the years.
Institute of Rural Management, Anand, as always, has contributed to the perspective building and professionalization of the management of cooperative sector. We express deep gratitude for its support.
We are indebted to Vidya Dairy for having organized training programs on dairy technology for our employees. We are also grateful to SMC College of Dairy Science, Anand, for strengthening the dairy cooperative sector, by providing technically skilled manpower. We express our sincere thanks to the College of Veterinary Science and Animal Husbandry, Anand.
Our advertising agencies, bankers, insurers, management consultants, suppliers and transport contractors have been of great help to us in managing our growth and are our partners in success. We acknowledge their contributions and commit ourselves to continue and strengthen this fruitful alliance in all times to come.
The Indian Railways has played a crucial role in the growth of our dairy cooperatives since inception. We thank them for their continuous support.
We depend on the efficiency of our WC&F agents, distributors, retailers and most important of all, the patronage of our consumers, who have come to regard our brands as synonymous with quality and value. While thanking them for their support, we assure them that we shall strive endlessly to delight them.
Our Member Unions are our strength. We thank them for their guidance, support and cooperation without which we would not exist.
Lastly, we thank the officers and staff of our Federation for their continued perseverance, loyalty and unflinching efforts devoted to our cause.
For and on behalf of the Board of Directors
Jethabhai P. Patel