46th Annual General Body Meeting on 18th July, 2020

REPORT OF THE BOARD OF DIRECTORS

The Report of the Board of Directors adopted at their meeting held on 30th May 2020 for presentation at the 46th Annual General Body Meeting to be held on 18th July 2020.

CHAIRMAN'S SPEECH

Ladies and Gentlemen,

Recently, our Hon. Prime Minister recommended ‘self-reliance’ as the way forward to fulfill our collective dream for a 21st century India. ‘Átma-nirbharata’, based on five pillars - a vibrant demography; world-class infrastructure; technology-driven systems; a robust supply-chain; and an economy geared for quantum leaps - is our national goal. Self-reliance will enable our country to realise its full potential and also help us emerge triumphant from the devastating impact of the Covid-19 pandemicRecently, our Hon. Prime Minister recommended ‘self-reliance’ as the way forward to fulfill our collective dream for a 21st century India. ‘Átma-nirbharata’, based on five pillars – a vibrant demography; world-class infrastructure; technology-driven systems; a robust supply-chain; and an economy geared for quantum leaps – is our national goal. Self-reliance will enable our country to realise its full potential and also help us emerge triumphant from the devastating impact of the Covid-19 pandemicRecently, our Hon. Prime Minister recommended ‘self-reliance’ as the way forward to fulfill our collective dream for a 21st century India. ‘Átma-nirbharata’, based on five pillars – a vibrant demography; world-class infrastructure; technology-driven systems; a robust supply-chain; and an economy geared for quantum leaps – is our national goal. Self-reliance will enable our country to realise its full potential and also help us emerge triumphant from the devastating impact ofa the Covid-19 pandemic.

The Indian dairy industry, propelled by cooperatives patterned on the Amul model, is a shining example of how self-reliance can place India in a position of undisputed leadership on the global map. Just a few decades ago, prior to the emergence of Amul-inspired dairy cooperatives, India was dependent on the import of dairy products to fulfill the nutritional requirements of its citizens. Till the early 1970s, with barely 110 gm of per-capita milk availability per day, our nation was well below World Health Organization (WHO) recommended norms for per-capita milk availability, deemed necessary for minimum nutrition.

However, the birth of the Amul cooperative movement in the 1940s, its growth and development in subsequent decades, and the replication of the Amul model through ‘Operation Flood’, completely transformed the face of the Indian dairy sector. By leveraging on the collective strength of millions of small and marginal farmers, dairy cooperatives catapulted India to a position of pre-eminence on the global dairy map cornering 21% share of global milk production. As a nation, we are now completely “Átma-nirbhar” or self-sufficient in the dairy sector, since our dairy farmers produce enough milk to fulfill 100% of the country’s demand for milk and dairy products. For the last 22 years, India has continued to be the largest producer of milk in the world and is likely to retain its prime position as it has had an annual growth rate of 4.5% over the last two decades, as against global milk production, which is growing only at 2%. Our dairy farmers have ensured self-sufficiency for India in one of the most “significant” agri-sector produce – milk and dairy products.

Milk is the answer to the need for economic self-sufficiency and income growth for our rural population. Dairying and animal husbandry serve as a source of livelihood for around 10 crore (100 million) milk producer families of India and this sector contributes around 28% to the Agriculture GDP and 4.5% to National GDP. The dairy sector is truly the economic backbone of rural India. With an annual production of 188 million metric tonnes (MMT) per annum worth INR 8 lakh crore (INR 8 trillion or USD 105 billion), milk is the largest agricultural sector of India with the value of its output surpassing the total combined value of wheat and paddy produced in the country.

On behalf of the 36 lakh (3.6 million) farmers of Amul, we would like to express our heartfelt gratitude to the Government of India, for taking a firm stand during Regional Comprehensive Economic Partnership (RCEP) negotiations and taking a decision which will benefit 10 crore (100 million) dairy farmers of our country. The dairy industry of the country will always remain grateful to the Government for protecting its interest and not surrendering to the demand of dairy surplus countries like New Zealand and Australia.

Most countries of the world, even if they are major importers of dairy products, protect their own dairy farmers by using both Tariff and Non-Tariff barriers. We are really proud that our Government has heard and responded to the apprehensions of our milk producers and protected their interests. We are confident that this will help India to achieve the triple dream of the Hon. Prime Minister of India, of "Doubling Farmers' Income", "Átma-nirbhar Bharat" and "Make in India".

Considering the large-scale employment the Indian dairy sector provides, our Government has naturally assigned it a very high priority and planned for its growth. As per Niti Aayog’s Working Group Report, India will produce 330 MMT milk by 2033 and become a US$ 200 billion industry, at current prices, thereby contributing 31% of total world milk production by 2033. For every 1,00,000 litres of milk processed by the organised sector, 6,000 jobs are created. With the huge growth projected in the organised dairy sector, we expect at least 1.3 crore (13 million) new jobs to be created in the next one decade, in this sector.

While India has 10 crore (100 million) milk farmers, New Zealand has only 10,000 dairy farmers and Australia has only 6,000; but while each of India’s dairy farmer owns merely two cows on an average, those in New Zealand and Australia own more than 355 cows per farmer. India takes pride in being self-sufficient; while New Zealand exports 93% of the total milk it produces. If India had allowed import of even 5% of cheaper dairy products from New Zealand, then India would have surrendered around 1/3rd of its dairy product market which would not have been in the interest of Indian dairy farmers. It would have led to a decline of INR 10-12 per litre in the milk price to the farmer and would have resulted in 5 crore (50 million) farmer families moving out of the dairy industry due to un-remunerative prices, thereby causing large scale unemployment in the rural areas of the country.

In India, consumers get the best quality milk and milk products at the most affordable prices and Indian dairy farmers are able to get the largest share of the consumer’s rupee. This share in India is as high as 80%, as compared to just 30-35% in New Zealand, Europe, US and all major countries of the world.

Countries who intend to sign Free Trade Agreements (FTA) with us are interested only in dumping their dairy surpluses into India, which will be detrimental to the interests of both our rural dairy farmers and also consumers, both in the short term and the long term. In the larger interest of Indian farmers, we request the Government of India not to include dairying under the RCEP or any FTA negotiations with New Zealand, Australia, US and EU, in future as well.

The Covid-19 pandemic has transformed the entire world, in a matter of few weeks. It is a catastrophe without any parallel in the last 100 years; a global tragedy which has no precedent in modern times and an event that no one could have foreseen or anticipated. This highly infectious virus has fundamentally changed human behaviour within a very short period of time and has already had a profound impact on the purchase behaviour and consumption patterns across the world.

As the coronavirus outbreak started spreading from China to other parts of the world, it became obvious it would reach our shores, sooner or later. Even before Covid-19 cases were found in India, we began planning to ensure our business operations continued smoothly, and our integrated supply chain remained intact. Every day, we collect 210 lakh litres (21 million litres) of milk, from 3.6 million farmers, spread across 18,600 villages and transport this milk to our 84 dairy factories, spread across the country. Amul products manufactured at these dairy factories are then transported through four distinct distribution highways to 200 warehouses, for fresh, chilled, frozen and ambient products. From these warehouses, our products move to thousands of distributors and then to more than a million retail stores, scattered across India. This supply chain is highly sensitive since milk is a perishable product. Our first and foremost priority was to plan how to keep this supply chain flowing smoothly during the crisis period. Our goal was to ensure that under all circumstances, milk must be collected from our farmers, without any interruption, twice every day, and safely transported to our chilling centres and dairy factories. Simultaneously, we created advance contingency plans to ensure that we continued to serve our loyal customers and make sure that our products are available to consumers across the country.

Safety measures including social distancing and sanitisation to ensure complete safety of our farmers, employees, service providers and supply-chain partners were put in place, even before the first lockdown was announced on March 24. As the lockdown commenced, our challenges became amplified during the first few days. However, close coordination with regulatory authorities, massive support of central and state governments, utmost dedication of our employees and supply-chain partners helped to bring our operations back on track, within a few days. Since ensuring availability of milk and dairy products is considered as an essential service, all employees of the Federation and Member Unions functioned selflessly as Corona Warriors, with supreme commitment to the cause of our farmers and our consumers.

I take this opportunity to thank all regulatory authorities for being very supportive during these difficult times. I also express my gratitude to all our farmer members for continuing to supply milk in ample quantities during this Covid-19 crisis and adopting all safety and hygiene measures, so that the demand of our customers can be fulfilled. I must take this opportunity to thank all our supply-chain partners for their immense contribution in helping us overcome all supply chain-related issues during these testing times. I would also like to thank all the employees of the Federation and those of our Member Unions for the remarkable display of courage, dedication and commitment during the ongoing crisis and for continuing to serve farmers and consumers of India.

Operating our supply chain in the midst of restrictions imposed during lockdown was a huge challenge, as it took some time for local administrative functionaries to understand that milk and milk products were part of permitted essential services, along with its related eco-system such as packaging material and critical ingredients required by the dairy industry. However, swift and effective coordination with local, state and central government authorities enabled our supply chain to get back on track within a few days. Heavy restrictions on timings during which retail stores could remain open in different parts of the country, gave us a narrow time window of just a few hours to complete our entire redistribution operation in the market on a daily basis. In order to incentivise our supply chain partners, transporters, sales team, contractual workers at factories, warehouses and in market, we gave them an extra incentive in the form of a special hardship allowance, to reward them for their contribution towards maintaining supplies of essential milk and milk products. Special arrangements were made for their safety and comfort including arrangements for food and refreshments along with sanitisation facilities.

Restriction on the movement of customers meant that we had to deploy creative ways to reach out to people who were in lockdown mode inside their homes. Our teams were nimble, agile and accustomed to thinking swiftly on their feet in response to the extremely challenging situation that they were faced with. We remodeled our last mile supply chain strategies almost overnight, partnering with online food delivery platforms such as Swiggy, Zomato, Domino’s and several others to deliver Amul products to consumers’ homes. We also leveraged on e-commerce to reach out directly to consumers. We started booking orders from Resident Welfare Associations (RWAs) of residential societies and apartment buildings and supplying our entire range of products directly to the housing colonies. We also launched an Amul Cart app, which enabled retailers to place online orders directly to our distributors, enabling us to leverage on technology to overcome distribution challenges.

Since hotels, restaurants, cafes, eateries, tea-stalls, sweet shops have not been functional during the Covid-crisis, this led to steep decline in consumption of our products. In an effort to compensate for loss in out-of-home consumption of our products, we redesigned our marketing campaigns to educate and inform consumers about using our range of products to try our restaurant-style dishes at home. These campaigns encouraged consumers to try their hand at cooking tasty and healthy dishes using Amul products as ingredients, thereby greatly enhancing in-home consumption of our products. Even chefs across India, who were largely unoccupied during the lockdown period, were invited on our special online Facebook live events to demonstrate their special recipes to consumers. This not only helped popularise the habit of cooking delicious dishes among consumers, thereby enhancing in-home demand for our products, but also bolstered our bond with these chefs.

During the lockdown, consumers had access to only a limited set of activities and hence their media consumption including TV, digital and over-the-top (OTT) increased significantly. Due to concerns regarding the coronavirus, people also spent a considerable amount of time watching news on TV and on digital media. During this period, we sensed a wonderful opportunity to further enhance our bonding and connect with Indian consumers. Hence, we enhanced our advertising and media presence. Amul is among the most heavily advertised brands across news channels and also across other media during the lockdown. As a result of our enhanced media presence, we have been able to strengthen our bonding with Indian consumers.

We designed and released multiple advertising and communication campaigns, positioning milk as a natural immunity booster which can be immensely beneficial during the current pandemic. We also launched ‘Haldi Doodh’ or turmeric latte, our new immunity enhancing milk beverage, and are further augmenting this range by introducing other immunity boosting milk-based beverages such as ‘Tulsi Doodh’ and ‘Ginger Doodh’.

The I&B ministry took the initiative of re-telecasting iconic TV serials such as ‘Ramayan’ and ‘Mahabharat’ on Doordarshan, which had once been extremely popular, and invoked great nostalgia. We rode the huge wave of nostalgia by not only associating with these iconic TV series as advertisers but by also taking the innovative step of telecasting Amul advertisements of yesteryears, which were a huge hit with consumers, evoking fondest memories of Amul from their younger days. This helped our brand to remain ‘top-of-mind’ during the entire lockdown period and further cemented our deep bonding with Indian consumers.

During this global pandemic, Amul cooperatives have converted the crisis into an opportunity. In the lockdown period, we procured an additional 35 lakh litres (3.5 million litres) of milk per day, which means, we have given around INR 800 crore (INR 8 billion) extra to the rural milk producers. During the lockdown, when many industries were completely shut and generated no business, we remained steadfast in our operations even in this tumultuous times, generating a remuneration of INR 6,000 crore (INR 60 billion) cumulatively for 36 lakh (3.6 million) families of rural India. This was the major source of livelihood for landless labourers and marginal farmers in rural India. Additional milk came to Amul cooperatives because during this lockdown period, the private dairy industry either stopped collecting milk from farmers or drastically slashed their procurement price; whereas our cooperatives continued paying high milk price and collected every drop of milk poured by the farmers. This strengthened the trust that farmers have in dairy cooperative structure.

Similarly, when very few food and dairy brands were even operating in the market, it was only the Amul range of dairy products that was available to consumers during lockdown, in every village, town and city of India. This further enlarged our image as the most preferred and reliable food and dairy brand among Indian consumers. Our huge media presence during the lockdown period, when media consumption was at its peak, further deepened our historic relationship with every Indian household.

We are grateful to the Government of India for acknowledging the contribution of dairy cooperatives during the lockdown. We thank the Union Finance Minister for her extremely important announcement of INR 15,000 crore (INR 150 billion) dairy infrastructure fund for the establishment of supply chain and dairy plants for enhancing the dairy and milk processing capacity. With this fund, we can build around 4 to 5 crore (40 to 50 million) litres of extra capacity. Extra capacity in the organised dairy sector automatically means more jobs, livelihood for more people, especially in rural India. These extra five crore litres of milk collected and processed by the organised dairy industry will provide livelihood to approximately 30 lakh (3 million) people in rural India. This is really the need of the hour, when hundreds of thousands of people have migrated back to their villages from urban centres.

We also welcome the 4% interest subvention scheme for cooperatives, announced by the Finance Minister. The INR 13,000 crore (INR 130 billion) push for the removal of Foot-and-Mouth Disease (FMD) and Brucellosis diseases in milch animals is a major initiative because it will save around INR 60,000 crore (INR 600 billion) lost on milk production. These announcements are going to benefit 10 crore (100 million) rural producers and will encourage labourers and migrants to get into milk production.

When our Hon. Prime Minister had visited us for the inauguration of our new chocolate factory, he had given us the goal of being ranked among the top three dairy organisations in the world within the next decade. With support, cooperation and the blessings of all our stakeholders, we are confident that we will be able to attain this goal, well within the assigned time duration.

I now present to you, our Federation’s Annual Report and the Audited Accounts for the year 2019-2020.

REVIEW OF OPERATIONS

Milk Procurement

The total milk procurement by our member unions during the year FY 2019-20 averaged 215.96 lakh kilograms (21.59 million kg) per day. The highest procurement was recorded during February 2020 at 250 lakh kg (25 million kg) per day. Interestingly, there is a sharp contrast in the milk procurement scenario before, and during, the Covid-19 crisis. Once the lockdown started on March 24, we witnessed an almost 15% increase in our milk procurement, as milk collection in the private dairy sector either stopped completely, or there was a drastic reduction in the milk procurement price paid by private dairies.

Taking a longer view, over the last 10 years, our milk procurement has witnessed a phenomenal increase of 138%. This enormous growth was a result of the high milk procurement price paid to our farmer-members which has increased by 127% in this period. The highly remunerative price has helped us retain the farmers’ interest in milk production; and better returns from dairying have motivated them to enhance their investments in increasing milk production. Our initiative in promoting the concept of commercial, scientific, cooperative dairy farming is also helping to attract the next generation of dairy farmers to remain in the business.

Sales

During the financial year 2019-20, your Federation registered a turnover of INR 38,542 crore (INR 385 billion), which marks a growth of 17% over last year in value terms.

Amul Milk in pouches, which is the largest category in our overall business, maintained leadership in all major markets such as Delhi, Mumbai, Gujarat, Uttar Pradesh and Kolkata with a 11% value growth. During the year, we launched Amul milk in pouches in the States of Bihar and Jharkhand – where the market response was extremely positive. Amul Dahi registered a value growth of 32% indicating a sharp increase in category demand for our brand.

I am very pleased to say that the Federation has done remarkably well in almost all value-added consumer packs. Ghee in consumer packs has achieved 28% value growth due to its wide range and availability throughout the year. Amul’s range of chocolates leveraging on a series of innovative new launches grew by 27% in value terms.

Amul Cheese registered a value growth of 18% over the last year. This has been possible due to creative marketing campaigns to promote in-home consumption of cheese and consumer education efforts in promoting usages and applications of cheese in Indian cuisine. We have been able to generate a 21% value growth in Amul Paneer and also a high double digit growth in Amul cream, UHT milk as well as milk powder consumer packs.

Innovation is ingrained in our DNA. Continuing on the path of product innovation, GCMMF launched 26 new products during the year, most of which have received a very encouraging response from the market. These new products, apart from meeting the demand of the market, also enhanced our brand image amongst the consumers significantly.

Distribution Network

Going ahead on the expansion drive, we started operations from four new branches – at Mehsana, Bhopal, Bhubhaneshwar and Bareilly – thereby taking the overall branch strength to 66. We have also been enhancing our infrastructure at branches so as to accommodate the increase in volumes being handled.

On our continued journey of expanding our direct reach to interior markets, GCMMF has added 2,790 Wholesale Dealers (WDs) and Area Milk Distributors (AMDs) in the current year which represents a growth of 27% over last year. GCMMF now has direct reach in 3,900 towns. This enhanced reach has been made possible by our aggressive push in appointing direct distributors in smaller markets of towns with a population of more than 10,000. In fact last year we have appointed 1,473 direct distributors in such markets. Our network of approximately 167 Super Stockists in these markets also covers about 3,600 even smaller markets through their sub-distributor network.

As a marketer, Amul has always tried to be ahead of the curve in terms of reaching out to our consumers. We have been actively engaged with the evolving channels of e-commerce and the new age concept of omnichannel retail, to ensure that we maintain the same leadership and market dominance that we enjoy in traditional trade, in emerging channels, as well. Our business in modern trade channels has grown by more than 25%; and our e-commerce business has increased 2x in the year gone by.

Information Technology Integration

We are happy to inform you that your Federation has successfully completed nine years of operations on SAP ERP. In addition to AmulFed Dairy, Vidya Dairy and your Federation, all 18 member unions are also deriving benefits of using SAP for business transactions.

We wish to inform you that AmulDMS (Distributor Management Software) has been implemented at 3,300 distributor points. More than 3,700 salesmen of these distributors book orders on mobiles through Sales Force Automation (SFA). Your Federation has also implemented mobile-based DMS solution for 350 WDs for capturing secondary sales data of the rural areas and small WDs.

Commendable progress has been made by your Federation on the implementation of the Amul Automatic Milk Collection System (AMCS) application at Village Dairy Cooperative Societies (VDCS). A total of 13,300 village societies have been covered in the project thus far. The application has helped integrate the Cow-to-Consumer (C2C) IT Value Chain. On a daily basis, more than 15 lakh (1.5 million) messages (SMS) are being sent to milk producers sharing information on the quality and quantity of milk poured.

Exports

As you are aware, last year there was a large Skim Milk Powder (SMP) surplus which was exported. This, as well as the very good growth of consumer packs, has added greatly to the performance of your Federation. During the beginning of the financial year, exports of bulk butter helped us to stabilise prices for both fat and powder, which in turn ultimately resulted in better price realisation for our farmers.

Our export turnover touched INR 365 crore this year. We are happy to note that exports of consumer packs increased in the last two months despite the difficult times due to the global impact of Covid-19.

I am sure we will continue to consolidate exports of our consumer pack products in the coming year.

Cooperative Development Programmes

During the year, we have continued to provide technical, managerial and marketing support to the Jamnagar Milk Union for the establishment and strengthening of the dairy cooperative structure in their district. We have continued to provide support to milk unions of Saurashtra and Kutch regions to organise farmers to build and develop cooperatives and increase milk production and procurement.

In the last 19 years, our member unions have been implementing the Internal Consultant Development (ICD) programme for promoting leadership among member producers. Till date, 12,292 VDCS have prepared their Mission Statement and Business Plan under the Vision Mission Strategy (VMS). During the year, 381 Dudh Utpadak Mandali Sanklit Vikas Ayojan Karyakram (DIVA) programmes have been conducted and 27,450 milk producers have drawn up their action plan.

Every year, on Independence Day, the milk producers of Gujarat Dairy Cooperatives conduct a mass tree plantation drive and in the last 13 years they have planted more than 733 lakh (73.3 million) trees.

Strategic Calf Rearing Programme:

To create awareness among Milk Producer Members to adopt scientific calf rearing practices and also to create good replacement stock and high productivity animals, we have initiated the Strategic Calf Rearing Programme.

Strategic Productivity Enhancement:

To improve the progeny of the upcoming generation of dairy cattle, the Strategic Productivity Enhancement Programme (PEP) has been initiated in 2,986 villages, covering 31.04 lakh (3.10 million) animals. FIP-XII, the Fertility Improvement Programme (FIP), is being successfully implemented in 3,385 selected villages covering 2.83 lakh (0.28 million) animals.

Entrepreneurship Development Programme:

Young and educated milk producers are trained in commercial dairy farming and management under the Entrepreneurship Development Programme (EDP). We have conducted 43 programmes and trained 2,488 milk producers during the year.

Ethnoveterinary Preparations Programme:

Our member unions have implemented the Ethnoveterinary Preparations (EVP) programme as an alternative medical stream; taking into consideration its cost, availability of ingredients at farm level and effectiveness in treatment of various diseases/conditions at the field.

Skill Enhancement Programme for Dairy Cooperative Services Consultants (SEPDCSC):

Consultant staff of Milk Unions act as a vital link between Milk Unions and VDCS to ensure Standard Operating Procedure for milk procurement. Hence, we have initiated the SEPDCSC programme with the focused objective of strengthening and upgradation of knowledge and skill of the consultant staff of our milk unions. We have conducted five programmes and trained 120 consultant staff members of milk unions during the year.

Awareness among Milk Producers in Covid-19:

During the Covid-19-triggered lockdown, our Milk Unions have carried out various activities to increase awareness among milk producers by displaying posters at VDCS for necessary precautions to be taken for Covid-19; made arrangements for maintenance of social distancing at VDCS; supplied gloves, masks and hand sanitizers – all in order to continue to procure milk from villages without interruption.

Doodh Sanjeevani Yojana:

The Government of Gujarat entrusted GCMMF and its member unions with coordinating and facilitating the distribution of Double Toned Pasteurized Homogenized Fortified Flavoured Milk to children of anganwadis and schools, and also to pregnant and lactating women of Gujarat. Under the Doodh Sanjeevani Yojana (DSY), GCMMF and its member unions have implemented distribution of milk in 81 talukas of 20 districts in Gujarat and have covered around 23.80 lakh (2.38 million) school children.

Take Home Ration:

The Government of India provides ‘ready to cook’ Take Home Ration (THR) to young children, adolescent girls, and pregnant and lactating mothers, through its Integrated Child Development Scheme (ICDS). GCMMF has taken up the opportunity for the production of THR and its supply to these beneficiaries; and has entered into a tripartite agreement with the Government of Gujarat and three member unions – Kaira, Banas and Surat – each of which established plants of 200 MT/day. GCMMF has started the supply of approximately 14,500 MT/month of THR products (Balshakti for children, Matrushakti for pregnant women and Purnashakti for adolescent girls) from these plants to around 53,000 anganwadis of Gujarat.

Moving beyond Covid…

While the Covid-19 crisis may have temporarily altered the macro-environment around us, it will not change the fundamental factors driving our dairy industry and we will certainly fulfill our ambition of becoming the largest dairy organisation in the world. During this crisis, we have amply demonstrated our strength, resilience, adaptability and agility and these qualities will enable us to overcome all current and future challenges that we may face. The entire nation has witnessed the fact that Amul stood strong and steadfast in this troubled period and continued to serve both farmers and consumers, even during the toughest of times.

Certain aspects of this altered environment may actually work to our advantage. The organised dairy industry may emerge stronger as consumers become more conscious of food-safety and their faith in branded, packaged food from reputed organisations will be strengthened even further. We have experienced a huge surge in demand for most of our consumer products during the lockdown imposed due to Covid-19, largely because in-home consumption replaced out-of-home consumption. While making purchases for their own in-home use, consumers have a greater degree of control over the ingredients that go into their food and they prefer brands which they have complete faith in. This control actually gets diluted when people eat out as there is very little transparency about ingredients that are actually used in restaurants, cafes and dhabas.

Prior to the Covid-19 crisis, the Indian dairy industry was facing a significant threat from cheap dairy imitations used in hotels and restaurants. While consumers were largely oblivious to imitations replacing real dairy ingredients used in food dishes ordered from restaurants, not a single consumer would deliberately purchase cheap imitations in preparations for their own families. This is definitely one of our major gains during the current times, as the slant towards higher in-home consumption triggered a massive increase in demand for Amul products which our loyal customers have full trust in.

Another huge change in consumer behaviour is the accelerated adoption of online shopping and home delivery of even daily necessities such as food, groceries, milk, fruit, vegetable, medicines and other such items. As lockdown restrictions are easing up now and physical shops are opening up for business, some quantum of this behavioural change may remain permanent. Several dynamic entrepreneurs have seized this opportunity and many online order-based home delivery platforms have emerged in many a town and city. When consumers order from home, they have a greater control on brands they purchase, since they are no longer restricted by brands and products available or visible in physical retail stores. This has led to a sharp increase in demand for our products and we have taken full advantage of this new and emerging trend by actively partnering with all national, regional and local online home delivery platforms. Clearly our policy since inception of focusing sharply on consumer marketing and investing heavily in brand building has placed us in a position of significant advantage during the current situation.

Our dairy cooperative structure became much stronger during this crisis and the bond of trust and faith that our farmers have in their own Amul cooperative network, strengthened even further. In the entire lockdown period, as the private dairy industry almost stopped functioning, we continued to collect every last drop of milk from all our farmer members and continued to pay them highly remunerative price for their milk. In sharp contrast, in some other states outside Gujarat, where the dairy cooperative structure is not strong, farmers suffered huge decline in procurement price for their milk.

Moreover, our teams across India, gained huge confidence in their own ability to function effectively under all circumstances. Assuming our mantle as Corona Warriors, we were able to keep our supply chain running when almost the entire world stopped functioning around us. We made a promise to our loyal customers that they will have no difficulty in getting supplies of Amul milk and we kept our promise. The massive boost of self-confidence that we got from this experience gives us a template to face any challenge that may come our way in the future.

As the leader of the Indian dairy industry, it is our responsibility to drive expansion of the organised sector and double its share in the next decade. We will one day surely fulfill our ambition of becoming the largest dairy organisation in the entire world. With the warm wishes, love, blessings and support of consumers, farmers and fellow citizens from every walk of life, we hope to take the ‘Taste of India’ to the entire world, one day.

Acknowledgements

Before closing, I would like to thank all those who have helped to make our Federation’s operations successful.

We are extremely thankful to the Hon’ble Prime Minister of India and Hon’ble Chief Minister of Gujarat for their constant support and guidance. We are grateful to the Government of India for the immense support received from various departments, specifically from the Department of Animal Husbandry and Dairy Development. We convey our special thanks to National Co-operative Dairy Corporation (NCDC) for providing valuable support to our village cooperative dairy societies. We are also thankful to the Government of Gujarat, especially the Department of Animal Husbandry and Cooperation, for their very supportive and facilitating role.

The National Dairy Development Board (NDDB) has played a role in our growth and development. We are extremely grateful to the Chairman, NDDB, for his continuous support to our organisation. The National Cooperative Dairy Federation of India has been providing us with invaluable support in coordination with other agencies and organisations. We are very grateful to them.

The Institute of Rural Management, Anand (IRMA), as always, has contributed to the perspective building and professionalisation of the management of the cooperative sector. We express deep gratitude for their support.

We are indebted to Vidya Dairy for having organised training programmes on dairy technology for our employees. We are also grateful to Anand Agriculture University and SMC College of Dairy Science, Anand, for strengthening the dairy cooperative sector by providing technically-skilled manpower. We also 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 going ahead as well.

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.

Thank you.

For and on behalf of the Board of Directors,

Ramsinhbhai P. Parmar

Chairman

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Indian dairy farmers can once again look forward to golden days ahead, with dairy commodity prices firming up in the last seven months. Across the world, dairy farmers have just emerged from a two-year depression in prices and there are strong indications of further improvement in global dairy prices during 2017, due to higher import demand from China. Decline in milk production last year in major dairy exporting countries such as New Zealand and Australia, as well as higher demand from Chinese importers due to decline in the number of milch animals in China, are the two major contributing factors leading to the upward movement in global dairy prices. Another significant global trend is the large differential in the price movement of fat-based dairy products and skimmed milk powder (SMP), largely due to the fact that Europe still has 350,000 MTs of SMP buffer stocks. Presently, the gap in global prices between dairy fat and SMP is at a record high. During the last two years, dairy farmers of New Zealand and other dairy exporting countries witnessed a 30% to 50% drop in farm gate milk prices, thus exposing their vulnerability to volatility in world dairy prices. The recent upward movement in prices has therefore come as a huge relief to farmers of these countries.