White Revolution 2.0 - The Milky Way for North East!!!

Boilal Gangte *

After spending almost a decade in the Southern and Western part of the country where you get easy fresh pouches of milk every morning (Amul /Mother Dairy/Paras), I kind of have some sort of distaste in drinking milk powder (milk cream) for my cup of tea. Somewhere that makes me believe that tea drinkers tend to develop some kind of acquired taste in the type of milk (apart from the type of tea leaves). A tea made from milk powder (cream) taste different from that made out of fresh milk pouches, which again differs from that of packaged milk. I was quite surprised by the absence of milk pouches in the nearby mom-and-pop stores in Guwahati. When inquired, I was told that I would not get it anywhere.

If Guwahati, which is the HUB capital for the NE States doesn't have abundant supply of fresh milk, chances of finding in other cities or towns is scarce...

This is contradictory to the nation status of the 'Oyster' of global dairy industry, because India is the highest producer of milk in the world. Our annual production is about 121 Million tones, which is a whopping 16.6% of global production. Though, this was not the case since the beginning because till the early 1950's, we were commercially importing tonnes of milk powder to meet our domestic milk demand.

This dairy super power status of India started from what is popularly known as the WHITE REVOLUTION - "Operation flood" as the program was called was started in 1970 by National Dairy Development Board (NDDB). The program was a replication of the AMUL model of Gujarat, championed by Dr. Verghese Kurien, also known as the father of the White Revolution. Freshly brewed from The States, Dr. Kurien forsook a government job of dairy engineer and joined the Kaira District Co-operative Milk Producers' Union in Anand, Gujarat where he set-up one of the most robust dairy distribution network for the rural economy through a co-operative society using a "hub and spoke" model which help procure and distribute milk produce of the rural farmers, which hitherto go wasted because of lack of market and distribution system. The model benefitted millions of farmers who began to generate additional stream of income from their milk produce. Today AMUL is one of the most trusted SUPER brand of the country and a mammoth $ 2.15 billion enterprise.

Why was the AMUL model so successful?

In my final year in B.Com, our marketing professor explains why BIC (Disposable Pen) could not ironically succeed in India despite their business model. The reason he gave was because the product goes against the consumer (cultural) behavior in India. Despite being a low cost product, which is a natural Indian preference (at least in the yesteryears) the Indian cultural belief system doesn't permit throwing away a pen even after the refill get exhausted because to us educational materials (paper, pen etc.) is like the secret cow. The crux of this small anecdote is that for a business to succeed, the product or service needs to have some kind of inherent congruence with consumer behavior.

In similar lines, somewhere the AMUL story worked because the land somehow fits the product and the business environment like a jigsaw puzzle.

• Gujarat is a vegetarian land and hence the importance of dairy as part of food habit is very important. Just think of it, people look for butter milk (chass) even while having Chinese cuisine.
• Entrepreneurship comes natural for Gujarati and hence they see relevance in activities which give them additional income. Had Dr. Kurien were to try out the AMUL model in villages of some other states, he would have a tough time convincing those farmers of earning more money through co-operative society.
• Also, society or community system is inherent to the Gujaratis and hence collective activity works well among them. Gujaratis by nature are peace loving (atleast in their land) and hence group work comes naturally to them. You won't find more "Bai" and "Ben" prefixes in any form in any part of the world than in Gujarat.

Apart from the genius idea and relentless effort of Dr. Kurien and his team, somewhere the land does provide a right kind of environment for such system to thrive. Therefore, going by the same rationale, I do believe that North Easter states do hold good potential in the same business model, though the reasons may differ in its own context. So why should the AMUL model work in the North East? There are three strong fundamental hypothesis why North Eastern states hold a potential.

• There is a strong need for the product
• The statistics – Market Opportunity
• A sustaining business case

Need for the product: North Eastern states by topography are mountainous in nature, an extension of the Himalayas. While the land produces exotic and nutritious herbs and plants, however these are majorly seasonal in nature and hence one doesn't get such dietary supply throughout the year. And secondly, the land is still dependent on kitchen garden for vegetable produce and hence productions of such essential food items are still limited.

Therefore, there is a need for regular supply of food which gives basic nutrients (especially protein) all throughout the year. What better supplement than the original power drink.

The Statistics – Market Opportunity:

The below two tables clearly indicates the potential of dairy as an industry in North East.

Average Expenditure Per Person Per 30 days

Particulars	Rural NE States	Rural All India	Urban NE States	Urban All India	Total NE States	Total All India
Dairy Expenditure	17.0	17.6	38.3	83.0	25.5	43.8
Food Expenditure	344.2	304.6	478.3	441.5	397.8	359.4
Non Food Expenditure	280.4	260.1	556.0	618.7	390.6	403.5
Consumer Expenditure	624.5	564.7	1,034.3	1,060.2	788.4	762.9
% of dairy expenditure	2.7%	3.1%	3.7%	7.8%	3.2%	5.7%

Milk Production (In '000 tonnes)

States	97-98	00-01	05-06	08-09	09-10	10-11
Arunachal Pradesh	43	42	48	24	26	28
Assam	719	683	747	753	756	790
Manipur	62	66	77	78	78	78
Meghalaya	59	64	73	77	78	79
Mizoram	17	14	15	17	11	11
Nagaland	46	51	74	53	78	76
Sikkim	35	35	48	42	44	43
Tripura	57	77	87	96	100	104
Total NE	1,038	1,032	1,169	1,140	1,171	1,209
All India	71,089	79,575	95,897	111,040	115,253	120,635
NE Contribution%	1.5%	1.3%	1.2%	1.0%	1.0%	1.0%
NE Growth%	-	-0.6%	7.7%	-2.5%	0.0%	6.6%
All India Growth%	-	11.9%	12.7%	15.8%	13.7%	13.0%s

If you have a closer look at the above two tables, anyone can conclude that NE has a lot of catching up to do as far as dairy is concern -

• North Eastern States are low in consumption of dairy diet as a percentage of their food expenditure as compared to the national average.
• The contribution of milk production vis-à-vis the national production is very miniscule
• All India growth rate of milk production is multiple times more than NE growth rate year on year

Therefore, one can easily conclude that not only is the level of consumption low, which indicates a MARKET GAP, at the same time North Easter States have much more scope for increasing production. In simple word, there is a good business case both from the demand side and supply side.

Sustaining Business Case:

There is more than a reason why dairy industry is an important business case for the North Easter states.

• Breed Self employment which is needed for the economy – A cooperative hub and spoke model like the "Amul model" enables many unemployed and farm dependents an additional source of income. One of the biggest challenges of subsistence and season dependent farmers are access to a dependable market where they can sell their produce at regular interval and at a consistent price. Such distribution system ensures easy access to market place and also a certain ceiling price for their produce. I'm sure hundreds (if not thousands) of people will get the needed encouragement boost to participate in such an economic network where they are guaranteed a justified value-for-money for their produce.
• Low cost of capital – In a less developed economy, one of the biggest challenges of starting up any business is the lack of capital/investment. The Amul model requires minimal capital or investment for any participants. One just needs a cow to start with.
• Abundant raw materials – Green fodder which is the main raw materials for the industry is bountiful and available throughout the land.
• Collateral industry – Meat is one essential and fundamental food items of North East. Unlike most other states, consumption of beef is quite prevalent throughout all the states. Hence, this model can spin off another collateral industry of meat production which can be locally consumed or even some form of meat package industry.

Quoting from Amul Chairman's speech - "Milk is the source of complete nutrition. Its indispensability for all people, rural or urban, poor or rich, cannot be contested. It not only suits the taste buds of most of us, but also offers a balanced diet with every essential nutrient in required proportion. As our age progresses, the most frequent problems that we come across are declining bone density and deteriorating digestive system. Milk comes as an elixir for these problems. Hence, while consumption of milk is critical to infants, it is imperative to maintain good health of adults too. It is basically the best fuel for life, and the world's original energy drink"

Thence, the Far East needs a certain white wash which will give health benefits and also economic value at the same time. A certain White Revolution 2.0 will certainly bring that needed "wind of change".

Can we have another Dr. Verghese Kurien as a North East special package, Mr. Government!!!

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* Boilal (Boi) Gangte wrote this article to e-pao.net
The author works for Idea Cellular as Marketing Head for Assam and NE. He is a management graduate from IIM, Bangalore and a commerce graduate from SRCC, Delhi. He can be reached at boilalpg(at)gmail(dot)com
This article was webcasted on December 07 2012.

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