Operation Feud

Patel, on her part, believes that cooperatives run more on sentiments than hardcore business principles have no role in the dynamic economy India aspires to become. 8216;8216;We want the cooperatives to come out from the clutches of the state government,8217;8217; she told The Sunday Express in an exclusive interview see alongside. 8216;8216;The challenge in the marketplace from the MNCs is so strong that if we don8217;t wake up now, it will be too late.8217;8217;

For the GCMMF 8212; the success of which led to the establishment of the NDDB, with a one-point brief of replicating Amul8217;s success elsewhere in the country 8212; though, the parting of ways couldn8217;t have come at a worse time. Undisputed market leaders for close to half a century, Amul today fights for shelf-space alongside products of MNCs like Britannia, Nestle and Hindustan Lever Limited HLL, not to mention various regional cooperatives.

Kurien 8212; snubbed publicly for possibly the first time in his career 8212; is breathing fire. 8216;8216;NDDB8217;s role is to make available its funds and expertise for creating such cooperatives, not in forming companies owned and controlled by governments instead of farmers,8217;8217; he says. What gets his goat is that under the NDDB-Milma agreement, NDDB will hold 51 per cent stake, while Milma holds the rest of the equity in the marketing company called Mother Foods. This, believes Kurien, will have Mother Dairy products competing directly with Amul, thereby hurting interests of the small farmers and sending all state-level federations into the red.

Notwithstanding the criticism, MDFL is already in talks with federations in other states, including Andhra Pradesh Vijaya, Punjab Verka, Rajasthan Saras, Karnataka Nandini and Uttar Pradesh Parag for the formation of similar marketing ventures. Patel is clear that independent marketing of their products is the only answer for cooperatives seeking to stand on their own feet, instead of government crutches see interview.

Even as the war of words hots up, old-timers at NDDB wonder what the fuss is all about. 8216;8216;During his tenure at the head of the Board, Kurien himself funded a private company in Kolkata called Metro Dairy, which held 43 per cent of the equity. The West Bengal Cooperative Federation held 47 per cent, while the rest was held by the NDDB,8217;8217; say sources, pointing out that Patel was not doing anything very different now.

The market scenario, though, has changed remarkably today. The FMCG majors, after all, have smelled the potential in the food sector 8212; there are estimates that the business will grow to Rs 100,000 crore in the next five years 8212; and in areas as varied as butter, ice-creams and dahi, the GCMMF is already feeling the heat.

Consider the cheese market. Till a few years ago, Amul had 55-60 per cent share of the 9,000-tonne annual cheese sales. Britannia, which entered the market in July 1997, now accounts for more than 20 per cent of the market, thanks to its aggressive marketing techniques. A threatened Amul has countered by launching new variants such as Emmenthal, Gouda and Mozzarella, and plans to introduce cheese sauces and dips.

Even its traditional stronghold of milk is under MNC threat, with Britannia8217;s Milkman 8212; a 8216;8216;tribute8217;8217; to the man often referred to as India8217;s Milkman, Kurien 8212; and Nestle8217;s UHT Milk and Slim Milk venturing into the market. Amul, in response, has entered the Nagpur and Pune markets 8212; earlier, its polypacks were available only in Gujarat and Mumbai 8212; and its long-life tetrapack milk is said to be doing very well in milk-deficit areas like Kolkata, the Northeastern states, Andamans etc.

Health concerns may have led to a sluggish 6-7 per cent growth in the butter market, but that hasn8217;t deterred Britannia from taking on the Amul bull by its horns. Amul still commands nearly 75-80 per cent of the national market as the only all-India brand, while local products like Parag Uttar Pradesh, Verka Punjab, Vijaya Andhra, Vita Haryana etc account for between 3-6 per cent. Though a senior Amul official refuses to recognise Britannia as competition, the GCMMF is trying to protect its turf by launching new varieties like salt- and colour-free cooking butter.

If the Amul presence in these three product categories 8212; as also the slow-growth milk powder sector, where its Amulya brand has competition from Britannia8217;s Milkman and Nestle8217;s Everyday 8212; is well-entrenched, areas like ice-creams and chocolates present pictures less in its favour. The chocolate market, for instance, is heavily titled in favour of Cadbury. More than 60 per cent of the 20,000-tonne, Rs 3.5 billion chocolate market belongs to the MNC, while another 32.8 per cent is bagged by Nestle, leaving just five per cent for Amul.

Then there8217;s ice-cream. Says HLL executive director ice-cream J H Mehta, 8216;8216;According to independent market research agency A C Neilson, HLL8217;s Kwality-Walls has 38.6 share of the market in five metros Delhi, Mumbai, Kolkata, Hyderabad and Bangalore that account for more than 60 per cent of the Indian ice-cream market, compared to Amul8217;s 16.5 per cent.8217;8217;

There are those at NDDB who insist that the Amul ice-cream market-share hides more than it reveals. 8216;8216;Under an agreement between the GCMMF and the NDDB, Amul initially stayed away from the Delhi market, though it used Mother Dairy8217;s manufacturing facilities to cater to the northern market. Then suddenly, one day, Kurien decided to enter the Delhi market. No amount of reasoning would help 8212; he had decided, that was it,8217;8217; say sources.

A simple incident, but it probably tells the story that few care to analyse. Not high ideals, not management philosophy, not even farmers8217; interests vs market forces. This could just be a turf war. With terribly high stakes.

With Jaya Basu in New Delhi