The political row over Gujarat Cooperative Milk Marketing Federation (GCMMF) entering the Bengaluru market, and supposedly threatening the local Karnataka Cooperative Milk Producers’ Federation (KMF), is both unfortunate and unwarranted. Unfortunate, because what should be a matter of economic competition in the marketplace has been turned into an emotive issue and misplaced subnationalism, amplified by the ongoing Karnataka state elections. Unwarranted, because, as this newspaper has reported, GCMMF’s Amul brand milk and curd are priced 20-40 per cent higher than KMF’s Nandini. Even if GCMMF comes to Bengaluru, it is unlikely to really eat into Nandini’s market share. But Amul or any other player shouldn’t be prevented from trying, just as the Bengaluru consumer must not be deprived of competition that could take the form of better quality or product differentiation. Incidentally, Amul has been selling in northern Karnataka markets since around 2015 – without inviting any provincial ire.
The current brouhaha is probably also a reflection of rivalry between India’s two largest dairy cooperatives. Amul is, of course, the original big brother. Its unions, in 2021-22, procured an average 264 lakh kg per day (LKPD) of milk, including around 43 LKPD from outside Gujarat. Nandini’s was only about 82 LKPD, much of it from the southern old Mysuru region districts. But the procurement increase, from a mere 30 LKPD in 2007-08, has been impressive and largely courtesy of a Rs 6-per-litre incentive given to farmers supplying to the KMF unions. The incentive, over and above their procurement price, has given a huge stimulus to dairying in Karnataka. Successive governments, whether of the BJP under B S Yediyurappa or the Siddaramaiah-led Congress, can take credit for Nandini’s growth, which has also been enabled by captive markets (Bengaluru, Mysuru and Mangaluru) not far from its main milk-shed areas.
That success only stands undermined by the calls for boycott of Amul products in Karnataka and “Amul vs Nandini” becoming a major poll issue. Karnataka’s dairy farmers, like their Gujarat counterparts, need to find new markets. By blocking Amul in Bengaluru, politicians are risking similar retribution when it comes to Nandini selling outside Karnataka. In fact, Maharashtra’s dairies allege that the Rs 6/litre producer incentive has led to KMF unions procuring milk far in excess of what can be absorbed within Karnataka. This surplus is, then, being “dumped” as milk powder, butter and ghee in other states. Neither producers nor consumers benefit from such protectionism and beggar-thy-neighbour policies: In this case, it’s happening not between nations, but between states in an ostensibly unified national market. The consequences of even milking a non-issue and creating imaginary fears can be dire. It also frames a political economy challenge where the government has to consider electoral exigencies before embarking on market reforms.
