Formation of Erode District Cooperative Milk Producers’ Union
The next step towards implementation of Operation Flood Programme was formation of the Producers’ Union, the apex body of the primary milk producers’ cooperatives to which all primary cooperatives will be affiliated. The Union will set up milk processing and product manufacturing facilities and provide production inputs like Animal Health, AI, Feeds & Fodder to the producer members. These activities were hitherto being performed by TNDDC.
I met Mr Menezes and explained to him the need for forming the Producers’ Union. Mr Menezes didn’t evince much interest in the formation of the Producers’ Union and advised me not to take up steps which will duplicate the activities of TNDDC. I told him that formation of Producers’ Union was contemplated in the Operation Flood Programme and was also as per the agreement signed between the Govt of Tamil Nadu and the Indian Dairy Corporation. Further, the “Anand Pattern” was incomplete without the apex body, the Producers’ Union. I told him that we will be submitting the proposal for registration of the Producers’ Union soon.
After the formation of 188 primary milk cooperatives, the Presidents of the societies met and resolved to form the Apex Body, the Erode District Cooperative Milk Producers’ Union. The area of operation of the Union comprised Erode, Bhavani, Gobichettipalayam, Sathyamangalam and Dharapuram talukas of the then Coimbatore district.
The general body unanimously elected nine Directors, from among the society presidents, to the Board of the Union with Mr SK Paramasivan and Mr MM Muthuswamy as the Chairman and the Vice Chairman, respectively. The proposals, along with the bylaws, were submitted to the Deputy Registrar (Dairying), Erode for registration.
The Deputy Registrar (Dairying) forwarded the proposal to the Deputy Milk Commissioner (Cooperation), Madras for clearance, as it was the first Producers’ Union to be formed in the state under the Operation Flood Programme. The Deputy Milk Commissioner, after consultation with the Milk Commissioner, Mr Menezes, discovered a technical hitch in registering the Producers’ Union as another Milk Union, Erode Cooperative Milk Supply Union, already existed in the same area of operation, having more or less similar objectives.
The Cooperative Law didn’t permit registration of another Milk Union, under such circumstances. A solution was found out to overcome this technical hitch: The Erode Cooperative Milk Supply Union should pass a resolution agreeing to convert the Union into a consumers’ cooperative society and issue a “No Objection” for the registration of the Erode District Cooperative Milk Producers’ Union. The Deputy Milk Commissioner (Cooperation) informed me about this. The Deputy Registrar (Dairying), Erode also conveyed this matter to me, subsequently. This technical hitch, in a way, came handy for the TNDDC to stall the registration of the Producers’ Union. TNDDC wanted “Anand Pattern” to stop at the primary society level.
I met Dr Muthuswamy, the Chairman of the Erode Milk Supply Union and explained to him about the proposal for formation of the Producers’ Union and the resolution required from the Milk Supply Union for registration of the new Union. I assured him that arrangements will be made for supply of adequate quantities of processed milk from the Erode dairy to the Milk Supply union for marketing in Erode town. He readily agreed and passed the necessary resolution and handed it over to me.
Thereafter, I met the Deputy Registrar (Dairying), Erode who told me that the Producers’ Union will be registered only after the Milk Supply Union passed the necessary resolution. He was confident that the Supply Union will not agree and pass such resolution.
I asked him whether he would register the new Union if such resolution from the Supply Union was obtained. He said yes and I took out the resolution from my pocket and gave it to him. He had no option but to register the Union which he did readily. It was sheer luck that the Producers’ Union got registered (February 2, 1975) without further trouble. I came to know later that the Milk Commissioner was upset that the Deputy Registrar registered the Union without his final clearance. He had remarked: “Madhavan out smarted every one” and got away with the Producers’ Union.
It was a great occasion for the producers. Mr Paramasivan convened the general body meeting of the Union and felicitated all the members for having got the Producers’ Union registered. Erode District Cooperative Milk Producers’ Union had the honour and privilege of being the first Producers’ Union to be registered in Tamil Nadu. At the request of the Union, NDDB lent my services as its General Manager, on deputation.
After the formation of the Producers’ Union, a small amount (Rs one per kg fat, approximately 7 paise per litre) was retained from the producers’ price, to build up funds in the Union. All the primary cooperatives welcomed the move and wholeheartedly agreed to the decision. The Union, at a later date, converted this amount into share capital contribution by the affiliated primary cooperatives. By 1979-80, the Union had 200 primary cooperatives affiliated to it with a membership of 26,000 producers and the paid-up share capital had gone up to Rs 26 lakhs. Daily milk collection was 50,000 litres from 200 cooperatives. All the cooperatives were in profit and disbursed Rs 16 lakh as bonus to their members.
Government Order on Adoption of Anand Pattern
Success of Anand Pattern in Erode paved the way for its adoption throughout Tamil Nadu. Towards this end, Govt of Tamil Nadu issued the famous G.O No. 1000 dated June 02, 1978 on adoption of Anand Pattern in the state. Mr TN Seshan, Commissioner, Department of Agriculture, Govt of Tamil Nadu was instrumental to issuing this order.
Milk Marketing in Erode Town
Milk collection from the newly formed cooperatives had reached about 25,000 litres per day. The entire milk was sold to the TNDDC dairy at Erode and it was being transported to Madras for sale in the city. The implication of this was that the competition became very tough in the villages. The vendors had to pay higher prices because of stiff competition. In Erode town, the consumer price went up because of milk shortage and the milk quality got further deteriorated. More the milk we procured, greater was the shortage and the degree of adulteration. The time had come that we marketed wholesome, pasteurised milk in Erode town.
I suggested to Mr Menezes that we marketed milk in Erode town as it will help to combat competition from private trade and tide over severe milk shortage in the town. Consequently, milk collection in the cooperatives will go up. The more milk we sold in Erode town, an equal quantity, if not more, will be collected by the cooperatives. In the process, the private agencies will gradually get eliminated from the villages as well as from Erode town. Besides, it will generate lot of good will from the consumers of Erode.
Mr Menezes didn’t agree and contended that it was purely a theoretical logic and that selling milk in Erode town would not result in increased milk collection. Further, he said that TNDDC was committed to provide milk to the consumers in Madras and selling milk in rural towns was only the last priority. I reminded Mr Menezes that the thumbs rule under OF was to meet the local demand and move the surplus milk to the cities. He remained unconvinced and blatantly rejected my proposal to market milk in Erode town.
I was left with no option but to seek the intervention of Mr Subramaniam in the matter. Mr Paramasivan and I met Mr Subramaniam who was at that time camping at Bennerghatta National Park, Bangalore. We explained to the Minister that the time was ripe to market wholesome and pasteurised milk in Erode town, from the point of consumer and the producer as well.
If the local demand was not met, the consumers will be exploited by the private traders by supplying adulterated milk, at higher prices. This will have adverse effect on the Project in two ways: loose consumers’ good will and milk procurement will get stagnated. By marketing milk in Erode town, the milk procurement will go up. Therefore, it was in the interest of the producers that the consumers were supplied wholesome milk which would give the correct signal that the Producers’ Union took care of the consumers’ interest also. Mr Subramaniam was fully convinced on the logic and advised TNDDC to make available the desired quantity of processed milk from the Erode Dairy for marketing in Erode town.
With great reluctance, Mr Menezes agreed to supply processed milk for marketing in Erode town. He agreed to supply 5000 litres of milk per day but on condition that should the milk procurement didn’t go up, as claimed by us, the supply will be discontinued. We accepted the condition and commenced marketing milk in Erode town, through the Erode Cooperative Milk Supply Union. Dr Muthuswamy very happily welcomed the decision and agreed to extend full support.
Erode town had a population of around one lakh. A quick survey carried out by us gave interesting and useful information: Total quantity of milk sold per day: 15-20,000litres; Quality of milk: Heavily adulterated raw buffalo milk having 3.4% Fat & 7% SNF; Agencies supplied milk: Erode Cooperative Milk Supply Union and private agencies, like Nilgiris Dairy, Aramana Dairy, Sakthi Dairy, etc; Mode of supply: Loose vending from cans fitted with taps.
Cans were tied at the back of bicycles. A bell was tied on the frame of the bicycle for heralding the arrival of the vendor. Source of milk: Procured from farmers in the villages directly or through contractors. The milk procured and sold was mostly “aracha pal” (separate milk) from the creameries.
Apart from this, Erode town had “pal sandai” (milk market) where ladies (Gounder community) from neighbouring villages brought milk in small vessels placed in baskets carried on their heads. The sandai operated on a fixed place in the morning: 5am to 8 am every day. Consumers come to the sandai to purchase milk. The price and quality of milk depended on demand. Higher the demand, higher was the price and adulteration. The baskets also contained vessels with water, for adulteration. The baskets remained covered always for privacy so that no one can see the “standardising technique”.
The vendors supplied milk in the morning only. Each street used to be served by at least five vendors, representing different agencies. They start supplying milk from 5 am and will go on till 8am. Vendors will ring their bells at the door step of every consumer in a typical way which can be identified only by the consumer. It was a very interesting scene to see several vendors going around the houses in the morning by ringing bells.
For some, ringing of the bells were wake up calls and for others, it was nuisance as their sleep was disturbed. Every consumer used to buy milk from more than one vendor as the supply was un-assured and irregular. Vendors carried aluminium measure sets (tampered) with concave bottoms which will vend at least 50-100 ml milk less per litre. Also, they created froth while vending milk from the cans so that the quantity vended will be further less.
It was interesting to note that the vendor, in order to create froth, will press the vessel (carried by the ladies to collect milk) down and the ladies will push it up! Milk was sold through coupons bought in advance, as well as on credit basis. The Erode Milk Supply Union had a division for redeeming the used coupons. Malpractices were common: redeemed coupons were often found in circulation!
Erode Milk Supply Union had more than seventy vendors for milk distribution. We had decided to introduce the system of direct vending from aluminium milk cans (40 litre capacity) brought directly from the dairy. It was processed (pasteurised) milk containing 4% Fat and 8.5% SNF. Quality-wise, it was far superior to the market milk and was reasonably priced also.
It was decided to introduce “cash and carry” system. We were convinced that the system will work and that the milk will be sold like hot cake. But, the staffs, particularly the vendors, of Erode Union were opposed to can vending, cash and carry system and most importantly, the consumers being asked to come to a designated place to buy milk (contrary to the prevailing door to door delivery practice). I knew the resistance was largely on account of powerful vested interests. The consumers will be happy to switch over to the new system provided they got good milk at reasonable price, and regularly. After all, it is quality, convenience and price that decide acceptability of any product in the market. Milk was no exception!
We launched a massive “milk campaign” in Erode town, basically to educate the consumers on milk/its constituents (particularly fat and snf), and the advantages of pasteurised milk. For a while, some of our field staffs were shifted from procurement to marketing. We identified suitable locations in the town to sell milk. Milk was brought to the identified locations at 5 am and vending was started by the Union’s vendors, under our supervision.
In about half an hour, the entire forty litres of milk was sold out! Consumers bought milk as low as 100 ml. We concentrated on the first location for a week to make sure that everything went off well and clarified all doubts/questions posed by the consumers. Our competitors watched our operation keenly and had launched a scathing anti-propaganda: dairy milk is not good for health, particularly children who will develop diarrhoea, it is not fresh milk and that it contained milk powder, rice/wheat powder, etc. Such propaganda didn’t last long, but helped us in educating the consumers.
The consumers liked the dairy milk and the new system: quality, correct measurements and regular supply. Our competitors started losing customers. Some of them even switched over to our system, but failed to attract customers because the quality of milk was poor. We increased the number of sale points and in about a month’s time, our sale touched almost 5000 litres. Simultaneously, our procurement also went up as our competitors lost market and many discontinued milk collection. Seeing us, the private vendors said that they have been hit on their belly first on procurement and now on selling.
Mr Menezes at last got convinced and increased the milk supply. By 1980, Erode Milk Supply Union started selling about 25,000 litres of milk in Erode town.
Dr Muthuswamy was very happy with the development and extended full support to our programme. He had all appreciation for OF programme. He put me on the Board of the Erode Milk Supply Union, as a permanent invitee and sought my advice and suggestions for improving the working of the Union. On my suggestion, the Union concentrated fully on liquid milk marketing and very soon, the Union had captured a commanding share of the Erode market.
All the vendors, with bells on their bicycles, disappeared. A friend of mine (Samba), who lived in Erode, said that the Erode people may forget all what we had done for them, but will remember us for the comfortable sleep they were able to get now as there was no more ringing of bells!