In 1998, India became the largest producer of milk in the world. The story of how it grew from a milk-deficient nation to the largest producer in the world makes for an essential reading for every entrepreneur, innovator and policymaker. Once a paltry player in the global market, forced to import butter and condensed milk from dairy conglomerates, India embraced a cooperative milk producing model in the 1970s.
A paradigm shift took place in the way milk was produced and marketed in the country. A shift that was nicknamed ‘Operation Flood’.
The cooperative milk movement flooded the country with more milk than the domestic market could handle. India began to export milk, and the revenues went to millions of farmers. The man behind the flood was Dr Verghese Kurien – the father of India’s ‘white revolution’.
India would never have had its milky moment had Kurien stuck to his field of choice – metallurgy and nuclear physics. In the 1920s, he was an uncertain apprentice in a major corporate conglomeration. The British Government then offered up to 500 scholarships for Indian students to receive specialised training in the UK, USA, New Zealand, Australia and Canada. Looking to escape his corporate job, Verghese applied and received this scholarship. But not in the field he wanted. As he narrates in his autobiography, “I Too Had a Dream”:
During the interview on the specified date, the Chairman of the selection committee, after inviting me to sit down, asked me only one question: ‘What is pasteurisation?’ I did not know exactly and I replied hesitantly but quite honestly, ‘I don’t know the process but I think it has something to do with sterilizing milk. ‘Correct’, he said. ‘You are selected for a sholarship in dairy engineering’.
It wasn’t what he wanted but it was what he got. After biding his time at the Imperial Dairy Research Institute in Bangalore (a period where he spent most of his time at restaurants and movie halls), he set sail on a Liberty cargo ship to the United States. At Michigan State University, to satisfy his scholarship, Verghese took up some token courses in dairy. But it was the atom bomb that fascinated him – and he studied metallurgy and nuclear physics as his major.
Verghese, at the time, felt nuclear energy had more to offer India (and himself) than the study of cows. He was an atheist and the animal had no special significance to him. With his professor, he designed a type of metal – colloidal iron – capable of stretching. It was a million-dollar idea, but someone else had already had it. Verghese never regretted it, saying:
In a way, it was good because if I had become a millionaire, I would not have left the US.
Milk was a scarcity in post-independent India. Those who grew up in the 1950s remember waiting in long queues for a single litre. At one point, in the 1970s, West Bengal had to ban milk-based sweets because the scarcity was so bad.
Verghese returned to a strange India. The country was partitioned in his absence, and his closest friends from University had to return to Pakistan. Verghese reported to Delhi, as he had been on a government scholarship. He already had a lucrative job offer in hand, from Union Carbide, but the government wanted him to work at a milk dairy in Anand – a place Verghese had never heard of. He did not strike a good first impression – his green shirt and yellow pants possibly to blame – and he was bypassed for a research position and given an obscure one instead. The comment on his application was “Unlikely to be an efficient officer.”
The Indian economy was churning. Polson, a British milk producer based in Anand, had earlier held a monopoly on milk production in Gujarat. They pioneered the transport of liquid milk and became the exclusive supplier to the city of Bombay. The farmers who gave Polson their milk received few profits for their labour. Sardar Patel and Morarji Desai both wanted this to end. The first cooperatives were born in Anand after Tribhuvandas Patel traveled village to village convincing farms to band together.
When Verghese arrived, he was made the Dairy Engineer at a World-War I era milk cream research facility (the legends around which stated that cheese made from here killed more British troops in Mesopotamia than the Ottomans). He found a place overrun by bureaucracy and highly inefficient. Even with his distaste for the job, Verghese couldn’t help but improve the factory. The only inspiring presence in Anand was Tribhuvandas and his farmers. The latter soon placed their faith in Verghese.
He convinced them to pool together and buy a pasteurizing machine in 1949. This allowed them to send milk to Bombay and tap into a thriving market. When Verghese’s former batch mate, H.M. Dalaya developed a method to make milk powder from buffalo-milk, it was Verghese who turned the opportunity into a reality.
The switch to buffalo was an important one. As of 2012, half of India’s milk and most of its beef came from buffaloes. In the 1950’s, most of the world’s experts believed it impossible to make such use of buffalo milk. Verghese and Dayala proved the contrary.
More importantly, Verghese found the fault and solution in the Indian industry’s stars. He found that a bureaucratic way of doing and obfuscating things, a trait inherited from the British, could be solved by tapping into the combined energies and skills of the Indian people. As he famously said:
Our belief at Anand has always been: ‘let the people’s energies be unleashed’.
***In 1954, Verghese found himself in London meeting with the heads of Nestle. His mission was to convince them to use Indian buffalo milk in their Indian operations – rather than importing cow’s milk. Verghese nearly negotiated the Swiss giant’s complete entry into India (with 100 percent ownership) but everything hit a snag when he suggested that Indians be hired in their factories. The Nestle official said that making condensed milk was a delicate procedure and that they “could not leave it to the natives to make.”
Insulted, Verghese stormed out of the office. Nestle had sown the seeds for a white revolution in India.
By 1964, Verghese’s work caught the eye of the Indian prime minister, Lal Bahadur Shastri. Shastri wanted Tribhuvandas Patel’s dairy cooperative, the Anand Milk Union Limited (Amul), to become a nationwide movement. Verghese then founded the National Dairy Development Board (NDDB)
Indian dairy was up against tough competitors – international aid suppliers who dumped milk into the subcontinent, forcing local competition out of action. But Verghese used this to his advantage, he had the government sell the surplus milk, and use the proceeds to grow India’s milk cooperatives.
The Anand model, at the village level, proved a highly scalable model, dubbed the Anand Pattern in later years. Milk production increased from 16 million tons in 1950 to 74.3 million tons in 1999. More than three-fourths of profits returned to the farmers who supplied the milk.
From a single Anand cooperative in 1946, Gujarat now has over 18,500. Across India, that number is 1.5 million. And since Verghese first breathed life into the Indian dairy sector, over 50 million farmers have benefited from the sudden resurgence in milk. In three phases, it doubled milk production within 30 years. And it dispensed with the endemic corruption of earlier bureaucratic systems. As Verghese said:
The cooperative structure never encourages huge bureaucratic systems, for it knows that mammoth bureaucracies cannot be sensitive to the needs of people.
Even with his sudden fame, Verghese stayed back in Anand – a town he once found despicable. From his initial residence in a garage, he moved to a house, not too ostentatious. There, he has hosted prime ministers. An extremely persuasive man, in the course of his life, Verghese influenced and advised nine of India’s prime ministers to his cause.
His life makes for relevant reading today, to understand the role that people can make when their collective efforts are put to action in the market. Farmers outperformed governments and corporations alike. The cooperative he helped grow, Amul, is the most recognizable milk brand in the country. The story of Verghese and Amul is a lesson in serendipity, life and entrepreneurship. A must-read for any modern entrepreneur, innovator and policymaker.
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