India‘s largest dairy producer is preparing to enter the U.S. market, seeking to build a global powerhouse from a company that counts on villages to stay competitive.
Relying little on industrialized dairy farms, India produced more than 34 billion gallons of milk in 2012, about 62 percent more than the United States.
And the country’s output is poised to continue to increase by nearly 50 percent in the next seven years, Rahul Kumar, managing director of Amul Dairy, said at the USA India Business Summit in Atlanta Sept. 12.
The secret was unleashing the power of village cooperatives pioneered by Amul’s founders in the Indian state of Gujarat, Mr. Kumar said.
Under a three-tiered model, individual farmers, many owning only two or three cattle, pay a nominal fee to enter local cooperatives. These cooperatives enter a district union which operates under a state-level federation that markets dairy products.
Amul Dairy is owned by the Gujarat Cooperative Milk Marketing Federation and until two years ago sourced all its milk from Gujarat.
Last year Amul’s revenues topped $3 billion, and its eyes are set now on the United States and Europe.
While the cooperative has been exporting products to the U.S. since 1998, Amul recently received Food and Drug Administration approval to begin production at a New York-based plant operated by a partner.
Two Amul products — paneer (a spicy cottage cheese) and ghee (clarified butter) — will be rolling out in the coming months, with other items from Amul’s portfolio, like yogurt and ice cream, entering later.
“When we’re successful, maybe the second plant will be in the state of Georgia,” Mr. Kumar said to applause from the audience at the summit.
Mr. Kumar said he expects to find a market with the many Indian restaurants in the United States.
“Indian food is popular, and they will need a lot of dairy products,” he said.
While Mr. Kumar said Amul’s village cooperatives provide the “best model to eradicate poverty” in places such as rural Africa, he believes his company’s expansion into first-world countries will benefit its operations back in India.
By collaborating with American innovators, Amul’s farms in India will improve in areas such as water conservation, solar power, feed storage and biogas.
Amul began in 1946 when dairy farmers in India’s Kaira district went on strike to protest middlemen and corrupt bureaucrats. Mumbai, which depended on the district for dairy, went without milk for two weeks before a settlement was reached.
The Amul brand and its cooperative model formed in the years that followed. India’s federal government eventually rolled out the privatized model in other states.
Through the years, Amul has maintained its focus on empowering farmers. All aspects of its dairy business — farms, feed plants, marketing, logistics and research — are a part of the cooperative and owned by the farmers.
“That’s the peculiarity of the Amul model,” Mr. Kumar said.
Having “India’s most well-known food brand,” according to a study by the Harvard Business School, hasn’t hurt.
“If you go to any city in India, you’ll find this very cheeky girl,” Mr. Kumar said, speaking of the dark-haired “Amul butter girl” who is the face of India’s largest food brand.
“Growing Business and Promoting Entrepreurship” was the theme of this year’s USA India Business Summit. Now in its fourth year, it is the largest Southeast U.S. conference bringing together diplomats, entrepreneurs, educators and policy makers interested in Indian-U.S. relations.
Amul isn’t the only Indian company that has used the country’s rural masses as a key sourcing base.
Two Indian carpet companies with operations in Atlanta, Surya and Jaipur Rugs, employ weavers in rural villages, allowing them to own the means of production.
For more information on the summit, visit www.usaindiabusinesssummit.com.
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