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The Future of India’s “Operation Flood” After the COVID-19 Pandemic

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Pooja Paswan
July 18, 2022

“When individuals join in a cooperative venture, the power generated far exceeds what they could have accomplished acting individually.” -R. Buckminster Fuller

White Revolution

“Operation Flood” is the program that led to “White Revolution.” It created a national milk grid linking producers throughout India to consumers in over 700 towns and cities. By eliminating the middlemen, seasonal and regional price variations were reduced, ensuring that producers get a major share of the profit. At the bedrock of Operation Flood stands the village milk producers’ co-operatives, which procure milk and provide inputs and services, making modern management and technology available to all the members.

It transformed India from a milk-deficient nation into the world’s largest milk producer, surpassing the United States of America in 1998[with about 22.29 percent of global output in 2018. Within 30 years, it doubled the milk available per person in India and made dairy farming India’s largest self-sustainable rural employment generator. It was launched to help farmers direct their own development and give them control of the resources they create. All this was achieved not merely by mass production, but by production by the masses; the process has since been termed as the “White Revolution”.

How Gujarat Became the “Milk Bowl of India”?

Anand, a small town in Gujarat, was transformed into the “milk bowl” of India. Dr. Kurien was instrumental in developing the ‘Amul’ brand for marketing of the milk & milk products of Khaira Milk Union and the ‘trade mark’ being registered.

Kurien’s Model of Co-operative capitalism permeated into the lives of millions of dairy farmers, empowering them. The huge success of the model received growing appreciation and culminated in creation of the National Dairy Development Board in 1965 with Dr. Kurien as its Chairman. The then Prime Minister, Shri Lal Bahadur Shastri, asked Dr. Kurien to replicate the Anand Model throughout the country. Dr. Kurien started the ‘Operation Flood Programme’, which ushered ‘White Revolution’ in India. Dr. Kurien did not pay heed to the opposition that buffalo milk could not be processed, but made all efforts to standardize the technology for processing of buffalo milk, getting it much deserved international recognition. To promote the continuation of the revolution, Dr. Kurien later created many institutions like the National Co-operative Dairy Federation of India, Institute for Rural Management, Anand, Indian Dairy Machinery Cooperation and many other cooperative institutes. Dr. Kurien, over years, revolutionized the production, procurement and marketing of milk and other farm produce in India through co-operative institutional set up, allowing India to achieve the coveted position as number one milk producer in the world.

Why Do We Need a Dedicated Scheme for Diary Sector?

To offset the economic impact of Covid-19 on Dairy Sector, Ministry of Fisheries, Animal Husbandry and Dairying has introduced a new scheme implemented during 2020-21 for the Supporting Dairy Cooperatives and Farmer Producer Organizations (SDC&FPO) engaged in dairy activities: The Interest Subvention on Working Capital Loans for Dairy Sector.

Due to higher milk procurement and lower sales during the COVID-19 lockdown, the milk/dairy cooperatives have resorted to large scale conversion into high shelf-life products like milk powder, white butter, ghee and UHT milk, etc. Such conversion into high shelf-life products resulted in blockage of funds and caused difficulty in payment to the farmers. Due to a decrease in demand for high-valued products like ice cream, flavored milk, ghee, cheese etc., only a small quantity of milk is converted into value added products like Paneer (Cottage Cheese) and Dahi (Curd) impacting the sales turnover and realization. This will limit the ability of cooperatives to procure milk at the current level or they will risk being forced towards downward revision of procurement prices, which will affect the farmers.

What Does the Scheme Entail?

In order to meet the working capital needs of the cooperatives and farmer-owned milk producer companies, interest subvention will be given on working capital loans taken from scheduled Commercial Banks/R.R.Bs/Cooperative Banks/Financial Institutions between April 1, 2020 and March 31, 2021 by Cooperatives/FPOs for the conversion of milk into conserved commodities and other milk products. The scheme has made provisions for providing interest subvention of 2 percent per annum, with an additional incentive of 2 percent per annum interest subvention to be given in case of prompt and timely repayment/interest servicing. This will help to ease out the working capital crisis for handling surplus milk and enable timely payment to the farmers. The scheme will be implemented by this department through the National Dairy Development Board (NDDB), Anand.

The modified scheme envisages a budgetary provision of Rs. 100 Crore earmarked for the component Interest Subvention on Working Capital Loans for Dairy Sector during 2020-21. The scheme was initiated during 2020-21. However, the Government of India has now extended the same for the 2021-22 to 2025-26 period, with an outlay of Rs. 500 Crore.

“Interest Subvention on Working Capital Loans for Dairy Sector”

The scheme envisages to have the following benefits:

  1. It will help in providing stable market access to milk producers.
  2. Enable the Producer Owned Institutions to make timely payment of milk bill to milk producers.
  3. It will help Producer Owned Institutions in supplying quality milk and milk products to consumers at a reasonable price and will also help in stabilizing the domestic market price of conserved dairy commodities and other milk products.
  4. Consistent increases in farmers’ income from dairying, even during flush season, making the dairy operations viable for milk producers. This in turn will lead to reduced dependency on imported commodities during periods of shortage, thereby helping to stabilize the domestic prices of milk and milk products.

Author: Pooja Paswan is currently enrolled at the John.F. Kennedy School of Government, Harvard University. She is an Assistant Professor in the Department of Political Science at Jamia Millia Islamia University, New Delhi, India. She has Ph. D in Public Administration and specializes in Public Policy. She was recipient of the ASPA 2019 Founders Fellow. She is currently the Book Review Editor at the International Journal of Public Administration IJPA and has worked extensively in the area of development administration and public policy. She can be reached at https://jmi.academia.edu/PoojaPaswanand [email protected]. Twitter @poojapaswan

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