Verghese Kurien – An Unsung Epic

The principles of Gandhian economics focuses on ideas of decentralized, self-sufficient village-style economies which work on the good-will of all resulting in the well-being of as many as possible. This series focuses on contemporary economic models inhabiting principles of Gandhian economics as arguments that when the dominantly practised systems are inherently destructive and work on inequality and exploitation, this might be the better method, a possible and achievable alternative. This article is the second installment of this series by Balasubramaniam Muthusamy.

The ordeal did not last long, but it has never quite left my memory.

On winter mornings, before dawn, my parents would wake me and send me outside my farm gate. Wrapped in a blanket, beyond our farm gate on the tarmac road, I used to stand facing west. The assignment was to ensure that the milkman did not skip our farm.  The milkman, who procured milk from our house, often refused to cycle into our muddy lane to take our milk for sale during winter. If he didn’t turn up, the milk would remain unsold, turning into curd and buttermilk. 

That routine ended abruptly.

A milk co-operative was formed in our village, Thalavaipettai. Milk drawn at four thirty in the morning was delivered to the milk co-operative by my father at six.  At the society, the sample was drawn in a small glass tube to measure the fat content of the milk supplied. Price for the milk supplied was calculated by volume and quality of fat content. Payments were made every Monday, which filled my mother’s purse, and it supported the weekly purchases at the Tuesday sandhai – weekly market.

Only much later would I understand that this quiet transformation—of cash flow, dignity, and routine had a name. And there was a man behind it.

As I was finishing my undergraduate degree in agriculture, the question what’s next came up. I had decided to pursue my postgraduate education. There were few choices and Management studies (MBA) was one of them. Popular Tamil Writer, Sujatha’s novel Pirivom Sandhippom and director Mani Ratnam’s Mouna Ragam did their part to influence my decision. If an MBA degree can get a job in Delhi, a car, a house, and perhaps even a life partner like actor Revathi, why wouldn’t one be tempted?

I failed to make it into any of the IIMs.  But I managed to get admitted into a new institution in Anand, Gujarat. The Institute of Rural Management, Anand. (IRMA). A distant relative told me that a degree from IRMA would get me a job at the National Dairy Development Board. In mid-June 1998, I left for Anand to join IRMA. On me reaching at the institute by around seven p.m., the security guard handed me a letter from the Administrative Officer, Soman Nair. It welcomed me and informed me that if I arrived before nine p.m., dinner would be available at the hostel. If not, it advised me to go back to the town, have dinner and then come back. The first impression of such a professional arrangement bowled me over.

After a sumptuous dinner, I strolled around the campus under sodium lamps—enjoying the green lawns, gentle mounds, the open-air theatre and more. All felt unreal, almost extravagant.

A week later, an announcement went up. The inaugural address for the new batch would be delivered by Dr. Verghese Kurien, Chairman of the National Dairy Development Board.

That evening, he arrived in a small Premier Padmini car. A short, stocky, fair-skinned man with a sagging jawline.

Verghese Kurien

He began his speech. It was a roller-coaster. When it ended, I realized I had barely breathed. It was the first time I had heard such a flawless oration in English in person. Beginning with the freedom struggle, Dr. Kurien breezed through the lives of Vallabhbhai Patel, Tribhuvandas Patel, Lal Bahadur Shastri—and through them, the making of Amul. He shredded the politicians apart, exposed the multinationals and their greed, and mocked at self-serving bureaucrats.

“Look at the queue at an Amul village milk co-operative waiting to supply milk,” he said. “There is no caste discrimination. Everyone stands in a queue. Amul is Gandhi’s dream.”

The hall went silent. My eyes welled up.

Kurien then spoke about the story behind IRMA. When he had tried to recruit graduates from IIM, Ahmedabad, to help set up the National Dairy Development Board, none had agreed as the salaries were too low. On that day, he decided that a management institute devoted to cooperatives and rural development was imperative. With the help of his cousin Ravi Matthai, the founder Director of IIM Ahmedabad and a fund grant from the government of Switzerland, IRMA was created. 

It seems a visiting chief minister once asked why a rural management institute needed such a luxurious campus. Kurien’s reply became legendary “Mr. Chief Minister, I do not raise princes in pigsties.”

The next day, as part of orientation, we toured around the early landmarks of Amul and Operation Flood. Some of them were the garage where Kurien once lived when he couldn’t find housing when he first came to Anand, Gandhi’s Sabarmati Ashram, and the cattle breeding station of NDDB etc. By then, he had become “Uncle Ku,” aided by jokes from senior batches.

Later, we were sent off to an Amul village in Gujarat to understand the Project Operation Flood and its functioning. Mornings were spent at the milk society. Evenings at the Tribhuvandas Foundation, which ran maternal and child health programmes, where we saw the vaccination cards, health records and systems that would later become templates for national public healthcare schemes.

Tribhuvandas Foundation (Logo)

Only then did I understand the magic which brought cash to my mother’s purse every Monday, transforming our lives and ending my early morning ordeals in the 70s.

Amul is often mistaken for a dairy company. It is not. It is a three-tier institution of socio-economic change.

At its core are village milk cooperatives, owned by milk producers. Above them are district unions that receive and process the milk from the village milk cooperatives. At the top are the Federations that market dairy products. Each layer has a distinct role, yet they function seamlessly as a single unit.

Producers are paid a remunerative price which is calculated based on the costs of inputs and labour. Amul converts raw milk into pasteurised milk and milk products and sells them at a modest margin. At the end of the year, if the Federation which markets the milk products has any surplus, it is returned to the producers, proportional to the milk they had supplied. The entire ownership of the organisation rests, unequivocally, with farmers who hold one share each.

One must become a shareholder in a village Milk Producers Society and only then can she supply milk to Amul. But the shareholding is limited to only one person per family. The Chairman of the milk producers’ society is selected by voting. The basis of the ownership is equity. However, there is no limit for a producer in supplying milk to society. Hence, while the ownership is equal, the benefits are directly proportional to the efforts – the quantity of milk supplied. 

The shares of the milk cooperative are not transferable or tradeable. Unlike in private sector organisations, where the promoter may hold the maximum shares, and they are traded in a stock exchange, and the same has an additional economic value, the shareholding in a cooperative society has no value.

In private sector organisations, the promoter and the shareholders take away the profit of the organisations in proportion to their shareholding. But in a milk producer’s cooperative, if there is profit at the end of the year, the same is shared with the shareholders in proportion to the milk they had supplied. Hence, efficiency is rewarded, which is an incentive to produce more.

This model was born out of a crisis. In the late 1940s, private contractors who had the monopoly to buy milk from farmers in Kheda District, and supply to Mumbai, refused to procure surplus milk. The milk producers suffered. They approached and appealed to Vallabhbhai Patel, their leader who had led two satyagrahas securing farmers’ interests in the past.   Vallabhbhai Patel had also previously chaired the economic surveys conducted by J C Kumarappa at the behest of Gandhi. He was part of Gandhi’s All India Village Industries Association (AIVIA) and was in complete sync with Gandhi’s economic ideology and plans.

Patel directed his deputy, Morarji Desai to help the farmers. Morarji Desai met the milk producers and their leader Tribhuvandas Patel and advised them to form a Milk Producers Cooperative. Thus Anand Milk Union Limited was born. It would later be known by its acronym Amul.

Kurien entered this story almost by accident—a government-employed Dairy engineer waiting out a mandatory service bond, uncomfortable in vegetarian Gujarat, counting days until he could leave. He was working in a Government Creamery next to Amul. Tribhuvandas Patel asked Kurien to help solve a technical problem: The milk which was transported to Mumbai was spoilt in heat. Kurien recommended a plate pasteuriser. Tribhuvan Das Patel did not have any technician to help him, and he requested Kurien for help. Kurien travelled to Bombay and bought plate pasteuriser from Larsen and Toubro and got it installed. The issue was resolved. Then he informed Tribhuvan Das Patel that he would soon leave.

Verghese Kurien (Leftmost) and Tribhuvandas Patel (centre)

“Stay. You are needed here,” Patel told him. Kurien stayed! He never left Anand again!

Under Kurien, Amul solved many technical problems that textbooks said could not be solved.

Milk collected at dawn in remote villages reached urban consumers the next morning, being ferried across mud roads and not highways, decades before ‘world-class infrastructure’ became a buzzword.

When European vendors refused to adapt spray-drying technology for buffalo milk, Kurien’s team built their own. When surplus milk flooded winters and shortages plagued summers, Amul converted milk to powder and back again. When costs threatened affordability, Amul designed rail containers to move milk at lower costs. In short, Amul had become a technological leader in Dairying under his management. 

Technology, in Kurien’s view, was not neutral. It had to serve producers first. So did money. Weekly payments for milk supplies ensured liquidity for small farmers. Cattle feed was sold at cooperatives at affordable prices as Amul ran its own cattle feed plants. Veterinary care and artificial insemination reached villages long before rural healthcare did.

Women, who did most of the work, were central to Amul’s business, not incidental. They handle the entire dairy operation at the farm. Hence, maternal health and child welfare are treated as production inputs, not charity. Tribhuvan Das Foundation was created to ensure maternal and childcare.

Amul Ad depicting women thanking Verghese Kurien

And consumers mattered too. In lean summers, Amul reduced the production of cheese and chocolate to prioritize milk, even at lower profit. Salaries across the organization were modest, including the Managing Director’s.

Another unique feature of the Amul Model Milk cooperatives is that these organisations do not have a profit seeking private investor in the business chain. The producers directly deliver their products to their consumers. This has resulted in both consumer and producer meeting at a reasonable price point. This also helped the producer to get close to 80% of the price paid by the consumer for the milk produced. This phenomenon of producer getting 80% of the price paid by the consumer is not there in any farm business chain in the world.

Worldwide, farm economists prescribe large, centralised dairy farms, high yielding cattle and rich feed as the recipe for a successful Dairy Unit. Indian milk cooperative business model is the exact opposite of that prescription. The production of milk is spread across villages.  The average farmer had just 2-3 milch animals which yield much less than an average milch animal in Europe. The milch animals are mostly fed with farm waste and small quantities of cattle feed. Western Dairy is an Industry and indulged in mass production of milk.  Indian Dairy cooperative is a collective of millions of cottage units. In short, Western Dairying is Mass Production; Indian dairying is production by Masses as Gandhi wanted.   And this model became very successful making India as the largest producer of milk in the world.

In 1964, Prime Minister Lal Bahadur Shastri visited Anand and spent a night in a village talking to the milk producers of Amul Cooperative. The next day, he asked Kurien to replicate Amul nationwide. However, he passed away shortly thereafter.

The next Prime minister Indira Gandhi wholeheartedly supported Dr. Kurien in taking the Amul Model Milk cooperatives across the country. He took the help of FAO in organising funds for his plan. The FAO had routed the excess skimmed milk powder and butter oil in the European countries free to Dr. Kurien. Dr. Kurien sold the skimmed milk powder and butter oil in the Indian market and used the funds to create milk cooperatives in many states across the country. The project was named, ‘Operation Flood’. 

Verghese Kurien and Indira Gandhi

‘Every Problem is an opportunity’, is one of the favourite quotes of Dr.Kurien. 

Operation Flood – Phase I

Phase I (1970–1980) was financed by the sale of skimmed milk powder and butter oil gifted by the European Union then EEC through the World Food Programme. NDDB planned the programme and negotiated the details of EEC assistance. During its first phase, Operation Flood linked 18 of India’s premier milksheds with consumers in India’s four major metropolitan cities: Delhi, Mumbai, Kolkata and Chennai.

 Operation Flood – Phase II

Operation Flood’s Phase II (1981–85) increased the milksheds from 18 to 136. Two hundred and ninety urban markets expanded the outlets for milk. By the end of 1985, a self-sustaining system of 43,000 village cooperatives covering 4.25 million milk producers had become a reality. EEC gifts and World Bank loan thus helped to promote self-reliance. 

 Operation Flood – Phase III

Phase III (1985–1996) enabled dairy cooperatives to expand and strengthen the infrastructure required to procure and market increasing volumes of milk. Veterinary first-aid health care services, feed and artificial insemination services for cooperative members were extended, along with intensified member education.

Operation Flood’s Phase III consolidated India’s dairy cooperative movement, adding 30,000 new dairy cooperatives to the 42,000 existing societies. Milksheds peaked to 173 in 1988–89 with the numbers of women members and Women’s Dairy Cooperative Societies increasing significantly.

Phase III laid increased emphasis on research and development in animal health and animal nutrition. Innovations like vaccine for Theileriosis, bypass protein feed and urea-molasses mineral blocks, all contributed to the enhanced productivity of milch animals.

Between 1970 and 1996, India’s milk production rose from 20 million tons to over 68 million. Cooperative networks spread across states. By 2014, production crossed 140 million tons, making India the world’s largest milk producer.

From the outset, Operation Flood was conceived and implemented as much more than a dairy programme. Rather, dairying was seen as an instrument of development, generating employment and regular incomes for millions of rural people. “Operation Flood can be viewed as a twenty-year experiment confirming the Rural Development Vision” (World Bank Report 1997c.)

Another important feat of the Operation Flood programmes is that more than 90% of the milk supplied to the milk cooperatives came from small and marginal farmers who owned 2 to 3 milch animals. The animals were mostly fed on farm residue and a bit of cattle feed. Since, Indian dairying was an additional economic activity in the farm with just few animals, it has a much lesser carbon footprint compared to the intensive industrial scale dairy farms of Europe and Western countries. 

Well, Kurien did not take a single rupee from the Indian government to achieve this feat is something remarkable. He used surplus European skimmed milk powder and butter oil—destined for the sea—to fund it. He drew no salary from the NDDB for 35 years. He was paid by Amul.

Kurien was not without flaws. He failed to manage a proper succession. The politics that followed eventually forced him out of the institutions he built. Yet institutions outlast individuals. Amul alone now generates around 90000 crores in revenue growing faster than most of the private players in business. Milk is the most valuable agricultural commodity overtaking food grains, and it accounts for around 4.5% of Indian GDP

Today, Milk cooperatives operate in 22 Indian states – and their brands like Amul, Nandini, Aavin, Milma, Verka, Vita, Saras etc., dominate the milk business, benefitting millions of farmers.

Kurien built over 30 institutions. Like Nehru, he was an institution builder. He won the Padma Vibhushan, the Ramon Magsaysay Award, and the World Food Prize. But not the Bharat Ratna. Not the Nobel. History has been oddly frugal with its gratitude.

By any standard, Leader, Manager, Public servant, Verghese Kurien stands as one of the most consequential figures of modern India, lifting millions of Indians above poverty.