Managerial Dilemmas

Public Ownership and Social Development: The Anand Experience

By V Kurien

In the year 1964, we had invited the Prime Minister, late Shri Lal Bahadur Shastri, to come to Anand and to declare open our new modem computerized cattle feed compounding factory. Shastriji accepted our invitation and sent word to us that he would come one day earlier. He also sent word to the Chief Minister of the state of Gujarat that he would like to spend one night, the first night, not anywhere else but in a village as the guest of a farmer, preferably a small farmer. So I told the chief minister, "If the Prime Minister goes to a village, you will send at least 300 policemen to that village. The villages have a population of only 300. So the village will become a police camp. Why should the Prime Minister go to a village to see a police camp? If you want the Prime Minister to see the village as it is, then you please entrust his security to me and I will protect him." The Chief Minister sent for the Home Secretary of Gujarat and told him this. The Home Secretary said, "This won't do. If something goes wrong, then it is my neck, not Dr Kurien's neck. So, I am sorry. I can't agree. Security of the Prime Minister is my business. I will not delegate it. But I understand what Dr Kurien is saying because we are friends also. We will arrange someway to meet Dr Kurien's needs as well as my need". The Chief Minister said, "How would you do it? He says no policemen and you say there have to be policemen". The Home Secretary said, "It is very simple. No one, just no one should know that the Prime Minister is going to the village and which village he is going to. Then the Prime Minister is perfectly safe. Nobody in a village wants to do any harm to anybody; let alone to our Prime Minister. So secrecy will be the keystone of our security arrangements." Then the Chief Minister, Mr Balwantrai Mehta said: "In that case, you and Dr Kurien will work on the programme and don't tell me anything. I am a politician and have a loose tongue!" Therefore the Home secretary and I met. I picked up a village, I picked up a farmer and told him, "Two foreigners will be coming and spending a night in the village. Please make arrangements at your home." He said, "Ok, but why do the foreigners want to spend the night in a village?" I said, "These foreigners, you know, are mad. They have strange ideas. What does it matter if they stay in your house?" He said, "If you wish that, it is okay." So I said, "You please clean up the bathroom, and make your house a little nicer," and he did all this. So arrangements were made for the stay.
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This is a transcript of the author's presentation in the video film "Dr Kurien on Anand Experience", produced and distributed by Electronics Trade & Technology Development Corporation Ltd. (ET & T), New Delhi. Used with permission from ET & T and Dr V Kurien.

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The P M was to reach the village at 7 p m and by 5:30 p m the guard of honour was drawn up. All arrangements were made to receive the P M at my residence at Anand. All ministers had arrived. Meanwhile, I met the collector and gave a sealed cover. The contents merely said that there is a change in the Prime Minister's programme and you will now take instructions from Dr Kurien hereafter. It was signed by the Home Secretary. He said, "What is this? How can it be?" I said "If we stop arguing we can get on with the job. Get into my car." He said, "My peon"? I said, "No peon." He probably thought that without a peon how can he be a collector? So I took the collector with me and both of us drove to the village and there was the farmer's house. He had cleaned up his house and sprinkled water all around and was waiting for his two 'foreign' guests. I then told him that "the time has now come to tell you who your guests really are- the Prime Minister and the Chief Minister of Gujarat." Whereupon he broke down weeping and said, "the Pradhan Mantri in my house! What have you done to me, Sir?" I said, "They are nothing but good people. They are just as good as anybody else. You treat him as you treat any guest of yours." He said, "I have not cooked anything special. You said that they do not want anything special." I said, "They don't want anything special. This is the collector. He is the head of the .district. It is his privilege to receive the Prime Minister. So he will be here. So I leave the Prime Minister to both of you to take care of. I am going home." He said, "You are going? What is to happen here?" I said, "Whatever the P M wants, you have to do. There is no programme. I am going because my wife is alone. There are many ministers. Somebody should be there to explain that the P M is not coming back." So I left them and went home. As the convoy of the P M was coming from Ahmedabad to Anand, the PM's car was diverted to that village and the rest were allowed to proceed to Anand. The P M reached the village, met the farmer, sat with his family for dinner. After dinner, he walked round the village. Of course, he was recognized. He walked into the houses of the farmers. He sat with them and started talking to them about the condition of their lives, how mud-;' milk the buffaloes produce, how much they are paid, do they get any inputs to increase production, why they are under this co-operative, how is the society doing, etc., in great depth. Then he asked, 'Are there Harijans, Muslims, or any minority community in this village?' He kept on doing this till 2 O'clock-talking to farmers and their families. He was like a bird released from his cage. At 2 O'clock the Home Secretary then told him, 'Sir, tomorrow morning the programme starts at 7 O'clock. I suggest you go to sleep." So he was forced to go to sleep. Next morning, he visited the village milk cooperative run by the elected representatives of the village. There I met him for the first time, and explained to him the working of the cooperative. Then he came to Anand and he stayed in my house. He declared open the Cattle Feed Compounding Factory and came back to my house. Before he left, he said, "Come Kurien:, sit down. I want to talk to you." What he said was most interesting. He said, "Under the Second and Third Five Year Plans, there have been so many dairies set up, all owned by the government and all of them unmitigatedly disastrous. All of them are running in loss. But I have heard of the Anand, the Amul Dairy-how it has grown from strength to strength, how all its products are liked throughout the country, how it is available everywhere, how well it is running and growing every time. Every year it is becoming bigger. I want to know why this dairy is a success and I must learn what is secret of the success of Anand and why all other dairies are not a success. I decided I will study for myself and hence wanted to stay in a village so that I can study it at grassroots level. I spent the whole of last night trying to understand what is the secret of the success of Anand but I am sorry to tell you that I have failed to discover it. I looked at the soil here; it is good, but not as good as the Indo-Gangetic plain. It is better soil there. I looked at your climate. It is cool in winter and very hot in summer. So it is in many parts of India. Nothing special there. The rainfall is also normal, thirty inches rainfall, two months a year. So it is in the rest of India. Nothing special there. I expected this place to be green and contented cows to be grazing but this place is brown. I looked at the buffaloes. I hope you won't be angry with me. Your buffaloes are not looking as good as the buffaloes I remember in my state, Uttar Pradesh. Those buffaloes are better. Lastly, I looked at the people. Farmers are all good people.

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Your farmers are good people but not as hard working as the Punjabi farmers. So I cannot find a single reason why Anand is such a great success. Everything is the same in Anand as it is in rest of India. Can you tell me what is the secret behind the success of Anand?" Then I told him, "There is one difference which you have not noticed. The dairy is, owned by the farmers. It is managed by the elected representatives of the farmers. They have employed me as the professional manager to run this dairy. I am not on deputation from the government. I am an employee of the farmers and if I don't satisfy them, I lose my job; I do not get transferred but I lose my job. So, this dairy is managed by farmers and my job in arranging it is to see that I satisfy the farmers who supply milk to it. As they produce more and more milk I have to ensure that I increase the capacity and help the farmers in getting more milk from the buffaloes. I can never say I can't collect more. When they come to me and say, 'Now help me, this buffalo gives two litres. How to make It gave three or four litres?' So I have to put up this cattle feed compounding factory you inaugurated today. We provide all inputs to farmers to increase production and all these are provided by the employees of the farmers and not by the employees of the government. So, this is a dairy sensitive to the needs of the farmer, responsive to their demands. In all advanced countries dairies are owned by farmers. All that we have done at Anand is to prove that what is true of New Zealand, what is true of Denmark, what is true of Holland, is true of India also." Then the P M said, "That means we can have many Anands.' I said, 'Yes, we can have many Anands," Then he said, "Dr Kurien, from tomorrow, you shall make it your business to work for India, not for Anand. Not for Gujarat but for whole of India. The Government of India will give you a blank cheque. You can create any structure or body you want provided you will head it. Please make it your business to replicate Anand throughout India. Be that your mission. Whatever you want, the Government of India will provide." I said, "I have two conditions." He said, "What are they?" I said: "I am today an employee of the farmers and I would like to continue to be the employee of the farmers. I will not be an employee of the government. In the government I have to please the superior. And I will not take any salary for the job. This new body, that is to replicate Anand, should not be in Delhi." He said, "why not?I said, "People in Delhi do not think of farmers. They think of other things. We in Anand think of nothing else but farmers, agriculture and dairy. We have no other interests. So whatever body the government creates it must be in Anand. I refuse to leave. I will not come to Delhi." The PM agreed to both these conditions. I was then invited by the then Minister for Food & Agriculture, Mr C Subramaniam, and the National Dairy Development Board (NDDB) was created and the brief of the Dairy Board was to replicate Anand. What did this mean? It meant to rescue dairy from government and give it to the farmers. Unfortunately government tries to get into everybody's hair in all sorts of ways. What the government has to do is to govern and not run dairies. Government rules and regulations are not to run dairy plants. It is to administer the country, to govern the country. When Government tries to run dairies like the Delhi Milk Scheme or the Calcutta Milk Scheme, or the Bombay Milk Scheme, it is utter disaster. This is the point Shastriji understood and that is why the Dairy Board was set up. Then I thought I will proceed to fulfil the mandate given to me. I will go to the CM, say of Maharashtra, and tell him, "Can I create an Anand for you in Maharashtra?" He would say, "Dr Kurian, yes! That is what we need. Yes, yes, you do this." He will agree for that and then he will send me to his minister. I will talk to his minister who will also say 'yes'. Then there will be a meeting with the Milk Commissioner who will say, "According to you, the dairy should be owned by the farmers. Then what shall I own? You have come here to dismantle my department. I know what you have done there. In Gujarat, there is no Milk Commissioner; no Milk Department" I said, ''Yes, but there is milk in Gujarat."" The farmers in Maharashtra are different, they are not Gujaratis. Your ideas are wrong. This won't work here. You please go away from here." It is well-known amongst us that the logical and natural enemy of the Milk Commissioner is the fellow called the

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Director of Animal Husbandry. Both of them are rivals and are hardly on speaking terms. So, I meet him. I explain to him that the privilege of collecting the farmer's milk must carry with it the obligations to help the farmer increase the production by providing him with inputs. Anand has got 75 veterinarians employed by farmers. We have 300 first-aid workers and we have our own breeding stations; 500,000 artificial inseminations carried out which are all done by the employees of the farmers. Immediately he says, "What the hell? What shall my department do then? What will happen to my department?" I said, "What happens to your department is irrelevant." He said, "That may be to you, but to me it is most relevant. This idea won't work here out!" Then I go to the third fellow. He is the Registrar of cooperative societies. That fellow will say, "You are absolutely right Dr Kurien, cooperatives is the only way." He agrees with me and then says, "I have an excellent man who is a Deputy Registrar and who is due for promotion. We will make him joint Registrar and put him in-charge of this project." I reply, "My friend, you have not understood; a cooperative is something managed by farmers. It has to be run by people employed by farmers and not by you, a government officer." He says, "Dr Kurien, you don't understand. Cooperative in this state is different." So, I discovered that it is not possible to do what the P M wanted. To create Anand has become very difficult because the bureaucracy will not permit it. These are the biggest obstacles to development in developing countries, the growing power of bureaucracy. The bureaucrats think that the government exists for them and not for the people. That is why people say, increasingly, in developing countries, the Government is becoming a government of the officers, by the officers, for the officers. I then came to the conclusion that if you want to develop and create more Anands, you will have to have money with you. Then you can say to a state government, "I will give you Rs 5 crore to create an Anand on the condition that you will create cooperatives." Then only I will give them. That is why we started Operation Flood. In other words, the state government officials are not going to permit the creation of dairies owned by farmers particularly when I expected them to release funds from the state resources. Therefore, the only solution .left was that I should have the funds at our disposal and I should be able to release tJ;1e funds required, say if you require Rs. 5 crore to create an Anand. I will say, 'I will give you 5 crore, provided a dairy is built out of this money. Milk should be collected through cooperative system and a genuine farmer's cooperative should be established and the farmer is made the owner of the dairy." So, that is Operation Flood. Now, there are a few important principles underlying Operation Flood. They are so simple that it is amazing how all the hundreds of dairies built before the Operation Flood ignored these fundamental principles. The first principle is that, if you want to produce milk, you must first have a market for it. If you want to produce a commodity you must have a market for it and the market must be such that the man producing it gets the profit. So, the first condition to increase production not only in industrial things but also in agricultural commodities is that there should be an incentive to the farmer to produce more. And you can depend on the farmer. He is no fool. He has a long and ancient tradition behind him and if it is ensured that he has an assured market and a good price, he will produce more. But this fundamental principle is not understood because our Director of Agriculture -if you ask him how he would increase the production, he would say, "better seeds, better irrigation, pesticides and so on." The Director of Animal Husbandry will talk about semen, warm semen, jersey semen, frozen semen, vaccines to protect the cow, etc. Neither of these gentlemen will speak about marketing, which is the crux to increase production-an assured market and a good price That is the first principle of Operation Flood. There can be no Anand unless there is a Bombay. There can be no production unless there is a market. The second principle is that you cannot create Anand next to Bombay. Take the Delhi Milk Scheme. If you start collecting milk from a radius of 30 miles of Delhi, it is bound to be a failure. First of all, if you are collecting milk, you have to sell it; you have to sell all the milk you collect.

Managerial Dilemmas

You cannot sell more than you collect or you can not sell less than you collect because milk is perishable. So, as you collect more and more, the market should expand just that much more. By linking procurement and marketing, rigidly, you have created a situation where market has to expand at the same rate as production or procurement which is an impossible one. For example, in summer, collection goes down but the market is not going to shrink. So the moment you link these rigidly like this, you are doomed. Now, if you try to procure milk from 30 miles radius as the Delhi Milk Scheme (DMS) does, you are doomed because you don't need a dairy in Delhi. You don't need a dairy, and all these chilling centres, to take the milk to the' consumer in a 30 mile radius. All you need a bhaiya (a term for milk seller) on a bicycle to distribute the milk from the farmer to the consumer. No professional man is required. No Kurien is required. Expensive structure like the DMS and the professionals you have engaged and an IAS (Indian Administrative Service) officer on top of it all is therefore unnecessary. You cannot compete with the bhaiya and win with your overheads. He will add water every summer when he collects less milk. In winter when he has too much milk, he will refuse to collect it from the farmer. He will collect only what he wants. Government departments cannot do all this. The bhaiya collects the exact amount of milk necessary from the farmer which the dairy cannot do. Therefore it is amazing you see how many dairies are built on this basis. Next, if you want to get hold of the procurement not only you have to fight with those who collect milk-bhaiyas-by persuading the farmer to give it to you at a higher price but you must attack those same markets also where they are selling milk. For example, in Baroda they could not capture the market because" there is no milk in summer. When there is market available, there is no milk, and in winter, when there is no market, they have milk. So I gave them milk from Anand in summer, about 25,000 litres. They thus capture additional market of 25,000 litres and they found automatically their collection going up by the same amount. This is because their competition lost the market of 25,000 litres. Now you will see in Operation Flood, I get this milk from Europe and you put that milk into distribution and capture the market in Delhi. Then the merchants will lose their market and you will get the collection of milk falling into your lap. So these are few simple principles, all based on marketing. Now about our cooperative system: We do not provide any room for those who are exploiting the producer and the consumer and sucking away margins. We are establishing a direct link between those who produce and those who consume; all the merchants and others are eliminated so, that we have a structure which transfers the maximum share of the consumer simply to the producer. So these are some of the fundamental principles underlying Operation Flood. Lastly I speak about the other implications of the Operation Flood apart from just mille you see, if you take Anand today, there is a District Cooperative Union which has 900 village cooperative societies federated into it. There are villages in Kheda District. In each village they have a cooperative society. Farmers of the village become members of this village cooperative which is managed by a managing committee of seven people whom they elect. The chairman of each village society comes to the general body of the District Cooperative Union at Anand. The District Union owns the dairy. They elect their Board of Directors to manage the District Union and the dairy plant. There are 3,60,000 farmers as members in 900 village cooperatives. The quantum of milk collected per day now, during the flush season, is 0.91akh litres. It is the largest dairy plant in Asia. Total sale is Rs 135 crore per year of one District cooperative. What are the implications other than that? we have put 135 crore in the hands of the farmers by also selling Amul butter, Amul baby food, Amul chocolate, and Amul cheese? What does it imply? It means that if you deduct the manufacturing expenditure, you are distributing Rs 100 crore to the farmers every year. If you produce more, then you distribute more, 15 per cent each year. Without anybody giving any subsidy the farmer with his labour and more importantly, the labour of his wife, is producing a commodity called milk which he is able to market and get Rs 100 crore. It is the largest employment scheme in the country. It has doubled the farmers' income. The farmer has three acres of land and his wife one or two. Her income equals in Very

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interesting. Now, is it therefore only the doubling farmers income that has taken place? Some 3,60,000 farmers are to stand in lipe this evening in 900 village milk collecting booths nm by the village cooperatives. The 3,60,000 in our villages, they stand in line, irrespective of sex or caste. Is it only the orderly milk collection? Is it not a blow to the caste system? The brahmin and the harijan stand in the queue and if the harijan is standing ahead of the brahmin in the queue it is because he has come before the Brahmin. What does it do to a high caste Brahmin to stand behind a low caste harijan? He does this twice a day because milk has to be sold twice a day, every day of the year. What does it do to both the Brahmin and the harijan to watch the milk flow into the same can? Their castes get submerged in the can of milk? Then comes another farmer of that village whose buffaloes are dry, who comes to buy milk from that can and takes it home. Are not these the ways to break down the caste prejudices? Our village milk-collecting centres are also dirty but are cleaner than the villages. Somebody has sprinkled water. Somebody has put glazed tiles to keep it clean. They try to keep dust away. Somebody has used flit to keep the flies away; sanitized pots and pans. Somebody has taken pains to keep it clean. These may well be the first few steps for. How can you speak about clean milk production unless you talk about clean environment? We have a veterinary scheme. There are 75 veterinarians who visit villages every 15 days and treat all sick animals free. Now take the case of a district here where a buffalo is pregnant and nearing calfing, and cannot calf because its uterus is twisted. Such things are common. The buffalo may die before anybody commiserates with the woman who owns the buffalo. Now, in any emergency, through radio telephone, the farmers send for the veterinarian. They will come within four hours, day or night, Saturdays and Sundays included. The veterinarian will stay behind the buffalo. He will put his hand in; he will have one man turn the buffalo other way, untwist the uterus and take the calf out. What does this display of modem science do to the thinking of the rural population? Do they not ask, "My son was ill. I sent for the doctor. No one came for four days. My son died. Can you not do something that we ourselves can manage the health of our children?" We have a scheme by which we take women to show them round their dairy. We have so far taken 200,000 women. What does it do to them-to enter the Amul dairy, to see the lush green lawns, the magnificent buildings, stainless steel equipment within and to believe that they have a share in running the dairy. Above all they have a share in the profit. When they go home, do they not go home a little more proudly because they belong to some organisation, because they own something? We take them to the cattle feed plant which Shastriji opened and explain to them how feed is formulated. We explain to them why it has got 18 per cent proteins, what is protein, why do we add vitamins and minerals, why a female buffalo which is dry in the last few months of pregnancy is to be fed properly even though it gives no milk because the foetus is growing. We explain to them animal nutrition. Can these women not relate this to their own growing foetus? We take them to the Artificial Insemination Centre and their only demand is no male member from their own village should be present. We show them how semen is collected from the bull; We explain to them mysteries of conception and birth by charts. We make 200,000 women look through the microscope at alive semen. Do they not then ask, "Is this what happens in humans? Can this not lead them to birth control?" So what is Anand? Is it just milk? Is it not an instrument of social and economic change in our rural sector? Is it not involving our own farmers in their own development? True development is not the development of the cow but the development of man. How can you develop man unless you place the instruments of development in his hands? Involve him in the procedures of development, create in him the structures he himself commands. What is a government at its best? It is when it governs the least. And let it mobilize the energy of our people. The biggest asset of India is its people. One must learn how to mobilize that energy. Combine it with professional management to

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give it direction and thrust and all will become possible.

Managerial Dilemmas

ISSUES FOR DISCUSSION 1. What does Dr Kurien's Anand experience say about leadership?
2. "Organizations come alive when organizational members experience a sense of ownership with regard to organizational missions and objectives." Comment. 3. Discuss the key principles underlying an effective milk cooperative organization. 4. How does an organization become an instrument of social development?