COMMENTARY

Vasudhara Adivasi Dairy

Cooperative
Model for the Second White Revolution?
Tushaar Shah, Yashree Mehta, Shilp Verma, Amit Patel

Indias White Revolution has

made the country the largest milk
producer in the world, but this
has bypassed the Adivasi heartland
of the central Indian plateau. The
Vasudhara cooperative, which has
organised 1,20,000 mostly Adivasi
women from Valsad, Navsari,
Dang and Dhule districts into a
Rs 1,000-crore dairy business,
provides a model for Indias
second White Revolution designed
to empower Adivasi women.

Economic & Political Weekly

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FEBRUARY 14, 2015

1 Amul Model

hile the contribution of Amulpattern dairy cooperatives to

making India the worlds largest milk producer is widely recognised,
their track record in fostering inclusive,
pro-poor dairy development across the
country has remained underwhelming.
Successful dairy cooperatives today are all
concentrated in the western corridor of
India, from Punjab down to Kerala. More
tellingly, 65 years after Amul was founded,
not even one out of over 30 core Adivasi
districts across the central Indian plateau
with over 30% of the Adivasi population has a successful dairy cooperative.
It is not that nobody has tried; a succession of schemes by the Government of
India have tried to accelerate dairy development in the Adivasi heartland but
vol l no 7

these have all ended in scams and failure.

It is also not that these areas have no tradition of cattle-keeping. The livestock
census shows, for example, that Chhattisgarh and Jharkhand have 7% of Indias
bovines but produce less than 1% of
Indias milk output. It is also not that there
are no urban markets. Jharkhand dairy
cooperatives procure only 20,000 litres/
daily (l/d) locally but import 6,00,000 l/d
from other states to meet local demand
(Hindu 2014). Adivasis do have a tradition of animal husbandry, though not of
profitable dairy husbandry. The Operation Flood programme to replicate the
Amul pattern has from the start as the
National Dairy Plan has done now selfselected only milk shed districts with
an extant tradition of profitable dairying.
As a result, the entire Adivasi belt has remained excluded. The Vasudhara cooperative is a classic case of the reinvented Amul pattern, ideal as the model to
launch Indias second White Revolution
to empower Adivasi women and strengthen their livelihoods.
2 Vasudhara Experiment
The Vasudhara cooperative was a rebellion against the orthodoxy that the Amul
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COMMENTARY

pattern can succeed only in milk sheds

with high milk production density and
an entrenched tradition of profitable
dairy husbandry. Vasudhara was established in Valsad, Gujarat, in 1973 by
Moghabhai Desai, an enthusiastic local
leader, and, Narendra Vashi, a dairy professional who quit the National Dairy
Development Board (NDDB) to start the
new cooperative. Vasudharas catchment was the tribal districts of Valsad,
Navsari and the Dangs populated by
Kokna, Dhodia, Bhil, Gamit, Warli, Kotwalia, Kolcha and Kathodi tribes, besides the old immigrant settler groups of
Patels, Desais, Vohra Muslims, Rajputs
and Koli Patels. The Adivasis had no tradition of scientific animal husbandry.
The Kuknas and Dhodias, who kept freegrazing desi cows for dung and poor
quality buffalos as work animals, neither produced milk nor consumed it,
subsisting on collecting bamboo and forest products and labouring in sugar cane
fields in canal commands.
The NDDB refused to finance a dairy
plant for Vasudhara because, thanks to
low yielding animals and poor economic conditions of tribal farmers coupled
with adverse geographical conditions
(Vasudhara Dairy Profile nd, p 1), Vasudhara would never collect 30,000 l/d
of milk, their minimum threshold for
viability. However, Moghabhai and
Vashi believed that a successful dairy cooperative could transform the economy
of these poor Adivasi districts. Undeterred by the NDDBs refusal, Vasudhara
began organising village-level dairy cooperative societies (DCS) and collecting
milk from farmers, processing the milk
in the Sumul Unions dairy plant at
Surat. In 1981, Vasudhara took a commercial bank loan and used a government subsidy to build its own 30,000 l/d
plant. Growth was slow in the early
years; during the first five years, daily
milk collection increased to only 17,000
kg, marketed locally in Valsad and
Navsari towns under Vasudhara brand.
The need was to accelerate milk production by Adivasi members. So in 1978,
when the Small Farmers Development
Agency (SFDA) offered Adivasi farmers
subsidies and loans to buy buffalos, Vasudhara took up the offer enthusiastically.
16

However, this proved disastrous. The

buffalo was not suitable for the local terrain and climate; moreover, Adivasi
farmers had neither tradition nor knowledge about profitable and scientific animal husbandry. Within a year, most buffalos perished or were eaten up and by
1980, Vasudhara Unions procurement
fell to an all-time low of 7,300 l/d.

to women members to finance them. It

also aggressively promoted artificial insemination to upgrade the very low
genetic potential of existing desi cows
and launched a highly successful heifer
rearing scheme providing subsidised
cattle feed to raise a young heifer to the
age of 2830 months when it becomes
ready for its first calving.

3 Winning Formula

4 Transformational Impact

Vashi and his team had to begin anew;

but now they forged a new threepronged strategy: (a) promote the crossbred cow rather than buffalo; (b) work
primarily with Adivasi women; (c) form
only all-woman Adivasi DCSs. The focus
was shifted from collecting milk to creating a culture of profitable dairy farming among Adivasi women who were
more responsive and sincere than menfolk about adopting new methods. This
was not easy; training to milk a highyielding crossbred cow without getting
tired often took three months of practice. Adivasi women were relentlessly
bombarded with practical animal husbandry tips such as the importance of
frequent watering of cows, optimal feeding practices, regular vaccination and
deworming of cattle, building ventilated
cowsheds, care of pregnant cows and
scientific raising of heifers, feeding mineral mix powder, of hygiene, sanitation
and quality milk production with low
bacterial count. Standard training for
DCS Management Committees in management, accounting and audit, milk
testing, were of course all there.
Under the new strategy, Vasudharas
procurement first grew slowly to 11,000
l/d by 1985, but then accelerated to
90,000 l/d by 1990. The tipping point
had been reached. NDDB now recognised
the miraculous feat that Vashis team
had achieved by training Adivasi women
in profitable dairy husbandry, and offered to finance a 1,00,000 l/d dairy
plant under Operation Flood III. In
200607, its capacity utilisation crossed
130%. After 1990, Vasudhara Union never
looked back. It opened DCSs in predominantly tribal areas at a breakneck pace.
To accelerate production, cross-bred
cows were initially brought from outside
and Vasudhara guaranteed bank loans

Compared to normal Amul type cooperatives, Vasudhara took longer to mature;

but its socio-economic impact has been
commensurately deep and wide. Today,
Vasudhara Union has 1.16 lakh primary
DCS members who are linked to 1,148
DCSs; two-thirds of them are Adivasis
but they supply 80% of Vasudharas milk
procurement (Damodaran 2013). Having exhausted villages in tribal Gujarat,
the union has now begun opening societies in the Adivasi-dominated Dhule,
Vardha and Yavatmal districts in neighbouring Maharashtra. Its procurement
is 5,00,000 l/d but it processes and markets 7,00,000 l/d of milk and milk
equivalent of milk products.
All along, Vasudhara has made sure to
keep its milk marketing capability ahead
of its procurement by getting raw milk
from sister cooperatives. Over 1,00,000
cross-bred cows are owned by mostly by
Vasudharas Adivasi women members.
And 37,000 heifers are registered under
Vasudharas heifer rearing scheme; but
the number being actually raised by
Vasudhara members is likely to be four
times larger. The union has already reached annual sales of nearly Rs 1,000 crore,
of which nearly Rs 500 crore is returned
to its members as procurement price for
milk as well as year-end price difference.
At Rs 580/kg fat, Vasudhara pays its
members a higher milk price than all other cooperatives in Gujarat. It also offers
its members a wider range of inputs and
services than other dairy unions offer.

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COMMENTARY

back in 1995, Laljibhai Mahua in Dharampur has so far produced 35 heifers

and sold Rs 25 lakh worth of milk to Vasudhara. By selling milk and heifers, he
ran his household, and sent his son and
daughter to college.

The annual dairy-related receipts of

an average active member household
from milk and heifer sales is in
the neighbourhood of Rs 1,00,000, or
Rs 8,300/month, four times the all-India
average gross receipts of farming households from farming of animals (Rs 2,604)
as estimated by the National Sample
Survey (70th round) from an all-India
survey of over 35,000 households (im4change 2014). With scientific management, many Adivasi women members in
Vasudhara obtain from a single crossbred cow lifetime milk output of 25,000
litres worth Rs 7.25 lakh and 5 heifers
with a market value of Rs 2 lakh. For
Adivasi households, milk holds out hope
more than mahua flowers or tedu leaves
(Damodaran 2013).
These averages mask large variations
among members. A well-performing DCS
presents a platform for livelihood building for all. Some use it intensively, others less so. During our fieldwork, we
found that the Kuknas have emerged as
major dairy producers, whereas the
Warlis and other tribes have opted for
rising wage rates in construction industry in nearby towns. In a quick survey,
we also found farmers with wells expanding their dairy economy more than
those with rain-fed land. Ability to grow
irrigated green fodder during the dry
season plays a decisive role in creating
favourable economics of dairying. In a
random survey of 96 Vasudhara members, we found the average well-owning
family kept more and better cows, spent
more on feeds and fodder, produced
twice the amount of milk/day and generated annual net income from milk production of Rs 1,30,600 compared to
Rs 64,100 for non-well-owning members. Everywhere, we found a few enterprising Adivasi women emerging as
champions: Kaushikaben, an Adivasi
farmer of Nichla Falia village in Dharampur had just one bigha of land but
tended six cows and earned more than
Rs 4 lakh a year from milk sales to the
DCS. A close second was Savitaben who
sold Rs 3.5 lakh worth of milk in 2013.
For some Adivasi families, Vasudharas
impact has been life-changing. From an
initial investment of Rs 50,000 in a unit
of two cross-bred cows and two heifers

Kurien used to explain the essence of the

Amul pattern with a clutch of six organising principles for building strong and
viable dairy cooperatives: (a) providing
farmers a stable and remunerative market is the precondition to creating surplus rural milk production; (b) a new
cooperative must use externally sourced
milk supplies initially to capture its target market while at the same time organising DCSs; (c) driving out unorganised trade from local milk and product
markets is the best way of diverting surplus milk to newly formed DCSs; (d) for
sustaining competitive advantage, a coperative union must have a powder plant
to deal with seasonal fluctuations in
milk production; (e) for a new cooperative to remain efficient and subservient
to producers, it needs to be managed by
professionals accountable to a board
elected by producers; and finally, (f) a
new cooperative can rapidly reach the
viability tipping point in a milk shed
with high milk production density and
an established tradition of profitable
dairy husbandry.
All early Amul pattern cooperatives
Kheda, Mehsana, Banaskantha, Sabarkantha, Surat, Erode, Bhatinda, Jalgaon,
Kolhapur, Bikaner and others already
had a high milk production density;
these became viable in three to five
years. Vasudhara also followed these
principles. However, because it chose to
focus on Adivasi districts which neither
had high milk production density nor an
established tradition of profitable dairy
husbandry, it took 20 years to achieve
critical scale.
Many central government schemes for
dairy development in Adivasi districts
have ignored all these principles. Even
before assuring a stable and remunerative market for milk, they began giving
Adivasi women cross-bred cows. The programmes were managed by fragmented
bureaucracies rather than professional

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5 Lessons

managers accountable to farmers. DCSs

were registered but these never gained
the volumes needed for viability. It is no
surprise that all these programmes
failed: cross-bred cattle perished; DCSs
went defunct; schemes left behind a
trail of corruption. The Integrated Dairy
Development Programme (IDDP), launched in 199394 to expand the dairy
economy in tribal districts by constructing dairy plants and organising DCSs
was the largest such intervention. A
2003 evaluation by the Planning Commission concluded that the IDDP has
generally failed to meet its primary objectives. Government of Indias Kamdhenu Scheme to give away crossbreds to
Adivasis ended up in large-scale corruption. Clearly, doing more of the same
will not help; a fresh view is needed to
kickstart Indias second White Revolution in 95 Adivasi districts in the central
Indian plateau.
6 Uplifting Dairying
in Adivasi Districts
Setting up new dairy unions as greenfield projects in the Adivasi heartland
will take 2530 years to reach the tipping
point as the experience of Moghabhai
and Vashi has shown in Valsad. However, there are institutional options
available today that were not on the horizon three to four decades ago. Having
exhausted the dairy potential of their
districts, many strong dairy unions in
western India, especially Gujarat, have
panned out in distant unexploited milk
sheds to procure milk to serve their existing and new markets. The Mehsana
cooperative has set up processing plants
in Manesar and Dharuhera in Haryana.
The Sabarkantha cooperative has set up
a large plant at Rohtak in Punjab. The
Banaskantha Union has dairy plants in
Faridabad, Kanpur and Lucknow. In
2012-13, Gujarat cooperatives already
procured 1.4 million l/d of milk from
farmers outside Gujarat. It is no surprise
then that the Gujarat Cooperative Milk
Marketing Federation (GCMMF) plans to
invest Rs 3,000 crore in setting up dairy
plants and provide a stable, remunerative
market to 5 lakh farmers in Uttar
Pradesh, Rajasthan, Maharashtra, West
Bengal and Haryana (Anand 2013).
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COMMENTARY

Because these cooperatives are exploring commercial potential, they carefully

choose milk sheds where they can quickly increase their procurement and make
their operations viable. In the process,
these cooperatives give a strong booster
effect to dairying in their new domains
by offering a stable, remunerative market for milk.
The best example of this booster effect
is presented by an unprecedented boom
that dairying has experienced during
the recent years in Saurashtra and Kachchh in Gujarat. These always had massive potential for dairying; yet, the Operation Flood programme left these out
of its coverage as they were thought unsuitable for cooperative development.
During recent years, however, Amul and
Mother Dairy have fiercely competed
with each other in establishing a milk
procurement network in Saurashtra and
Kachchh villages. Their objective has
been to serve their growing national
market for dairy products. However, by
providing a stable and remunerative
market for farmers milk at their doorstep, they have jumpstarted the regions
belated white revolution (Shah et al
2014). By 2012, Amul was organising
1,600 DCSs collecting a million litres of
milk daily while Mother Dairy collected
6.8 l/d from 2,100 villages. Today, between them, Mother Dairy and Amul collect 1.8 million l/d from Saurashtra and
Kachchh, pumping Rs 2,600 crore as cash
income to milk producers every year.
7 Catalysing the Second
White Revolution
No Gujarat cooperative has invested in a
dairy plant in any of the 95 Adivasi districts in the central Indian plateau, except,
of course, Vasudhara. And the reason is
long and arduous roads to reach the high
break even volumes of milk collection.
The set up cost of establishing a viable
milk collection system is high in Adivasi
villages. It costs Vasudhara upwards of
Rs 10 lakh to start a new DCS; it then
keeps investing in training members, providing feeding, breeding and management support; it keeps the DCS going even
with daily collection of 4050 litres when
the viability threshold is 150200 l/d. For
the same reasons, its milk routes and
18

chilling centers too will remain unviable

for a long time while its DCSs increase
their collection. Until the entire operation
becomes viable, the effective average cost
of milk procurement would be too high
for a cooperative to be competitive.
Milk is Indias largest crop, and at an
annual turnover of Rs 160,600 crore (in
201112 at 200405 prices) it is nearly
twice that of Indias next largest crop,
rice (value of output: Rs 82,700 crore in
201112 at 200405 prices) (MOSPI 2013).
This is one economy in which the poor
women of Indias hinterland have established their foothold. Yet, women in our
entire Adivasi heartland are excluded
from this dynamic and growing economy. The only way to change this situation is by incentivising strong dairy cooperatives to first offer like Vasudhara
did a stable, reliable and remunerative market for milk to Adivasi farmers,
and then undertake an intensive production enhancement programme as is now
envisaged under the National Dairy
Plan. Our surmise is that a viability gap
subsidy of 25% of the procurement price
in their home districts (i e, around Rs 80
100/kg fat) for a five year period would
neutralise the massive cost disadvantage that prevents a strong cooperative
from Gujarat and elsewhere from setting
up shop in an Adivasi district instead, for
example, of a milk shed district in Uttar
Pradesh or Haryana. In addition to the
viability gap subsidy, the National Dairy
Plan needs to be expanded to cover such
Adivasi districts to undertake training,
capacity building, production enhancement activities.
Such a viability gap subsidy on actual
procurement can be transparent and
easy to administer. Moreover, it can have
a magical booster impact on the dairy
economy. The Government of Karnatakas
offer of Rs 4/litre of price support to milk
producers has raised its cooperatives
collection from Rs 6,000 crore in 201112
to Rs 9,700 crore in 201314, second only
to Gujarats (Balasubramanyam 2013).
While the milk subsidy in Karnataka and
wheat-rice bonuses in Rajasthan and
Madhya Pradesh are much criticised as
vote bank policies, a viability gap support
price for milk procured from Adivasi
women for a strictly limited period is far

more justifiable as a positive policy

designed to create a dairy industry as a
livelihood system in a fragile region.
True, in the absence of honest and strict
management, such subsidies can turn
perverse. Therefore, it is important that
the responsibility for managing the viability gap subsidy is given to a professional organisation, such as the NDDB,
for implementation. For a start, it might
be a good idea to support Vasudhara itself to establish procurement operations
to bring another 1,50,000 Adivasi women into its fold over a three year period
while NDDB fine-tunes its strategy to set
into motion Indias second White Revolution out of the Adivasi heartland.
The authors acknowledge financial support
from Water, Land and Ecosystem programme
of CGIAR.
Tushaar Shah (T.Shah@cgiar.org) is a Senior
Fellow of Colombo-based International
Water Management Institute; Yashree Mehta
(Yashree19@gmail.com) is a graduate student
at the University of Hohenheim; Shilp Verma
(shilpv@gmail.com) is a consultant; and
Amit Patel (amitbpatel22@gmail.com) is a
field-research administrator with the IWMI-Tata
Programme.

References
Anand, Kumar (2013): Gujarat Cooperative Milk
Federation to Invest Rs 3,000 Crore Outside
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Balasubramanyam, K R (2013): Karnataka Takes
to Exports and Powder-Making to Deal with
Surplus Milk Production, Economic Times,
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Damodaran, Harish (2013): The Next White Revolutionaries, Hindu Business Line, 25 October.
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