Express View: Who’s afraid of Amul?

Tamil Nadu Chief Minister M K Stalin does not want the Gujarat Cooperative Milk Marketing Federation (Amul) to procure milk from the state. He has even asked the Union Home and Cooperation Minister Amit Shah to “direct” Amul to desist from “infringing” on the Tamil Nadu Cooperative Milk Producers’ Federation‘s (Aavin) milk-shed area. The demand is uncalled for on at least two counts. First, Amul and Aavin are supposedly farmer-owned and professionally- managed dairy cooperatives. It isn’t desirable for any minister or bureaucrat to intervene in the business operations of such organisations. The urge to control and reduce cooperatives to departmental undertakings has unfortunately only increased in recent times, both in the states and at the Centre. It goes wholly against the spirit of liberalisation: Ease of doing business shouldn’t be only for large corporates.

Secondly, whom does Amul’s entry harm in Tamil Nadu? Certainly not producers or consumers. The state’s dairy farmers will benefit when there are more buyers for their milk. In this case, Amul brings both size and credibility. For consumers, too, the more the brands, the merrier it would be. The only loser might be Aavin, the state-controlled cooperative that would like a situation of both monopsony (single buyer) and monopoly (single seller). As chief minister, Stalin should actually welcome Amul setting up processing plants and chilling centres, besides farmer producer organisations and self-help groups for milk procurement, in Tamil Nadu. Far from leading to “unhealthy competition between cooperatives”, it will force Aavin to become more efficient, pay farmers better and work towards retaining consumers. The state government should enable that, rather than blocking competition and the creation of a single national market. How can India, the world’s largest milk producer, become a dairy products exporter if firms are not allowed to buy and sell freely within its own boundaries?

The pushback against Amul in Tamil Nadu comes just over a month after the political brouhaha over the Gujarat cooperative’s announced entry into the Bengaluru market. That move was seen as threatening the local Karnataka Cooperative Milk Producers’ Federation (Nandini). In both instances, what should be normal and desirable economic competition in the marketplace is being thwarted by misplaced subnationalism. The truth is that Nandini and Aavin are strong brands in their own right. Consumers in the two states are unlikely to switch to a new entrant’s product in a hurry. Amul itself has been around in Telangana and north Karnataka for nearly a decade, but hardly made a dent in these markets against homegrown cooperative and private dairy brands. That should, however, not be a reason to deny competitors a chance to serve consumers and producers better.

ummary of the Editorial

1. The Tamil Nadu Chief Minister, M K Stalin, has opposed Amul's attempt to procure milk from the state.

2. Stalin has asked Union Home and Cooperation Minister Amit Shah to prevent Amul from infringing on Aavin's (Tamil Nadu Cooperative Milk Producers’ Federation) territory.

3. The editorial criticizes this intervention, suggesting it is inappropriate for politicians to interfere in the operations of farmer-owned cooperatives like Amul and Aavin.

4. This interventionist approach has been increasing in recent years, going against the spirit of liberalization.

5. The editorial points out that Amul's entry into Tamil Nadu could benefit both producers and consumers.

6. Dairy farmers in the state could have more buyers for their milk, promoting competition and potentially better prices.

7. For consumers, the increased number of brands would bring greater choice and competition.

8. Aavin, however, could face challenges from competition, disrupting its monopsony (single buyer) and monopoly (single seller) situation.

9. The editorial suggests that Stalin should welcome Amul's initiatives, which could force Aavin to be more efficient and provide better services to farmers and consumers.

10. It criticizes the state government's attempt to block competition and the creation of a single national market.

11. The editorial argues that for India, the world's largest milk producer, to become an exporter, firms must be allowed to freely trade within its boundaries.

12. The opposition to Amul in Tamil Nadu echoes a similar situation in Bengaluru, where the Karnataka Cooperative Milk Producers’ Federation felt threatened by Amul's entry.

13. The editorial criticizes this "misplaced subnationalism" that hinders normal economic competition.

14. It suggests that established brands like Nandini and Aavin have strong consumer loyalty and can compete effectively.

15. Amul's limited success in Telangana and north Karnataka, despite being present for nearly a decade, is cited as evidence that new competitors should not be denied the chance to improve services for consumers and producers.

©The Indian Express Editorial