Why Amul’s Andhra Pradesh entry has sparked a political slugfest, with TDP and YSRCP trading charges

TDP says YSRCP is surrendering state's dairies to Gujarat-based firms, while Jagan says Naidu weakened local cooperatives for personal gain.

BySNV Sudhir

Published Jul 05, 2023 | 8:07 PM Updated Jul 05, 2023 | 8:07 PM

Amul's initial phase involves an investment of ₹150 crore and it would process 1 lakh litres of milk per day. (Sourced)

Amul’s marketing plan for South India seems to have run into rough weather once again after the Opposition TDP in Andhra Pradesh accused the ruling YSRCP government of surrendering the state’s dairies to Gujarat-based companies.

On Tuesday, 4 July, Chief Minister YS Jagan Mohan Reddy had laid the foundation stone to mark the revival of the Chittoor Cooperative Dairy and signed a memorandum of understanding (MoU) with representatives of the Gujarat Cooperative Milk Marketing Federation (GCMMF), the makers of Amul.

Amul’s plan to expand its footprint in South India suffered a backlash in Karnataka and Tamil Nadu as the two states feared the entry of the dairy major would be detrimental to the local milk marketing cooperatives as well as their strong local brands, Nandhini and Aavin, respectively.

The move, which had the backing of Union Home Minister Amit Shah — who also heads the new Ministry of Cooperation — was seen as going beyond the pride in regional brands and extending to questions about the Union government’s attempt to take control of cooperatives, which fall in the State List under the 7th Schedule of the Constitution.

Also read: ‘Amul-Nandini tie-up an attempt to control dairy cooperatives’

Jagan’s reasoning

Chief Minister Jagan has claimed that his government was reviving the cooperative dairy sector by welcoming Amul. The local cooperatives, he said, were made defunct by the previous TDP government.

The Chittoor Cooperative Dairy, which initially began as the state’s first milk chilling unit in 1969 with a daily capacity of 6,000 litres, soon started milking losses.

The Chittoor Dairy had achieved a processing capacity of two lakh litres per day before its closure in 2002. Despite being scheduled for liquidation in 2003, the process was never finalised.

To revive the dairy, the state government has agreed to settle the outstanding dues of ₹180 crore.

Related: Amul vs Aavin: TN CM MK Stalin seeks intervention of Amit Shah

Amul to invest ₹150 crore 

Amul’s initial foray into Andhra Pradesh would involve an investment of ₹150 crore and it would process one lakh litres of milk per day in the coming months. It would also set up a large ice cream manufacturing plant.

For Amul, Chittoor is a good catch as it is strategically located and could cater to markets in neighbouring Tamil Nadu and Karnataka.

Within a year after coming to power, the YSRCP government had signed an MoU with the GCMMF, and launched the “Jagananna Palavelluva” scheme.

Under the AP-Amul project, the state government established Mahila Dairy Sahakara Sanghalu (DSS) in around 9,899 villages across Andhra Pradesh.

The government will provide these DSSs with Bulk Milk Chilling (BMC) and Automatic Milk Chilling (AMC) units at a cost of ₹1,672 crore.  Women dairy farmers who come under these DSSs supply/store milk in these BMCs and AMCs.

Amul has started procuring milk in six districts: Prakasam, Chittoor, Kadapa, Guntur, West Godavari, and Krishna.

While Andhra Pradesh produces around four crore litres of milk a day, Amul has procured 8.78 crore litres from various parts of Andhra Pradesh over the past two years.

Related: #Save Nandini, #Boycott Amul campaign in poll-bound Karnataka

Dairy sector in Andhra

Apart from the state-run Andhra Pradesh Dairy Development Cooperative Federation (APDDCF)’s brand Vijaya, there are several other private dairies and also a dairy farmers’ company, Visakha Dairy, in the state.

TDP chief N Chandrababu Naidu’s family members own one of the private dairies, Heritage Foods. His wife Nara Bhuvanewari is the vice chairperson and managing director of Heritage Foods, while his daughter-in-law, Nara Brahmani is its executive director.

Jagan has often accused the TDP government in power between 1995 and 2004 of weakening the milk cooperatives in the state, especially in the Chittoor belt, for the benefit of Heritage Foods, which Naidu founded in 1992.

Currently, Heritage’s milk and allied products have a market presence in Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharastra, Odisha, NCR Delhi, Haryana, Rajasthan, Uttarakhand, and Uttar Pradesh.

Earlier, state Animal Husbandry Minister Seediri Appalaraju said Amul had agreed to pay ₹7 more per litre than Dodla dairy, a private player, and ₹5 more than Heritage for buffalo milk with 6 percent fat and 9 percent SNF (solids-not fat).

It is ₹6.97 more than Sangam and Heritage pay for 10 percent fat and 9 percent SNF quality of milk, and ₹4.97 more than Jersey Dairy pays in the Prakasam district.

For cow milk, Amul has agreed to pay ₹4.88 more per litre than Heritage, ₹2.80 more than Sangam, and ₹3.11 more than Jersey for 3.5 percent fat and 8.5 percent SNF quality in Chittoor district.

Opinion: Amul-Nandini row about federalism and efforts to undermine it

Charges against Naidu

On Tuesday, Jagan said Naidu orchestrated the destruction of the Chittoor Dairy and finally closed it down in August 2002 to develop his family-owned Heritage.

“The Chittoor Dairy, which started as a chilling unit, had grown to process 2.5 to 3 lakh litres of milk daily by 1993, but during the 10 years between 1992 and 2002, it was systematically pushed into losses by Chandrababu Naidu, who started Heritage in 1992,” he said.

The conspiracy to run down the Chittoor Dairy was so visible as, while it suffered losses during those 10 years, Heritage reaped huge profits every year, Jagan alleged.

The chief minister added that after launching Jagananna Palavelluva in December 2020, the milk collection rates went up manifold, benefiting the dairy farmers. It forced the private players to match the rates.

The chief minister elaborated on how the dairy cooperatives were destroyed during the TDP’s rule.

“Naidu intentionally brought Andhra Pradesh Mutually Aided Cooperative Societies Act (APMACS) and illegally converted six district milk unions into APMACS and turned Visakha, Guntur, and Prakasam district unions into private companies. Additionally, Chandrababu Naidu used his office to shut down the Chittoor Dairy to safeguard Heritage Dairy,” he added.

Incidentally, TDP leaders run or dominate the majority of district milk unions-turned-APMACS companies.

Related: What is common between ‘hot’ Pushpa and ‘cool’ Amul?

TDP returns fire

However,  the Opposition TDP has another story to narrate about handing over the Chittoor Dairy to Amul.

“Jagan, who had promised to revive the cooperative dairies, including the Chittoor Dairy, soon after coming to power, changed tack and undermined the whole system. Gujarat-based Amul has been invited to the state only to weaken the cooperative dairies,” TDP state unit chief K Atchen Naidu said.

He added that the state government is betraying the dairy farmers, and pointed out that public properties worth ₹6,000 crore have already been conceded to Amul.

“Jagan handed over the Chittoor Dairy to Amul on an annual lease of ₹1 crore for 99 years, and even its assets worth ₹650 crore, for commissions,” Atchen Naidu alleged.

Also read: KMF shelves Nandini’s cross-border marketing plan for Kerala

Amul may get more diaries

It is learnt that the state government is now identifying defunct or loss-making cooperative dairies. The government wants to hand over such dairies to Amul on lease to make them turn around.

“It is all about how you look at it and the perspective. If one looks at the Amul project from a political angle it hurts some. From a business perspective, it is purely remunerative pricing and it will benefit the state’s dairy farmers, Visakha Dairy chairman Adarai Anand told South First.

“There are a few private dairies who had dictated procurement pricing all these years. They used to slash the procurement price without any warning. Now, we can expect some uniformity,”  he said.

Visakhapatnam-based Visakha Dairy procures at least nine lakh litres of milk every day. It is one of the fastest-growing milk and milk products manufacturing companies having plants at Visakhapatnam and Rangampeta in the East Godavari district.

“Farmers would give milk to those who will provide better prices. If you want the farmer to supply to you, give them the best price. Ultimately farmers should benefit,” Anand added.

He agreed that vested interest weakened the Chittoor Dairy. The Chittoor region can produce 25 lakh litres of milk daily, he contended