How Amul Turned India into the World's Largest Milk Producer - Sustainably

I've just returned from a whirlwind trip to India (provided by SAP) to investigate how IT is helping address issues of sustainability - from energy use to economic development to everything in between.  Over the next week or two I'll be publishing some of my experiences.  You can follow along on this page.

One of the most rewarding parts of our SAP Labs India trip was talking to customers of SAP, large and small, to find out how information technology is improving the efficiency of business and therefore the lives of people.  Among the most interesting: Amul.

Amul is one of India's most iconic brands. It's a dairy cooperative based in the town of Anand, in Gujarat state and was born out of the so-called "white revolution" which turned India into the world's largest milk producing country.  The company is most known for butter and milk, but produces dozens of products from frozen yogurt to paneer.  With $2 billion in revenue, the brand is as recognizable across India as Coca-Cola and has recently begin exporting products to the Indian communities in UAE, Singapore and elsewhere.

The brand is managed by the Gujarat Cooperative Milk Marketing Federation (GCMMF) which is owned by more than 3 million small farmers in the state of Gugarat, all of whom benefit directly from the company's successes.  What's even more interesting is how the milk collection system is structured to benefit even folks with a single cow.

Here's how it works:

Anyone in the state of Gujarat is able to join the cooperative provided they own at least one cow. In doing so, that farmer is granted one vote toward electing what is known as a Village Dairy Cooperative Society - a hyperlocal group who manage milk collection at the village level and pay farmers on the spot for their milk. The village society is the lowest of three tiers of management which continues to the district and state level.

The economic impact:

Village societies run small collection shops which purchase milk from farmers twice a day. They are seldom more than a kilometer from the actual cows and pay out about $1 a day for a typical cow's output.   This may not seem like a princely sum, but given that most small farmers consider their cows to be a strictly an "on the side" business, that money can make a substantial difference in their lives - even if they only own one or two cows. The $1 per day sum is also after expenses - GCMMF offers basic veterinary care and nutrition to cows.

Considering the overhead of the company, more than 80 percent of profits still go directly back to farmers.   According to GCMMF management we met with, this compares to only 36 percent in the United States.

As a result, Amul, via GCMMF, has radically increased incomes for millions of people, and improved the supply of important nutrition and calories for over a billion.

The IT angle:

With three million farmers making at least two transactions a day at thousands of collection facilities, you can imagine how complex things get.

SAP's Enterprise Resource Planning technology has been implemented at the  higher levels of GCMMF to improve the efficiency of transporting milk from thousands of collection points to a central facility as well as product manufacturing and distribution - including general monitoring of the enterprise.

Things are still relatively primitive at the most local levels, but with mobile technology available to almost everyone, efficiencies are quickly being realized.