Food & Beverage News: Top Stories - Proposal to convert it into a producer company

The worst fears of Dr Verghese Kurien, Father of India's White Revolution and former founder chairman of Gujarat Cooperative Milk

Marketing Federation (GCMMF), better known as Amul, may prove correct. Within two months after Dr Kurien bid a tearful adieu to the organisation which he created so passionately and nurtured and marketed so defiantly as a farmers' cooperative, Amul is being converted into a producer company. Dr Kurien has devoted a lifetime to realising his dream - empowering the farmers of India -- and engineered the milk cooperative movement in India. For over five decades when he was at the helm, he kept the Anand milk cooperative clear of the politicians and the bureaucrats. The Rs 3,600-crore Amul pattern of cooperative is being replicated even in the neighbouring countries.

According to reports, the proposed transformation of Amul from a cooperative to a producer company under section 581B of the companies Act had been on the agenda at the Federation's Board meeting held on May17, the first-ever meeting since the election of Parthibhai Bhatol as the new chairman. However, a spokesman of the GCMMF said no such proposal was discussed at the meeting. He said it was not easy to change the cooperative structure. A decision on the issue will have to be taken at next month's annual general meeting.

According to officials at GCMMF, at present the state government's permission was required for everything - from opening of offices in other states to investment of surplus funds, issue of bonus shares, election of chairman and appointment of statutory auditors. It gives a lot of scope for official interference.

The Companies Act, which is a Central legislation, is comparatively more liberal, especially since the passing of an amendment in 2002 enabling the creation of 'producer companies.' These are akin to private limited companies, though in this case there are no limits to the number of numbers. Moreover, voting rights are based on the cooperative principle of one-man-one-vote and not the extent of shareholding as in normal private or public limited companies.

"A producer company will have more flexibility in so far as investment in other companies and formation of subsidiaries is concerned. Also since shares can be attached, it would be possible to raise more borrowings from commercial banks and other institutions for expansion of business," according to the officials

This is going against the core feature of Amul pattern of farmer control on all three stages of procurement, processing and marketing, with 2.4 million farmers of Gujarat owning India's largest dairy products marketing organisation. By converting it into a producer company, Amul will be going the way of the National Dairy Development Board (NDDB). For Dr Kurien, the cooperatives stand for a set of values. They reflect the national commitment for self-reliance and development of human resources and values based on sustainable development process. The Amul pattern, by empowering the farmer, has created opportunities to improve his employment, income and quality of life. According to Dr Kurien, NDDB, under the pretence of helping the farmer, has floated joint venture companies and marginalised the farmer for whose benefit it has been created.