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Where a co-operative paid bonus; helped eradicate caste bias...
Whenever we talked to farmers on formation of cooperatives, the first question invariably asked: whether we will give loans for purchase of milch animals.

Nationalised banks advanced loans to farmers for purchase of milch animals through the cooperatives. The cooperatives were obliged to collect the loan instalments from the farmers and remit them to the lenders. The farmer was happy when the loan was advanced, but unhappy when loan instalment was deducted from their milk payments. For fear of loan deductions, they stopped giving milk to the cooperative and sold it to private traders, even at lower prices.

State Bank of India (SBI) had advanced loans to several farmers in Erode for purchase of milch buffaloes, through Nilgiri Dairy Farm (NDF). NDF had given repayment gua-rantee to the bank for the loan advanced. NDF had made their agents responsible for collection of loan instalments. Thus agents became the main link between the bank and the borrowers. To NDF, SBI loan came handy to exercise full control over the farmers (borrowers) to ensure regular milk supply. The agent facilitated issue of loans and kept all the documents, including the passbooks issued by SBI, with him. The agent received the loan amounts and passed it on to the borrowers, but after deducting certain amount towards miscellaneous expenditure. Many borrowers didn’t even know about such deductions, as they had no access to their passbooks.

I met the Chairman, NDDB and explained the problems faced by the farmers who had taken loans from SBI for purchase of milch animals. He patiently listened to the misery of the farmers. On his way back to Anand, Dr Kurien spoke to R K Talwar, Chairman, SBI, and narrated the story. Ramamurthy, Divisional Manager, SBI-Madras came down to Erode to investigate the matter. I told him that the prices received by the farmers from the society were much higher, compared to what NDF paid. I requested Ramamurthy to verify the facts, which he did and was thoroughly satisfied.


The first co-operative to distribute bonus!

As per the bylaws of Anand Pattern cooperatives, 50 per cent of the profits earned by the society were to be distributed as bonus to its members, based on the transaction each member had with the cooperative. After the first set of cooperatives had completed its first financial year (1974-75), I approached the District Cooperative Auditor, Erode to arrange for the audit of the cooperatives. The Auditor replied that audit of several cooperatives for past several years was pending for want of audit staff and that the audit of the milk cooperatives, which had just completed one year, could not be audited early. I explained that the cooperatives had to disburse bonus and hence those were to be audited on priority. Raising his eyebrows, he said how could  a cooperative make profit and pay bonus when all the cooperatives in the state were under loss!  

 I met the Registrar of Cooperative Societies and the Chief Cooperative Audit Officer in Madras and requested them to arrange for early audit of milk cooperatives. They were also surprised to hear about cooperatives disbursing bonus when the existing cooperatives had not even paid share dividend to their members! The Registrar and the Chief Cooperative Audit Officer were greatly impressed and ordered for immediate audit of all the Anand Pattern cooperatives.

It was a great occasion and the bonus distribution function was celebrated like a Mela, attended by the entire village. Prominent dignitaries, renowned co-operators, senior government officials and others were chief guests at the bonus function. VIPs who visited the cooperatives included Union Finance Minister, C Subramaniam, Chairman, NDDB, V Kurien and Agriculture Secretary - T N Seshan When bonus was distributed, the farmers were very happy and milk collection went up! It was yet another blow to the private trade.

Co-operatives abolished caste prejudices...

One day, I received a letter from  District Collector, Sivakumar asking me to enrol a Harijan milk producer as a member in a cooperative. But there was a problem: the Gounder community in the village, which constituted the majority, didn’t want a Harijan’s milk to be collected and objected. They warned that all of them would stop giving milk if Harijan’s milk was accepted. So, the option was whether to run the cooperative without Harijan milk or accept Harijan’s milk and loose the cooperative.

I put forward a proposal to the Gounder community: collect milk from the Harijan in a separate can and send it to the dairy. The Harijan will not stand in the queue, along with other farmers. After a lot of persuasion, they agreed to the proposal. The Harijan farmer also agreed to this proposal.

From the next day, the Harijan’s milk was collected in a separate can and sent to the dairy along with other milk cans. This continued for more days, under our close supervision. But, the staff of the cooperative found this exercise very difficult. After two weeks, the staff started collecting the Harijan’s milk in the same can where milk from other members were collected. But, the Harijan had to stand separate and pour milk. This continued for some more days. One day, the Harijan was found standing in the same queue giving milk! The farmers didn’t object,  they accepted the change! The Harijan was also made a member of the cooperative!


Keeping distance from the government...

One of the main reasons for government’s interference in the working of the cooperatives is its participation in the cooperatives’ share capital. When the first set of Anand Pattern milk cooperatives was formed in Erode, the local

Deputy Registrar insisted that these cooperatives should accept financial participation by the government. The spearhead team declined the offer as it affected the autonomy of the cooperatives. The Deputy Registrar was upset because it was for the first time that such assistance had been declined. He wondered as to how the cooperatives will function without government assistance. I told him that the project would be to build a ‘revolving fund’ to the cooperatives to ensure regular milk payments and the recurring expenditure would be met out of the profits earned by the cooperatives. Greatly upset, the Deputy Registrar remarked: “what will I do with the funds the government has allotted to me? I have a target to meet.”

The Erode Milk Producers’ Union retained one rupee per kg fat out of the milk price payable to the cooperatives. We had explained to the cooperatives that the deduction was being made to build funds for the Union, which would be required to buy land for the proposed dairy and also to meet other expenditure. If the Union didn’t have the funds, government assistance will have to be availed which will affect the autonomy on the Union. All the affiliated cooperatives graciously agreed to the deduction. By 1980, the Union had a paid up share capital of Rs 26 lakh, entirely contributed by  member cooperatives. This fund came very handy for the purchase of land for the dairy, for the cattle feed plant and the chilling centres. Seeing the success of Erode, Government of Tamil Nadu ordered adopting the Anand Pattern throughout the state.


Pasteurised milk for Erode...

Milk collection from the newly formed cooperatives had reached 25,000 litres per day. The entire milk was sold to the TNDDC dairy at Erode an was transported to Madras for sale. This intensified competition in the villages. Vendors had to pay higher prices. In Erode, consumer price went up because of milk shortage and the milk quality deteriorated. The time had come that we marketed wholesome, pasteurised milk in Erode town.

Chairman, Paramasivan and I met C Subramaniam (CS) who was at that time camping at Bangalore. We explained that the time was ripe to market wholesome and pasteurised milk in Erode town. If the local demand was not met, private traders will exploit the consumers by supplying adulterated milk at higher prices. CS advised TNDDC to make available the desired quantity of processed milk from the Erode Dairy for marketing in Erode town.


Erode’s milk map

We launched a massive ‘milk campaign’ in Erode town, basically to educate the consumers on advantages of pasteurised milk. We identified suitable locations in the town to sell milk. Milk was brought to locations at 5 am and the Union’s vendors, under our supervision, started vending. In about half an hour, the entire forty litres of milk was sold out! Consumers bought milk as low as 100 ml. Our competitors watched our operation keenly and had launched a scathing counter-propaganda: dairy milk is not good for health, particularly children who will develop diarrhoea, etc. Such propaganda helped us in educating the consumers. The consumers liked the dairy milk and the new system: quality, correct measurements and regular supply. We increased the number of sale points and in about a month, our sale touched almost 5000 litres. Simultaneously, our procurement also went up as our competitors lost market and many discontinued milk collection.

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IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
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