Modi is right. Amul was indeed an inspiring success story (but it’s all going wrong now)

Dairy cooperative Amul came in for high praise from Prime Minister Narendra Modi on Sunday.

Talking to a gathering of farmers after inaugurating the cooperative’s new chocolate factory in Anand in Gujarat, Modi said the organisation represents a viable alternative to capitalism and socialism. According to a report in The Hindu, he also said, “It fills me with pride that it is the result of a farmers’ cooperative movement of over seven decades that Amul has become an identity, inspiration and necessity in the country.”

What does one make of these words? Several publications, including Scroll.in, have reported on the rot setting into Amul, one of independent India’s greatest achievements. The latest instance of institutional decay came in March when K Rathnam, managing director of the first Amul milk union, Kaira Union, resigned after some members of the union’s board alleged a Rs 450-crore scam had unfolded during his three-year tenure….

after a long break, i am back at work. out today, this quick and dirty opinion piece drawing together most of scroll’s reports on amul.

Amul federation could be soured by corruption charges against its oldest cooperative in Gujarat

On March 31, K Rathnam abruptly resigned as managing director of the Kaira Union, the oldest of the 18 cooperatives that market their products under the Amul brand name.

The announcement came shortly after some board members of the union, including vice chairman Rajendrasinh Parmar, alleged a Rs 450-crore scam during Rathnam’s three-year stint running the cooperative.

For their part, Rathnam and Ramsinh Parmar, the long-standing chairman of the Kaira Union, said the resignation was a routine matter. Rathnam, 55, told The Indian Express, “I have given Amul 22 years of my life. Now, I wish to spend time with my family that is settled in Tamil Nadu and America.” Both said talk of corruption was politically motivated.

Two weeks later, as public attention has gradually moved away, the contradiction between these claims and counter claims has not been discussed much in the media. In the process, urgent questions about the functioning not just of the Kaira Union but also the Gujarat Cooperative Milk Marketing Federation, which coordinates the Amul cooperatives, are slipping under the radar.

Part two of the report, out tomorrow.

The Amul story: How politics is hurting the economics of Gujarat’s milk cooperatives

In the winter of 2013, the inner workings of Amul briefly became public. A boardroom putsch was underway. The directors of no less than 14 of the 17 district milk cooperatives that were then part of the Gujarat Cooperative Milk Marketing Federation, which owns the Amul brand, had turned against chairman Vipul Chaudhary. A member of the Bharatiya Janata Party, Chaudhary was part of the Shanker Singh Vaghela-faction that had branched out as a separate party in 1996 and formed a shortlived government with Congress support. Chaudhary had since then returned to the BJP, but in 2013, others in the Amul federation suspected him of cosying up to the United Progressive Alliance government at the Centre. This cost him the support of BJP-controlled district milk cooperatives, news reports said.

In the course of the power struggle, serious accusations of financial impropriety surfaced against Chaudhary, who was also the chairman of the milk cooperative at Mehsana. Board members charged him with selling 7,000 tonnes of milk powder at low rates to private buyers, resulting in losses for the Mehsana dairy. It was also alleged that Chaudhary had created excess manufacturing capacities without taking permission from the federation. This had led to a higher interest and depreciation burden, resulting in huge losses, alleged RS Sodhi, the managing director of the federation.

But with public attention focused elsewhere – the 2014 national election was already creating headlines – Amul’s boardroom battle did not get the attention it deserved. In January 2014, the dissidents won. Chaudhary was removed. Amul found itself a new chairman and vice-chairman. A curtain dropped on its functioning all over again.

This year, in August, the curtain parted briefly when Ramsinh Parmar, the MLA from Thasra constituency, left the Congress to join the BJP. Parmar wasn’t just one more MLA deserting the Congress before state assembly elections. As the chairman of the Kaira milk cooperative, he was the last standing non-BJP chairman in the federation.