The resistance to Amul Diary’s merger with Karnataka Milk Federation (KMF) has acquired new political dimensions with the Opposition parties using this to invoke Kannadiga pride. The ruling BJP (Bharatiya Janta Party) in Karnataka is in damage-control mode, trying hard to dispel fears regarding the possibility of a home-grown brand from Karnataka becoming subservient to a Gujarati brand. But the matter has now become a political thorn for the BJP.
To give some background on the issue, it started first when Union Cooperation Minister Amit Shah made an announcement in December 2022 during the inauguration of a mega-dairy in Mandya, that Amul Dairy and KMF would be working together. While Amul’s products are already in sale in the state, this comment raised apprehensions about the implications of the move on KMF’s dairy brand ‘Nandini’ in the market.
KMF is the second-largest dairy cooperative in the country after Amul. KMF comprises 16 milk producer unions that procure milk from primary dairy cooperative societies at the taluk and village levels. There are over 15,000 village-level cooperative dairies in the state. A former KMF official told TNM that around 13,000 people are directly employed by KMF and another 35,000 more people are part of activities like transportation of the milk. Approximately 18 lakh milk suppliers from across the state depend on KMF for their livelihood, and when those who are involved in rearing cattle along with their families are taken into account, the number of people from the farming community who will be directly influenced by the developments at KMF becomes significantly big.
Financially, KMF has a formidable annual turnover of over Rs 1,55,000 crore. KMF’s milk, sold under its popular brand ‘Nandini’, fetches farmers Rs 29 per litre (the market price goes up to Rs 44). Farmers are paid Rs 24 by their district milk unions and Rs 5 by the Karnataka government. The various milk unions pay a commission to KMF for each litre of milk bought from farmers and the daily procurement levels are currently at 84 lakh litres.
Most of the milk unions are based in the Old Mysore region where the BJP has been making an aggressive bid to gain seats. Districts like Mandya, Hassan, and Mysuru, along with a few others from Central Karnataka and Mumbai-Karnataka region, have traditionally been supplying milk in the state. In total, around 120 Assembly constituencies fall under these districts. Therefore, given the significance of KMF in the state and the magnitude of the campaign that the opposition parties, as well as pro-Kannada and farmer groups have launched against the ruling BJP over the merger, why is the BJP reluctant to rethink the deal?
Political observers say that this issue has the potential to snowball into one of the biggest election campaigns in recent times.
On the surface, the merger of Gujarat-based Amul with KMF fits into BJP’s nationalist plans. Journalist and political observer Muralidhara Khajane said that it also panders to BJP’s unified approach to the country – one nation, one election. Additionally, given that the announcement about the merger was made by Amit Shah in Mandya, backpedalling now would cause much embarrassment.
But the reason for persisting with the decision is much more serious than prestige. Amul’s entry had to be announced before March because summer is a crucial time for milk production. The former KMF official said that milk production is reduced due to natural reasons between March and May and that this would present Amul with an opportune moment to divert surplus milk into the Karnataka market.
Apart from selling products like Amul butter and cheese in Karnataka, for many years now, KMF and Amul have been collaborating on another product - Amul Ice Cream. The milk supply for the manufacture of the popular Amul Ice Cream comes from KMF. But this time around, the partnership is on a different scale, said a KMF insider. “The process for the merger began over five months ago. The management of KMF had been convinced completely around Amit Shah’s visit in December 2022. Now it is just a matter of time before the process is finished,” he added.
The source also said that according to the current agreement, the brand will operate as Amul-Nandini. But in his experience, within six months, the equation will change from a merger to a takeover. With Amul executives calling the shots, it will be a matter of time before they get their way and dominate the relationship, given their larger footprint and support from the Union government, he said.
The takeover of KMF’s funds and executive power not only gives India’s ruling party a financial grip but also gives them access to control crores of voters, and eventually a grip on the farming community. This is not an isolated project for the BJP, and the plan to consolidate and take over India’s cooperative structure began with the formation of the Union Ministry of Cooperation in July 2021. The decision of choosing Amit Shah to helm the department signalled its importance.
BJP’s rise in Gujarat was also linked closely to capturing the rural areas, and Amit Shah had played an influential role in that. For many years, taking on the Congress in Gujarat had been a daunting task. Amit Shah and several others strategised a plan to woo the second most influential leader in each panchayat, as well as the rural sections, and work towards toppling the Congress.
The role of cooperative societies was pivotal in Gujarat and was a major source of economy for the state. During his political rise, Amit Shah managed to buck the trend of caste dominance in the governance of the Ahmedabad District Cooperative Bank (ADCB) and became the president of the biggest cooperative bank in the country in 1999. He was later appointed Chairman of the Gujarat State Financial Corporation, a public sector financial institution which funded small and medium businesses. This gave Shah a bigger grip on cooperative societies. Having successfully captured the cooperative societies in Gujarat and through that, the power in the state. The formation of the new Union Cooperation Ministry is an attempt to further extrapolate the same formula across the country.
Many regional parties have successfully retained power through control of cooperative societies. In Maharashtra, for example, Sharad Pawar and his Nationalist Congress Party’s (NCP) influence on the sugar cooperative societies translates into political clout in the western Maharashtra region. In Karnataka, the JD(S)’s influence on the KMF contributed to their electoral success as well. Similarly, the BJP wants to give the cooperative movement a national push.
“If the BJP manages to get a grip on the milk, sugar, silk, agriculture, and other such cooperative societies across the country, the political output of controlling over 15 cr people will be possible,” a BJP leader told TNM. He added that this will also be instrumental in breaking the funding cycles for many regional parties like the JD(S) and NCP.
But with Assembly elections in the offing in Karnataka, the aggressive push for the Amul-KMF merger has backfired. Another BJP source told TNM that a retaliation of this magnitude had not been anticipated by the BJP. “There are a lot of half-truths and even fake news in the opposition’s accusation against the BJP. While we decided to ignore it initially and not give it more credence, it has now been decided at the highest level that a serious attempt to counter the Congress, JD(S) propaganda war should be made,” the source added.
In the last week, many BJP leaders started speaking out. Karnataka's Cooperation Minister ST Somashekar told the media, “There’s no proposal to merge Nandini and Amul, let alone the two making dairy products together. Only those who don’t know enough about the KMF can say the wrong things.” Health minister K Sudhakar said, ‘People have not yet forgotten that during Congress rule in Karnataka, the cooperative sector was dysfunctional. Cooperatives are known to be the backbone of Indian agriculture, but no efforts have been made for their smooth management.”
But will BJP’s attempts to assuage fears work? Amul is a dominant player and its entry into the Karnataka market will surely threaten those depending on KMF, said Khajane. “BJP's defense of Karnataka tolerating Heritage Misty Milk and other such brands is irrational because they are minor or micro players in the market. They cannot affect the Nandini market in any way. If Nandini minds, it can knock them out at any time. They are not a threat like Amul,” he added.
In many of their campaigns, the BJP has played on the fears of the electorate and managed to consolidate their vote bank. In Karnataka, it looks like the Opposition is applying BJP’s tactic right back at them.