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Amul says ‘cheese’ to demonetization, shifts to online payment for big farmers

Amul says ‘cheese’ to demonetization, shifts to online payment for big farmers

Dairy farmers in Gujarat are no longer a distressed lot. Their initial woes following Prime Minister Narendra Modi’s announcement of overnight ban on high-value banknotes have now made way to happy jamborees. Farmers are busy opening bank accounts and learning the basics of going cashless as Amul—owned by India’s largest milk cooperative chain, Gujarat Cooperative Milk Marketing Federation (GCMMF)—just decided to take the bull by the horns.

“Since November 8, we have helped farmers open 5.4 lakh new savings accounts, taking the total number of banked milk farmers to over 17 lakh. All their payments are now streamlined through respective bank accounts,” says RS Sodhi, managing director of the Federation, adding that most new accounts are being opened in public sector banks and cooperative banks.

GCMMF—jointly owned by over 36 lakh milk producers across 18,600 villages in Gujarat and helped 70-year-old brand Amul spread its wings across India—has asked dairy societies to make payments to all big farmers through bank transfers. Small farmers will still get it in cash, thanks to Rs 50,000 per week withdrawal relaxation granted to societies operating current accounts in district cooperative banks.

Sodhi said the milk procurement, which suffered an initial setback in the wake of the demonetization drive, has now improved to 192 lakh litres per day. “On the sales front, there was a short-term impact on discretionary products such as ice-cream. But there is absolutely no impact on sales of milk, butter and curd,” he said.

Farmers have found some positives in the direct credit of money, the most important being the transparency and a curb on irrational spending. The age-old practice of societies providing informal short-term loans to farmers— under the table for a fee—has come to a naught.

“The response from farmers to open bank accounts has been immense. Earlier, they were spending money recklessly and had not developed the habit of saving. With their bank accounts now being operational and a withdrawal limit in place, milk farmers have seen an improvement in their savings too. Also, they can look forward to applying for loans once they built a supporting credit history,” says Sodhi.

The demonetization has not produced any dent in Amul’s proposed revenues. It is looking to clock around 20 per cent growth and revenues in excess of Rs 28,000 crore, claims Sodhi.

Another senior official of the Federation said Amul presents a classic case study for PM Modi’s plan to double the income of farmers in the country. In May, Modi had unveiled a seven-point strategy to double the income of farmers by 2022.

“The government can emulate the Amul model of backward/forward integration, with its own supply chain and marketing network, to help farmers across the country,” said the official.

In 2015-16, the Federation recorded a turnover of Rs 23,005 crore, 11 per cent higher than the previous financial year’s sales turnover of Rs 20,733 crore, with the entire sales turnover growth having come from volume growth.





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