Amul in the Amid of Corona Virus Crisis

 

Amul-Ad-CoronaVirus

Late evening on 24 March, India’s Prime Minister Narendra Modi announced a stringent 21-day lockdown and No one will be allowed to move out of their homes from midnight to control the spread of the novel coronavirus. Even though essential services were exempted from the lockdown said by the PM, families across India rushed to grocery stores and dairy to stock up on essentials that night. Being an essential food item, dairy products were exempted from the lockdown.

India enforced a lockdown from 25 March to 7 June and most industries’ Supply chain was disrupted and also essential perishables like fruits and vegetables witnessed repeated fluctuations in prices and availability. But there were no instances of scarcity of dairy products or consumers being overcharged. Over the next three months Amul fulfilled the rising demand for milk as household consumption shot up. Demand for the long-lasting Amul butter and products like cheese nearly doubled, but there have been no shortages. During lockdown not a single case of infection was reported among plant workers. And not a single litre of milk was wasted in Amul.

How Amul model survived in that panic situation of national lockdown???

Amul has a mammoth Supply chain network in which 2.6 million farmers under GCMMF (Gujarat Cooperative Milk Marketing Federation), 10,000 distributors and a million retailers include.

To handle the situation Amul began preparation by intensively planning with supply chain partners more than a week before the lockdown was announced. Soon after the lockdown imposed, Amul announced cash incentives for dairy plant workers, drivers, sales executives, distributors and retailers. Extra cash support of 100 to 125 Rs were given to casual workers for working during a pandemic and distributors also got an 35 paisa incentive per litre of milk. food and stay arrangements were arranged for workers inside dairy plants to avert any labour shortages.

Simultaneously, Amul reached out to the Union home ministry and state animal husbandry departments to arrange passes for its workers and ensure that empty trucks were allowed to return. To ensure uninterrupted supply of packaging materials, it engaged with district collectors where packaging factories were located. Amul even arranged for cattle feed to be transported from states like Punjab and Haryana for its farmers in Gujarat. Close to 45% of its products were moved via freight trains, which cut down transit time.

As an unorganized trade of small local dairies, Amul received 15-17% more milk from farmers. Demand for Amul’s packaged milk increased by 5-7% compared to pre-covid times as households chose a trusted brand over loose milk. Demand for cheese and paneer is increased 30% more even though closure of hotels and restaurants, while butter and ghee sales are up by 10-20%. Demand for ice creams decreased during the lockdown. But due to a flexible supply chain Amul was able to divert its distribution network of ice creams to other product segments.

The advantage of the Amul cooperative model is that profits are not a business target. They never turn a farmer away and the primary objective is to deliver products at the lowest possible price to the consumer. The success of the Amul model is a result of a unique mix—a company owned by farmers, managed by professionals, where consumer safety and trust are paramount.