Utterly Uncooperative

At a time when the Kaira District Cooperative Milk Producers' Union, the makers of Amul products, was planning a golden jubilee fiesta to boast its unprecedented success against Nestle, Glaxo and other transnationals, the organisation finds itself headless, with the Gujarat High Court and the chief election officer having stayed the election of the chairman and the vice-chairman of the cooperative board. The year-long celebrations, slated to begin in December, now stand cancelled.

The immediate cause for the impasse is the state BJP government's insistence on its "statutory right to appoint three nominees on the board", as the government had stood guarantee for Rs 84 crore that the union had borrowed. But the cooperative is adamant about maintaining its autonomy from the state government, or any government for that matter. "One of the major reasons for Amul's success is that it has distinctly remained aloof from politics," says Kail-ash Vyas, managing director.

The union had borrowed over Rs 200 crore under the Operation Flood scheme to finance a new dairy and a cheese processing plant. But, in what seems to be a wily manoeuvre to wriggle out of government control of any sort, the union over time shifted the government guarantee of Rs 84 crore to the National Dairy Development Board (NDDB) and its marketing wing, the Gujarat Cooperative Milk Marketing Federation (GCMMF).

Hence, in April, the state government was forced to remove its nominee from the board. Whereupon, it tried to appoint a custodian by dissolving the board on charges of misdemeanour. The union challenged this and the high court stayed the dissolution. Asks state Deputy Education Minister and Anand district BJP President Manish Chauhan: "If Amul wasn't afraid that its past and present misdeeds would come to light, why would they go to court?"

After the elections to the board of directors in October, the state government appointed three nominees under Section 80(1) of the Gujarat Cooperative Societies Act. A former Congress minister, Ramsinh Parmar, filed a writ petition challenging this, after which the district collector cancelled the elections of the chairman and vice-chairman.

Why is the state government hell-bent on having a say in the Amul management? At stake may be over 36 lakh votes. Starting with a small cooperative at Hadgud village that handled 200 litres of milk a day, the Kaira union today handles close to 10 lakh litres and Rs 1.2 crore a day, out of which Rs 1 crore goes to individual cattle owners. The district has 954 village cooperative societies with 5.37 lakh members, and a potential 10.6 lakh voters who directly benefit from the Amul movement. And across the state, there are 18.47 lakh farmer members with a vote potential of over 36 lakh. The money involved is also impressive; the 49,000 cooperative societies in Gujarat have a total turnover of between Rs 8,000 and Rs 10,000 crore.

Ever since coming to power in the state, the BJP government has been trying to grab control of the cooperative sector. It has taken over the administration of the Ahmedabad District Cooperative Bank. It appointed a minister to run the Panchmahals District Cooperative Bank when its chairman went to the US for a short visit. Earlier, it had taken over the Gujarat Cooperative Marketing Federation, the state's biggest oilseed growers' body (turnover: Rs 556 crore) by appointing its custodian. While dismissing the cooperative board, the government had appointed custodians in 125 taluka sanghs to gain control over the cooperative. Though elections to the board of directors have been completed, the collector has yet to call a meeting to elect a new president and vice-president, possibly because Congressmen have seized a majority on the board.

As Amul battles it out, the long-term solution may lie in reworking the laws governing cooperatives. Says Verghese Kurien, the architect of Operation Flood and NDDB chairman: "Our cooperatives operate under archaic, colonial legislation in which the rights of the owners—the members—are observed in the breach and in which due process finds no place."

MOREOVER, Kurien adds: "Our competitor takes a decision to invest or divest, to enter a new territory or product, or to abandon it. If we wish to invest or divest, we must seek the approval of the registrar of cooperatives. We cannot expand our membership beyond the con-fines of a geographical area. If we wish to diversify, a bureaucrat with no experience in commerce may challenge us. And our audit is done by individuals whose qualifications fall far short of those found in even the least able of our chartered accountants. Is this competition fair?"

A possible model is the amendment to the Cooperative Act enacted by the Andhra Pradesh government. It guarantees freedom to cooperatives to conduct their affairs and provides that polls will be conducted by the cooperatives themselves and their affairs governed by their own by-laws, with limited restrictions. Cooperatives need not take the government's permission to make their investments. The act is applicable to cooperatives in which the government did not have any investment as share capital.

The point the cooperative sector is making is that with the market opened up to transnationals, it's high time the restrictions on the cooperative sector were removed. Kurien notes that any cooperative, existing or newly formed, should be given the choice to register as a multi-state cooperative company under the Companies Act.

But first, the subjudice election of the top office-bearer is necessary. Or else, caught between vote-hungry politicians and ferocious market rivals, the dreams of the 50-year-old Kaira union to meet the transnational threat head-on may remain just that. Amul Inc may never see the light of day.