The Amul model of a socio-economic enterprise has immense potential to aid India’s crop-growing farmers
26 November 2021 was celebrated in Anand as the 100th birth anniversary of Verghese Kurien, the leader of India’s ‘white revolution’, which increased the incomes and wealth of millions of cattle-owning small farmers in India, many of them women. 26 November 2021 also marked one year from the day when thousands of crop-growing farmers, who have been the beneficiaries of the ‘green revolution’ which increased their incomes, began a non-violent protest to force the Indian government to withdraw new laws it made to undo the policies of the green revolution. The government’s new policies intended to double incomes of small farmers, which have been languishing while stock markets are soaring. The protesting farmers feared the new policies would enable corporations to make more profits and marginalize farmers further. The government must now go back to the drawing board to find better ways to increase farmers’ incomes.
Revolutions, varied purposes
The contrast between the two revolutions provides valuable insights. Their purposes were different. The purpose of the green revolution was to increase the output of agriculture to prevent shortages of food. The purpose of the white revolution was to increase incomes of small farmers in Gujarat, not the output of milk. The green revolution was largely a technocratic enterprise driven by science and principles of efficiency. Whereas the white revolution was a socio-economic enterprise driven by political leaders and principles of equity. Sardar Vallabhbhai Patel and Tribhuvandas Kishibhai Patel had a vision of a cooperative movement of Gujarati farmers for increasing their incomes. Kurien recounts in his autobiography, “I Too Had a Dream”, how they enrolled him in their visionary enterprise and how he became a servant of the farmers for whose sake the enterprise was created, and amongst whom he lived.
Amul has become one of India’s most loved brands, and is respected internationally too, for the quality of its products and the efficiency of its management. It has successfully competed with the world’s largest corporations and their well-established brands. The fledgling, farmer-owned, Indian enterprise the two Patels sponsored had many technological problems to solve. That is why they enrolled Kurien, who had studied engineering in the USA (on a government of India scholarship). Kurien and his engineering compatriots in the organization were compelled to develop solutions indigenously when Indian policy makers, influenced by foreign experts, said Indians could not make it.
Equity was key
Kurien’s accounts of the political battles he fought for “Make in India”, and of the “can-do” spirit and innovation of Indian engineers, are inspiring. However, as he repeatedly emphasizes, the enterprise achieved its outcome of empowering farmers because the governance of the enterprise to achieve equity was always kept in the foreground, with the efficiency of its production processes in the background as a means to the outcome.
The green revolution’s aim was to increase outputs by applying scientific breakthroughs with methods of management to obtain economies through scale. It required inputs, like chemical fertilizers, to be produced on scale and at low cost. Therefore, large fertilizer factories were set up for the green revolution. And large dams and irrigation systems were also required to feed water on large scale. Mono cropping on fields was necessary to apply all appropriate inputs—seeds, fertilizer, water, etc., on scale. Focus on only one or two crops at a time enabled their outputs to be increased by avoiding diversion of land use to other “non-essential” crops. Mono-cropping increased the efficiency in application of inputs. Thus, farms became like large, dedicated engineering factories designed to produce large volumes efficiently. Diversity in the products and processes of large factories creates complexity. Therefore, diversity is weeded out to keep the factories well-focused on the outputs they are designed for. Similarly, in large scale farms and plantations, any plants other than those the farm is designed to produce on scale are weeds.
On productivity
In large, modern factories, workers are only a means for producing outputs. Workers are replaced by machines whenever possible to increase outputs more efficiently. Thus, “productivity”, when defined as output per worker, can be increased by eliminating workers. This may be an acceptable way to measure and increase productivity when the purpose of the enterprise is to increase profits of investors in the enterprise. It is a wrong approach to productivity when the purpose of the enterprise is to enable more workers to increase their incomes, which must be the aim of any policy to increase small farmers’ incomes.
The need for new solutions to increase farmers’ incomes has become imperative. Moreover, fundamental changes in economics and management sciences are necessary to reverse the degradation of the planet’s natural environment that has taken place with the application of modern technological solutions and management methods for the pursuit of economic growth. IRMA (the Institute of Rural Management Anand), which Kurien had founded to develop a new breed of manager for increasing the well-being of farmers, convened a workshop to celebrate his 100th birth anniversary to discover what can be learned from the white revolution to regreen the green one. Leaders of on the ground movements, who are applying the principles of cooperative management in “natural (environmentally suitable) farming” around India, assembled to distill insights for better economic policies and better management methods to increase inclusion and improve environmental sustainability.
The guidelines
The first insight is: aHHHHinclusion and equity in governance must be hardwired into the design of the enterprise. Increase in the incomes and wealth of the workers and small asset owners in the enterprise must be the purpose of the enterprise, rather than production of better returns for investors.
The second: the “social” side of the enterprise is as important as its “business” side. Therefore, new metrics of performance must be used, and many ‘non-corporate’ methods of management learned and applied to strengthen its social fabric.
The third: solutions must be “local systems” solutions, rather than “global (or national) scale” solutions. The resources in the local environment (including local workers) must be the principal resources of the enterprise. The enterprise must be embedded in the local community from whom it gets its environmental resources, and whose well-being it must nourish by its operations.
The fourth: science must be practical and useable by the people on the ground, rather than science developed by experts to convince other experts. Moreover, people on the ground are often better scientists from whom scientists in universities can learn useful science.
The fifth: sustainable transformations are brought about by a steady process of evolution, not by drastic revolution. Like strong drugs to treat specific ailments, large scale transformations imposed from the top can have strong side-effects too. They slowly weaken the patient’s health, as the scientific managerial solutions of the green revolution have harmed the soil and water resources of Northern India.
Large scale farming using modern scientific methods was the approach in the Soviet Union to improve agricultural outputs, as it is in the US, and it achieved equally spectacular results. However, it wiped out peasants in the Soviet Union and has swept off small farmers in the US. Kurien told Prime Minister Kosygin of Russia who visited him in Anand that top-down ownership of enterprises, whether by the state (in the Soviet model), or by remote investors (in the capitalist model) was the wrong solution. The essence of democratic economic governance is that an enterprise must be of the people, for the people, and governed by the people too.
(This article was published by The Hindu on Dec 3 2021)