In a poll-bound state, even a spark can turn into a wildfire. Karnataka got itself a huge issue out of an innocuous ad that announced last week Amul would sell its products online in Bengaluru. “A new wave of freshness with milk and curd is coming to Bengaluru. More information coming soon,” the Amul ad said. What happened next was a flurry of commentary stoking fears that Amul would take over the state’s own milk brand Nandini. The controversy has ballooned into an election issue now, and Amul had to suspend its Bengaluru launch.

After a breathless campaign against Amul raged on for a week on social media, a closer look at the issue reveals almost nothing is as it has been made out to be.

Will Nandini merge into Amul?
The canard that fuelled nativist fears emerged from distorted comments of Amit Shah, the Union Home and Cooperation Minister. While inaugurating a Mega Dairy at Mandya in Karnataka on December 30, Shah said that he would like to assure all the farmer brothers and sisters of Karnataka that Amul and Nandini would work together towards establishing primary dairies in every village of Karnataka and in next three years there will not be a single village in Karnataka where primary dairy has not been established.

Shah said that the government had decided that the National Dairy Development Board and the Ministry of Cooperation would establish a primary dairy in every panchayat of the country in the next three years. He said two lakh primary dairies would be established at the village level across the country in three years,

Shah said that Karnataka Milk Federation would be provided with technical support, cooperative sector support and overall functioning support from Amul and all its requirements would be addressed by the Ministry of Cooperation. He said that Gujarat and Karnataka together could work for the welfare of the milk-producing farmers of the whole country.

Shah did not say Nandini would merge into Amul. He outlined how Karnataka as well as the rest of India can increase milk production if Amul and Nandini worked together, with Nandini using Amul’s support. Amul certainly has better technology and know-how which Nandini can find beneficial. Nothing of what Shah said suggested the merger of Nandini into Amul or Amul competing with Nandini.

Is Amul stepping into a new market?
Contrary to the fears around Amul’s entry, Amul is not planning to invade the Karnataka market. The Amul ad announced only its Bengaluru entry while Amul has already been selling its products into some parts of Karnataka for many years. It has been selling pouch milk and fresh products in Hubballi and Belgaum since 2015. The upcoming planned launches from its fresh category in Bengaluru are toned milk, gold milk and curd. The ad was used to unleash a hysterical campaign which had no basis in reality. The fact that was totally overlooked is Amul already sells in Karnataka and is only expanding to Bengaluru now.Will Amul out-compete Nandini?
A comparison of prices of Amul and Nandini would show Amul can’t compete with Nandini due to its lower prices on top of the brand loyalty it enjoys in Karnataka. If they operate in coordination, as suggested by Shah, they will be leveraging their synergies for more efficient and higher production. In fact, they are already working together in Karnataka. Amul ice-cream is being manufactured at the flagship plant of Karnataka Milk Federation (KMF), which owns the Nandini brand, at Bengaluru for more than a decade, using the milk procured from farmers of Karnataka, Amul MD Jayen Mehta has told ET. Amul has also purchased large quantities of cheddar cheese from KMF in the past. This shows there is scope for both to work together for higher growth of business.

Should Amul and Nandini sell only in their native states?
The opposition to Amul selling its products in Karnataka is based on a dangerous argument. There is nothing wrong in preferring Nandini to Amul but to argue that Amul should not operate in states other than Gujarat violates the very spirit of the nation. Nandini too sells in other states such as Maharashtra, Goa, Andhra Pradesh, Telangana and Tamil Nadu. The argument is a slippery slope which would mean no Karnataka company has the right to sell to people in other states.

India’s milk problem
Milk production remained stagnant in the 2022-23 due to lumpy skin disease in cattle, while the domestic demand grew by 8-10 per cent in the same period because of a rebound in the post-pandemic demand, according to a government official. Milk prices have risen more than 15% to Rs 56 a litre over the past year, the fastest rise in a decade, says Reuters. Lumpy skin disease, which causes blisters and reduces milk production in cows, has infected millions of cattle and killed more than 184,000 in India, including around 76,000 in Rajasthan, according to government data.

Industry officials estimate demand for dairy products to rise 7% this year. But milk production is likely to have risen just 1% in the fiscal year to March 2023, well below the average annual rate of 5.6% in the past decade, a senior official of the National Dairy Development Board told Reuters.

Rise in fodder prices has contributed to the rise in milk prices. Fodder crop area has remained stagnant in the last four years, while the dairy sector has been growing annually at nearly 6 per cent.

India needs to match its milk production with rising demand. That can happen with, among other things, creating efficiencies in milk production by using new technologies and better management practices, for instance. Amul, being the market leader by far, can help other milk cooperatives ramp up their business. Perhaps that’s what Shah had meant when he said Amul and Nandini should work together in establishing more primary dairies in Karnataka as well as the rest of India.