GCMMF into Oil Business

Why in news?

The Gujarat Cooperative Milk Marketing Federation Limited (GCMMF) has acquired an edible oil plant in north Gujarat.

What is the concern?

In 1990s, the GCMMF had faced a crisis.
[The GCMMF is the country’s biggest milk cooperative, which is Amul’s parent company.]
This crisis arose as it sold edible oil under the brand name ‘Dhara’, which was adulterated oil.
This led to dropsy epidemic in which lives were lost.
Eventually, the GCMMF exited the oil business in 2004.

What is GCMMF’s edible oil project?

The GCMMF has launched a pilot project in Gujarat on a small-scale.
Their Cooperative Milk Producers’ Union Limited of the Banaskantha district has acquired an edible oil plant at Palanpur.
This closed oil plant, with a 250-tonne per day capacity, will tap locally grown oilseeds.
They have started processing three types of oil at the plant — groundnut, mustard and cotton seeds.
For the new launch, GCMMF will be using the brand name “Janmay”.
The product will be made available in Amul parlours.

What are its expansion plans?

How does this project mean extra remuneration for farmers?

Banaskantha farmers already grow mustard, groundnut and cotton in large quantities.
The idea is to create value-added products for farmers growing oil seeds, similar to those created for milk.

Why did GCMMF venture into selling edible oil in the first place?

NDDB (National Dairy Development Board) had launched edible oil in 1988 under the brand name ‘Dhara’.
Dhara was launched under the edible oil marketing intervention scheme on the request of the Government of India.
It was launched as a part of its Golden Flow operation aimed at curbing the sale of loose oil in the market.
GCMMF was appointed as the sole selling agent and the milk cooperative union continued to distribute it till 2003.
Dhara became so big that 35% of GCMMF’s Rs 1,000-crore revenue in 1994-95 came from the oil business.

What led to GCMMF suspending the edible oil business?

In 1998, adulterated mustard oil had led to dropsy epidemic, which left several dead and ill in many parts of the country.
Several state governments banned mustard oil after argemone oil, an adulterant, was found in several oil brands that were tested.
Dhara was one of the affected brands.
In 2017, a Delhi court had fined both NDDB and GCMMF in the matter.
GCMMF exited from selling Dhara on March 31, 2004.
Mother Dairy Fruit and Vegetable (MDFVL) took over the marketing of the brand.

How will the new venture procure raw material for producing the oil?

Dropsy was a very serious issue.
So, the GCMMF has to be very careful of the source of raw material.
Banaskantha grows groundnut, cotton and mustard and so GCMMF is sourcing the oil seeds locally.
GCMMF plans to tap 3.6 million milk producers in its network who are also farmers cultivating oil seeds.

How competitive is the edible oil market in India now?

When GCMMF began selling Dhara, there was hardly any organised player in the packaged edible oil market.
Only a couple of brands like Marico were around.
Now, there are four big national brands.
The main focus of the GCMMF remains the dairy business.
It has no big plans for edible oil and non-dairy products.

Source: The Indian Express