After having described the background to this book in chapter one, chapter two describes how to form new milk producer groups, and may also be of interest to existing groups: 2.1 describes the steps for forming milk producer groups. The steps don't necessarily have to be followed in the described order. Other topics are leadership and elections (2.2), keeping records (2.3) and calling meetings (2.4). Chapter three continues with developing already existing groups, chapter four and five with group activities and chapter six with participatory tools.
FAO group promoter's resource book
An overview of the steps to take when forming milk producer groups is given below, and is followed by a detailed description of each step.
STEP 1: INITIAL MEETINGS
STEP 2: DETAILED PROPOSAL
STEP 3: PUBLIC MEETING
STEP 4: FORMING A MANAGEMENT COMMITTEE
STEP 5: DEVELOPING A CONSTITUTION
STEP 6: FORMAL REGISTRATION
STEP 7: INAUGURAL MEETING
STEP 8: PLAN ACTIVITIES
STEP 1: INITIAL MEETINGS
Every new group initiative starts with an idea or a vision, which is shared with others. These may be friends, neighbours, or a group that shares a common concern - in this case milk producers who want to increase their income from milk. The best starting point is an informal meeting with a small group (5 to 10 people, the 'core group'). This will give everybody the chance to express his or her views.
When this 'core group' has decided to form a milk producer group, it is time to organize a meeting with other milk producers from the area. At this meeting, the core group presents a general summary of its proposal to form a milk producer group. It is important that this meeting is well organized. At the same time, the meeting should be informal enough to allow full participation and open expression of ideas.
This core group will play a central role in the meeting but others should be actively encouraged to assist the group. An outside facilitator or resource person may be useful to guide the meeting, to encourage participation, to prevent domination by some and to outline the main issues to be discussed. The proposal made by the core group is discussed and should include the following issues:
Why form a group?
Who will be the members of the group?
What will be the activities of the group?
What is the plan to set up the group?
- What type of organization?
- What resources are needed (labour, land, capital)?
- Where do these resources come from?
- What facilities are needed?
When is the group going to be set up?
If there is an agreement to set up a milk producer group during this second meeting, an advisory sub-group should be set up. The advisory sub-group should be elected (see section 2.2: "leadership and elections), and preferably consist of a maximum of seven committed people. The meeting may name the chairperson, secretary, and treasurer, or leave that to the newly formed sub-group. This advisory sub-group will gather all relevant information needed for setting up a milk producer group (step 2) and present this at another meeting of potential members (step 3).
STEP 2: DETAILED PROPOSAL
The advisory sub-group will develop a detailed proposal for establishing a milk producer group, and will inform the potential members of the advantages and obligations involved. The sub-group may find outside assistance helpful when writing the proposal. The steps needed for developing a proposal are described below:
1. describe the detailed purpose of the group
For example: The group aims to increase the financial returns of its members from milk production through the collection, processing and marketing of milk and by providing inputs as well as training and advice.
2. propose a name, base and physical operating area for the group
The name should indicate the purpose of the group. Each group should have a base, i.e. a place where it meets regularly. The physical operating area of the group should also be clearly defined.
3. investigate what type of organization is best
Examples of types of organizations are a cooperative, a self-help group, an association, society, etc. You have to ask yourself:
what are the advantages and obligations of the different types?
what are government regulations?
4. describe the requirements for becoming a member
who can become members of the group?
do members have to pay membership fees, and if so, how much?
what other requirements? (e.g. supplying milk, attending meetings, providing labour)
5. propose a plan of activities in detail
See chapter 4 and 5 for ideas on possible group activities. Make a proper plan for what is going to be done by whom and when (see section 2.5, planning of activities).
6. specify the source of funds
To run a group successfully funds are needed and this is the most common constraint in setting up a milk producer group. Although a one-off grant or loan to cover the start-up costs can help a group to take off, financing a group by members' funds is one of the major cornerstones for a sustainable group. The different forms of capital include:
fixed capital for equipment, buildings etc
working capital to meet the operating expenses
reserve capital to meet unexpected expenses
Sources of finance for a milk producer group can come from:
members, in the form of fees, share capital, savings, fund-raising activities or interest from bank accounts.
outsiders, in the form of grants or short- or long-term loans
Loans should be considered carefully, because it might not always be possible to repay in time. If a group wants to apply for a loan, interest rates need to be discussed, including how long it will take to recover the loan. It is the responsibility of the group to make agreements with lending institutions.
7. specify other resources needed
are electricity, water or other facilities needed?
what buildings are required?
what materials and equipment are needed?
what kind of transport is necessary?
what will be the source of personnel?
if members are providing labour, who will do what?
is training needed to develop additional skills?
8. carry out a participatory dairy survey
If you are an outside advisor and assisting milk producers in setting up a group, a participatory appraisal of the dairy situation of the area can give you useful information. If you are a member of a milk producer group, a similar survey can help you to reflect on your situation and make the right decisions. The participatory tools given in chapter six can greatly assist you in carrying out the survey. The list below gives an overview of the items in the survey:
proposed area of the project
number of milk producers in the area
education level of the milk producers
number of dairy animals in the area
existing village groups
existing dairy enterprises in the neighbourhood
marketing opportunities for products
existing livestock support services
current market prices of milk and milk products
current milk prices paid to farmers
ways in which the milk is used
Very often women are involved in dairying, but are often not represented in milk producer groups. It is therefore important to find out what activities women undertake in all aspects of milk production, to assess women's special knowledge of the nutrition, health and breeding of dairy animals and their skills in processing and marketing dairy products. From this you will learn that women can play a very important role in groups.
9. define contacts with outsiders
It will be a good idea to find out who has an interest in milk production in the area, whether these are individuals or organizations. If you have this information, you can decide if contacts with these people would be helpful or not. See also section 3.4: 'developing links with other organizations' and section 6.3: dairy institutional diagram.
dairy institutional diagram, section 6.3
10. carry out a feasibility study
If a group decides to market products themselves, a feasibility study has to be carried out. For a detailed description of such a study, see section 4.4: milk and milk product marketing.
11. discuss the risks
There are certain risks when starting a group: members may not cooperate, or have the skills necessary to carry out the activities, there might be changes in demand, costs, prices of milk products and weather as well as disease and theft risks. The group should discuss the risks and find out how they can be reduced (e.g. through training), and whether it is worthwhile taking the risks.
STEP 3: PUBLIC MEETING
At the public meeting the advisory sub-group will present its findings in the form of a proposal. The purpose of this meeting is to find out whether there is sufficient demand to start the group, to make sure that everybody fully understands the implications of setting up a group and to ensure that the type of organization proposed is appropriate. The chairperson of the sub-group presents the report and guides the meeting through a thorough discussion. When the meeting has discussed the report fully and all questions and concerns raised have been addressed, it can continue with the formal procedure.
The chairperson should now call for a vote to find out how many people are prepared to start a milk producer group, accepting the responsibilities that membership would involve. If those present at the meeting decide democratically to set up a milk producer group, the meeting should elect a provisional management committee in the same way as the advisory sub-group was elected in step 1 (see also section 2.2.: leadership and elections). This also means that the advisory sub-group has ended its activities.
STEP 4: FORMING A MANAGEMENT COMMITTEE
The provisional management committee may or may not include members of the advisory sub-group. The main task of this committee is to set up the milk producer group and make it a legal entity. The committee must carry out a final review of the whole proposal and agree on objectives, policies, finances, organization and management of the milk producer group.
The provisional management committee must choose the appropriate form of legal organization before starting any activity. The form of organization chosen by the group depends on the group activities, the options available and the legislation in the country.
STEP 5: DEVELOPING A CONSTITUTION
This is probably the longest and most difficult step of forming a milk producer group. A constitution is a set of written rules made by the members of a group, and it is a legal document. The constitution sets out what is expected from the group members and what they can expect from the group. The constitution is meant only for the benefit and use of the members and can only be changed by the members.
Every group needs a set of rules to regulate its activities and avoid problems and misunderstandings. The rules include the objectives and activities, internal regulation of the organization, and ways to change any or all of the rules. Information from the detailed proposal developed in step 2 can be used for the constitution.
National milk producer unions will have a model constitution, which can be adopted to suit the particular needs of the group. You should also consult other milk producer groups in the area to learn from their constitutions.
There is no blueprint for a group constitution. It should be made step by step, through discussion between (potential) group members. You can discuss the following items when developing a group constitution in a meeting with all the members:
Full official name, objectives, activities and location of the group;
Definition of membership of the group: duration of membership, duties and responsibilities, how to become a member, including a non-discrimination clause;
Leadership and election procedures: types of leadership position, duties of the committee members, how long elected for (see also section 2.2.: leadership and elections);
Contributions: when to pay and how much; joining fee and regular contributions.; who to pay; purpose of contributions; what to do if the money is lost?
Disciplinary action against members: What to do if duties of committee members are not carried out? What will happen in the case of absences and late arrivals. Amount of fines, when to pay and what to do in case of non-payment? What to do if contributions are not paid?
Meetings: Which place, time (make sure all members, including women, can attend), day; number of members needed for decisions, unanimous or majority decision making, reporting absence, is representation for absentees allowed? Can representatives vote? (see section 2.4.: calling meetings)
Record keeping: what and by whom (see section 2.3: keeping records)
Savings: purpose; where to be kept; how to save; record keeping (see section 5.2: financial services)
Loans: Rules for re-lending of group savings to members; interest rate; terms of repayment; penalties for non-repayment.
Profit: Use of profits; sharing; when and who; what to do in case of death, drop out, absence and negligent work.
What happens if the group decides to stop the activities?
STEP 6: FORMAL REGISTRATION
Once the draft rules have been agreed, the formal registration process can start. The details will vary according to the country and type of organization, but there are common basic steps. These might involve sending a completed application form to a national authority, together with copies of the constitution, registration forms for founder members, evidence of funds and payment of a prescribed fee. This is followed by formal approval and acknowledgement by the registrar. The national milk producer organizations usually provide the model rules and assist in registration. Sometimes there is a trial period for the group of for example three months. If the group is functioning satisfactorily at the end of this period, the official registration takes place.
STEP 7: INAUGURAL MEETING
When the group has been registered and the required number of completed membership application forms have been received, the group can proceed with the inaugural meeting. At this meeting, the provisional management committee must report on the tasks carried out and resign as provisional committee. The meeting should appoint a management committte as set out in the rules (see also section 2.2: leadership and elections). The following is an example of an inaugural meeting agenda:
AGENDA FOR AN INAUGURAL MEETING:
appointment of chairperson for the meeting
minutes of previous meetings of the group
report of provisional management committee on tasks carried out
report on application for membership and shareholding
approval of draft constitution of the group
election of management committee
appointment of external auditor(s) (see section 2.3, keeping records)
setting of borrowing limits and nomination of a bank
Details will vary according to the constitution but these central issues must be addressed.
STEP 8: PLAN ACTIVITIES
After the inaugural meeting, the newly elected managing committee meets to make a proposal for the group activities. Initially the emphasis will be on:
agreeing the milk pricing and payment procedures
planning and organization of milk collection routes
planning and establishment of possible cooling and/or processing centres
planning and organizing milk distribution and marketing
planning any other services to be provided to members
making financial arrangement for the capital requirements
These issues will be dealt with in more detail in section 2.5: planning of activities), and in chapters four and five where ideas are given for activities that can be carried out by milk producer groups.
what is leadership?
Leaders play an important role in a group. A simple structured group needs at least a chairperson, secretary and treasurer to function properly. Gradual rotation of leadership positions among all members (women and men) can help to develop leadership skills within the group.
Leadership involves overseeing and monitoring the activities of the group. A few people who are recognized and accepted by all members carry out these tasks. Participatory leadership means that all members are equally informed and have an equal opportunity to participate in group activities.
leadership qualities and duties
It is difficult to be a secretary if you cannot write, a chairperson without being able to read, or a treasurer that cannot be trusted with money. Leaders may need certain qualities, e.g. being able to read and write, being active, energetic, good at motivating others, respectful, brave, honest, patient, and able to work and communicate with others. Listing the desired qualities for a certain position can help to choose the right people. Choice of leaders should be based on the skills and not on the position or status of people. The duties of the leaders should be discussed and listed, for example: the duties of a chairperson are to:
schedule meetings and prepare agendas in cooperation with the secretary;
chair meetings and summarize them at the end;
encourage fair and equal participation by all members in discussions, decision making and group activities;
ensure the group constitution and work plan is followed;
ensure that the secretary and treasurer do their jobs;
ensure members pay their contributions as agreed;
delegate work and assignments;
maintain harmony in the group;
make suggestions and give advice to the group;
represent the group and contact resource persons, groups, and institutions.
the duties of the secretary are to:
write the agenda, minutes and attendance record of meetings;
read aloud the minutes of meetings;
maintain all group records;
deal with letters to and from the group;
report on progress of the group;
assist the chairperson where needed.
the duties of a treasurer are to:
keep the financial records of the group;
safeguard and manage the money;
inform members about expenditure and receipts and the available cash or bank balance as required;
give receipts for money received;
keep the cash book and the receipts;
manage the group fund.
how to conduct elections?
Electing group leaders should be carried out at a meeting of all the members. The constitution will determine the percentage of members required to be present for elections (e.g. 70%). Apart from having decided on the qualities and duties of the leaders (see above), a decision should have been made on what leadership positions are needed and their term of office.
A common method for electing is by show of hands. If you think this method is too sensitive, you can consider other methods like a secret ballot (writing a name on a piece of paper, folding it, and collecting all the votes in a basket). An external election supervisor who is independent of and respected by the group members should be present during elections.
how often should you have elections?
Changing leaders frequently can be unsettling and make long-term planning difficult, but rotating leadership frequently within the group provides all members with the chance to develop organizational and leadership skills. A balanced approach is therefore needed and depending on the particular group activities, elections should be held at least once a year.
bank account signatories
When the leaders have been elected, signatories for the bank account of the group and other official papers must be selected. Usually three signatories are selected, with the condition that at least two signatures are required for any transaction.
In this section, we will deal with keeping general and financial records. Keeping records for milk collection purposes is dealt with in 4.1.3: milk collection records.
why keep records?
The group can check whether plans are being followed if all records of the groups activities, decisions, finance and other factors have been properly kept. Records help the group to remember what has happened, to monitor progress and to evaluate activities. If there is some kind of mistrust from members or outsiders, the records will show what the group is doing, how money is spent, etc. Keeping proper records can be the key to the success of the group. Group leaders should be responsible for keeping records, in cooperation with other members. Keeping group records is generally the task of the secretary while the treasurer deals with the financial records.
which records to keep?
The group members should discuss which records are important to keep. A group can begin with noting down minutes of meetings, incoming money, and the names and other information about the members (e.g. group member identity card, see figure 1). Records that can be kept include:
official membership list of the group;
the group constitution (see section 2.1);
information about the group members;
certificate of registration;
minutes of meetings (see section 2.4);
records on milk collection (see 4.1.3);
breeding and artificial insemination records (see section 5.4);
milk processing and marketing records;
financial records (see below);
animal health, treatments and vaccination records.
figure 1: example of group membership card
how to keep records?
Records should be kept simple so that all group members can understand them. If some members cannot read, symbols can be used for keeping records. Record keeping should be carried out on a regular basis (daily, weekly or monthly), or whenever meetings are held or activities take place. Information should be kept in record books, not on loose sheets of paper.
Records can be used for evaluation purposes. Evaluation is an indepth analysis of the groups activities and records, and is used to assess whether the group is making progress according to the work plan. A participatory approach to evaluation creates a greater sense of ownership and control by members (see section 6).
Cammack, John, Basic accounting for small groups
The keeping of proper financial records is essential for a milk producer group, and can be the key to the success or failure of the group. It is important to show members and others how the group earns and spends money. Keeping financial records is often a requirement by law to provide information to lending institutions or to government agencies.
Keeping financial records is generally the task of the treasurer. All transactions must have some verification (e.g. a signature). You can normally buy account books in a stationery shop or you can have them specially printed with the name of the group.
A cashbook shows all the money that is coming in and going out. Each time money is transferred, there should be evidence of payment (a receipt). These receipts should be numbered, and the numbers of the receipts should be noted in the cashbook next to the transfer. Always make sure there is a receipt! You can buy receipt books in a stationery shop, or use other written statements with some kind of proof (signature or stamp). Figure 2 is an example of some cashbook entries.
figure 2: example of cashbook entries
Balance brought forward is the amount of money available when you start recording in your book, when you start on a new page, or when you start a new financial period, e.g. every week or month.
inventory list of equipment, buildings, etc;
All belongings of the group should be recorded in the inventory list. They belong to all members, so it is important to know at all times what is owned by the group. The inventory list could, for example, look like figure 3.
figure 3: example of an inventory list
All bank statements must be kept in a separate book.
Auditing may be described as checking. The auditor however, is not only looking for faults or irregularities. She or he has to verify whether the cashbook and other financial records are maintained properly. He or she is responsible for checking whether the final accounts show a true picture of the financial state of a group. Audits are generally done annually. An audit is sometimes required under the constitution or if the group is a public or charitable trust. Auditing can be done internally, for example by the chairman or by a trusted and capable member, but it is best done by an independent and competent outsider.
In a milk producer group, you can differentiate between meetings of leaders and meetings of members. Meetings should be regular, and preferably be held at the same time and on the same day. In the beginning you can have a member meeting every week, later you might want to have a meeting every 2 or 4 weeks, and have more regular meetings for the management committee. The weekly meetings are important events where members share experiences, learn from each other and receive education and training. The following items should be remembered when calling meetings:
Consult as many members as possible to identify the most convenient venue and start and finish time, and make sure it is convenient for all members. Pay special attention to a suitable timing for women; at certain times they are often not available because of other tasks they have to fulfil;
Minutes of meetings should be kept by the secretary in simple language to remind the group of activities and discussions at previous meetings, (see box 3 for an example).
Agenda items should be listed in writing and circulated prior to the meeting. Reports from the treasurer, sub committees, members or others who have been given assignments at previous meetings can be included and circulated prior to the meeting. Copies of the minutes can be made available at milk collection centres, for example.
BOX 3: EXAMPLE OF MEETING NOTES
Date of meeting _________________________;
Meeting chaired by ______________________;
List of members present/absent/late;
Agenda (Can be modified as needed):
The proper planning of the activities of the group is very important. Too many activities in the beginning will not help the group. It is better to do a few things right than a lot of things half-right! The planning of activities should be done with all group members. When making a plan, the following questions should be asked:
can the group carry out the plan?
does the plan include everything that has to be done?
does the plan explain exactly in detail what has to be done?
do all members agree with the plan?
If all these questions can be answered with yes, then you have a good chance that the plan will succeed. The plan should be written down to remind everyone what should be done. Table 1 gives an example of such a plan. A detailed plan will include the following items:
what will be done (in detail)?
who will do it?
when will it be done?
what will be needed to be able to do it?
where and how will it be done?
what will it cost?
It is important to try to calculate what the activity will cost, and to write these estimates down in a budget. A budget will include the money coming in and the money going out (e.g. member fees that you want to use for this specific activity).
In planning activities, it is good to have a long-term strategy for the group. The group should ask itself how it thinks it should look in a few years time, and not simply what it is going to do next week. The group should also have a strategy to prioritize activities: if you have only limited resources, which activity should be first? You will find some ideas on how to prioritize in section 6.5: brainstorming and ranking.
brainstorming and ranking
Table 1: example format for a plan of activities
DATE OF COMPLETION
NAME OF PEOPLE RESPONSIBLE