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Organization management and training of milk producer/ marketing groups: experiences from India

(by Sinha Om Pal, India)

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  • Predominantly is a country of Villages.

  • Total number of villages - 634321

  • Land area of 3166414 sq. km

  • Total population - 1028.6 millions. (as per the census of India 2001)
    Males- 532.15 millions and the remaining 496.45 millions are the females.

  • About 75 % population lives in villages.

  • Rural population - majority is small and marginal farmers and landless labourers.

  • Average land holding is 2 hectare.

  • About 30 % of rural population is the landless labourer.

  • Livelihood - depend on crop, livestock and dairy farming.

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Livestock & Dairying

  • Livestock -

  • Bovine wealth
    204 millions Cattle (Cows) and 84 millions Buffaloes
    (1/6th of the world.)
    Multipurpose role in rural system -
    Ranging from -
    Cheap source of Nutritious food, draught power and fertilizer.

  • Dairying -
    Predominantly with the small scale milk producers. Source of regular income.

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Small- scale Dairying

The small-scale milk producers predominantly constitute India's dairy industry.

  • The small and marginal farmers and landless labourers own 70% of the India's bovine wealth and Contribute 62% of the total milk produced in country.

  • Milk production and crop production are complimentary enterprises.

  • The milch animals are fed on crop residues and milch animal dung is used as manure for crops.

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  • Indian Agriculture is an economic symbiosis of crop and cattle population

  • These together provide employment and income to the momentous rural population.

  • The dairy sector today provides triple benefits to 80 million farm families-Nutritive food, Supplementary income, and productive employment for family labour, and mainly for women.

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Live Stock Sector:

  • In India the livestock sector is characterised by Large numbers and low productivity. (Local Breeds)

  • Not more than two to four dairy cattle / buffalo per household.

  • BUT: Highly livelihood intensive.

    Provides supplementary income to more than 70% rural population.

    Cattle (Cows & Buffaloes) are the most popular milch breeds and kept by farming community.

Milk Production:

  • Milk production in India takes place in millions of small and very smallholdings, scattered across the length and breadth of the country.

  • The marginal producers and smallholders, who account for some 80% of all land holdings, constitute the core milk production sector; they own over 60% of all milch animals

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Self Employment:

  • Livestock production is considered as one of the house hold activities in rural area which is highly gender sensitive.

  • Over 90% care & management of livestock are carried out by womenfolk.

  • About 67 % of the landless, small and marginal rural workforce, is engaged in agriculture either as cultivator or farm labour.

  • In a normal year, crop production can generate employment for this workforce for only 90 to 120 days.

  • For the remaining period, they are virtually unemployed. In this situation, dairying sets right this imbalance in employment.

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Economical Feature of India's
Small-scale Dairy Industry

It is low energy consumption in producing milk:

  • This is mainly because of:

  • (a) Use of animal and human power in producing fodder and feed;

  • (b) Feeding of crop byproducts such as straw, rice bran, cottonseed, oilseed cakes, etc. whose production does not require any additional energy;

  • (c) Predominance of grazing over stall-feeding;

  • (d) Use of human power for milking, tending and disposal of animal wastes including dung;

  • (e) Keeping animals in low cost sheds or in open; and

  • (f) Relatively low consumption of concentrated feeds.

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Small-scale Dairy Farming

Could be broadly classified into four main categories:

(a) Dairying for home consumption - Specialised milk production for home consumption, where milk is an essential part of the household diet.

(b) Dual - purpose animal (milk and draught) - where seasonal surpluses of milk are converted into market sales of storable household products.

(c) Small-scale dairy farming - where milk and milk products are converted into market sales.

(d) Commercial dairy farming - Where the animal holding is comparatively large and milk products are converted into market

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Disposal and Marketing of Milk

The disposal of milk all around the country, is usually through four modes:

(a) Through Dudhias (Traders) - The milk bought from producers is then adulterated and sold in the urban market. No profit are ploughed back to the producers.

(b) Through Private enterprises - Own and run by an individual / in partnership as private business. Such enterprises make huge profits and exploit small producers by buying their milk through agents or middlemen.

(c) Through State owned City Dairies - These dairies were also depended on traders and could not neither benefit the producers nor the consumers, mainly because the producers did not have a direct link with such dairies.

(d) Through Collective ownership - e.g. self help groups/milk bulking groups/dairy cooperatives. This mode was better comparing to other modes. But due to organizational and managerial defects, the desired progress could not be achieved and producers could not get the remunerative returns. (till the launch of Operation Flood)

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Small-scale Dairying - Constraints

  • Almost like any other business, in dairying also:

  • Farmer owns the live stock, looks after them, Produces the raw material i.e. milk,

  • Paid low for his contribution in terms of management, breeding and feeding.

  • The producers live in remote and isolated area and do not have the links with the urban markets.

  • This brings them under a pressure to come under the clutches and vicious cycle of middlemen who exploit them.

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  • In India milk is produced in millions of tiny small holdings, both in terms of land and animals, scattered through out the country. Reaching out to such a scattered small holder for technology transfer and extension support is, to say the least, a difficult task.

  • Lack of awareness on latest and updated technical information and training related to management, breeding, feeding, milk sanitation and hygiene.

  • Lack of low cost small - scale milk chilling and processing technologies.

  • Lack of appreciation for legal and food safety measures.

  • Lack of realization of opportunity developed to enter in the market due to withdrawal of many Governments from milk collection and processing.

  • Lack of good quality credit circumscribes the potential of the small holders for dairy production.

  • Lack of appreciation to increase the involvement of women who are the main stay in milk production at grass roots.

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The following constraints/challenges are also need to address:

1. To satisfy the consumer awareness - Consumer is looking for the value for money (he /she is spending in buying the milk and milk products) in terms of quantity & quality.

2. Milk being the perishable commodity -Quality preservation is another challenge.

3. Market Competition

4. Distribution and marketing of milk by 'unorganised-sector' under most unhygienic condition

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Small-scale Dairying - Opportunities

  • To avoid exploitation and to get better remunerative returns for their milk, awareness should be created among the small scale producer to join and market their produce through milk producers organization/ cooperative.

  • Providing supportive policy environments by the Government to encourage democratic milk producers group.

  • Raising productivity of dairy animals and mitigating the production risks requires the availability of improved breeding services, preventive animal health care and better feeding strategies.

  • Attempt to organize export of high quality dairy products since the new world trade regime is being enforced.

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  • Enhance the competitive economic advantage in dairy products, in terms of both quality and cost.

  • The effective production of milk under good hygienic conditions is the key to successful dairying. This has to be taken care by addressing the principal constraints in small holder systems like inadequate feeding, low hygienic potential in animals and high levels of bacterial contamination leading to spoilage before reaching to market.

  • Safety and quality assurance training programme for milk and dairy products are essential to cover the whole dairy chain from farm to table.

  • Emphasis on Human Resource Development (HRD), imparting improved technical and management skill besides adopting participatory approach from grass route level are essential for promoting initiative and building self-confidence in producer organizations

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Role of Dairy Co-operatives

  • AMUL & Evolution of Anand Pattern Dairy Co-operatives:

  • Emergence of cooperative in the dairy sector was basically an organized attempt to address the situation in farmers favour. The most famous and talked about 'AMUL' Anand pattern of cooperatives in Kaira district of Gujarat state of India was started as a determined retaliation against the monopolistic exploitation of farmers by a private traders.

  • The cooperative structure and the system established in December 1946 as a part people's effort came to be known as Anand-Pattern of Dairy Co-operative.

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Salient Features of Anand Pattern Co-operatives:

  • A single commodity approach;

  • A four-tier organisational structure;

  • Producer-elected leadership and decentralised decision making for total democratic Governance.

  • Hiring of professional managers and technicians;

  • Accountability of professional managers, technicians and other employees to the Board of Directors comprising of elected leaders from the producer members.

  • Provision of all necessary inputs and services to member-producers at nominal price.

  • Integration of production, procurement, processing and marketing functions;

  • Cash payment to producers for their milk - daily or weekly; and

  • Contribution to village amenities like drinking water, school etc.

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Technical Inputs/ support services:

  • The Anand Pattern Dairy Co-operatives (APDCs) provide their members with a complete package of inputs and support services necessary for enhancing milk production.

  • The package includes:

  • Animal health care through both regular as well as emergency visits by qualified veterinary doctors.

  • Artificial Insemination,

  • Balanced cattle feed,

  • Improved fodder seeds,

  • Extension education and training,

  • More importantly, the APDCs provide a year-round and assured market at producers' door step and a Quality based regular remunerative price.

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Education & Training:

Education and training have played a vital role in the success of Anand Pattern Dairy Co-operatives.

Continuous education and training to its:

members, elected leaders and employees at every stage of organization, management, procurement, processing, quality control, monitoring, ccounting/book keeping and over all supervision, has created a significant awareness towards the their duties and responsibilities and sense of belongingness towards their cooperatives.

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Structure and Functions of Anand Pattern Dairy

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Integrated Approach to a Systematic Dairy Development

  • Each tier of the Anand Pattern of Dairy Cooperative structure performs a unique function:

  • Procurement, payment and services by the village dairy cooperative;

  • Processing by the district milk union;

  • Marketing by the state dairy federation; and

  • Advancing the interests of the cooperative dairy industry by the national dairy federation.

  • Thus, the Anand Model has evolved into an integrated approach to a systematic dairy development.

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National Dairy Development Board (NDDB):

  • The National Dairy Development Board (NDDB) was founded to replace exploitation with empowerment, tradition with modernity, stagnation with growth and transforming dairying into an instrument for the development of Indian farmers.

  • The Board's creation was routed in the conviction that India's socio-economic progress lies largely on the development of rural India that is 'Small Scale' farmers.

  • The National Dairy Development Board was created in 1964 under the Chairmanship of Dr V Kurien. in response to the Prime Minister Lal Bahadur Shastri's call to "transplant the spirit of 'Anand-Pattern' in many other places" of country.

  • Mr Shastri wanted that Anand model of dairy development - with institutions owned by rural producers, which were sensitive to their needs and responsive to their demands - replicated in other parts of the country.


  • To promote, finance and support producer-owned and controlled organizations. NDDB's programmes and activities seek to strengthen farmer cooperatives and support national policies that are favourable to the growth of such institutions.

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Operation Flood:
The world's largest dairy development program

  • With a mission to make dairying a vehicle for a better future for millions of small scale milk producers in rural India, the NDDB launched "Operation Flood" the world's largest dairy development programme, in 1970.

  • The 'Operation Flood' had three phases. The third phase ended in 1996.

  • It made India the world's largest milk producing nation and within three decades.

  • Dairy Cooperatives at a glance:
    "Operation Flood" led to the creation of more than 100,000 village level dairy co-operatives and 170 District Milk Unions with membership of 11 million farmers nationwide. These cooperatives procure an average of 17.93 million kg of milk per day and marketed an average of 13.69 million litres of milk per day in the year 2002-03.

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Impact of Anand Pattern Co-operative Dairying on Small Holders:

  • Due to maximizing the productivity, profit with assured market and regular payment have brought a significant socio-economic upliftment of rural smallholders.

  • The producers are now directly linked with the urban market and consumers.

  • Provided gainful employment to a large number of rural population through village /district level dairy cooperatives.

  • The presence of cooperatives plays a psychological barrier in stopping exploitation of farmers by the traders.

  • Due to secured market for their milk production at their doorstep, these enterprises are inhibiting the migration of rural population to urban areas.

  • A significant involvement of women in cooperatives as members and also in management committees.

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  • Contribution to creation of basic amenities like roads, transport, communication and schools in the villages.

  • Solutions to problems of providing credit to smallholders are being tackled in a number of innovative ways. Even better credit facilities by their own institutions i.e. Dairy Cooperative societies.

  • Regular flow of cash from urban to rural areas has helped the farmers to greatly become economically self reliant instead than depending upon money - lenders.

  • Provision of continuous education and training enable them to adopt the new technologies, modern and advance breeding and, feeding practices.

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India - the Largest Milk Producer

  • Today India is the largest milk producer in the world with a production of 84 million MT during the year 2001. While during the decade of 60s the milk production was hovering around 20 million MT and per capita availability of milk was a dismal of 127 gram per day.

  • Today with country becoming the largest milk producer in the world & per capita availability of milk has almost doubled to 220 grams per day.( notwithstanding the increased in population by two and half times over the same period.)

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The Future:

Global Trade Privatization and Liberalization:

  • Liberalization of world trade in dairy products under the new trade regime poses new challenges and has opened up new export opportunities for dairy industry.

  • There is need to enhance their competitive economic advantage in dairy products, in terms of both quality and cost.

  • Government Role should be:

  • to direct, co-ordinate and regulate the activities of various organisations including smallholders engaged in dairy development.

  • to create and maintain a congenial socio-economic, institutional and political environment for small-scale dairy development through appropriate policies and programmes.

  • Increased pressure:

  • Trade liberalisation will put increased pressure on high-cost producers of milk and milk products and force smallholders to improve efficiency, cut costs and further rationalise collection, transport, processing and distribution.

  • It is expected that the decreased volume of subsidised exports of dairy products from several developed countries will be offset, to some extent, by increased export from countries like India, which do not subsidise their exports of dairy products.

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New Trade Opportunities:

  • India will need to set and enforce high quality standards for various dairy products through an independent non-governmental authority and to improve the basic infrastructure.

  • They will also need to improve their competitive advantage in milk production by

  • Improving milk yields

  • Reducing the per litre cost of production

  • Improving the quality of their products

  • Adopting the latest processing and packaging technologies and professional management.

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The Thrust Areas -
Where the Emphasis is To Be Given:

1. Strengthening the cooperative structure - By-

  • Increasing the geographical spread, organization of new cooperatives and strengthening the old ones, expanding services and markets.

  • Developing qualified and skilled manpower.

  • Educating the producer members, opinion leaders and Training of professionals.

  • Adopting modern and advanced technology.

  • Enactment of progressive legislative framework for the cooperatives at the provincial and federal level.

2. Productivity Enhancement: By-

  • Improving the production potential of indigenous breeds of cows and buffalo through appropriate selection of breeding programme.

  • Increasing the production and use of high quality feed and fodder appropriate to local conditions.

  • Increasing production and availability of green and ensiled fodder.

  • Providing proper veterinary health care.

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Quality Assurance by:

  • Identifying and addressing the quality related problems at every stage from the producer at the village cooperative, to the dairy plant and the process of final delivery to the consumer level.

  • Facilitating improvement of hygiene, sanitation, clean milk production, bacteriological quality, food safety and operating efficiency in he dairy plants.

  • Sensitising and training of the dairy personnel in management of the quality of the products as per international standards.

  • Facilitating dairy cooperatives in certification under ISO-9000-2000 (Quality Management Systems), ISO HACCP (Safety Management Systems) and maintaining the required plant conditions under the accreditation on a sustainable basis.

Real agenda for future strategies:

  • Thus the real agenda for future strategies must address the training and human resource need, managing issues related with trade barriers and supportive policy interventions.

  • There are few more issues need to be address like product quality and safety requirement, local taxes on products, and import duties on equipments, accessibility to the information on the market trend and appropriate technology, legal requirement and standards and other relevant issues affecting the development of small-scale dairying.

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  • Farmer's organizations can play a vital role in the development process of small - scale dairying-

  • By organizing in a democratically managed group, the farmers have the potential to meet the increased demand for milk and milk products and the inherent competition in the market.

  • The basic philosophy of this vertically integrated structure is to establish a direct linkage between milk producers and consumers eliminating all the middlemen.

  • This vertically integrated system transfer the longest share of the consumer's price to the producers. Above all it puts the tools of self development in the hands of the farmers themselves making the communities self reliant and accountable.

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