Dairy Development from 1970 Onwards

In this country, three forms of organization viz. private, government and cooperatives have helped in the development of dairying and animal husbandry. The private dairies by and large have been observed to be solely interested in earning maximum possible profits and have never cared for providing the necessary incentives for milk production. Obviously, there can be no hope for improving the dairy industry by depending on private enterprises owning and operating milk plants. The performance of city milk supply schemes, managed by the Government, did not also prove satisfactory and encouraging. The experience of most successful Dairy Cooperatives such as AMUL and the results of Operation Flood programme being implemented by the erstwhile Indian Dairy Corporation (financing agency for the programme)/ National Dairy Development Board through cooperative organizations has shown that organizing dairying on cooperative lines would only yield desired results. How milk cooperatives have emerged as the most cohesive organizations of the farmers which could handle the milk procurement, transport, processing and marketing of milk on the one hand and how they can improve and enhance the milk production through an infrastructure designed for the purpose and also raise the income and social standards of the rural community in the country on the other hand are some of the important points, which need special emphasis.

i. Dairying through Co-operatives - Anand Pattern

It may be interesting to recall as to how Anand Pattern of organizations came into existence, took shape and ultimately became the model for developing dairying in the entire country. Like other places in the country, in the Kaira District in Gujarat also, milk was being purchased by private vendors. The milk vendors exploited the milk producers by low and defaulting milk price payment, incorrect weightment, and provided little incentive to improve the milk production. Ultimately, the farmers of the district had to decide, striking against these exploitative activities of the private vendors and founded the village cooperatives to procure bulk of their milk and market it. It was with the guidance from able leaders like Late Sardar Vallabh Bhai Patel and Shri Morarji Desai that this beginning could be made. Few of the village cooperatives so organized joined together and formed into a union called the Kaira
District Milk Producers Co-operative union at Anand, now popularly known as AMUL.

The success of the concept of managing the milk business by milk producers themselves” at the Kaira District Milk Producers Cooperative Union also AMUL led to the emergence of the strong development tool known as Anand pattern”.

The basic unit in the Anand Pattern in the village Milk Producers’ Co-operative Society – a voluntary association of milk producers in a village, who wish to markettheir milk collectively could become a member of the Co-operative Society. At a general meeting of members, representatives are elected to form a managing committee, which manages the day-to-day affairs of milk collection and its testing for fat content, sale of cattle feed, etc. Each society also provides Artificial Insemination (AI) Services and Veterinary First-Aid.

Each milk producer’s milk is tested and paid for on the basis of the quality of milk.Usually the morning milk is paid for in the evening and the evening milk is paid for the next morning. The village societies also market nutritionally balanced compounded cattle feed produced by a cattle feed plant owned and operated by the district level union. The balanced cattle feed is sold on a no-profit-no-loss basis.

The primary milk producers’ societies are affiliated to a district union, which owns and operates a feeder/balancing dairy, cattle feed plant and facilities for production of semen and its distribution. The Union also operates a network of veterinarians to provide routine and emergency services for animal health care. The village societies elect the Board of Directors of the Union, which is responsible for the day-to-day management of the union’s centralized facilities for milk collection station,processing and marketing of inputs. Each union is professionally managed by a Managing Director, who reports to the elected Chairman and the Board of Directors.

The dairy, owned by the Union, usually has a milk drying plant to convert the seasonal surpluses into milk powder and other conserved products. In turn, all the milk union form a federation.

ii. National Dairy Development Board

In the year 1964, the then Prime Minister of India, Late Shri Lal Bhadur Shastri desired that a ‘body’ should be set up, with the Government’s assistance, which would help replicate the Anand pattern of Dairy Cooperatives in other parts of the country. And thus, the Ministry of Agriculture and Irrigation, Government of India,constituted the National Dairy Development Board (NDDB) in September, 1965 under the Societies Registration Act. The major objectives of the NDDB are:
  •  to promote projects of general public utility relating to dairying, animal husbandry,food and agriculture, fisheries and cold storages.
  •  to make available, on request, the information, skills and technical services needed to increase production of milk and dairy technical inputs and to speed up procurement, processing and distribution of milk.
  •  to prepare initial feasibility studies and to design, plan and start-up of operations.
  •  to provide manpower development services for dairy and allied projects by organizing technical progammes for training personnel.
  •  to help in the selection of equipment and undertake bulk procurement services.
  •  to offer consultation services on dairy and allied operations in the field of planning, control, including quality control, organization and marketing back up,
wherever necessary, by research within the NDDB and outside, in other organization. to serve as international liaison to other National Dairy Boards and international agencies and to facilitate the exchange of information and personnel: as also to assist other countries’ dairy development, and
 to conduct research in the field of dairying and animal husbandry.

iii. The Three Phases of Operation Flood (OF)

The first phase of Operation Flood (OF-I) was originally designed to be implemented over a period of five years but was extended till March 31, 1979. The main objective of OF-I was to create a virtual flood of rurally produced milk and lay a foundation for modernizing India’s dairy industry. The second phase of Operation

Flood (OF-II) was launched on October 2, 1979, while OF-I was still underway and concluded on March 31, 1985. OF-II was designed to build on the foundation laid by OF-I to create a modern and viable dairy industry to meet the nation’s requirements for milk and milk products. The third phase of Operational Flood (OF-III) was started on April 1, 1985 to consolidate the extensive milk procurement, processing and marketing infra-structure created under OF-I and OF-II and finally completed on March 31, 1996.OF-I was financed by the funds generated from the sale of 126000 MT of Skimmed Milk Powder and 42000 MT of Butter Oil donated to India by the World Food Programme (WFP), an agency of Food and Agricultural Organisation (FAO) of the United Nations Organisation (UNO). In 1970, the original allocation for OF-I was Rs. 95.40 crore for a period of five years, 1970-71 to 1974-75. This was subsequently revised to Rs. 116.54 crore. The funds generated from the sale of donated dairy commodities since the inception of the programme till March 31, 1981 amounted to Rs. 114.68 crore and the actual disbursements over the same period of time were Rs. 116.55 crore. The denoted commodities were received, and sold, on behalf of the Government of India, by the IDC, which as mentioned earlier was the financing agency for the programme. The funds were disbursed by the IDC as 30% grant and 70% loan to the implementing agencies nominated by the participating State governments.

Goal of Operation Flood: This was originally conceived as a milk marketing project aimed at enabling the modern dairies to capture commanding shares of the liquid milk markets in India’s four metropolitan cities of Bombay, Calcutta, Delhi and Madras. This goal was to be achieved by creating a virtual ‘flood’ of milk in the rural milk sheds of these four metropolitan cities and channeling the flood to the liquid milk markets of these cities through a producer-owned-and-controlled co- operative system of milk procurement, processing and its marketing. Eventually, the goal of OF was broadened to include improvements in the standards of dairy farming by introduction of improved methods of breeding, feeding, health care and management of dairy animals backed up by necessary training and extension services.

Implementation of operation flood programme through an integrated approach has been taken up under various action items as follows:
  •  expansion of city dairies.
  • new dairies in four cities.
  •  storage and long distance transportation
  •  rural dairy processing.
  •  resettlement of city kept cattle.
  •  milk production enhancement inputs.
  •  improved milch animals.
  •  organisation of rural procurement
  •  project planning and manpower development
  •  unloading, storing, transport and central pool.
Although, there were several difficulties with regard to the quality and continuity of dairy commodities received for the programme, the funds generated from their sale provided enough liquidity, buffer, and freedom to the IDC to finance the programme. The programme caused no financial strain on the Government of India’s resources. Besides, the programme administrators learnt quite a few useful lessons from their experience with this form of aid and on that basis modified the procedure of receipt of donated commodities. For OF-II, donated commodities were received directly from the donors but not through any intermediaries as was the case with OF-I, and there were face-to-face and man-to-man dealings between the recipients and the donors. OF-II had an original outlay of Rs. 485.51 crore. TheEuropean Economic Community (EEC) assisted it with a donation of 1,86,000 MT of skim milk powder (SMP) and 76,000 MT of butter oil (BO). About US $ 150 million was provided by the World Bank in the form of loans on soft terms. OF-II was approved by the Government of India for implementation during Sixth Plan period with an outlay of Rs. 273 crore. OF-III had an investment of Rs. 1303.1 crore of which Rs. 1095.4 crore was received us the external assistance from the World Bank and EEC and Rs. 207.7 crore by the NDDB’s own resources.

OF-III continued to be the major dairy development programme in the Seventh and Eighth Plan period. The main thrust of this programme was the dispersal of dairy development activities on a wider scale in the country and strengthening further the National Milk Grid (NMG) for balancing seasonal fluctuations in milk procurement and marketing, some 1,108 road/rail milk tankers had been provided to meet the requirements of the four metropolitans and other big cities especially during the lean season. Adequate storage facilities were also set up (33,750 MT for milk powder and 4,280 MT for butter oil) to facilitate the operation of NMG. This grid is also helping to even our inter-regional gaps between the demand and supply of milk.With the increase in the production of milk and milk products, the Government of India recognized the NDDB as an agency to stabilize the domestic prices of milk and milk products and exploit any export potential for Indian dairy products.

At the request of the Government of India, the International Development Association (IDA) which is an affiliate of the World Bank, financed three dairy development projects in the States of Karnataka, Rajasthan and Madhya Pradesh. Like OF-I, these projects also sought to replicate the AMUL model of dairy development.

Major Achievements of Operation Flood: OF projects were well underway in 170 milksheds covering 267 districts in 23 States/Union Territories in the country by the end of 1995-96. Except Arunachal Pradesh, Meghalaya, Manipur, and Mizoram, all the states originally envisaged for coverage under the OF programme had been covered. Over 92.63 lakh milk producing families were participating in the programme and over 72.5 thousand VMPCS had been established in the country.By March 31, 1996 (end of OF-III), the average milk procurement under OF had increased nearly two times as compared to the level of production at the end of OF-II. Almost the same rate of increase was observed during the OF-II period.

The average growth in milk procurement in the OF and IDA-assisted project areas was over 20% per annum during the sixteen-year period from the base year of 1980-81. By the end of 1995-96, the total milk processing capacity in the OF milk sheds had gone up to 21.97 million litre per day with an annual growth rate of over 14% per annum since the end of OF-I (1980-81). In many milk sheds in states like Rajasthan, Maharashtra, Tamil Nadu, the capacity created has fallen short of the requirement especially in the peak flush month when milk procurement had to be discontinued to contain the flow of milk to the plants. Altogether by the end of OF-III, the dairies under OF recorded an average milk processing capacity utilization nearly 67% during the peak milk procurement month (January, 1996) and 55% on an annual basis.

Presently, OF dairies are having their milk distribution network in over 778 cities(including 175 metro and class I cities) out of the total of 3700 cities and towns in the country. The average daily liquid milk supply from all sources in the metro cities by the end of March 1995 was 9.42 million litres of which dairy co-operative sector organized through OF contributed 3.47 million litres. During the year 1994-95, OF projects produced nearly 2,68,000 MT of milk powder (including SMP, WMP, baby food), 40,000 MT of butter and 1,30,000 MT of ghee. Milk powder manufacturing capacity in the country increased form 58.50 MT per day in 1970 to 842 MT per day in 1995-96 and use of imported SMP came down form 19.0 thousand MT in 1970 to 0.7 thousand MT in 1993.

iv. Technology Mission on Dairy Development

The Government of India launched a Technology Mission on Dairy Development(TMDD) in August 1988 to support and supplement the efforts of the OF programme thereby enhancing rural employment opportunities and income generation through dairying in 264 OF districts in the country. The objectives of TMDD were to accelerate the pace of increasing rural employment and income through dairy development on co-operative lines; to accelerate the pace of application and adoption of modern technology to improve overall dairy productivity; to ensure greater availability of milk and dairy products; to dovetail state government programmes in animal husbandry, dairying, poverty alleviation, IRDP etc. with that of the dairy co- operatives; and to dovetail research programmes of the central government research institutes, agricultural universities and NDDB for optimum results. TMDD concluded in March 1997. While the targets for the TMDD during the Eighth Five Year Plan have been achieved to a large extent, the dairy industry needs to improve its performance in many crucial areas. Increasing the productivity of Indian cows and buffaloes, control and containment of animal diseases, improving the regularity and reliability of livestock related data, enforcing high quality standards for dairy products etc. are important areas for urgent interventions.

v. BAIF Development Research Foundation

It was March, 1946 - the dawn of Indian Independence. The brief sojourn of the Father of the Nation - Mahatma Gandhi to Urulikanchan, a backward village near Pune, marked the turning point in community development. Promotion of community health through nature cure became a reality with the establishment of a Nature Cure Centre, managed by his trusted disciple Manibhai Desai.

The village presented an appalling picture to Manibhai. Unemployment and underemployment being the root causes of poverty, Manibhai decided to promote income generation activities as the main plank of development. Cultivation of high yielding varieties of food crops, vegetables and fruits was his first successful venture. However, he realized that these technologies would only benefit the well to do farmers and widen the gap between the rich and the poor.

He maintained a dairy herd consisting of an elite cattle breed - Gir. Although the herd produced several champion cows, the dairy incurred losses due to genetic limitations of this breed. This made him launch a unique experiment of breeding the Gir as well as the local non-descript cows with exotic milch breeds. The new-born crossbred cows were able to produce 10 times more milk than their mothers. Most of the poor farmers who owned non-descript cows were willing to take part in cattle development.

The encouraging response from the rural community prompted Manibhai to establish the Bharatiya Agro Industries Foundation (BAIF) at Urulikanchan in 1967, to replicate his novel experiments in rural development. Later it was renamed as BAIF Development Research Foundation.

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