Incentive Schemes for Farmers, Youth and Entrepreneurs.

 i. Dairy/Poultry Venture Capital Fund:

 

Small rural producers scattered all over the country accounting for about 70% of production characterize milk production in India. In India, a far larger proportion of milk continuous to be handled by the unorganized sector i.e. about 85% comprising innumerable small processors and manufacturers of indigenous milk products. But the main contention in the unorganized sector is quality, which cerates a serious threat to human health. The Government of India has introduced this scheme in the tenth plan to provide financial assistance for setting-up/modernization of dairy sector.

The interventions through the scheme involve the generation of self-employment and providing infrastructure to the unorganized sector for making improvement in the quality resulting in food safety. It will help in bringing a significant portion of unorganized sector in the ambit of organized sector and will result in increasing the commercial viability of the activities.

The guidelines for the approval of the project shall be as below:

• The financial assistance of 50% of the project cost will be provided by Government of India as interest free loan while 40% of the project cost shall be provided by the financing bank at the rate of interest as applicable for agricultural activities and 10% share of the project cost shall be borne by the beneficiary. Besides this, the Government of India will also subsidize the interest component applicable for agricultural activities to the extent of 50% in case of regular/timely repayment by the beneficiary.
• The Government of India will release its share to NABARD, which will be maintained by it as revolving fund.
•  The scheme will be extended to agricultural farmers/individual entrepreneurs and groups of all sections of unorganized as well as organized sector.
• The proposals will be sanii. Livestock Insurance Scheme

 ii. Livestock Insurance Scheme

 

The Department of Animal Husbandry & Dairying will introduce a Centrally Sponsored Scheme ‘Livestock Insurance’ in the year 2005-06.The justification given for introducing the scheme are:

•  To protect the farmers and landless labour against losses, which they have to incur resulting from untimely death of livestock, owned by them.
•  It is difficult for the Government to persuade the farmers to go in for genetic upgradation of their cattle through cross breeding or acquisition of high yielding milch animals unless sufficient incentive is provided by way of insuring them against losses (which will be much higher in case of crossbred and high yielding animals) caused by death of these animals.

The broad features of the proposed new scheme are:

i)While eventually all types of livestock will be brought under the scheme, it is proposed to concentrate initially on crossbred and high yielding cattle and buffaloes. Maximum 2 dairy animals per farmer will be insured under this scheme.

ii) While preference will be given to small and marginal farmers and landless labour, other farmers will not be excluded from the purview of the scheme.

iii) It is proposed to link the new scheme of livestock insurance with Centrally Sponsored Scheme of ‘National Project for Cattle and Buffalo Breeding’ (NPCBB) this scheme so as to ensure easy identification of animals to be insured and necessary follow-up; this will also act as an incentive for the participants in NPCBB.

iv) The insurance companies will be persuaded to apply the scheme rates (which are lower) or near scheme rates, for the animals to be covered under the proposed new scheme. The expected premium would be around 5-6% for a policy period of 3 years.

v) It is proposed that 50% of the premium should be borne by the Government(the remaining 50% to be paid by the beneficiary).

vi) To ensure active involvement of the veterinary practitioners at the village an incentive of the order of Rs. 50 per animal will have to be provided for them.

iii. Others Schemes for Dairying

Besides the Ministry of Agriculture, schemes relating to dairying are being implemented by other ministries viz. Ministry of Food Processing Industries,Department of Science and Technology, Ministry of Rural Development. During the tenth plan, Ministries of Food Processing Industries (MOFPI) had been operating many schemes for the development of food processing sector which inter alia includes setting up/expansion/modernization of food processing industries covering all segments viz. fruits & vegetable, milk products, meat, poultry, fishery, cereal,pulses, oil seeds and such other agri-horticultural sectors. During the tenth plan, these schemes were merged and one macro level scheme for ‘Infrastructure Development’ has been introduced with a view to enabling small and medium scale units to attain viability by defraying the cost of major facilities such as cold storage,warehousing, R&D Laboratories, power and water supply, etc. Under the scheme Food Parks will be established in different parts of the country. For packaging center, entrepreneurs will get assistance upto 25% of the total cost of plant and machinery and technical civil works (33% in difficult areas) subject to a maximum of Rs. 2 crore. The scheme has also provision for assistance for stationary/mobile pre-cooling storage, refrigerated transport system and freezer cabinets at retail outlet. Technology Information, Forecasting & Assessment Council (TIFAC) under the Department of Science and Technology also assist for projects like clean milk production and improvement of milk quality. The Ministry of Rural Development assists in the formation of dairy cooperatives especially women dairy cooperative through the Science Technology Entrepreneurs Parks (STEP) programme. Assistance is also available for construction of milk chilling centers.ctioned by the commercial banks as per the guidelines of RBI, NABARD and Government of India. The recovery of loan, when made, will be divided between the Government of India’s share and the Bank’s share of loan on pro-rata basis. Similarly, the loan will be disbursed simultaneously from the revolving fund as well as banker’s share on pro-rata basis.

Schemes for Development of Dairying

i. Intensive Dairy Development Programme (IDDP)

The implementation of Operation Flood (OF) program has revealed that linking of milk shed/milk production areas to the urban markets pays rich dividends through increased availability of milk to the urban consumers and remunerative return to the rural milk producers through cooperative infrastructure. During Operation Flood implementation period, the dairy development activities in the non-operation flood,hilly and backward areas, which have comparatively lesser potential for milk production, were carried out by the State Governments under the State Plan Schemes.

However, due to limited resources of the State Governments, it has been observed that there is a strong need on the part of Government of India to support efforts of the State Governments in taking up dairy development activities in these areas.

Accordingly, the Department of Animal Husbandry and Dairying had launched a scheme entitled “Integrated Dairy Development Project (IDDP) in Non-Operation Flood, Hilly and Backward Areas” on 100% grant-in-aid basis during the 8 th Plan period and continued during IX Plan. The proposal to further continue the scheme during the remaining period of X Plan and also in the XI Plan period has been considered by Government of India.

The Government of India has now approved the implementation/continuation of the modified scheme during X Plan period. The scheme would be entitled “Intensive Dairy Development Programme” (IDDP) and is implemented in hilly and backward areas including the districts which have received less than Rs. 50.00 lakh for dairy development activities during Operation Flood Program. The total Central Outlay of the scheme during the X Plan period is Rs. 175.00 crore.

Funding: The pattern of funding in non-operation flood areas will be on 100% grant in aid basis from Central Government to the State Governments/Union Territory Administration except for the cost of land. The pattern of funding for the districts which were covered under OF program but where investment during OF Programme was less than Rs. 50.00 lakh will be 100% grant in aid for the processing capacity up to 20,000 liters/ day. Above this capacity, OF pattern will be followed namely, 70% loan and 30% grant.

Implementation

•  The State Dairy Federations/District Milk Unions in view of their expertise and professionalism will implement the project.
•  The funds will be released directly to the implementing agencies to avoid delay in release of funds and speeding up the implementation of the project.
•  The project will be prepared based on cluster approach in areas with better availability of water and fodder.
•  Provision will be made for producing better quality milk in order to create environment for production of clean and good quality milk and adopting good hygienic practices.
•  Maximum project cost will be Rs. 3.00 crore per district.
•  Major components of the project will have the following ceilings:
•  Milk processing and marketing facilities (including chilling, processing, product manufacturing and marketing – not more than 60% of the total project cost.
•  Milk procurement activities including expenditure on DCS milk transportation,procurement tankers and other vehicles etc. – not more than 30% of total project cost.
•  Technical input services including breed improvement, animal health care,feed and fodder development/provision etc. – not more than 20% in areas where the breed improvement facilities are not provided under National Project for Cattle and Buffalo Breeding (NPCBB) or any other similar program and not more than 10% in areas covered by NPCBB etc.
•  Cattle induction to be restricted to only scheduled castes/scheduled tribes and BPL families subject to an overall ceiling of 10% of the total project cost and subsidy may be restricted to 50% of the NABARD cost of cattle.
•  Manpower development including training requirements of field and dairy staff as well as Management Committee of DCS and farmers training –not more than 10% of the total project cost.
•  Working capital–not more than procurement price for 21 days of the targeted milk procurement.
•  Management grants for a period of 3 years on a tapering down basis.
•  Benchmark survey and preparation of high quality Detailed Project Reports– not more than 3% of the total project cost.
•  Concurrent evaluation and in-depth independent evaluation to be undertaken– not more than 2% of the project cost.

Monitoring: The project prepared by the State Governments/Implementing Agencies within the project guidelines given in preceding paragraphs shall be considered by the Project Sanctioning Committee .The projects will be regularly monitored on quarterly basis by a Technical Management Committee headed by Secretary, In charge of Dairy Development in the concerned State/Union Territory.

ii. Strengthening Infrastructure for Quality & Clean Milk Production

Government of India has introduced a centrally sponsored scheme “Strengthening Infrastructure for Quality & Clean Milk Production” during 10 th Plan period with following objectives:

•  Creation of infrastructure for production of quality milk and milk products at the farmers level up to the points of consumption.
•  Improvement of milking procedure at the farmers level.
•  Training and strengthening of infrastructure to create mass awareness about importance of clean milk production.

Funding: The pattern of funding under the scheme will be on 100% basis, for the following components:

•  Training for clean milk production to all members of the society.
• Detergent, antiseptic solutions, muslin clothes.
•  Utensils and accessories for clean milk production.
•  Strengthening of existing laboratory facilities.
•  Planning and monitoring.The pattern of funding under the scheme will be in the ratio of 75:25 for purchase of bulk cooler between Government of India and the respective Dairy Cooperative/Union.

Government Policies and Incentives

Implementation: Dairy Cooperative/Union/Federation will implement the scheme through State Government. The Project shall be prepared as per the guidelines of the scheme given below and shall be submitted through concerned state Government/Union Territory Administration to the Department of Animal Husbandry & Dairying.

i.The first element of the project formulation would be to undertake an analysis of the proposed village to ascertain the quality standard of milk available in the village and adjoining areas both in terms of bacteriological and chemical quality.Then the status and performance of the Dairy Cooperative Society (DCS) formed in the village; its total collection and distance covered to transport the milk to the union/nearby market will be examined.

ii. While preparing the project it must be ensured that the villages and the DCS proposed for consideration under any other similar schemes on clean milk production of NDDB/Central/State Government are not covered by this scheme.

iii. While selecting DCS all such DCSs those are located in a single charged milk collection route under a Union should be covered under the scheme. In this manner all DCS of a milk route will be covered at the first stage.

iv. It should be emphasized that all DCSs, who are currently procuring more than 500 liters of milk should be considered at first priority for providing post milking chilling facilities. At second priority, all DCSs having potential of collecting 500 liters of milk per day and having no post milking chilling facilities available within a reasonable distant area but located in the same milk collection route will be selected for assistance under the scheme. In such cases, at first a DCS shall have to be organized before the village can be considered for assistance under the scheme.

v. Farmer-members who have supplied milk for a minimum of 250 days in a year to the self associated DCS or to another nearer DCS (from farmer’s cattle shed/procurement spot) will be considered for assistance under the scheme.However, all farmer-members associated with the concerned DCSs shall be considered for training.

vi. Selection of DCS and selection of Farmer-members as per above shall be done by the technical/management officers involved in milk procurement and in field level extension services of Dairy Cooperative Union/Federation or Department of Dairy Development of State Government.

vii. Training program will be undertaken by ‘Technical Expert Group for Training’constituted by Dairy Cooperative Union/Federation or Department of Dairy Development of the State Government or at existing training institute nearby.

viii. The training shall cover theoretical explanation as well as practical demonstration.

ix. As for the referral text material required for the theoretical training, Dairy Cooperative Union/Federation shall get this material printed and shall distribute the same to each farmer-member in local language at the time of training.

x. There will be one theoretical session and a practical demo-session in a day.Thereafter, regular field technical staff shall examine the impact of the training for seven to ten days and if needed, they shall supervise day to day activities in the field. The second theoretical session shall thereafter be taken up followed by a practical demo session.

xi. Expenditure on each farmer-member shall be @ Rs. 125/- for one day of training including referral text material contingency expenditure during the training program.

xii. The expenditure involved against the traveling expenses of the trainer experts may be met by the concerned department/Dairy Cooperative Union/Federation.

xiii. As a part of the project formulation exercise, Dairy Cooperative Union/Federation will have to ensure that inputs relating to 25% of the financial assistance for chilling facilities will be borne by the respective society/Union.

xiv. The Project will be examined and scrutinized by Dairy Division and approval by the Department in the normal course up to cost of Rs. 5.00 crore and by a Project Sanctioning Committee (PSC) for the Project costing more than Rs. 5.00 crore.

xv. The total outlay for the scheme for 10 th Plan is Rs. 30.00 crore and the budget provision of Rs. 1.00 crore for implementation of this scheme during 2003-04 as grant in aid to State Government/Union Territory.

iii. Assistance to Cooperatives
Many district level milk cooperative unions established under Operation Flood programme are running in loss and the effort to rehabilitate them through the Central Sector scheme ‘Assistance to Cooperative’ is also not effective in most cases. During Operation Flood Programme, about 265 districts out of over 500(presently 600) districts in the country were covered; the remaining 250 districts will be covered by the ongoing scheme ‘Integrated Dairy Development Project (IDDP)’. Due to various problems a significant number of Milk Unions created under both the Operation Flood and Integrated Dairy Development Projects are running in loss. The Government of India’s ‘Assistance to Cooperative’ scheme supports the steps necessary to restore the financial health of some loss-making district milk unions established under Operation Flood program. The scheme provides for matching contribution of grants (50:50) from the Central and State Governments.

The scheme is implemented through National Dairy Development Board (NDDB).NDDB on its part would reschedule loans, waive penal interest and freeze interest on outstanding loan.

iv. National Project for Cattle and Buffalo Breeding (NPCBB)

The NPCBB scheme is implemented by the Department of Animal Husbandry and Dairying for restructuring and reorienting cattle and buffalo breeding operations in the country with special emphasis on maintaining quality in inputs and services. The project will, over a ten year period, bring under organized breeding coverage, all the breedable female cattle and buffalo in the State through a combination of (i) a vastly improved artificial insemination (AI) network delivering AI at the farmers door step and (ii) it will strategically position bulls for natural service. The project will be implemented in two phases: I phase between 2001-2005 and II phase between 2006-2011.

Under this project, 100% grant-in-aid will be provided to the States for taking up the following activities:

•  Survey work to generate relevant information.
•  Conduction of Seminar and Workshop
•  Computerization at state and district level.
•  Strengthening of training center, bull farm and semen bank/stations etc.
•  Strengthening of infrastructure for Liquid Nitrogen storage and distribution
•  Training of professionals.
•  Establishing of breeders association and progeny testing programme.
•  Training of A.I workers (both departmental and private worker)
•  Farmers training and extension program
•  Conversion of static to mobile AI centers.
•  Purchase of equipment for private AI workers
•  Tapering grant for private AI workers Purchase of new bulls.
•  Extension programme and farmers training.
•  Equipment for AI workers.
•  Strengthening of AI networks.
•  Managerial grant to State Implementing Agency
•  Miscellaneous

Vision and Mission of the Government

In the last few decades, the overall growth rate in livestock sector was steady and was above 5% per annum and this has been achieved despite the fact that investment in this sector was not substantial. But since the Ninth Plan there is some decline in the growth rate of livestock products. Total livestock output increased at 3.8% per annum during the Ninth Plan, slower than the 4.5% growth rate achieved during 1980-97. In comparison to the Ninth Plan, growth rates in the first two years of the Tenth Plan have declined quite significantly - milk (2.2% from 4.3%), egg (2.14 from 7.3%) and wool (-0.6% from 2.1%). A matter of concern is that milk and egg production has decelerated despite the latest Livestock Census showing large increase since 1997 in the number and proportion of crossbred cattle and also of poultry.

Besides drought conditions, feed availability and marketing problems of livestock products appear important. Broad frame-work of cattle and buffalo breeding policy recommended for the country since mid-sixties envisaged selective breeding of indigenous breeds in their breeding tracts and use of such improved breeds for upgrading of the non-descript stock. While the States accepted the framework, appropriate implementation of the same through field level programme could not be done. Lack of interest in promoting Breed Organization/ Societies and related farmers’ bodies contributed to gradual deterioration of indigenous breeds. That there had been large deviation from the laid breeding policy is quite obvious from the fact that crossbreeding which was to be taken up in a restricted manner and in areas of low producing cattle has now spread indiscriminately all over the country including in the breeding tracts of some of the established indigenous cattle breeds.

Investment in the dairy sector has been reduced drastically in the Ninth Plan. In comparison to Eighth Plan investment of Rs. 821.43 crore (against the plan outlay of Rs. 900 crore), the maximum investment during 9th Plan would be Rs. 130.93 crore against the plan outlay of Rs. 469.52 crore. Out of 168 Milk Unions, 119 Milk Unions (70.8 percent) were running in loss as on 31.3.1998. So far, the Government policy in dairy sector has been to give preference to the establishment of milk processing plants and selling liquid milk particularly in urban areas. This policy was guided by an overall shortage of milk and the national milk production falling short of nutritional requirement during the earlier years of planning era. But the scenario has changed from a milk shortage environment to conducive environment that will enhance demand so that growth rate of milk production is stimulated. No policy measures were undertaken so far to give a fillip to the unorganized sector involved in the production of Indian dairy products (like ghee, paneer, channa, khoa, etc.),which have tremendous potentiality for export market in Asian and African countries.

The major focuses of Government of India for dairy development during the Tenth Five-Year Plan are:

1) The main thrust will be on genetic upgradation of indigenous/native cattle and buffaloes using proven semen and high quality pedigreed bulls and by expanding artificial insemination and natural service network to provide services at the farmer’s level. Production of progeny-tested bulls in collaboration with military dairy farms, government/institution farms and gaushalas will be taken up.

2) Conservation of dairy breeds should be the national priority to maintain diversity of breeds and preserve those showing decline in numbers or facing extinction.

3) After the successful eradication of Rinderpest disease, the focus would now be to adopt a national immunization program to control prevalent animal diseases.Efforts will be made for the creation of disease-free zones to boost export of milk products.

4) Development of fodder through cultivation of fodder crops and fodder trees,regeneration of grazing lands and proper management of common property resources.

5) Building infrastructure for animal husbandry extension network. Panchayats,cooperatives and NGOs should play a leading role in generating a dedicated band of service providers at the farmer’s doorstep in their respective areas

6) Strengthening infrastructure and programmes for quality and clean milk production and processing for value addition.

7) An information network would be created based on animal production and health with the active involvement of Research Institutions, Government departments, private industries, cooperative, and NGOs.

8) A regular interaction between the Department of Animal Husbandry and Dairying and research institutes like the Indian Veterinary Research Institute, National Dairy Research Institute, Institutes on cattle, buffalo, sheep, goat, equine and camel.

Government Policies and Incentives

The role of dairy development in increasing milk production, improving the nutritional standards of the people, generating employment opportunities (both direct and indirect) and improving income level in rural areas, especially for small and marginal farmers and agricultural labourers has been well established. We have already learnt the role of various organizations (like NDRI, NDDB, NGOs, Cooperatives etc.) and programmes (like Operation Flood) in the development of dairying in India. These institutions and programmes are directly related to the government policies and initiatives for improvement of both milk production and marketing.

Presently animal husbandry and dairying receive priority in the government’s efforts for generating wealth and employment, increasing the availability of animal protein in the food basket and for generating exportable surpluses. The value of output of milk at current price (2003-04) was Rs.110085 crore, which is about 67% of the total contribution of livestock sector. Table 3.1 gives the information about the percentage contribution of livestock sector in the total Gross Domestic Product(GDP) of the country and the percentage contribution of milk in the total livestock sector. The Tenth Plan target for milk production is set at 108.4 million tonnes(MT). envisaging an annual growth rate of 6.0 per cent. Dairying plays a crucial role in rural economy and livelihood particularly for the rural women who play a significant role in dairy farming and are directly involved in major operations likefeeding, breeding, management and health care. In dairying, 75 million women are engaged as against 15 million men. As the ownership of cattle and buffaloes are more evenly distributed with landless labourers, and marginal farmers, the progress in the dairying sector will result in a more balanced development of the rural economy, particularly in the reduction of poverty ratio. Even many small and medium farmers who derive yearly savings from agriculture are dependent on livestock especially dairy and poultry for daily subsistence. The allocation for animal husbandry,dairying and fishery is Rs. 2500 crore during the tenth plan.

Percentage contribution of livestock sector in the total Gross
Domestic Product of the country and the percentage contribution of
milk in the total livestock sector.

National Milk Grid

The operation Flood – II, which began in 1981 aimed at building a National Milk Grid linking 136 rural milk sheds in 22 states and union territories with the Urban demand centers in the country and creating infrastructure required to support a viable dairy industry. Milk Grid takes care of the surplus milk within the State, where the milk from the surplus area/district is transferred to the deficient area.

Under such a situation, it is termed as State Milk Grid. When the surplus milk from one state within the region is transferred from surplus states to the deficient state it is called a Regional Milk Grid. Transportation of milk from the surplus region to the deficient region is called National Milk Grid.

National Milk Grid now in operation in India is capable of transporting large quantities of pasteurized milk across long distances in hygienic conditions by rail or road tankers. For example, insulated rail tankers carrying 40000 litres of milk, routinely move from Anand or Guntur or Jalagaon to Calcutta, covering distances of 1500 to 2000 km. in 30 to 40 hours, with only a 2 0 C rise in the milk temperature. This takes place in a developing country where, traditionally, a paucity of transportation and infrastructure facilities has restricted the reach of fresh produce to potential markets.

At present, one rake of 60 wagons each ply milk between Anand and destinations such as Delhi, Calcutta and Guwahati each week. To that extent, the National Milk Grid exists and it connects all the four metros and about 500 towns that come in between, the nerve center being Anand in Gujarat. The milk procurement by the 12 district member unions of the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF) stood at 44.19 lakh litres per day in 2000-01.

Milk Federations

As mentioned earlier all the Unions in the state or contiguous districts form an apex body known as the Federation. The Federation, working under the Managing Directormarkets the products produced by various milk unions, supplies inputs and provides consultancy and supervises their activities. Federations at the level of the state is known as State Dairy Development Co-operative Federation, while at the national level, it is known as National Cooperative Dairy Federation of India (NCDFI).

i. National Co-operative Dairy Federation of India

The National Co-operative Dairy Federation of India (NCDFI) was registered in 1970. In June, 1985, the bye-laws of the NCDFI were substantially amended to limit its membership to federal dairy co-operatives of the States and union territories and the NDDB. The amended bye- laws vest with these members- to the extent that the Multi-State Co-operative Societies Act, 1984, permits—the direction,management and control of the NCDFI. In December 1986, to gain locational advantage, the NCDFI shifted its headquarters from Delhi to Anand, the milk capital of India.

In December 1990 NCDFI included the co-operative oilseeds growers federations as its members. There are now 21 state co-operative milk producers federation apex unions and 7 oilseeds growers co-operative federations as the members of the NCDFI. These state federations comprise 170 district co-operative milk producers unions and 19 co-operative oilseeds growers’ regional unions. The primary level membership comprises about 74500 villages co-operative societies and 98 lakh farmers.

Presently, the NCDFI is performing and consolidating the activities initiated during 1984 to 1987. These are: members relations, establishing a common national platform for the dairy and oilseeds co-operatives and, functioning as a single window for the coordination of purchases and supplies activities of the national level institutions and members of the NCDFI. The NCDFI is also working to improve the quality of these services by evolving an organizational climate of professionalism and excellence.

The NCDFI is managing on turnkey basis, the movement of 142 broad gauge Rail Milk Tankers in different regions of the country. There are about 24 linkages that have been established over time for the movement of liquid milk from the surplus milksheds to the demand centers. Further-more, the NCDFI has undertaken a series of measures - including a comprehensive agreement with the railways - to ensure improved turn around time and efficient utilization of the fleet.

The focus of the NCDFI is to facilitate - through co-operation and networking - a shift from:

the restrictive and repressive co-operative laws in the country to the creation of an enabling legal environment where co-operatives can thrive and prosper.

•  State owned or supported co-operatives to member-owned and controlled self reliant co-operatives.
•  Political and state interference in the affairs of the co-operatives to the management of the co-operatives through enlightened membership
•  Unnecessary interference in the day-to-day functioning of the co-operative by its board of directors to the evolution of true partnership and accountability between the board and a professional chief executive officer who enjoys the autonomy and power to fulfill organizational objectives.
•  a policy of having chief executive officers on loan or deputation from government or other organizations to having a professional chief executive, who is a permanent employee of the co-operative and is specifically appointed by and
• accountable to the board of the co-operative.
•  a policy of having a system of common cadre of senior officials who keep shunting between the federation and its constituent unions to the policy of having mutually exclusive and independent full time permanent employees in the unions and the federation.
•  a policy where quality and excellence were viewed as a luxury policy to the policy where quality and excellence are pre-requisites for the organizations to succeed in the market place.

ii. Main Functions

National Cooperative Dairy Federation

•  Develop inter Dairy Cooperative relationship
•  Research, Publication and Consultancy on Dairying
•  Liaison with NDDB, Government of India, etc.

State Cooperative Dairy Federations

•  Production programming
•  Marketing of milk products
•  Coordinating bulk purchases
•  Assist the Unions in input programmes
•  Training, consultancy etc.

District Cooperative Milk Producers Union

•  Organisation and supervision of primary cooperative societies
•  Collect milk from primaries for processing and manufacturing milk products
•  Ensure regular payment to DCS
•  Marketing liquid milk in their area of operation
•  Distribution of cattle feed
•  Provide technical inputs
•  Extension activities
•  Arrange training of staff, DCS personnel
•  Educate member farmers and farmer ladies

Primary Milk Producers Cooperative Society

•  Collection and sale of milk to milk unions
•  Ensure regular and remunerative payment to producers
•  Help members to increase milk production
•  Provide veterinary First Aid and Artificial Insemination services
•  Sale of cattle feed

Three Tier Structure of Dairy Co-operatives

Co-operatives in India are working at three stages viz. production processing and marketing. At the primary level in villages itself, the willing farmers join together to form a Milk Producers Co-operative Society. As already mentioned they form a society popularly known as Village Milk Producers Co-operative Society (VMPCS) as per the agreed principles of milk cooperatives. The secretary of the society appointed by elected representatives runs the day to day affairs of the society viz. collects the milk, tests for its quality, dispatches the milk to the Union/chilling centers, prepares the bill, draws the payment and distribute it to the producers. In addition to this he supplies the seeds and other inputs as available and required from time to time.

The second stage is the milk union at the district level (Milk District Co-operative Union). The membership of the Union consists of all the registered milk producers societies in the district or any other co-operative institution, which undertakes to supply to the Union commodities belonging to its members. The Union/chilling center collects the milk, which is processed/converted into products at the plant owned by the Union. The union at district level arranges the various facilities which other wise a society cannot arrange viz. (i) supplies the milk testing kit and the consumables required for testing, (ii) makes payment for milk procured by the society, (iii) supplies inputs i.e. fodder seed etc. for the producers, (iv) supplies milk products and concentrate feed for sale in the villages and (v) arranges for supply of semen for insemination and first aid to the sick animals in the villages and host of other facilities.

All the unions in the state form a co-operative federation at the state level (State Dairy Development Co-operative Federation). Federation appoints the Chief Executive officer to every union, who administers and runs the day to day activities of the Union, but is supervised by the Board of Directors of the Union. The Federation in turns supplies all the inputs to the Union, markets the produce for all the Unions,collects the money and gives it to the Union of onward transmission to the societies.

In other words it is the three tire system i.e. village level, district level and finally the state level.

Co-operatives Movement in India

After the introduction of cooperative societies Act 1904, the cooperative movement started. Cooperatives were organized to break the poverty cycle of small farmers,which was due to the poor facilities, low productivity, famines and the heavy dependence on money lenders, who charged heavy rate of interest. The farmers were also exploited by the intermediaries engaged in the marketing of the produce.

These co-operatives formed aimed to encourage thrift and wide use of credit.In 1912, a legislation was passed to give the power to the cooperatives (other than credit cooperatives) to be incorporated. In 1918 again, the responsibility for cooperative legislation was given to state governments. During the period 1920-1940, many co- operative societies came into existence. It is interesting to note that a very large number of cooperatives were from agriculture field. The number went on increasing and more and more emphasis was laid in the formation of cooperatives in the subsequent five year plans. National Cooperative Development Corporation has reported in 1992, that there were 3,38,000 cooperatives with membership of about 15.60 crore people with 43.7% share of agricultural credit. This was an impressive achievement for a country like India in less than half a century after its independence.Again under the Operation Flood (OF) programme stress was laid on the formation of milk cooperatives.

i. Anand Pattern Co-operatives
An introduction to Anand Pattern of co-operative has been given in the Unit (1.4).We know that the success of Kaira District Co-operative Milk Union popularly known as “AMUL” lead to the emergence of the strong developmental tool known as “Anand Pattern”. It is designed to support the production, procurement, processing and marketing/distribution of milk and milk products. It is owned by the milk producing farmers. The salient features of Anand Pattern of Dairy Co-operatives(APDCs) are as under.

•  A single commodity approach
•  Decentralised decision making and producers elected leadership
•  A three- tier organizational structure
•  Employment of professionals
•  Accountability of these professional to milk producers
•  Provision of providing technical inputs
•  Integration of production, procurement, processing and marketing functions
•  Regular audit
•  Contribution to development of village

Amul pattern provides opportunity to farmers to control over the resources they create. The farmers elect those who manage their affairs and subsequently appoint professional managers and hold them accountable.The most important factor is that the cooperatives organized both in the villages as well as the District Union are in a purely democratically knit system. The milk producers own elected representatives form the Board of Directors of the Union.

The Union’s board appoint a General Manager and other professional staff for day-to-day working of the union. Thus, the institutional structure wherein the farmer producers frames the general policies for conducting the milk business through the help of professionals. They look themselves that the policies laid are pursued in the right direction in the interest of the producer members emerges and grows consistently. The Anand Union grew gradually in the 50s and 60s and developed 30to become a successful model to be followed in rest of the country.

The basic unit in the Anand Pattern is the Village Milk Producers’ Co-operative Society, a voluntary association of milk producers in a village, who wish to market their milk collectively. Every milk producer can become a member of the Co-operative Society. In the 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 provide Artificial Insemination (A.I.) services and Veterinary First-Aid.

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 dairy, owned by a Union, usually has a milk drying plant to convert the seasonal surpluses into milk powder and other conserved products. With the help of the dairy plant, the Union is able to ensure that the milk producers get 80-90% of the lean season price even in the flush season.

The cattle feed plant owned and operated by the co-operative union is able to provide nutritionally balanced cattle feed at prices 20-30% lower than the prices of the traditional feeds. The milk producers are therefore able to substantially increase their returns from milk production because of the better returns for their milk and lower feeding costs. Each co-operative dairy tries to market the bulk of its milk as liquid milk and converts the surplus milk into products. The profits made by the dairy are redistributed to the milk producers as a subsidiary payment. Many Societies are able to pay 12-15% bonus to their milk producers based on the business transacted with their union.

It was in the year 1964 that the Prime Minister of India Late Shri Lal Bahadur Shastri after visiting Anand and having convinced himself of the benefits that accrued to the rural Milk Producers desired that a national body should come up,which would help replicate dairying through cooperatives on Anand Pattern in the other parts of the country. Thus, came into existence the National Dairy Development Board in September, 1965. In 1969, the National Dairy Development Board formulated an integrated dairy development programme popularly known as operation Flood-I programme. The proposal envisaged 18 Anand Pattern Dairy Cooperatives in the hinter-land milk sheds of India’s four major Metropolitan Cities viz. : Calcutta(Kolkata), Bombay (Mumbai), Delhi and Madras (Chennai), to provide for guaranteed investment in milk producers organization, milk production, processing and marketing.

Each structure thus erected was to be handed over to the producers whose milk handled thereby put this instrument of development into the hands of rural milk producers. Concurrently in the four major cities, the urban dairy plants capacities were to be built up so that they could capture a commanding share of the market for milk. A beginning was made in the year 1970 with the funds generated from out of the conserved commodities received as gift from the World Food Programme.

The funds generated provided the finances for operation Flood Programme as a whole. To handle the donated commodities, generation of funds and their disbursements for procurement, the Government of India set up the Indian Dairy Corporation which became the finance and promotion house in the country’s dairy development. The NDDB became the official technical expertise body for the IDC.

Now, IDC has merged with NDDB. With the implementation of this programme till March, 1981, it became possible for establishing 13270 Villages Dairy Cooperative Societies and to bring into the fold of cooperative ambit around 17.47 lakes farmers families. The capacity of the rural dairy plants was enhanced form the pre-project level of 6.6 lakh litres per day to 45.38 lakh litres per day and the throughput level raised form 4.60 lakh litres per day to 33.87 lakh litres per day. Similarly, the milk marketing capacity of the metro dairy plants could be raised from the pre-project level of 10 lakh litres per day to 29 lakh litres per day and the throughput form 9.02 lakh liters per day to 22.76 lakh litres per day.

ii. Co-operatives in Dairy Development
According to the All India Report on Agricultural Census 1970-71, there have been some 70.50 million households cultivating around 162.12 million hectares of land in India. Of the total households engaged in agricultural farming and operating different sizes of land, approximately 70% households have been operating in less than two hectares of land. These farming families operate some 21% of the total cultivated land in India. It is significant to note that of the total agriculture farming units in India, about 33% cultivated land holding size is less than 0.5 hectares. Another 18% operated land holdings between 0.5-1.0 hectares. Those who cultivated land between 1.0-2.0 hectares were around 19% of the total cultivators in India (1970-71). The human population is increasing day by day-and –the size of land holdings are further being split into smaller size groups. Thus the role of dairying in the economy of the farmer has gained further importance in the present context.

As far as the organized attempt in dairying is concerned, in this country we have seen three forms of organization - private, government and co-operatives. 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 governments, 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 Indian Dairy Corporation/National Dairy Development Board through cooperative organizations has shown that organizing dairying on co-operative lines would only yield desired results. How milk co-operatives have emerged as the most cohesive organizations of the farmers which can handle the milk procurement,transport, processing and marketing of milk on the one hand and how they canimprove and enhance the milk production through an infrastructure designed for the purpose and also raise the incomes and social standards of the rural community in the country are some of the important points, which need special emphasis.

Indian Co-operative Societies Act

Co-operative Societies Act is a Central Act. However, ‘Co-operative Societies’ is a State Subject (Entry 32 of List II of Seventh Schedule to Constitution, i.e. State List). Though the Act is still in force, it has been specifically repealed in almost all the States and those States have their own Cooperative Societies Act. Thus,practically, the Central Act is mainly of academic interest. As per preamble to Act,the Act is to facilitate formation of co-operative societies for the promotion of thrift and self-help among agriculturists, artisans and persons of limited means.

The Statement of Objects and reasons states as follow- (a) Cooperative Society can be established for purpose of credit, production or distribution. (b) Agricultural credit societies must be with unlimited liability. (c) Unlimited society is not best form of cooperation for agricultural commodities. However, the provision is continued as in several provinces (now States) such societies do exist and are working. It is not intended to give them undue encouragement, but to legalise their existence. (d)Unlimited society can distribute profits with permission of State Government.

i. Registration of Society
State Government appoints Registrar of Cooperative Societies. State Government also appoints persons to assist Registrar and confer on such persons all or any of powers of Registrar (section 3). Function of Registrar begins with registration of a society. He has powers of general supervision over society. Returns of Society are to be filed with Registrar. He can order inquiry or inspection against society.He can also order dissolution of society.

ii. Societies which may be Registered
A society, which has as its object the promotion of economic interests of its members in accordance with cooperative principles can be registered as a society.Similarly, a society established with the object of facilitating operation of such a society can also be registered under the Act. The society can be registered with limited or unlimited liability. However, unless State Government otherwise directs,(1) Liability of society of which a member is a registered society shall be limited.(2) Liability of a society of which object is to creation of funds to be lent to members, and of which majority of members are agriculturists and of which no member is a registered society shall be unlimited (section 4). Thus, a registered society can be member of another society, but liability of such other society must be limited, unless State Government otherwise directs.

iii. Who Can Form a Society?

A society can be formed with at least 10 members of age above 18 years. If object of society is creation of funds to be lent to its members, all the members must be residing in same town, village or group of villages or all members should be of same tribe, class, caste or occupation, unless Registrar otherwise directs. The provision of minimum 10 members or residing in same town/village etc. is not applicable if a registered society is a member of another society. The last word in name of society should be ‘Limited’ if the Society is registered with limited liability (section 6). Registrar is empowered to decide whether a person is agriculturist or non-agriculturist or whether he is resident of same town/village or whether the members belong to same caste/tribe etc. and his decision will be final (section7).

iv. Restrictions on Society with Limited Liability

If a society has limited liability, any individual member of such society cannot have share capital more than one-fifth of total capital. An individual member cannot have interest in shares exceeding Rs. 1000/-. This restriction of 20% shares or Rs. 1000/- shares value is not applicable to a registered society which is member of another society (section-5). Thus, if a registered society is member of another society, it can hold shares exceeding 20% or exceeding Rs. 1000/- in value.

v. Amendment of Bye-Laws
Any Amendment to bye-laws shall be registered with Registrar. If Registrar is satisfied that the amendment is not contrary to Act or rules, he will register the amendments.. He will issue a certificate of registration along with copy of amendment certified by him, which is conclusive evidence that the amendment has been duly registered (section 11).

vi. Rights and Liabilities of Members

If liability of members is not limited by shares, each member shall have one vote irrespective of amount of his interest in the capital [section13 (1)]. If liability of members of a registered society is limited by shares, each member will have as many votes as may be prescribed in bye-laws [section 13 (2)]. If a registered society has invested in shares of other registered society, it can vote by appointing a proxy [section 13 (3)]. A member of registered society shall not exercise his rights as member, unless he has made payment to society in respect of membership or has acquired interest in society, as may be prescribed by rules or bye-laws Thus, if there is any default in payment to society, the member cannot exercise his rights.

vii. Management of Society

Every society will be managed by a Committee. Committee means the governing body of a registered society to whom the management of its affairs is entrusted[section 2(b)]. Office bearers of a society includes a Chairman, Secretary, Treasurer, Members of Committee or other person empowered under rules or bye-laws to give directions in regard to business of society. [section 2 (e)].

viii. Liability of Past Members

Liability of past members towards society as on the date he ceased to be member will continue for two years

ix. Restrictions on Loans

A registered society can give loans only to its members. However, it can give loan to another registered society with permission of Registrar [section 29(1)]. A society with unlimited liability cannot lend money on security of movable property without sanction of registrar [section 29(2)]. State Government, by issuing a general or special order, can prohibit or restrict lending of money on mortgage of immovable property by any registered society or class of registered society.

x. Inspection of Affairs of Society

Registrar can hold an inquiry or direct some person authorized by him to hold enquiry in following circumstances- (a) Of his own motion (b) Request of Collector(c) Application by majority of committed members of society or (d) At least one- third of member of society [section 35 (1)]. All officers and members of society shall furnish necessary information to registrar or person authorized by him [section35(2)].

xi. Dissolution of Society

Registrar, after inspection or enquiry, or on application received form 75% of members of society, may cancel the registration of society, if in his opinion, the Society is to be dissolved. Any member can appeal against the order of Registrar within two months to State Government or other Revenue Authority authorized by State Government. If no appeal is filed within two months, the order of dissolution shall become effective. If appeal is filed, the order will become effective only after it is confirmed by appellate authority [section 39].

xii. Companies Act Not Applicable
 

Provisions of Companies Act are not applicable to registered cooperative society[section 48].

Principles of Co-operatives

The principles of co-operatives are aimed at the realization of certain moral values of life. There are four basic principles of co-operation viz.

•  Open and voluntary membership.
•  Democratic Governance.
•  Limited return on equity.
•  Equitable distribution of surplus.

Based on these principles, the organization developed the following principles:

•  Co-operation between Co-operatives.
•  Co-operative Education.

These principles are of universal significance and can be applied to different type of co-operatives in different situations with a considerable degree of understanding and skill. To apply these principles in the various forms and situations, it is of utmost importance to understand these principles.

i. Open and Voluntary Membership

The membership of the society should be open to any body residing in the area according to his willingness only. For it, the criteria could be that he is willing to accept the responsibility bestowed upon him. The right of membership should not be based on religion, cast, political affiliation or other artificial distinctions. The person full-filling the conditions should neither be denied nor compelled to take the membership under pressure either social or legal rather it implies freedom to join,continue or withdraw from the society.

ii. Democratic Governance

All the members of the cooperatives are the owners of the business and have the right and responsibility to govern its affairs either in their individual capacity or through the leader they choose. In case, the business of the cooperatives expands and diversifies, all the members may not get time to meet each other every day to discuss the minor details of the business and take decision. In such cases, it becomes practically difficult to involve all the members all the time. Hence the members have to choose/elect certain members from amongst them selves. The members have to delegate their powers to these elected members, known as Board of Directors, who take the decision at every moment concerning the business. If the member of the board of directors does not have the adequate time to look after the affairs of the society, the powers are delegated to the General Manager, subject matter specialists in the field or to the sub committees formed for the purpose.

iii. Limited Return on Equity

The co-operatives formed is a human association directed towards earning profits and therefore it is an economic enterprise. For starting any economic enterprise capital is required. To raise the capital for running the enterprise, every member of the society contributes his share. This shared capital of the members of the society is known as the equity. Since the money invested as equity by the members has not been paid for direct returns, a limited interest/bonus as determined by the board of directors after calculation of profits is paid to the members from time to time.

iv. Equitable Distribution of Surplus

Since the co-operative society formed is an economic enterprise running with a motto of earning profits, surplus is originated. This surplus can be used in several ways viz. capital formation and expanding the business in the same direction or starting some other business related or unrelated with this business, for common benefits or enjoyment and dividend to the members. The dividend is generally distributed on the basis of the contribution of the members or the number of shares which a member possesses in the society. Non-members who may be directly or indirectly connected with the business are not entitled to any dividend. The surplus after paying the dividend and taxes, etc. remain with the society and is at the disposable of board of directors. They can take the decision to use this surplus capital for the benefit of members, the way they like. One of the way generally used is to give the loan to the members of the society for a specific period at a certain specified rate of interest (generally the rate of interest is the same as offered by the cooperative/public sector banks).

v. Co-operation among Co-operatives

Both in the business and in protecting the interest of one another, the cooperatives work together extending the benefit of cooperation even in wider circles.

vi. Co-operative Education

Cooperative Education means providing knowledge in the principles and techniquesof cooperation to its members, officers and employees at the same time. This will facilitate the Co-operatives to run effectively and efficiently.

History of Co-operatives

The history of co-operatives is very old. In ancient times, there were four cooperative institutions known as ‘KULA’, ‘GRAMMA’, ‘SHRENI’, and ‘JATTI’. Our joint family system, in which all the members of the family live together for their betterment is a fine example of co-operative institution. In such a system (Joint Family System), all the members are insured against incapability, illness and old age. In the modern times, we find the cooperatives in all the fields of production,processing, marketing and distribution. Like the other industries/enterprises, in the milk trade too, we have producer co-operatives at the village level, processing cooperatives at the district level known as the Milk Union and the marketing/distribution Co-operatives at the State level known as Federation.

i. Need of Co-Operatives

Whether it is production, processing or marketing, the producers/individuals are exploited at all levels. As the saying goes, the big fish swallows the small one. It is true in agriculture field, the traders exploit the individuals to pocket the major share of profit leaving the producers poor at the lower end. In milk trade too, the business of milk production is in the hands of innumerous producers belonging to all the category, viz. marginal, small, medium and large producers and the landless cultivators/agricultural labour and artisans. These producers individually produce a small quantity of milk. A part of it is consumed at home and only the surplus milk available with the producers goes for sale. The quantity of the product produced being very small cannot be marketed by an individual since it requires lot of time, labour and resources. With the result he has to sell his produce to an intermediary- the milk Vendor. The milk Vendor exploits the producers by giving them low prices, under weighing the product, not providing any incentive, faulty payments, lifting the milk at his convenience, and more particularly avoiding the evening procurement of milk. All this forces the producers to unite together not only to produce the product but to process and sell it unitedly. The Co-operatives have come into existence at consumers level as Consumers Co-operative Societies to get rid of exploitation from the monopolistic producers. Similarly the co-operatives have come into existence at other levels viz. processing and sales/ marketing and distribution.

ii. Advantages of Co-operatives

Co-operatives came into existence and took its roots because of the inherent advantages laid down as under:

•  Prevents exploitation of the poor
•  Promotes people initiative, mutual interest and self help. Ensure proper use of resources-human, material and financial.
•  Forms effective link between producers and consumers.
•  Improves production, productivity and quality.
•  Provides the consumers with good quality product at a comparatively lower rate and competitive prices.
•  Since the resources are pooled, the capital and other constraints are reduced to some extent.
•  Many programmes like availability of inputs required for the production process can be started at the village level and can be delivered from producer to producer as per his requirements.
•  Links the members of the society to outside world for increasing their benefits.