Professional Documents
Culture Documents
Towards Accelerated
Growth in Dairying
An Action Research to Improve the
Traditional Milk Sector
KHAMMAM, ANDHRA PRADESH
Summary Report
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Capitalisation of Livestock
Programme Experiences India, New Delhi, India
Email: calpi@intercooperation.org.in
Towards Accelerated
Growth in Dairying
An Action Research to Improve the
Traditional Milk Sector
Summary Report
December, 2006
Series 2
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Contents
i Acknowledgements 5
ii Foreword 6
iii Preface 7
Abbreviations
AP Andhra Pradesh
APDDCF Andhra Pradesh Dairy Development Cooperative Federation
AR Action Research
CALPI Capitalisation of Livestock Programme Experiences India
CBO Community Based Organisation
CMS Catalyst Management Services Private Limited
DIIS Desktop Interactive Information System
DoAH Department of Animal Husbandry
DRDA District Rural Development Agency
FAO Food and Agriculture Organization
HH Households
IC Intercooperation
IIM-A Indian Institute of Management, Ahmedabad
ISAP Indian Society for Agribusiness Professionals
ILRI International Livestock Research Institute, Nairobi
LACG Local Actions Core Group
lpd Litre per day
MBRT Methylene Blue Reduction Test
NDDB National Dairy Development Board
NDRI National Dairy Research Institute
NRMPA Natural Resource Management Programme, Andhra Pradesh
OMS Organised Milk Sector
PPLPI Pro-Poor Livestock Policy Initiative
PRA Participatory Rural Appraisal
RRG Research Reference Group
SDC Swiss Agency for Development and Cooperation
SHG Self Help Group
SMILDA State Management Institute for Livestock Development, AP
SNF Solids Non-Fat
T0R Terms of Reference
TMS Traditional Milk Sector
TS Total Solids
Towards Accelerated Growth in Dairying
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T sincerely acknowledges
the contributions of hun-
dreds of milk producers, milk
Acknowledgements
Foreword
PREFACE
The action research was carried out by millions and to trigger accelerated growth
a team led by Catalyst Management in milk production, particularly in the low-
Services, Bangalore. The others in the potential areas, the sector deserves
research team comprised experts from investment support and hand-holding by
the Department of Animal Husbandry, the government and other development
AP, the National Dairy Research agencies.
Institute, Bangalore and the two facilitat-
ing non-governmental organisations, The support to the sector may be in the
ACTIVE and SECURE. Representatives form of infrastructural facilities to improve
from ILRI, CALPI and NRMPA have, in the quality and food safety aspects of milk,
addition to providing conceptual and the scale of operations at the vendor level,
design support, contributed valuable the returns to producers on the milk
inputs and suggestions. supplied and the value for money to
consumers, and capacity building of the
The implementation of the AR generated stakeholders. It also provides space for
wide interest and participation from the a review of the minimum criteria for
state dairy development and the animal coverage of areas under dairy develop-
husbandry departments, the District Rural ment, the food standards and regulatory
Development Agency, the Velugu pro- mechanisms. In this respect, it is hoped
gramme, a vast number of producers, that the observations and findings of the
vendors and consumers and a wide spec- AR will provide pointers to the way ahead
trum of partners. The TMS in India is in stimulating milk production and support-
widespread, with immense potential for ing livelihoods in the areas served by the
stimulating growth in dairying, impacting sector.
the lives and livelihoods of millions of
resource-poor farmers, consumers and AK Joseph
market intermediaries/vendors dependent Senior Programme Coordinator
on it. To sustain the livelihoods of these CALPI
Towards Accelerated Growth in Dairying
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Map I
1. Background and Rationale poor. In this respect, TMS has vast size,
The Indian dairy sector has made signifi- spread, reach and impact potential on the
cant progress in the past 30 years. The poor. A review of the growth of the sector
country is now the largest milk producer also indicates that if it is addressed appro-
in the world, with dairying providing an priately, the sector has the capacity to mit-
important livelihood support for the rural igate regional imbalances leading to equi-
poor in India. The profitability of dairy table development.
enterprises, to a large extent, is depend-
ent on the efficiency of the marketing net- CALPI, with technical support from the
work. However, market access for small- Pro-poor Livestock Policy Initiative
holder livestock producers remains a (PPLPI) of FAO (Food and Agricultural
major constraint in many parts of India. Organization), commissioned a desk
Realising the need to address the issue, study of the informal milk market through
CALPI1 took up 'livestock products mar- the Indian Society for Agribusiness
keting' as one of its major thrust areas Professionals (ISAP). It identified some of
with the aim of supporting small livestock the strengths, deficiencies and data gaps
holders in improving their incomes and highlighted the need for a compre-
through better market access. hensive study of TMS to understand its
Table I functioning. It concluded
that the unorganised
Milk Market Overview - 2005-06
market agents are likely
to continue playing criti-
Parameter Total Covered Left out % left out
by OMS 2 of OMS 2 of OMS 2 cal roles in the market-
Districts 597 338 266 44 ing of milk, and it is
Villages 6,22,035 1,88,365 4,50,000 70 important to understand
Milk producing the micro-dynamics of
house holds (Min.) 66.94 20.33 46.61 70 the market behaviour of
Quantity of milk various market agents
marketed Min. mt 63.19 14.19 49.00 77 so as to capitalise on
Milk purchasing their strengths for the
households (Min.) 143.6 32.3 111.5 77 benefit of poor rural pro-
Source : Derived using data from Dairy India 2007, NDDB Annual Report 2005-06, ducers and urban con-
Animal Husbandry statistics, Department of AH, Dairy and Fisheries, Govt. of India. sumers. A methodology
for understanding the
dynamics, engagement with the tradition-
An estimated 77 per cent of the milk mar- al sector in new interventions and to bring
keted in India, (some 1,340 lakh litre per together stakeholders and facilitating
day in 2005-06) reaches the consumers actions at the habitations were consid-
unprocessed through the Traditional Milk ered important, while bringing in method-
Sector (TMS). TMS covers many low- ological rigour and conceptual focus.
potential areas and serves an estimated Further consultations with the Indian
46 million small milk producer households, Institute of Management, Ahmedabad
some 111 million consumer households (IIMA), the International Livestock
(See Table 1) and a few million market Research Institute (ILRI), other partners
agents/vendors. This sector provides high and the Steering Committee of CALPI led
livelihood support and employment poten- to a consensus for integrating both quali-
tial for a vast number of urban and rural tative and quantitative methods through
9
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Box I
faculty members of the Indian Institute of
Action Research3 Management, Ahmedabad. The details of
Action Researchv is a flexible spiral the research partners, their roles and
process that allows action (improvements, nature of involvement are presented in
changes) and research (understanding, the main report of the AR. The members
knowledge) to be achieved at the same of the RRG, who guided and steered the
time. At each stage, the strategies, methods programme and the role played by the
and activities are reflected upon and RRG are presented in Box III.
refined. AR bridges the gap between the
deciders and the doers. People affected by The study was conducted in the
the decisions (milk producers, consumers, Khammam district of Andhra Pradesh
channel partners, etc.) join those who plan (AP), after a careful selection process4.
the processes, carry them out and regulate AP scored high in the selection process
the decisions (like NGOs, CBOs, dairy dept because of the balance in the presence of
officials, health authorities). They (the peo- the organised and the traditional milk sec-
ple who decide as also those afftected by tors. Within AP, the district selection was
the decision and carry them out), remain at done using the criteria of dairy animal pop-
the centre of assessing the process and ulation, the balance between cow and buf-
effects, extracting learnings, taking deci- falo populations, estimated milk production
sions and implementing them. The process and the extent of milk marketed through
generates participation and thus guarantees TMS. Khammam (See map 1 on page 8 )
commitment for action. It integrates both was selected as the quantum of milk sold
qualitative and quantitative approaches. through TMS was in the mid range (i.e.
200,9305 tonne per annum which is 61 per
cent of the total production and 91 per cent
an Action Research (AR) process. The of the total milk marketed in the district),
principles of AR are summarised in Box I. and the cow-buffalo ratio was almost
equal. The estimated milk production too
1.1 Objectives and Methodology was in the middle range (329,6505 tonne
Based on the outputs of the desk per annum) as compared to the other dis-
research, CALPI initiated this AR to tricts in the state. The local consumption in
understand this sector and facilitate
Box II
actions to strengthen it. The major objec-
tives of the AR are summarised in Box II. Objectives of the
Action Research
The AR was conducted by Catalyst 1. To test an Action Research Methodology
Management Services (CMS) and the to understand the dynamics of TMS and
National Dairy Research Institute (NDRI), experiment field actions for improving the
in partnership with two facilitating agen- sector.
cies (SECURE and ACTIVE) and steered 2. To facilitate community-identified spon-
by a Research Reference Group (RRG). taneous decisions and actions.
It was actively supported and backed by 3. To identify additional information needs
partners from the Department of Animal to clearly understand TMS and its con-
Husbandry (DoAH), government of straints and opportunities.
Andhra Pradesh, CALPI, ILRI, NRMPA, 4. To test the relevance of the methodolo-
Intercooperation, the State Management gy to identify and address the con-
Institute for Livestock Development in straints and opportunities.
Andhra Pradesh (SMILDA) and the 5. Through these, contribute to sustain-
Andhra Pradesh Dairy Development able livelihood options for poor produc-
Cooperative Federation (APDDCF). The ers and supply of assured quality of milk
AR was also extended conceptual, tech- to the consumers.
nical and steering support by two senior
6 'Village' here refers to Revenue Village and 'Habitations' include all localities in a particular hamlet and comes
under the revenue village boundaries.
Box IV
market' etc were assigned low priority
Samples for the
under the AR. The final sample was
Action Research drawn based on field findings of the pilot
Four markets with varying profiles were study and clarification/guidance by RRG.
covered - rural (villages; eight habitations),
semi-urban (town market - Satupalli), urban The preliminary study in these habita-
(district market - Khammam) and well tions also threw up another factor - mar-
evolved market (corporation - Vijayawada). ket competition profile - that seemed to
A total of 949 producer house holds, 819 play an important role in deciding the
household consumers, 179 institutional dynamics in the sector. Two profiles
consumers, 75 market intermediaries (65 emerged from the pilot study - one, the
vendors, 2 creameries, one ghee-maker pockets where all three players (coopera-
and 7 dairies ) were covered through semi- tive, private dairy and vendors) operate
structured questionnaires, focus group dis- and two, the pockets where only vendors
cussions and observations. operate. During the same period, the pilot
Eight habitations were covered in the pro- study in the Vijayawada market provided
duction side. Two profiles of habitations a field methodology to identify habitations
were selected - one set with an exclusive with different competition profiles, working
traditional market chain and the other with a backward from the market. Based on
combination of organised (coop and pri- these, it was decided by RRG to modify
vate) and traditional market chains. Four the methodology used to identify habita-
habitations in each profile were covered. tions that have these two competition pro-
Besides, five habitations where the study files (on the production side). At the same
was originally initiated were later dropped time, it was also decided to cover four dif-
as the focus of the study was clarified by ferent kinds of markets. (For the final
RRG as being habitations where a reason- samples, see Box IV.)
able quantum of milk flows through the tra-
ditional milk market, and not one of bringing The study also had a number of interac-
farmers into milk market. tions with the state DoAH, DRDA, munici-
pal authorities and the cooperative and the
private dairies. Scientific sample collection
sector for the purpose of understanding and quality tests7 by NDRI were conduct-
the comparison. Therefore, issues such ed. These tests were used to determine
as 'productivity of animals' in these habi- the practices and dynamics of TMS and
tations, 'bringing farmers into the dairy the quality of products being sold mainly
Box V
Tools and Approaches Used in the Action Research
At the habitations: ● Observations of entire dairy day cycle with
● Social mapping, using transect walk and vendors, producers
participatory exercises ● Interviews with key informants in the habita-
● Seasonality analysis, particular reference to tions
dairy sector
● Dairy timeline, milestones At the Market:
● Dairy livelihood analysis - identifying prob- ● Mapping of vendor points using key inform-
lems, actions ants, observations
● Individual interviews with producers - 30 per ● Interviews with household consumers - total
habitation of about 1,000; and institutions such as
● Vendors interviews - all vendors in the habi- hotels, hostels
tation ● Interviews with vendors and private dairies
● Habitation level individual interviews with ● Observations in creameries, transit points
consumers - 30 per habitation ● Scientific tests for quality through samples
● Case studies ● Interviews with key informants from govern-
● Formal and informal discussions ment and communities
● Veterinary camps ● A number of reflection meetings within the
● Producer-vendor meetings team
Figure I
Traditional Milk
Channel
under the traditional milk chain. For facili- and spontaneous solutions developed and
tating actions, a number of meetings/ inter- facilitated with stakeholders. Five meetings
actions were held with a variety of stake- of the RRG were conducted during the
holders - about 20 interactions in each of course of the AR process. Groups of RRG
the habitations studied. These include members made extensive visits to the
PRA exercises, meetings with SHG/pro- field, both to the habitations and the mar-
ducer groups, vendor groups, local leaders kets, on three different occasions and had
and meetings together with the AHD staff. wide ranging interactions with the produc-
At the vendor association level too, at ers, vendors and their associations, con-
least two meetings per month were con- sumers, creameries, private dairies, coop-
ducted during the project period apart from eratives and the field research teams. The
other small group interactions. findings emerging from the research were
shared with RRG members periodically
The methodology adopted for the study and suggestions were incorporated in the
covered both flush and lean seasons and research process and used for midcourse
were spread over one year (August '05 to corrections. A detailed documentation of all
June '06). The study involved extensive the processes that were followed has been
data collection using tools and techniques done by the study team (refer Process
developed, tested and vetted through the Documentation). A desktop interactive
RRG mechanism (Box V). The data col- information system that brings together all
lected was both quantitative and qualita- the documents (proposals, tool kits, data-
tive, using structured questionnaires, PRA bases, analysis, reports), photographs and
tools, observations on the field relating to video documentation of the entire AR is
both within the habitations and markets, under development.
enquiries leading from these observations,
informal interactions, meetings and work- 1.2 Characteristics of TMS
shops. Raw milk samples were also col- As the first step, the study focused on the
lected from various points in the chain for main characteristics of the traditional mar-
laboratory assessments. The study fol- ket. Although traditional products like ghee,
lowed principles of AR wherein the prob- sweetmeats, paneer etc., form part of TMS,
lems related to traditional milk markets they were not covered under the AR.
were participatively identified, analysed Based on consensus within RRG, for the
7 Tests for fat, solid non-fat, adulterants in milk and bacterial load to determine the shelf life.
purpose of this AR, TMS was characterised duction to marketing. Any improvement
as the channels of supplies, either by pro- made in the value chain improves their
ducers directly or by vendors, selling incomes. Compared to other vendors, the
unprocessed8, unbranded milk in loose producer-vendors were more involved in
form or filled in plastic packets or bottles9 in the study, willing to learn, attend training,
flexible quantities and prices10. The market try out innovations and proactive in sug-
operates through informal agreements both gesting actions. Their interests also
at the producer and consumer levels. The appear to be different as compared to the
processing, if undertaken, uses traditional other categories of vendors. Other play-
methods (mainly creameries11, ghee-mak- ers in the channel were creameries13 and
ing). The geographical boundaries of oper- product-making units and the consumers
ation by TMS are limited to an area12 in (both households and institutions). The
which the cycle of procurement and sale details of the traditional milk channel and
can be completed in about five hours. the vending cycle and key players are
depicted in figures - I and II respectively.
1.3 Channels of TMS
For the purpose of this AR, two main Vendors cater to different kinds of con-
routes for TMS were identified: (i) produc- sumers at the market level - households,
er-to-consumer (including neighbourhood institutions, dairies, bulk coolers and milk
sales) and (ii) producer-to-vendor-to-con- product manufacturers. Vendors have
milk with varying quality to cater to the dif-
ferent needs of the consumers. At the
procurement level, sometimes vendors
collect milk from the agents, or from coop-
erative and private dairies to handle any
shortages (in all-three operators' habita-
tions). Usually, any left-over milk from the
market (due to consumers not available,
lesser quantum purchased, etc), is sold
to dairies or bulk coolers at a substantially
lower rate (without checks on quality).
8 100% of milk supplied by operators covered in the research in all three markets; very few centres in Satupalli
and Khammam sell refrigerated loose milk through retail outlets and refrigeration facilities.
9 52% of the milk is sold in loose form, 28% in PVC bottles, 12% in plastic bags, 8% other
10 100 ml onwards; even measures such as one-glass, half-glass, or even 'for Rs 6', etc.
11 Mostly in Vijayawada market, used mainly by large-scale vendors (operating at 70 litre and above per day)
12 In terms of distance, this could go up to 70 km in places where train/bus services are available and the mar-
ket is large (e.g. Vijayawada).
13 In Vijayawada about 30-odd creameries are operational. In Khammam, there are four creameries, but are
used very sparingly as most large-scale vendors supply to institutions where quality check for fat is conducted.
14 Four creameries in Khammam and one in Satupalli
Figure II
15 According to secondary sources (APDDCF, 2003-04 list of private dairies/competitors in the federation milk-
shed; and statement showing procurement and sales in APDDCF Ltd, year-wise/unit-wise) about 91% of the milk
produced in the district is handled through TMS, i.e... approximately 301,000 tonne of milk per year.
1.5 Milk Producers - Profile and milk producers, with limited animal
Operations holding and milk production.
1.5.1 Milk Production
The habitations studied were mainly buf- The average milk production per animal
falo tracks, with very limited number of was 2.38 litre per day (lpd) for the flush
cows being reared. In these, 42 per cent season and 1.77 lpd for the lean season.
of the households were primary milk pro- At these levels, milk production is consid-
ducers (proportion similar in all-three ered an unviable option if investment is
operator and vendor-only habitations). considered16. Overall, 60 per cent of milk
producing households handled quantities
less than 5 lpd. In terms of breed, less
than a fifth of the animals in the habitation
were graded buffaloes, and the rest were
of local breeds.
16 According to calculations, at least 4 lpd per animal is required for commercial viability for the producer.
Detailed calculations of profitability and cash flow for small-holder dairy farmers included in the main report.
17 Through veterinary camps conducted as a part of entry-point activities and as a part of collaborative actions
with DoAH and community organisations.
18 A cadre of para-veterinarians engaged in AP under the National Project for Cattle and Buffalo Breeding, gen-
erally chosen from the community where they are to work and are supported by the Andhra Pradesh Livestock
Development Agency and the state animal husbandry department
vendors in the evening was limited in all most of these non-price incentives prevail.
habitations studied. In all-three operator
habitations, producers sold milk mainly to With regard to the price received by the
the organised sector (cooperative or pri- producers, the average price reported
vate) in the evenings. In fact, producers from vendors ranged between Rs 11 and
who sold milk to vendors in the morning 12 per litre. Producers selling directly to
also sold evening milk to the organised the consumers got higher prices depend-
sector. However, in vendor-only habita- ing on the market accessed and the level
tions, evening milk was either stored and of adulteration with water. For producers
mixed with morning milk or used for selling to private and cooperative dairies,
household consumption. Effective stor- the price ranged between Rs 14 and 15
age of milk using locally appropriate per litre (worked out on the basis of the
methods was one of the areas identified announced price of Rs 19.20 per litre for
by vendors to improve market access. 10 per cent fat in case of cooperative and
Rs 19.50 in case of private dairies). During
In all-three operator habitations, during the lean season, cooperative and private
flush season, about 50 per cent (23 per- dairies increased the price by Rs 1 per
cent through vendors and 27 percent to litre, which was not practiced by vendors.
household and institutional consumers) of The price offered by vendors was similar
the milk is sold through TMS. This propor- through the seasons, ranging between Rs
tion increased to 57 per cent of the mar- 11 and 12 per litre, irrespective of all-three
keted milk in lean season, wherein the or vendor-only habitations.
share of organised sector came down. In
vendor-only habitations, 76 per cent was Prima facie, the price paid by TMS to pro-
sold to vendors and 24 per cent was sold ducers seems lower than that paid by the
directly to consumers in the lean season. private and the cooperative channels. Only
51-59 per cent of the consumer rupee
The reasons for milk producers choosing reaches the producers through TMS.
a particular channel for sale are varied. In However, producers value many non-price
case of vendors and private dairies, pro- incentives such as acceptance of froth in
ducers prefer them for regularity of pay- the milk sold, no separate sample milk for
ment and reliability of the person collect- fat test, door-step collection/delivery of
ing milk. It is to be noted that the operation milk, personal contact with the farmers,
of private dairies is similar to that of ven- morning wake-up call, help in milking, lim-
dor operations, wherein these dairies ited grocery supplies, milk price realisation
appoint local level agents to procure milk.
In most cases, the producers select the
private dairy based on the agent. In a few
cases, ex-vendors have taken up such
agencies in their own habitations. In case
of cooperative societies, the reasons for
preference were mainly reputation (well-
known government dairy) and correct or
higher price, which is quality-based. In
habitations where cooperatives operate
through agents, the reliability of the per-
son and the confidence that the producer
has on the agent have been reported as
reasons for preferring the channel. The
cooperatives collect milk from fixed cen-
tres. The private dairies also have their
fixed centres. The vendors with doorstep
collection, personal relations, flexible
methods and other non-price incentives
fulfill some of the basic needs of the pro-
ducers. In the case of consumers as well, Skimming the profit
bility of the supply of milk available to them per cent). Vendors supplying grocery items,
from these habitations. The total quantum helping in milking operations, supplying
from the locality and quality of milk were milk during dry periods etc. were also
other factors that decided the selection of observed during field interactions. A higher
habitations. Within these habitations, the proportion of large vendors provided non-
selection of producers were based on the price incentives such as loans/ advances.
'quality of milk', followed by quantum. The Very little variation was found in the rates
frequency of selection of habitations and offered by vendors between all-three
producers for most vendors was once in six operators and vendor-only habitations.
months (46 per cent of vendors reporting).
The main challenge for vendors was to 1.6.6 Handling Practices
retain the producer, ensuring consistent Irrespective of the scale of operations or
supply and maintenance of quality. The type of habitations or profile of vendors,
most common strategy adopted by vendors all vendors are reported to adulterate milk
to this effect was to ensure regular pay- with water before it was sold (reported in
ments to producers. One of the learnings the interviews and during observations).
from this study is that vendors also operate The data based on the test results by the
on monthly payment terms, both with their National Dairy Research Institute (NDRI),
consumers and their producers. Bangalore shows that 67 per cent of the
consumer samples in Khammam, 88 per
1.6.4 Milk procurement and Ensuring cent in Satupalli and 55 per cent in
Quality Vijayawada were diluted. There are differ-
In all the cases, the place of procurement
by vendors was the door-step of the pro-
ducer. Vendors ensured quality of milk
supply by being personally present (or a
family member being present) while milk-
ing. This demands a large amount of time
and effort from the vendors. In a few
cases, milking is done in the absence of
the vendor, when the price paid was usu-
ally Re 1 less than the regular rate offered.
Case studies of vendors' day-cycle show
that the time spent on procurement was
between two and four hours depending on
the number of producers covered by them. Handling milk, the vendor's way
Most vendors started their working day as
early as 4.30 am. ent levels of adulteration with water by the
vendor based on the price offered by the
1.6.5 Price and other Non-price Incentives consumer20. The lowest quality milk (sold
The average price paid to producers (as at around Rs 10 per litre21) was adulter-
reported by vendors) was Rs 10.75 per ated with water to the extent of 75 per
litre. The average price was Rs 11.20 per cent to 100 per cent. The highest quality
litre in case of small-scale vendors com- milk (sold at around Rs 18-20 per litre)
pared to Rs 10.60 in the case of large-scale was adulterated with water to an extent
operators. Apart from the price, vendors of 10 to 20 per cent. The scientific test
provided other non-price incentives such as carried out by NDRI confirms a degree of
loans/advances (31 per cent vendors) and correlation, though weak, between milk
information on animal management price and milk solids. The perceptions of
(concentrate feed, fodder, Vet. services -20 the consumer with respect to the propor-
20 In some locations, vendors usually keep three to four cans, of which one is invariably water, but looks white
as a small quantity of milk is added to make it look like milk. When the consumer asks for milk, the vendor usu-
ally asks what price and based on the price, a combination of thick milk and water is added in quick time to make
the milk for that price.
21 General understanding among vendors is that it is 50:50 milk, i.e. 50% water and 50% milk for Rs 10 per litre.
Vendors serve a variety of consumers cent of the sale amount realised). For the
large-scale vendor (100 lpd), the net mar-
tion of water added in the milk purchased gin works out to Rs 500 per day (37 per
by them are consistent with the findings of cent of sales realisation).
the scientific tests.
The scale of operations by most vendors
Many small-scale vendors sell milk in is generally very low given the time and
PVC bottles and some medium and effort spent on operational activities. Each
large-scale vendors use plastic cans vendor balances the quantity of milk han-
which are not made of food-grade plas- dled at his/her level - 'collects only what
tics. These cans are not easy to clean s/he can sell and sells only what s/he can
properly thereby increasing the microbial collect'. This restricts the quantity of milk
load in repeat uses adversly affecting the handled by each vendor, making it
milk quality. unfavourable to the vendors. The process
of collection (including milking in pres-
Most vendors do rudimentary tests to ence), transport and distribution of milk at
check the thickness of milk by dipping the doorsteps of consumers requires over
fingers into the milk. In creameries too, all six hours of the vendor's time every day.
the operations involve contact with milk Thus, the cost of labour (based on oppor-
and its products with bare hands. The tunity cost) on a per litre basis remains
water used for adulteration is not filtered. exceptionally high.
The hygiene and sanitary conditions in
creameries are areas of concern. Poor handling practices and adulteration
of milk with water and neutralisers by ven-
1.6.7 Vendor operations - overall dors affect the quality of milk supplied to
Case studies of vendors show that the consumers. The scientific tests conducted
gross margin from milk vending opera- by NDRI show that the deterioration of milk
tions ranged from 41 per cent for small quality in terms of milk solids and microbial
scale operators to 49 per cent for large- load is highest at the vendor level.
scale vendors. The details are presented
in figure III. i.e. about Rs 75 per day for 1.7 Consumers - Profile, references
small-scale operators and Rs 700 per day Of the total 819 urban consumers cov-
for large scale vendors. If one considers ered in the study, 94 per cent purchased
opportunity costs and other direct costs, milk. Of this, 60 per cent purchased milk
then the net margin for a small-scale ven- from TMS, with 98 per cent in Satupalli,
dor works out to only Rs 10 per day (6 per 86 per cent in Khammam and 39 per cent
Access to the traditional milk market 1.8 Quality of Milk in the TMS
was the highest among the high-income The scientific tests conducted by NDRI
group (52 per cent of households report- across the channel show that most of the
ing purchase from TMS), followed by the producer samples consistently conformed
upper-middle income group (48 per cent). to total solids figures. Less than half of
In the low-income categories, access to vendors' samples conformed to legal
the organised sector was the highest with quality standards with respect to total
59 per cent reporting preference for this solids. However, at the point of sale the
channel. dilution takes place depending on the price
realised from each consumer. As a result
The main reasons of preference for TMS of this, more than three-fourths of
were the 'quality of milk (thickness and consumer samples did not conform to legal
taste)' followed by 'availability at right standards with respect to total solids,
time' and 'home delivery'. In case of the although almost all samples were
organised sector too the 'quality of milk diluted to some extent. The details are in
(thickness and taste)' was the main rea- figure IV.
son for preference, followed by 'availabili-
ty at the right time'. Institutional consumer samples (from
hotels, tea shops, etc.) had the poorest
About 65 per cent of the consumers pur- conformation rate.
chasing from TMS reported that the milk
was diluted with water. This proportion The smaller-scale vendors had a higher
was the lowest at 58 per cent in proportion of samples meeting the requi-
Vijayawada (where price and competition site standards vis-à-vis larger vendors.
is high, and there is a practice of cream
separation), compared to the high- Figure IV
est at Satupalli at 88 per cent. In
Khammam, 67 per cent of con-
sumers reported that the milk
was diluted.
Figure V
1.9 Summary of Findings and
Actions Identified/ Facilitated
1.9.1 Summary of Findings
● TMS has enormous size, spread,
reach and impact potential. With
increasing urbanisation, the propor-
tion of milk handled by TMS in the
market is diminishing, but at a very
slow rate. Still substantial quantities
are handled by TMS in these markets.
An analysis of the macro data at the
national level indicates that at the
present rate of displacement, TMS
The average total solids in milk sold would take six to seven decades to
during the lean season was marginally reduce to ten percent share of the
higher than that during the flush market. It is therefore important to
season, with producer samples showing address the gaps (Annexure-I) in TMS
the highest level and the institutional and also build on the strengths of this
consumers showing the lowest level of sector to contribute to overall milk pro-
solids. duction in the country.
● At the production and market points,
The correlation between price paid (as TMS provides an important livelihood
reported by the consumers) and milk option for large numbers of smallhold-
solids from these tests is moderate (cor- er dairy farmers and milk vendors. At
relation coefficient 0.50122 for total solids the production points where there is
and 0.441 for fat). It supports the percep- no presence of the organised sector
tions of the consumer with respect to due to difficulty in access and unviable
water mixing. quantities for operation, TMS provides
important market linkages. Even at the
No chemicals or thickeners were found research sites, where all three operators
in milk sold at any level during the flush have a presence, more than 50 per cent
season. However, during the lean sea- of the quantum of milk (57 per cent in
son, about 50 per cent of the vendor sam- lean season) is sold through TMS.
ples were found to carry neutralisers ● In spite of its size, coverage and
(sodium carbonate). impact potential, the sector is not
focused on by any agency (govern-
Milk quality assessment carried out on ment or other development organisa-
the basis of Methylene Blue Reduction tions) for its improvement. Planned
(MBR) test is reflected in figure V. While investments focused on dairy devel-
at the producer level the quality of milk was opment are not made in these low-
consistently good, at the vendor and con- potential areas served mainly by the
sumer level about two-thirds of the samples traditional milk system.
were of 'fair' or 'poor' quality (with MBR time
ranging from five minutes to one hour). The 1. The key features of TMS are:
samples from institutional consumers (such ● Provides the most important market
as hotels) showed very poor quality in access for milk produced in low pro-
terms of MBRT. ductive and inaccessible areas.
● Provides livelihood opportunities for
Though most of the milk through vendor large numbers of producers and ven-
route is diluted, the criticality of this quali- dors, and addresses the consumer
ty is not felt at the consumer level, as preferences in markets (price, flavour,
diluted milk less often clots on boiling. taste, size, etc.).
2. Areas of improvement in
TMS are:
● Improvements in the quality
of milk handled through TMS
so that issues of food safety
and conformation to legal
standards are ensured.
● Quality based pricing at both
producer and consumer level.
● Operational inefficiencies
due to low quantities han-
dled, handling practices,
methods used for procure-
ment, etc.
● Lack of institutions and platforms that The vendors after their training at NDRI, proudly
enable sharing, negotiations and exhibits their certificates
working together to address common
issues. district staff of DoAH, APDDCF and the
● Low productivity due to lack of incen- Velugu programme and the Vendor
tives for higher productivity & lack of Associations (VA) actively participated in
services. the AR and pledged their support to stim-
● Establishment of some minimum infra- ulate improvements. Most of these
structure for quality testing, preserva- actions were taken up through linkages
tion, storage etc. with existing institutions, with only facilita-
● Review of legal standards for tive support from the study team.
unprocessed, unpacked milk being
supplied by TMS The few field strategies that emerged
from the AR during consultations with
1.9.2 Actions identified/facilitated various stakeholders were facilitated by
The AR generated vast insights into the the study team. The detailed actions that
working of TMS in research sites. The were tried out on the field and the support
channel through which milk is being sold provided and expected from each stake-
was mapped, with variations in different holder is given in Annexure I. These
types of markets. During the process, a actions may be classified into the following
series of actions were identified by the areas:
producers and vendors, on a wide range
of topics including input supply, breed ● Capacity Building: building capaci-
improvement, quality, price and other ties of all players in the TMS channel
parameters. The actions already imple- in the areas of clean milk production,
Towards Accelerated Growth in Dairying
25
SUMMARY REPORT FINAL1 change.qxd 9/26/2007 6:16 AM Page 26
An institutional mecha-
nism for undertaking such
AR needs to bring in multi-
skill teams at various levels
to ensure quality, least start-
up time and effective techni-
cal support. The composi-
tion of an RRG mechanism
(mix of academic-research-
practitioners, policy-imple-
menters, government-non-
Learning through the Action Research government and communi-
ties, international-national-local, multi-
The study has proven that with systemat- disciplinary like social, market, manage-
ic and consistent effort, one can work ment, gender, animal sciences), along
with players in this sector and create plat- with the rigour brought in through
forms for producers and vendors to come analysing results periodically and field
together to their benefit. Focused efforts visits motivated the members to
and facilitation at different levels can lead contribute more than was originally
to coordinated efforts of various stake- planned.
holders in solving the problems of dairy
farmers. The promotion of the traditional sector
should not be seen as detrimental to the
The enormous size and spread of TMS growth of the organised sector. These
and the nature of its operations clearly two are complementary to each other,
point to the need to appreciate its keeping the producers and consumers at
relevance and accept and work with the the centre of development. By having
players so as to improve the quality of both, the consumers and producers have
milk supplied by them and enhance the option to make informed choices.
efficiency. There are opportunities for learning from
each other.
The study has also developed and tested
a methodology, tools and analysis method- While handling sensitive subjects such
ologies that can be readily used to under- as quality issues in TMS, there could be
stand and work with TMS. vested interest groups using these out-
puts for their benefit. This can potentially
1.12 Learning from the Research spoil the relationship with the groups with
The informal milk market, being one of whom the study teams worked closely
the least studied, but sensitive areas, and developed confidence. There needs
requires extra care and effort to obtain to be a system of periodically identifying
accurate and transparent information. and assessing these risks from external
factors and a strategy to address these
Multiple actors, some with divergent from time to time.
interests, call for very effective and effi-
cient AR to ensure participation, learning 1.13 Policy Changes and Approaches
and improvements simultaneously. The foregoing chapters demonstrate
that TMS is a sleeping giant with vast
AR is a process-oriented approach. potential for growth and development.
However, there is a need to have dead- About 77 percent of the milk marketed in
lines and specific outputs for administra- India passes through this channel.
tive and accountability purposes. There is Millions of producers, consumers and
Towards Accelerated Growth in Dairying
28
SUMMARY REPORT FINAL1 change.qxd 9/26/2007 6:17 AM Page 29
Box VI
1. In recent years, milk production in India has for the consumer's rupee.
started showing erratic growth patterns. In 5. Investments in dairy production hitherto
this context, stimulating dairy production, were focused in about 250 high-potential
particularly focused on TMS deserves spe- districts of the country. In spite of its vast
cial attention. size, reach, spread and impact potential,
2. TMS covers a vast number of low-potential the TMS or the areas served by them
districts and markets. Millions of resource- received no worthwhile investment or sup-
poor farmers and market intermediaries port. With small selective investments, the
earn their livelihoods through TMS. In low-potential areas served by TMS could
order to realise the national goal of a stimulate milk production to reach a thresh-
'socially inclusive and regionally balanced old level faster so as to attract other chan-
economic growth', it is important that the nels also to join, compete and drive still
government does not ignore these millions faster growth - exploring synergies.
and the low-potential regions . 6. The enterprise of small-holder dairy farm-
3. Growth trends in various segments of the ers with low producing animals seems to be
milk value chain demonstrate that TMS is economically unviable. It is feared that bet-
likely to exist for a long time to come - at ter availability of credit for purchase of live-
least 6 - 7 decades to drop down to a level stock under the poverty-alleviation pro-
of 10 percent of the milk marketed in India. grammes may be aiding in the creation of
4. The quality of milk served by TMS has more such unviable enterprises. Market
scope for improvement. It deserves high access through TMS and appropriate poli-
attention from the angle of food safety, net cy support to provide better animals,
returns to the milk producers and the value deserve attention.
Box VII
Annexure I (Contd.) - Summary of the Findings and the Actions Identified/ Initiated
Sl. Findings Actions identified/ Support from
No. Initiated Govt & others
producers is low at 51-59%. improve the price spread. ty. Also, hand-hold
iii. There are many non price incentives which 4. Facilitate establishment of to conform to PFA
the producers/ consumers value. Producer and Consumer standards.
iv. Quality based pricing is not practised by Associations/ link groups to 7. Support in producer
vendors at producer level. inter-phase production, qual- and consumer edu-
v. A correlation (though moderate) exists ity, price service negotia- cation and aware-
between the price paid by consumers and tions. ness building.
the total solids level of milk 5. Facilitate producer and con- Existing govt and
vi. There are no strong producer organisations sumer education and capaci- public institutions to
to negotiate the price ty building in milk quality and extend support in
food safety parameters. training. Govt
5 Institutional structure
6. Work closely with vendors extension staff to
i. Building strong vendor organisations/ asso-
and producers associations support this.
ciations is important to begin improvements
to come together and dis- 8. Govt AH depart-
in TMS.
cuss issues to be facilitated. ments to extend
ii. Organisational development to be taken up
7. Build capacity and training of training, extension
to facilitate training, infrastructure building,
local facilitators to effectively and inputs delivery
self regulation of quality standards & effi-
work with vendor, producer with special focus
ciency.
and consumer associations. on public good
iii. Building producer associations and con-
8. Facilitate establishment of services.
sumer platforms are important to improve
minimum infrastructure for 9. Legal standards of
the terms of trade, transactions and quality
weighing, bulking, preserva- milk may require a
and to act as pressure groups.
tion, storage, quality tests review. e.g. 9%
6 Producer / consumer perceptions
etc. at the level of vendor/ SNF & 0.5 % fat;
i. Both producers and consumers value the
stakeholder associations. (total solids 9.5%)
vendor's services including non price incen-
9. Build the capacity of the falls within quality
tives. In spite of high frequency of water
actors. Facilitate public qual- standards when it is
mixing, 60% - 74% of consumers perceive
ity testing facilities. processed milk,
TMS milk to be thick, creamy and tasty.
10. Share the findings of the AR where as 8.4% SNF
ii. The satisfaction levels of both producers
with the vendors, producers & 7% fat (total
and consumers remain high.
and the consumers associa- solids 15.4%) is not
7 Capacity Building/ Training tions. in TMS in Khammam.
i. Vendors lack awareness on milk quality 11. Presentation of findings to 10.Design support for
parameters, economy of scale, financial opera- govt officials of DoAH, appropriate milk
tions and marketing and facilitation skills. APDDCF, district officials, containers especial-
ii. As a result of awareness building, the ven- others with policy outreach. ly for TMS.
dors underwent training at NDRI in testing 12. Wider dissemination of find- 11.Effective coordina-
procedures, food quality standards, storage ings to be arranged (without tion of the activities
& preservation, hygiene & sanitation etc. damaging the country's of the concerned
They even met part of the training costs. interest) through circulation govt departments
iii. The producer - vendors are more eager of this report, e-conferences, like AH, Health,
than only vendors to learn and improve workshops etc. Rural Development,
their operations. 13. Work with the policy makers, Forests etc. at the
iv. Producers and consumers are generally planners and concerned district, mandal and
unaware of milk quality parameters, terms govt officials to accept and village level.
of trade and related aspects. support TMS whereever it
8 Productivity Enhancement demonstrates its determina-
i. Productivity levels of animals are low at tion to conform to the quality
1.77-2.38 lpd. food safety standards for
ii. Livestock service delivery is weak or absent. milk.
iii. Vendors expressed willingness to facilitate
and inter-phase with service providers in
preventive vaccinations, de-worming,
doorstep breeding services, supplementary
feeding, extension etc
CALPI is a programme of SDC implemented by IC. It's objective is to capitalize on SDC-IC's rich
experiences to significantly inspire changes in the economic, administrative, legal and policy frame
conditions in the livestock sector in such a way that the priorities and challenges of the rural liveli-
hood systems are effectively addressed and the rural poor, particularly women benefit from the
emerging opportunities. The Action Research to improve the traditional milk sector is one among
the seventeen activity lines supported by CALPI in the livestock- livelihood-environment domains.