Amazing as it may sound, India is the world’s largest producer of milk accounting for almost 18% of worldwide production. Even more significant than that is the fact that it supports almost 70 million rural households and provides them their daily livelihood. Milk also plays the very important role of providing an accessible form of protein & nutrition to India’s growing population especially rural families.
However even after 40 years of Dairy development, the organized sector (cooperatives and private sector) contributed only 30% of the milk produced in the country. The rest viz 70% was still pretty much in the hands of the Dudhiya. It was evident that the country needed to reduce this dependence as the organized handling of milk would also contribute positively to milk quality and to farmer’s lives.
How could the conversion from Dudhiyas/traders to an organized system be accelerated? Maybe the time had come to try a new approach! Would farmers be willing to come together to create something of their own? Something, in the creation of which they felt a strong sense of ownership and which had a value which would be accretive and long term.
Maybe the time had come to unleash the entrepreneurial spirit of the farmer by building an institution for the farmer by the farmer! Was this being utopian or would this work and how could such a creation be made sustainable? All difficult questions that got the best minds at NDDB Dairy Services to work together, thinking, discussing & creating.
With NDDB’s weight behind this initiative the DS team worked painstakingly to build companies using & leveraging farmer equity, focused on the task of ensuring a fair return to the farmer. One of the best achievements of such a creation was that the endeavor was inclusive of small and marginal farmers who nationally made up one half of all dairy farmers in the country.
2 such companies were set up one in Rajasthan and one in Saurashtra, with substantial turnovers, 100,000 farmer enrolled as members.
The companies were based on the principles of mutual assistance. Just like any other corporate they had very well thought out and firmly laid out governance mechanisms, a professional & capable management team, robust systems and processes and a performance dashboard. A farmer Board of Directors with 30% women representation was put in place and readied for their enormous task through a series of training sessions and exposure trips.
These companies probably represent some of the largest producer companies that have been created so far. Both companies turned profitable in the first 18 months of operation.
Some of the important lessons gleaned were:
- Farmers were happy to take their destiny into their own hands.
- Several of them had the wherewithal to invest, all of them had the inclination
- Strong leadership was required to hold the organization together and to keep it unequivocally directioned on the path of progress
- A critical ingredient was that simple farmers fully understand and appreciate the role of professional management.
- Only producer farmers were permitted to form such companies. This served as an insulation jacket to safeguard the future well-being of the farmers.
Could this model be applied to other agricultural areas thus truly empowering the marginal farmer and substantially raising his standard of living?