13

Chapter 2

REVIEW OF LITERATURE

This chapter consists of the review of the conceptual and empirical literature, related to

the topic of Village Milk Co-operatives in Kerala. The Review of Literature consists of

four parts. The first part deals with the theoretical framework used for the study. The

social, economic and political dimensions of empowerment and favourable investment

climate suggested by World Bank for the promotion and growth of rural prouder

organizations and the Asset Based Community Development (ABCD) model are used for

assessing the performance of Village Milk Co-operatives. The second part comprises of

the conceptual background of co-operative organizations with their significance in the

socio-economic development of the poor. The historical perspectives of dairy

development and dairy Co-operatives in India with special emphasis on the growth of

dairy sector and diary Co-operatives in Kerala are presented in the third part. The fourth

part has provided an overview of the related studies conducted in dairy sector in India

especially in the Post Operation Flood period.

2.1 The Theoretical Framework for the Study of Dairy Co-operatives

The World Bank has recognized that the broad strategy for poverty reduction must rest on

two pillars namely the Investment Climate and Empowerment. The investment climate

creates opportunities for people to have access to markets and invest their resources to

reap future benefits. The empowerment of poor people enables them to freely participate

in the markets, governance and society on their terms of interests. Both concepts can be

applied at the macro or national level as well as at the micro or local level in reducing

14

poverty among the poor people. There is also a realization that the process through which

decisions are made and implemented matters at all levels. (Narayan & Glinskaya, 2007)

2.1.1 Investment Climate

Large domestic and foreign investors critically review the investment policy and

regulatory frameworks of the governments, socio-political situations, property rights,

safety of investment and infrastructural facilities before making any substantial

investment in any country or region. The same must be equally applicable and relevant in

the case of poor people and their organization in taking decisions about their small

investments in the market for getting better benefits. The property rights and access to

markets are critical components of the investment climate. The quality of local

infrastructure, including electricity, water, roads, transport, communication facilities and

quality of local governance, including freedom from harassment by the police and

government officials are determining factors for the success of poor peoples business

organizations. (Narayan & Glinskaya, 2007)

2.1.2 Empowerment

The empowerment is a multi-dimensional construct with social, economical and political

dimensions. People who are endowed with finance, education and technology, social and

political connections capture the resources and shape the institutions to their advantage

where the poor remained outside the process of growth and development. Empowerment

is a process which expands the freedom of choices of poor people to decide and to shape

their lives by attaining control and influence over the resources available in their live

situations. The World Bank has defined empowerment as the expansion of assets and

15

capabilities of poor people to participate in, negotiate with, influence, control, and hold

accountable institutions that affect their lives. (Narayan & Glinskaya,2007)

The four key elements of empowerment are:

*Access to information. Information is power and informed citizens are better

equipped to take advantage of opportunity, access services, exercise their rights.

Information and communication technologies often play a pivotal role in

broadening access to information.

* Inclusion/participation. An empowering approach to participation treats poor

people as co-producers, with authority and control over decisions and resources

devolved to the lowest appropriate level.

* Accountability. State officials, public employees, private providers, employers,

and politicians must be held to account, making them answerable for their policies

and actions that affect the wellbeing of citizens.

* Local organizational capacity. This refers to the ability of people to work

together, organize them, and mobilize resources to solve problems of common

interest. Organized groups and Communities are more likely to have their voices

heard and their demands met. When such membership-based groups federate at

higher levels, they can gain voice and representation in policy dialogues and

decisions that affect their wellbeing. (Narayan, 2002)

Empowerment of poor people is an end in itself and is also critical for development

effectiveness. It is not a stand-alone strategy but a way of doing development, grounded

in the conviction that poor people themselves are the most invaluable partners in the task

of poverty reduction. Empowerment and improved development outcomes are products

of the interaction between the opportunity structure (rules, norms, behaviours) and the

16

agency of the poor and excluded groups.(Narayan, 2002) Empowerment therefore

involves both changing the opportunity structure through changes in institutions and

increasing the agency of poor people to take action on their own behalf.(Narayan &

Glinskaya,2007)

Figure 2.1 Overview of the Empowerment Framework

Opportunity Structure

Institutional Climate

Information

Inclusion and

participation

Accountability

Local organizational

capacity

Social/political

Structure

Openness

Competition

Conflict

Norms, values,

behaviour

Rights, rules,

and resources

Agency of the Poor

Individual Assets

and Capabilities

Material

Human

Social

Political

Psychological

Collective Assets

and Capabilities

Voice

Organization

Representation

Identity

Development Outcomes

Improved incomes, assets for the poor

Improved governance, peace, and access to justice

Functioning and more inclusive basic services

More equitable access to markets and business services

Strengthened civil society

Strengthened poor peoples organizations

(Source: Narayan & Glinskaya, 2007)

The diagram outlines a framework for understanding empowerment in terms of the

relationship between institutions of the state, market, and civil society (the more powerful

actors) and poor people. It also points to possible intervention points. Four elements have

been found to be consistently important in changing the institutional climate, power

17

relations, and the incentives of actors engaged in unequal power relationships. They are

access to information, mechanisms of inclusion and participation, social accountability,

and local organizational capacity. Change can also come about through direct

intervention in social and a political structure..Agency of poor people has both

individual and collective aspects. Individual agency depends on assets such as health,

education, and finance, as well as psychological dimensions of self-confidence and

aspiration. Collective agency comes from poor peoples own organizations, which enable

their voices to be heard, their identity and dignity to be asserted, and their interests to be

represented.(Narayan & Glinskaya, 2007)

2.1.3 Poor People's Organizations

The capacity of poor people to mobilize and organize themselves for collective action is

an important development asset often forgotten by development planners. The

membership based organizations have emerged successful in addressing common needs

and concerns of people. In the context of rapid globalization, poor people are always

excluded from decisions making in even the issues affecting their livelihood and survival.

The poor people have to unite and stand together to address the problems affecting them

as well as to initiate programmes for their better wellbeing. Rural producers, home-based

workers, slum dwellers, indigenous people, and landless workers were organized in

different regions of the world to address problems and issues affecting their survival and

growth and recorded positive results due to their organized strengths. (Narayan D. , 2002)

2.1.3.1 Rural Producers' Organizations (RPOs)

Seventy percent of the world's poor live in rural areas, where agriculture or agriculture

related activities are the mainstay of their livelihoods. The rural poor have limited access

18

to services or means of production, and limited influence, if any, in local, national, or

global level decision making processes. To lift themselves out of poverty and improve

their livelihoods, rural producers around the world have organized themselves into rural

producers' organizations. RPOs are key actors for any development strategy aimed at

reaching the rural poor. RPOs had created success in

* Development of processing, marketing, and alternative employment;

* Management of collective goods;

* Networking and coalition building for influencing decision making.

The emergence of vibrant, representative poor people's organizations enabled poor

people to connect with and influence national and global actors.

A 1993 review of the World Bank's role in the development of Co-operatives and

rural organizations concluded that inappropriate policy frameworks and

government interference were the major reasons that many Co-operatives failed to

develop as viable and efficient organizations. The review has recommended that

Co-operatives must be seen as private sector enterprises and that government's

primary role should be not only to control or regulate, but also to establish a

conducive policy environment for their growth. In the 1999 review, the World

Bank emphasized that RPOs are not only key economic actors, but also vehicles

for the empowerment of rural people and for their inclusion in policy dialogues at

the local, national, and global levels. Partnership with rural development actors

and the private sector-including RPOs is necessary to achieve rural development,

but it is a fledgling process that requires long-term support. (Narayan D. , 2002)

Some areas for programmatic emphasis include the following:

* Promoting a conducive environment

-Promote a conducive legal environment in which private initiatives (collective

and individual) are supported by appropriate legislation that is effectively

enforced.

- Promote effective decentralization that provides a favorable environment for

RPOs to generate locally relevant answers to their needs.

19

- Promote decentralized rural finance institutions.

- Promote institutional reforms in the delivery of public services to ensure client-

responsive services and accountability to users.

- Strengthen the capabilities of service providers.

- Promote a dialogue among donor agencies to harmonize approaches and

procedures in support to RPOs.

* Empowerment of rural producers' organizations

- Promote the establishment of forums for RPOs at the local, regional, and

national levels (when they do not already exist), where rural producers can meet,

establish their priorities, and exchange experiences.

- Finance a regional and national RPO capacity-building fund, in which allocation

decisions are made by RPOs themselves.

- Finance "professional facilitators" to help RPOs organize themselves and help

them define transparent procedures to allocate resources and operate their forum.

- Obtain recognition of RPOs from governments and end the mistrust directed

toward them by public services.

- Ensure that RPOs are recognized as partners by governments and donors, and

that they actively participate in: Preparation and negotiations of rural development

policy or strategy and preparation, implementation, monitoring, and evaluation of

rural development projects. (Narayan,2002)

Activities of Rural Prouder Organizations:

Poor people's producer organizations have the potential to play important roles in

improving and expanding access to markets and opportunities. They can coordinate

production activities of rural producers and workers in the informal sector, provide

marketing and/or advocacy services, and execute capital-intensive investments in

infrastructure and processing and marketing.

2.1.3.2 Co-operatives as Poor Peoples Producer Organizations

The United Nations Organization (UNO) in its reports on co-operatives in social

development underscores the importance of co-operatives to socio-economic

20

development and how agricultural and financial Co-operatives contribute to long-term

solutions for food security and a more resilient and inclusive financial system, in the light

of the food and financial crises worldwide. It suggests that proclaiming 2012 as an

International Year of Co-operatives is an opportune moment to highlight the importance

of Co-operatives in development. Co-operatives, organized as business enterprises for the

benefit of their members, offer a model of enterprise that is particularly relevant in

difficult economic times and instances of market failures. As a self-help group, a co-

operative organization is widely accessible, especially for the impoverished and the

marginalized. Where private enterprise or government is weak, particularly in remote

rural areas, Co-operatives enable local people to organize and improve their conditions.

Co-operatives promote and support entrepreneurial development, creating productive

employment, raising incomes and helping to reduce poverty while enhancing social

inclusion, social protection and community-building. Thus, while they directly benefit

their members, they also offer positive externalities for the rest of society and have a

transformational impact on the economy. (UNO, 2009)

International Co-operative Alliance (ICA) commends UN Proclamation of International

Year of Co-operatives 2012 and observed that UN resolution recognizes that the co-

operative business model is a major factor of economic and social development,

promoting the fullest possible participation in the economic and social development of

people in both the developed and developing world, and that, in particular, Co-operatives

contribute to the eradication of poverty. The resolution also encourages all governments

to create a more supportive environment for co-operative development, particularly when

it comes to securing finances for capacity building. (ICA, 2009)

21

The International Year of the Co-operatives is a well timed event that represents the

depth of understanding of the entire co-operative movement, said Pauline Green, ICAs

first-ever woman president. The co-operative model is a better choice and offers the

basis for a more sustainable way to do business when compared to traditional capitalist

models now under scrutiny. What sets this model apart from others is that all co-

operatives, whether they are small farmers or large consumer-owned entities, share the

values of democracy, solidarity, equality, self-help and self responsibility, creating

businesses that serve the greater good as opposed to maximizing profit for the very

few.(ICA, 2009)

The United Nations recognizes the co-operative movement as an important partner in the

implementation of the development agenda as shaped by the United Nations global

conferences and summits since the 1990s. The 1995 World Summit for Social

Development in Copenhagen underscored the importance of Co-operatives in a people-

centered approach to development. Governments adopted the United Nations guidelines

on Co-operatives of 2001 which serve to guide co-operative formation, as well as limit

the role of Governments to one of providing an enabling environment and level playing

field so Co-operatives can operate on a sustainable basis alongside other types of

business. The ILO Recommendation No. 193 of 2002emphasizes the need to promote the

business potential of Co-operatives so they can contribute to sustainable development and

decent employment (UNO, 2009)

Agricultural Co-operatives, which are typically organized as supply and/or marketing

Co-operatives contribute to the development of rural areas. In 2002, International

Federation of Agricultural Producers/International Co-operative Agricultural

22

Organization estimated that there were about 569,000 agricultural co-operatives

worldwide. Co-operatives enable farmers to pool limited resources to enhance earnings

capacity through lower input and credit costs and better marketing of products. For

instance, agricultural co-operatives are important in areas where the Private sector, owing

to market failure, is weak or unable to meet the needs of farmers for agricultural inputs or

credit. They also improve the market reach and bargaining power of farmers in marketing

agricultural products. Thus, agricultural co-operatives enable farmers to improve their

earning and productive capacities. (UNO, 2009)

2.1.3.3 Indias Milk Revolution - Rural Producers Co-operative Venture

Dairy co-operative development in India began with the establishment of the Kaira

district co-operative milk producers union at Anand in Gujarat in 1946 in response to

limited opportunities for traditional milk producers. Operation Flood project was built on

this experience when formation of co-operatives became a government priority for

agricultural development in the 1970s. Beginning in 1974 with three projects in

Karnataka, Rajasthan, and Madhya Pradesh, and following with two national dairy

projects funded through the late 1980s, the World Bank lent more than $500 million to

develop the milk industry through co-operatives (made up of district unions combined

into state federations). The projects have focused on capacity building (strengthening co-

operative institutional structures and training) and support to activities and infrastructure

development for increasing production and marketing. The overall objective was to

promote viable co-operative businesses, owned and managed by producers, for collecting

and marketing milk products in order to expand rural incomes and improve dairy

productivity. (Narayan, 2002)

23

India today is home to one of the most successful co-operative ventures in the world, the

Anand pattern dairy co-operatives, which have transformed India from a net importer to

the worlds largest producer of milk and a milk exporter. Producers, mostly small farmers

with one or two cows, are organized into more than 100,000 village-level dairy co-

operative societies. These are grouped into district-level unions, which in turn are joined

in state-level marketing federations. The entire federated structure is governed

democratically by the farmer-members, supported by professional managers. By 2003

04, the dairy co-operative movement involved nearly 12 million farmers. Their farms

supplied almost 15 million litres of milk per day to over 750 towns and cities across

India, with an annual value of Rs 880 billion. Among other innovations, Operation Flood

marked the first creative use of food aid from developed countries to prime the pump

for a domestic dairy industry rather than depressing prices for local producers. (Narayan

& Glinskaya, 2007)

The village level dairy co-operative societies are the local level poor peoples prouder

organization who procure milk from the farmers and sell to their apex union for

processing and marketing in the towns and cities. These village level organizations have

created common assets in the villages for the members as well as for the society at large.

The organizations have also empowered the members by facilitating them to own

individual assets and capabilities through dairying and allied activities.

2.1.4 The Community Development Model

Community development is considered as a process and as an outcome. As a process it is

developing and enhancing the ability to act collectively and as an outcome taking

collective action and result of that action for improvement in a community in any or all

24

realms: physical, environmental, cultural social, political and economic. (Phillips &

Pittman, 2009) The facilitating element of community development according to the

community development literature is social capital or social capacity, which describes the

abilities of community members to organize and mobilize their resources for the

accomplishments of consensually defined goals (Christenson and Robinson 1989 cited in

Mattessich and Monsey 2004 cited in Phillips & Pittman 2009)or the resources embedded

in social relationships among persons and organizations that facilitate cooperation and

collaboration in communities (Mattessich and Monsey 2004,cited in Phillips & Pittman

2009).

Social capital or capacity is the extent to which members of a community can work

together effectively to develop and sustain strong relationships; solve problems and make

group decisions and collaborate effectively to plan ,set goals, and get things done(Phillips

& Pittman, 2009).

The four other forms of community capital are 1) Human capital (labour, skills,

capabilities, experience etc.) 2) Physical capital (buildings, streets, and infrastructure) 3)

Financial capital (community finical institutions, community banks, credit funds) 4)

Environmental capital (natural resources, weather, and recreational opportunities) (Green

and Haines 2002, cited in Phillips & Pittman, 2009). Although all forms of community

capital are important, the social capital plays a crucial role in community building and

progress. The more social capital a community has, the more likely it can adapt to and

work around the deficiencies in the other type of community capital. The process of

community development involves social capacity building which leads to social capital

which in turn leads to the outcome of community development. (Philips & Pittman, 2009)

25

2.1.4.1 Community Economic Development (CED)

CED is a process of creating wealth through the mobilization of human, financial,

physical and natural resources to generate marketable goods and services. The concepts

and definitions of community development and economic development are linked and

synergistic. Community development is a planned effort to produce assets that increase

the capacity of residents to improve their quality of life. These assets may include several

forms of community capital: physical, human, social, financial and environmental (Green

and Haines 2002 cited in Phillips & Pittman 2009).

The purpose of community development is to produce asset that may be used to improve

the community and the purpose of economic development is to mobilize these assets to

benefit the community. Both definitions refer to the same community capital assets:

human, financial and physical (environmental and natural). Holistic concept of economic

development include not only wealth and job creation but increasing the quality of life

and standard of living of the people which is compatible with the community

development definition. The links and relationship between community development and

community economic development are as follows

We maintain that community economic development occurs when people in a

community analyze the economic conditions of that community, determine its

economic needs and unfulfilled opportunities, decide what can be done to

improve economic condition in that community and then move to achieve agreed

upon economic goal and objectives. Economic development theory and policy

have tended to focus narrowly on the traditional factors of production and how

they are best allocated in a spatial world. We argue that community economic

26

development must be broader than simply working about land, labour and capital.

The broader dimension includes public capital, technology, and innovation,

society and culture, institutions and the decisions-making capacity of the

community (Shaffer, Deller and Marcouuiller, 2006 cited in Phillips & Pitman,

2009)

Economic development largely aims to improve employment, income and the economic

base of the community. Economic development is part of community development,

which seeks to build all five community capitals, not only enhancing the communitys

economy but its environment, social structures, attitudes and assets. Economic

development involves many of the elements of community development such as

participation, rethinking, action learning etc. However, it specifically aims to improve the

relative economic position of the community. (Cavaye, 2008)

Local industry development is the primary step towards the economic development of the

community which involves facilitation of relatively small groups of people, who are

engaged in local level production of goods and services. The strengthening of local

producers could be achieved by forming their producer organizations and establishing

necessary channels and linkages for production, processing, value addition and marketing

of their products which ultimately results in the communitys economic development.

The growth and development of local producer organizations results in the creations of

various community assets for the benefit of all members of the community. Besides the

local producer organizations provide assured opportunities for people to engage in

livelihood options related to the production, processing and marketing activities of the

organization.

27

Figure 2.2 The Relationship between Local Industry Development,

Economic Development and Community Development

The diary co-operatives could be seen as local level rural producer organizations of dairy

farmers with necessary upward critical linkages for processing and marketing of milk and

milk products so that the gains at all levels come back to the benefit of the primary milk

producers.

Communities with social capacity (the ability to act) are inherently more capable of

creating good economic development programmes which they choose to do. When these

communities take action they create and maintain effective economic development

programmes that mobilize the community resources. They also improve their physical

and social nature and become more development ready which leads to success in business

attraction, retention and expansion, and start up. (Phillips & Pittman 2009)

The community development process if practiced in an efficient and effective manner

ultimately leads to the economic development of the community. Community

Community Development

Economic Development

Local Industry Development

28

development and economic development are frequently used interchangeably and the

term community economic development is often used to described the integration of

the community and economic development processes (Shaffer et al 2006 cited in Phillips

& Pittman 2009) and it is also used to refer to local economic development

encompassing growth (economic), structural change (development) and relationships

(community) (Haugthtan, 1999, cited in Phillips& Pittman, 2009).

2.1.4.2 Asset Based Community Development (ABCD) A Paradigm shift in

Community Development Approach

The traditional approach in community practice was needs based community development

with emphasis on community organization which is often understood as a process by

which a community identifies its needs or objectives, orders (or ranks) these needs or

objectives, develops the confidence and will to work at these needs or objectives ,finds

the resources (internal and/or external) to deal with these needs or objectives, takes action

in respect to them and in so doing extends and develops co-operative and collaborative

attitudes and practices in the community. (Ross, 1955)

Even though the goal of community organization is to develop co-operative and

collaborative attitude and practices (development of social capital of collaboration), the

major attention is towards the need identifications and resource organization for solving

the problems or meeting the needs of the community.

Many of the problems identified, like poverty, unemployment, inflation etc. are

issues too large for one community to solve by itself by focusing on the causes of

such problems, community may end up wringing their hands or giving up because

of the overwhelming nature of the causes. The approach can create unreasonable

29

expectations that may lead to disappointment and failures over time. People may

identify a set of problems and needs on which no immediate solutions exist with

government or development agency who initiate the process of need

identification. (Phillips & Pittman, 2009)

The need based approach has often presented one sided view of the community with

leaders/agencies have developed a framework where the community is tuned to

continuously rely upon them for external support and guidance for the problems affecting

the community from time to time with minimal opportunities for communitys self

determination.

In the needs-based approach, well-intentioned efforts of government and

development agencies have generated needs surveys, analyzed problems, and

identified solutions to meet those needs, in the process, however, they have

inadvertently presented a one-sided negative view, which has often compromised,

rather than contributed to, community capacity building. One of the main effects

is leadership that denigrates the community. Leaders find that the best way to

attract institutional resources is to play up the severity of problems. Local

leadership is judged on how many resources are attracted to the community, not

on how self-reliant the community has become. Another consequence is that

people in the communities start to believe what their leaders are saying. They

begin to see themselves as deficient and incapable of taking charge of their lives

and of the community. Not surprisingly, community members no longer act like

citizens; instead they begin to act like "clients" or consumers of services with no

30

incentive to be producers. (Kretzmann and MCKnight, 1993 cited in (Mathie &

Cunningham, 2002))

The communitys potentialities and linkages available in addressing the problems were

not sought adequately in the context of readily incoming outside assistance. The projects

were implemented based on the problems identified and addressed forgoing the multiple

dimensions of the community and its problems.

The asset based community development approach is developed by John McKnight and

Jody Kretzmann at the Institute for Policy Research (IPR) at Northwestern University,

USA based on extensive inquiry into the characteristics of successful community

initiatives, and articulated ABCD as a way of counteracting the predominant needs-based

approach to development.

2.1.4.2.1 The Context for the emergence of ABCD

ABCD can also be viewed as a response to global changes in the social, political and

economic landscape. In most countries, liberalization policies have resulted in weakening

of the social contract that gave the government, the responsibility for providing

programmes and solutions to community problems. At the same time, stronger,

accountable forms of governance at the local level and the emergence of effective civil

society have been noticed in the process of democratization, particularly in countries of

the global south. Technological advances in global and local communications provide

opportunities for decentralized economic development for some communities.

31

The decentralized governance with emphasis on identifying the local resources to solve

the local problems has shifted the focus towards looking at the assets existing inside the

community. The idea is to build the capacity within a community to build and

strengthen a communitys assets. In contrast to focusing on problems and needs, this

approach focuses on communitys capacity, strengths and assets. The community is

guided to see its positive aspects and encourage to work on to developing these assets.

The approach does not ignore the needs and problems but focus first on its strengths and

successes to provide a positive perspective of the community with a vision for the future

rather than its limitations and failures.

ABCD recognizes that it is the capacities of local people and their associations

that build powerful communities. The process of recognizing these capacities

begins with the construction of a new lens through which communities can "begin

to assemble their strengths into new combinations, new structures of opportunity,

new sources of income and control, and new possibilities for production." and to

encourage communities to take charge with confidence in their own capacities.

Communities are helped to build an inventory of their assets and are encouraged

to see value in resources that would otherwise have been ignored, unrealized, or

dismissed. Such unrealized resources include not only personal attributes and

skills, but also the relationships among people through social, kinship, or

associational networks. By mobilizing these informal networks, formal

institutional resources can be activated -such as local government, formal

community-based organizations, and private enterprise (Kretzmann and McKnight

(1993) p6., cited in Mathie, & Cunningham, 2002)

32

Individuals, associations, local institutions, and organizations are useful and

valuable within the asset based community framework. Kertzmann and McKnight

defined asset as the gifts, skills and capacities of individuals, associations and

institutions In fact, the key to ABCD is the power of local associations to drive

the community development process and to leverage additional support and

entitlements. These associations are the vehicles through which all the

community's assets can be identified and then connected to one another in ways

that multiply their power and effectiveness. (Mathie & Cunningham, 2002)

2.1.4.2.2 Approach and Method of ABCD

Asset-Based Community Development can be understood as an approach, as a

set of methods for community mobilization, and as a strategy for community-

based development. As an approach to community-based development, it rests on

the principle that the recognition of strengths, gifts, talents and assets of

individuals and communities is more likely to inspire positive action for change

than an exclusive focus on needs and problems. Seeing the glass half-full as well

as half empty is not to deny the real problems that a community faces, but to

focus energy on how each and every member has contributed, and can continue to

contribute, in meaningful ways to community development. Focusing on

uncovering the merits of all members encourages a spirit of egalitarianism, even

in societies that are hierarchical in structure and differentiated by culture,

educational background and gender. At its core are associations of community

members, both formal and informal. As engines of community action, and as a

33

source of power and leadership, these are considered assets of the community

(Greene, 2000 cited in Mathie & Cunningham, 2002)

While rejecting any kind of blue-print for ABCD, it propose a number of steps to

facilitate the process,

Collecting stories about community successes and identifying the capacities of

communities that contributed to success.

Organizing a core group to carry the process forward

Mapping completely the capacities and assets of individuals, associations, and

local institutions

Building relationships among local assets for mutually beneficial problem-solving

within the community.

Mobilizing the community's assets fully for economic development and

information sharing purposes

Convening as broadly representative group as possible for the purposes of

building a community vision and plan

Leveraging activities, investments and resources from outside the community to

support asset-based, locally defined development

(McKnight and Kretzmann, 1993, pp 345 cited in Mathie, & Cunningham, 2002)

ABCD is a strategy for sustainable community-driven development. Beyond the

mobilization of a particular community, ABCD is concerned with how to link micro-

assets to the macro environment. In other words, there is attention paid to the boundaries

of community and how to position the community in relation to local institutions and the

external economic environment on which its continued prosperity depends.

The Process of ABCD has got four main steps namely 1) community organizing 2)

visioning 3) planning 4) Implementation and evaluation and back to organizing.

34

The components of community capital namely human, social, physical, financial and

environmental (Ferguson and Dickens,1999 cited in Philips and Pittman 2009,p41)are

further enlarged by adding cultural and political components (Green & Haines,2007

cited in Phillips and Pitman 2009.p41).Identifying various assets under each of the

aforesaid capital is termed as assets mapping in ABCD.

ABCD focuses on developing and strengthening all forms of capital that are required for

a community to survive and develop. Kertzman and McKnight the founders of ABCD

had the belief that the key to community revitalization is to locate all of the available

local assets, to begin connecting them with one another in ways that multiply their power

and effectiveness, and to begin harnessing those local institutions that are not yet

available for local development purposes (Kertzman and McKnight (1993) citied in

Philips and Pitman 2009).

The focus in ABCD approach is on the socio-economic capacities of the subgroups in the

community. The strengths and capabilities of various micro level organizations such as

credit unions, village banks, co-operatives and community enterprises are to be assessed

and utilized to achieve the goal of community economic development.

The village milk co-operatives are the local level producer organizations with critical

linkages for dairy based enterprises in the rural villages in India. The dairy co-operatives

have helped the farmers in developing various individual as well as common assets and

capabilities which could enhance the economic development of the villages through a

sustainable diary based rural enterprises. The dairy co-operatives as rural prouder

organizations can accelerate the economic development of the community by revitalizing

35

their strengths and establishing productive linkages for the growth of dairy based

enterprises.

2.2 Co-operatives: Pro Poor Organizations

Co-operative is a way of socio-economic life. The principle of co-operation is as old as

the human civilization itself. Mutual help or working together is the essence of co-

operatives. In the modern technical sense, the genesis of co-operative movement

emanated from the ill effects of Industrial revolution such as mass poverty, degeneration

of resource poor people and concentration of wealth among a few people. Co-operation

as an economic system was born as a peaceful revolution against the mercantile economy

and capitalism. The organized strength of the resource poor people and their small

savings are combined in a united way based on the strategy of mutual help for their

survival and growth in a competitive world.

In 1844, in a small town of Rochdale of Great Brittan, 28 flannel weavers united together

with a vow of mutual help and formed the first co-operative organization named as

Rochdale Society of Equitable Pioneers. It was an effort of the weavers to save

themselves from the onslaughts of the owners of the cotton industries. It was a society of

the workers by the workers and for the workers. Even the nomenclature co-operative

was not utilized in the title of the society which may not have been known to them but

they have coined a set of principles which were foundational to their organization. The

organization was established on the principles of open membership, democratic control

and dividend on purchase, limited interest on capital, political and religious neutrality,

cash trading and promotion of education.

36

The success of that co-operative was the inspiration for the promotion of co-operatives in

England and other European countries. Gradually, the movement spread across the world

with the formation of International Co-operative Alliance (ICA) in 1895.

The co-operative principles adopted by ICA was mainly evolved from the principles

followed by the Rochdale Society of Equitable Pioneers. These principles were further

amended by ICA in1934, 1937 and in 1966. Finally in 1995 ICA has revised its

principles and framed a statement of co-operative identity which was endorsed by the

General Assembly of ICA. Presently ICA is the global umbrella organization of the co-

operatives working all over the world. (Nayak, 2004) (Bandyopadhyay, 2004)

United Nations Organization (UNO) has declared the year 2012 as the International Year

of Co-operatives to highlight the importance of co-operatives in development. (UNO,

2010) Recognizing that co-operatives, in their various forms, promote the fullest

possible participation in the economic and social development of all people, including

women, youth, older persons, persons with disabilities and indigenous peoples, are

becoming a major factor of economic and social development and contribute to the

eradication of poverty. (UNO, 2010)

2.2.1 Definition, Values and Principles of Co-operation

Co-operative is a form of business organization where people work together by

pooling their resources for business purposes on the basis of mutual benefits. As a self-

help group, a co-operative organization is widely accessible, especially for the

impoverished and the marginalized. Co-operatives promote and support entrepreneurial

37

development, creating productive employment, raising incomes and helping to reduce

poverty while enhancing social inclusion, social protection and community building.

(UNO, 2009)

What is a co-operative?

Co-operation is a way of life, a philosophy, an approach to human problems based on the

principles of equality and justice. Being self help organizations, co-operatives help to

meet the needs of the members and to generate employment and incomes in the

communities in which they operate. Co-operatives are also enterprises that follow a set of

values and co-operative Principles. International Co-operative Alliance (ICA) in 1995

has accepted and elaborated on co-operative identity, values and principles which are

guidelines by which co-operatives function all over the world. A co-operative is an

autonomous association of persons united voluntarily to meet their common economic,

social, and cultural needs and aspirations through a jointly-owned and democratically-

controlled enterprise. (ICA, 2007)

Values of Co-operatives:

Co-operatives are based on the values of self-help, self-responsibility, democracy,

equality, equity and solidarity. In the tradition of their founders, co-operative members

believe in the ethical values of honesty, openness, social responsibility and caring for

others. (ICA, 2007)

38

Principles of Co-operatives

1st Principle: Voluntary and Open Membership

Co-operatives are voluntary organizations, open to all persons able to use their services

and willing to accept the responsibilities of membership, without gender, social, racial,

political or religious discrimination.

2nd Principle: Democratic Member Control

Co-operatives are democratic organizations controlled by their members, who actively

participate in setting their policies and making decisions. Men and women serving as

elected representatives are accountable to the membership. In primary co-operatives

members have equal voting rights (one member, one vote) and co-operatives at other

levels are also organized in a democratic manner.

3rd Principle: Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their co-

operative. At least part of that capital is usually the common property of the co-operative.

Members usually receive limited compensation, if any, on capital subscribed as a

condition of membership. Members allocate surpluses for any or all of the following

purposes: developing their co-operative, possibly by setting up reserves, part of which at

least would be indivisible; benefiting members in proportion to their transactions with the

co-operative; and supporting other activities approved by the membership.

4th Principle: Autonomy and Independence

Co-operatives are autonomous, self-help organizations controlled by their members. If

they enter to agreements with other organizations, including governments, or raise capital

39

from external sources, they do so on terms that ensure democratic control by their

members and maintain their co-operative autonomy.

5th Principle: Education, Training and Information

Co-operatives provide education and training for their members, elected representatives,

managers, and employees so they can contribute effectively to the development of their

co-operatives. They inform the general public - particularly young people and opinion

leaders - about the nature and benefits of co-operation.

6th Principle: Co-operation among Co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative

movement by working together through local, national, regional and international

structures.

7th Principle: Concern for Community

Co-operatives work for the sustainable development of their communities through

policies approved by their members. (ICA, 2007)

2.2.2 The Co-operative difference

Co-operatives are enterprises that put people at the centre of their business and not

capital. Co-operatives are business enterprises and thus can be defined in terms of three

basic interests: ownership, control, and beneficiary. Only in the co-operative enterprise

are all three interests vested directly in the hands of the user.

Co-operatives put people at the heart of all their business. They follow a broader set of

values than those associated purely with making a profit. Because co-operatives are

owned and democratically-controlled by their members (individuals or groups and even

40

capital enterprises) the decisions taken by co-operatives balance the need for profitability

with the needs of their members and the wider interests of the community.

2.2.3 Type of Co-operatives

The co-operative model of enterprise can be applied to any business activity. They exist

in traditional economic sectors such as agriculture, fisheries, consumer and financial

services, housing, and production (workers' co-operatives). However, co-operative

activity spans to large number of sectors and activities including car-sharing child-care,

health and social care, funeral, orchestras and philharmonics, schools, sports, tourism,

utilities (electricity, water, gas, etc.), and transport (taxis, buses, etc). (ICA, 2007)

The co-operatives could be broadly classified into three major types.

1 Consumer Co-operatives: which include financial co-operatives, enable members to

buy goods or obtain services at close to cost price.

2 Producer Co-operatives: which include agricultural co-operatives, enable members to

achieve higher profits through reduced input costs and better marketing

3 Worker or Employee-owned Co-operatives: This may provide the members with

opportunities for employment and skills improvement. (ICA, 2007) (UNO, 2009)

2.2.4 Co-operatives are significant economic and social actors

All over the world, millions of people have chosen the co-operative model of business

enterprise to enable them to reach their personal and community development goals. Co-

operatives create and maintain employment providing income; they are responsible for

41

producing and supplying safe and quality food and services to their members, but also to

the communities in which they operate. By putting the Co-operative Principles and ethics

in practice they promote solidarity and tolerance, while as 'schools of democracy' they

promote the rights of each individual - women and men. Co-operatives are socially

conscious responding to the needs of their members whether it is to provide literacy or

technical training, or to take action against the HIV/AIDS pandemic. Through their

varied activities, co-operatives are in many countries significant social and economic

actors in national economies, thus making not only personal development a reality, but

contributing to the well-being of entire populations at the national level. (ICA, 2010)

2.2.5 Co-operative Reach in the Globe

The Co-operative Movement brings together over 800 million members in over 100

countries around the world through 221 membership organizations of ICA. The United

Nations estimated in 1994 that the livelihood of nearly 3 billion people, or half of the

world's population, was made secure by co-operative enterprises. Co-operatives Provide

100 million Jobs worldwide, 20% more than multinational enterprises. These enterprises

continue to play significant economic and social roles in their communities. (ICA, 2010)

2.2.5.1 The Co-operatives in India

Co-operatives in India were started off as an appropriate institutional means to alleviate

the problems of poor farmers from the clutches of money lenders. The co-operative

movement formally began in India with the enactment of First Co-operative Credit

Societies Act of 1904 and had touched all spheres of activities such as credit, marketing,

consumers, processing, housing, fishery, labour and diary etc. Co-operatives were

assigned key positions in five year plan up to period of liberalization of Indian economy

42

in 1992. Eight five year plan (1990-97) stated that co-operatives should function as self-

reliant, self-regulated and self-managed organization under the open economic regime.

(Prasad, 2007)

The co-operative movement in India has provided institutional support to the people with

limited means to become self-reliant through self-help and democratic mode of business

and participation. Pandit Jawaharlal Nehru was conscious of the role of Co-operatives for

national development, advocated, Convulse India with Co-operatives. He had pleaded

for positive support of the government to Co-operatives without impairing their

autonomy and independence. (Amin, 2007) India has got a strong co-operative movement

spread across the country with 236 million people with 528249 co-operatives. (NUCI,

2010)

2.2.5.2 The Co-operative Scenario of Kerala

The Co-operative sector has been playing a distinct and significant role in the process of

socio-economic development of the state with special focus on rural population and

livelihood. The co-operative movement in Kerala has a solid foundation and impressive

track record in terms of financial stability and sound infrastructure to generate adequate

funds. The spread and growth of co-operatives in different sectors were nurtured under

development plans with Government initiative and Government finance. Kerala has a

wide network of co-operatives engaged in various promotional activities such as

distribution of credit, marketing, agro processing, consumer activities, public health,

education, insurance and infrastructure development

43

After the formation of Kerala State, the Kerala Co-operative Societies Act of 1969 came

into force with effect from15.5.1969 in order to enact a uniform law on co-operation

applicable throughout the State. Consequent on the introduction of Kerala Co-operative

Societies Act 1969, Societies with unlimited liability ceased to exist and societies with

limited liability came into existence. Thereafter Government of Kerala passed the Kerala

Co-operative (Amendment) Act 1999 which came into force with effect from 1.1.2000

Providing of membership to local body institutions, Deposit guarantee scheme in Primary

Agricultural Credit Societies, Consortium Lending Scheme, Co-operative Development

and Welfare Fund, Independent Election Commission, Separate Audit Wing and

Vigilance Wing, and Co-operative Examination Board are the new provisions made in

the Amendment Act (GoK, 2011)

About 29 million people of the state are members of Various Co-operatives

functioning under the departments of co-operation, Industries, Kadhi Board fisheries,

Welfare and Dairy Development. Kerala has reached a high point in the development of

co-operative movement and their contributions in all fields were remarkable and most of

the apex federations of Kerala are in profits. (Anthati, 2009).

2.3 Development of Dairy Co-operative movement in India

The co-operatives have achieved commanding positions in many segments of national

economy. Dairy Co-operatives are the shining example of the success of co-operative

efforts of small and marginal framers in India. As on March 2010 the Dairy Co-operative

Network in India includes 177 milk unions, operating in over 346 districts, covering

1,40,227 village level societies, is owned by 14 million member farmers of which 4

million were women (NDDB, 2010).

44

2.3.1 The Birth of AMUL and Development of Dairy Co-operatives in India

The marginal milk producers in a small town named Anand (in Kaira District of Gujarat)

had to travel long distances to deliver milk to the only dairy, the Polson Dairy in Anand.

Many a times, the milk went sour as producers had to physically carry the milk in

individual containers, especially in summer season and farmers had incurred huge loss.

The agents of Polson Dairy arbitrarily decided the prices depending on the production

and the season. Milk is a commodity that has to be collected twice a day from each

cow/buffalo. In winter the producer was either left with surplus/unsold milk or had to sell

it at very low prices. The Polson Dairy had been given monopoly rights by the

government to collect milk form Anand and supply it to Bombay city in turn. The farmers

were heavily exploited by the Polson Dairy. Angered by the unfair and manipulative

trade practice, the farmers of Kaira District approached Sardar Vallbhbhai Patel (who

later becomes the Deputy Prime minister of India) under the leadership of the local

farmer leader Tribhuvandas Patel. Sardar Vallbhbhai Patel advised the farmers to form

co-operative and supply milk directly to the Bombay Milk Scheme instead of selling it to

Polson. He sent Morarji Desai (who later became Prime Minister of India in 1977) to

organize the farmers. In 1946 the farmers of the area went on a milk strike refusing to be

further oppressed. Thus the Kaira District co-operative was established in 1946 and milk

collection was also decentralized as most producers were marginal farmers who were in a

position to supply only 1-2 litres of milk per day. Village level co-operatives were

established to organize the marginal milk producers in each of those villages. (Vyas,

2007)

45

The co-operative was further developed and managed by Dr.V.Kurien along with

Shri H.M Dalaya. The first modern dairy of the Kaira union was established at Anand

(which came to be known as AMUL dairy after it brand name). Indigenous R&D and

technology development at the co-operative had led to the successful production of

skimmed milk powder from buffalo milk- the first time on a commercial scale anywhere

in the world. The foundation of a modern dairy industry in India was laid since India had

one the largest buffalo population in the world.

Impressed with the development of dairy co-operatives in Kaira District and its success,

shri Lal Bahadur Shastri, the then prime minister of India during his visit in Anand asked

Dr.Kurien to replicate the Anand Model dairy co-operative all over India. Thus the

National dairy Development Board (NDDB) was formed and Operation Flood

Programme was launched for replication of the Amul Model all over India. (Vyas, 2007)

2.3.2 The Three tier Amul Model

The Amul model is a three tier co-operative structure consists of Dairy co-operative

society at village level affiliated to a Milk Union at the District level which in turn is

federated into milk federation at state level. The three-tier structure was setup in order to

delegate the various functions. Milk collection is done at village level dairy society, Milk

Procurement & Processing at the district milk union and milk & milk products marketing

at the State Milk Federation. This helps in eliminating internal competition and ensures

that each tier has got clearly defined role in the business operation. This structure was

first evolved at Amul in Gujarat and replicated all over the county under the Operation

46

Flood and came to be known as the Amul Model or Anand Pattern of Dairy Co-

operatives.

Figure 2.3 Organizational Structure of Anand Pattern Dairy Co-operatives

State Level Dairy Co-operative Federation

District Milk Producers co-operative Union

Village Level Producers Co-operative Society

Dairy farmers at the village

The Anand Pattern co-operative structure comprises village level co-operative societies

(DCSs), which promote district level union, which in turn promote state level marketing

federation. Anand pattern envisaged:

Decentralized milk production by small producers,

Milk procurement by primary co-operatives of milk producers,

Centralized Milk Processing by union of dairy co-operatives and

Marketing of milk and milk products done by federations of unions

47

The primary milk producers democratically govern this entire federal co-operative

structure to ensure that the higher tier organizations are geared to serve the purpose of the

lower levels and the gains at all levels flow ultimately back to the milk producers in a

significant measure. The core feature of Anand model is the farmer control on all the

three stages that is procurement, processing and marketing of milk and milk products.

The value addition at procurement and processing stages can be realized by the co-

operatives only through control over marketing thus making control over marketing

essential and critical features for success. In contrast, many dairy co-operatives

worldwide end up as suppliers of raw materials to private companies as the private

companies own the brands and marketing. (AMUL, 2010)

Village Dairy Co-operative Society

The milk producers of a village, having surplus of milk after own consumption, come

together and form a village dairy co-operative society which is the primary society under

the three tier structure. It has membership of milk producers of the village and is

governed by elected management committee consists of 9 to 12 elected members, based

on principle of one member, one vote. The village society appoints a paid secretary and a

few staff for the management of the day to day functions. The major functions of the

village diary co-operative society are mainly the following

the collection of surplus milk from the milk producers of the village, payment

based on quality and quantity (price bases on FAT& SNF) of milk supplied

48

providing support services to the members like veterinary first Aid, Artificial

insemination services, cattle-feed sales, mineral mixture sales, fodder and fodder

seed sales, conducting training on Animal Husbandry and dairying

selling liquid milk for local consumers of the village

supplying milk to the district milk union

The village milk co-operative is an independent entity managed locally by the milk

producers and assisted by the district milk union. (Vyas, 2007)

District Co-operative Milk Producers Union (Milk Union)

The village dairy societies of a district having surplus milk after local sales come together

and form a milk union. The milk union is the second tier under the three tier structure.

It has got membership of village dairy societies of the district and governed by the board

of directors elected from affiliated village dairy co-operatives. The milk union is

managed by the appointed professional management team consisting of a Managing

Director and competent staff. The main functions of milk union are as follows

Procurement of milk from village dairy societies coming under its preview

Arranging transportation of raw milk from village societies to the union

Providing input services to the producers like veterinary care, artificial

insemination services, cattle-feed sales, etc.

Conducting training on co-operative development, Animal Husbandry & dairying

for milk producers and conducting specialized skill development and leadership

development training for village dairy society members and staff

49

Providing management support to the village dairy co-operative society along

with regular supervision of its activities

Establishing chilling centers and dairy plants for processing the milk

Selling liquid milk and milk products within its operational area

Processing milk into various milk and milk products as per the requirements of

state marketing federation

Deciding the prices of milk to be paid to milk producers as well on the prices of

support services provided to members. (Vyas,2007)

State Co-operative Milk Federation (Federation)

The milk unions of the state are federated into a state co-operative milk federation.

The federation is the apex tier under the three tier structure. It has membership of all

the co-operative milk unions of the state and is governed by board of directors

consisting of elected representative of each milk union. The state federation appoints

a managing director and competent staff for the professional management of the

federation.

The main factions of the federation are as follows

Marketing of milk and milk products processed/manufactured by milk union

Establishing distribution network for marketing of milk and milk products

Arranging transportation of milk and milk products from the milk union to

the market

Creating and maintaining a brand for marketing of milk and milk products

Providing support services to the milk unions and members like technical

inputs, management and advisory services

50

Pooling surplus milk from the milk unions and supplying it the deficit unions

Establish feed balancing dairy plants for processing the surplus milk of the

unions

Arranging for common purchase of row material used in manufacture

/packing of milk products

Deciding the prices of milk and milk products to be paid to milk unions

Deciding on the products to be manufactured at various milk unions and

capacity required for the seam

Planning long-term milk production and procurement & processing as well as

marketing.

Arranging finance for the milk unions and providing them technical knowhow

Designing and providing training on co-operative development, technical &

marketing functions.

Conflict resolution and keeping the entire structure intact. (Vyas,2007)

2.3.3 The Operation Flood Programme in India

Operation Flood, the worlds largest dairy development programme, was based on the

rich experience gained from the Amul Model dairy co-operatives. This innovative three

tier organization structure has combined the productive capacity of dairy farmers with

professional management and modern dairy technology. Major objectives of Operation

Flood projects were increase in milk production, augment rural income and fair prices

for consumers. Operation Flood programme was implemented in three phases.

51

Phase I lasted from 1970-1980. It was financed by the sale of skimmed milk powder and

butter oil gifted by European Economic Community (EEC) through the world Food

programme; NDDB planned the programme and negotiated the details of EEC assistance.

During this phase, Operation Flood linked 18 of Indias premier milk sheds with

consumers in Indias four major metropolitan cities viz, Delhi, Mumbai, Kolkata and

Chennai.

Phase II commenced in 1981 and lasted till 1985. It increased the milk shed from 18 to

136 and 290 urban markets expanded the outlets for milk. By the end of 1985, a self

sustaining system of 43000 village dairy co-operatives covering 4.25 million milk

producers had come into the network. Domestic milk powder production had increased

from 22,000 tons in the project year to 140,000 tons by 1989; all this came from dairies

set up under Operation Flood. The EEC grant and World Bank Loan helped to promote

self-reliance. Direct marketing of milk by producers co-operatives have increased by

several million litres a day.

Phase III started in 1985 and lasted till 1996. It enabled dairy co-operatives to expand and

strengthen the infrastructure required to procure and market increasing volumes of milk.

Veterinary first aid services, feed and artificial insemination services for co-operative

members were extended, along with intensified member education. This phase

consolidated Indias dairy co-operative movement adding 30.000 new dairy co-operatives

to the 42,000 existing village milk co-operatives organized during Phase II. This Phase

gave increased emphasis to research and development in animal health and animal

nutrition. Innovations like vaccine for Theileriosis, bypass protein feed and urea-molasses

mineral blocks, all contributed to the enhanced productivity of animals. (Kurien, 2007)

52

Impact of Operation Flood

The Amul model (Anand pattern) co-operatives seem to be the most appropriate

organizational force for promoting agricultural development, using modern technologies

and professional management. And thereby generating employment for the rural masses

and eradicating poverty in undeveloped areas. India has demonstrated the superiority of

this approach. The assets and facilities at all levels are owned by farmers and the co-

operatives were able to build markets, supply inputs and create value added processing.

Prompt and remunerative payment for produce of good quality has ensured the best

incentive for the farmers to increase production and quality.

The effect of Operation Flood programme was appraised by World Bank and commended

that an investment of Rs.2000 crores over 20 years under Operation Flood has

contributed to increase of Indias milk production by 40 Million Metric Tonne (MMT)

i.e. from about 20MMT in Pre - Operation Flood to more than 60MMT at the end of

Operation Flood Programme. An incremental return of Rs.40, 000 crores annually has

been generated by an investment of Rs.2000 crores over a period of 20 years. This has

been the most beneficial project funded by the World Bank anywhere in the world (Vyas,

2007).

The movement has helped India to attain the status of the largest milk producing country

in the world and per capita milk consumption has increased from 107gms per day in 1970

to over 226grams per day in 2002. The substantial increase in milk production and milk

availability have resulted in the stabilization of milk prices in the country. (Kurien, 2007)

53

The impact of milk co-operatives at micro level, namely on milk production, milk price,

income, employment, the distribution of resources and equity were studied by many

scholars during the period 1984-1996 and the studies have concluded that the dairy co-

operatives had a positive impact on the income of the members (Singh & Das, 1984;

Parthsarathy, 1991; Arora & Bhogal, 1996; Singh & Chattaraj, 1996; Koli, 1996; Singh

& Singh, 1998 cited in Kurien, 2007)

The dairy co-operatives have been instrumental in economic development of the rural

society but at the same time have provided vital ingredients for improving health and

nutritional requirement of the Indian society with enhanced per capita consumption of

milk. The wealth created under dairy industry has ploughed back to the society especially

to the millions of rural poor dairy farmers. The corporatization of milk industry has

helped the social development of the dairy farmers and their families.

As per the report of World Bank on the impact of Dairy Development in India, the three

tier Amul model has been instrumental in bringing about the white Revolution in the

country. The Anand pattern has demonstrated the following benefits:

The role of dairying in poverty reduction

The fact the rural development involves more than agricultural production

The value of national ownership in development

The beneficial effects of higher incomes in relieving the worst aspects of poverty

The capacity of dairying benefiting the poor at low cost and create jobs for the

poor

The importance the of commercial approach to development

The capacity of single commodity projects to have multi-dimensional impacts

The importance of getting government out of commercial enterprises

54

The power and problems of participatory organizations

The importance of policy (World Bank Report 1997c. cited in Vyas,2007)

By putting the instruments of development in peoples hand with member control at all

stages of the production and marketing with the professional management support has

led to the socio-political and economic empowerment of millions of marginal dairy

farmers in the county under Operation Flood. (Kurien, 2007)

2.3.4 The Present Status of Dairying in the Country

India ranks first in world milk production, its production having increased from

17 million tonnes in 1950-51 to 108.5 million tonnes by 2008-09. The per capita

availability of milk has increased from 112 grams per day in 1968-69 to 258 grams per

day in 2008-09, but still low compared to the world average of 265 grams per day. (GoI,

2010) The following table has given the details regarding the total production and per

capita availability of milk in India.

Table 2.1 Production and per capita availability of Milk in India

Year Milk Production (MMT) Per capita availability (grams/day)

1990-91 53.9 176

2000-01 80.6 220

2005-06 97.1 241

2006-07 100.9 246

2007-08 104.8 252

2008-09 108.5 258

(Source: Dept. of Animal Husbandry and Dairying cited in GoI, 2010)

55

About 80 per cent of milk produced in the country is handled in the unorganized sector

and the remaining 20 per cent is equally shared by co-operatives and private dairies. Over

1.33 lakhs village level dairy co-operatives spread over 265 districts in the county collect

about 25.1 million litres of milk per day and market about 20 million liters of milk per

day in the country. The efforts of the government in the dairy sector are concentrated in

promotion of dairy activities in non-Operation Flood areas with emphasis on building

infrastructure and, revitalization of sick dairy co-operatives and federations and creation

of infrastructure in the states. (GoI, 2010)

2.3.4.1 Reach of Dairy Co-operatives as on March 2010

The following details about the dairy co-operative network of India and its output are the

positive results of Operation Flood Programme (commonly referred to as White

Revolution) implemented in India from 1970-1996.

The Dairy Co-operative Network (As on March 2010) includes 177 milk

unions, operates in over 346 districts

covers 1,40,227 village level societies is owned by around 14 million farmer

members of which 4 million were women

Milk Production

India's milk production increased from 21.2 million MT in 1968-69 to 104.8

million MT in 2007-08 and to 112 million MT in 2009-10.

Per capita availability of milk was 258 grams per day in 2009-10 increased

from 241grams per day in 2005-06, up from 112 grams per day in 1968-69.

India's 3.7 percent annual growth of milk production between 1999-00 and

2009-10 surpasses the 1.8 per cent growth in population; the net increase in

availability is around 2 per cent per year.

56

Marketing

In 2009-10, average daily co-operative milk marketing stood at 211.2 lakh

litres; annual growth has averaged about 6.2 per cent compounded over the

last five years.

Dairy Co-operatives now market milk in all metros, major cities and more

than 2000 towns/cities.

During 2001-2010 the daily milk supply by Co-operatives to each 1000 urban

consumers has increased from 47.7 to 61.9 Kg per day.

Innovation

Bulk-vending - saving money and the environment.

Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative

rail and road milk tankers.

Automatic Milk Collection Unit (AMCU) and Bulk Milk Cooler (BMC) at

grass root level preserve quality and reduce post-procurement losses.

Macro Impact

The annual value of India's anticipated milk production amounts to more than

Rs.1, 745 billion in 2009-10.

Dairy co-operatives generate employment opportunities for around 14 million

farm families.

Livestock contributes 22.2 per cent to the GDP from agriculture & allied

activities.

About 22.45 million people work in livestock sector, which is around 5.8% of

the total work force in the country (NDDB,2010)

The following table has provided the data about the spread of dairy co-operatives in the

length and breadth of the country. About 1.4 lakhs Dairy Co-operative Societies (DCS)

are part of the dairy network of India with 1.40 crores of farmer members who supply

milk to the dairy co-operatives.

57

Table 2.2 Dairy Co-operatives - Progress on Key Parameters in 2009-10*

State / UT

No. of DCS

Organized

(Cumulative)

Farmer

Members

('000)

Women

Members

('000)

Milk

Procurement

(TKgPD)

Milk

Marketing@

(TLPD)

Andhra

Pradesh 4911 841 177 1443 1409

Assam 66 3 0 5 12

Bihar 8299 441 64 736 437

Chhattisgarh 751 31 7 24 35

Delhi - - - - 3047

Goa 179 19 3 36 75

Gujarat 13890 2809 791 9053 3164

Haryana 6881 313 73 522 384

Himachal

Pradesh 795 33 11 55 18

Jammu &

Kashmir ** ** ** ** **

Jharkhand 50 1 0 5 239

Karnataka 11902 2052 660 3566 2468

Kerala # 3632 775 162 769 1067

Madhya

Pradesh 5729 266 50 525 447

Maharashtra 22217 1845 452 3151 2807

Nagaland 47 2 0 9 3

Orissa 3203 181 77 241 264

Puducherry 101 39 18 48 87

Punjab 6904 381 54 952 723

Rajasthan 15956 670 205 1654 1365

Sikkim 287 10 1 11 14

Tamil Nadu# 10038 2122 874 2277 1990

Tripura 84 6 1 2 13

Uttar Pradesh 21343 971 265 518 402

West Bengal 2962 210 70 262 655

ALL - INDIA 140227 14021 4015 25864 21125

Note: (1) * refers to provisional, ** for not reported and NA for not available

(2) # includes conventional societies and Taluka unions formed earlier

(3) @ Co-operatives (state) and metro dairies

(NDDB,2010)

2.3.4.2 The Perspective 2010 of NDDB

The National Dairy Development Board (NDDB) was created to promote, finance and

support producer-owned and controlled organizations. NDDB's programmes and

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activities seek to strengthen farmer co-operatives and support national policies that are

favourable to the growth of such institutions. Fundamental to NDDB's efforts are co-

operative principles and co-operative strategies

The Perspective 2010 plan of the NDDB maps the future of dairying in India, setting

realistic goals for strengthening Co-operative Business, production enhancement,

assuring quality and creating a National Information Network. The Plan was realized

with successful completion of the Operation Flood programme and has been developed

by the state milk marking federations and the milk producers co-operative unions in

consultation with NDDB. The Perspective 2010 goals and strategies have been drawn by

its actual implanters- Federation and Unions and supported by NDDB. The plan seeks to

strengthen the functioning of dairy co-operatives as producer owned and controlled

organizations. NDDB support the development of dairy co-operatives by providing the

financial assistance and technical expertise. (NDDB, 2010)

2.3.4.3 National Co-operative Dairy Federation of India (NCDFI)

The National Co-operative Dairy Federation of India Ltd. based at Anand is an apex body

of co-operatives comprising of 23 state level dairy co-operative federations. The NCDFI

formed in 1970 was registered under the Multi State Co-operative Societies Act of

1984. Its primary objective is to facilitate the working of dairy co-operatives through

coordination, networking and advocacy.

Important activities of the NCDFI are coordinating the sale of different products by its

members to the Ministry of Defence and other institutions, management of Rail Milk

Tankers, coordinating the sale of frozen semen doses and farm produce of the Sabarmati

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Ashram Gaushala, providing support to members and affiliated organizations in

computerizing their operations and information systems and offering other need based

services to members. The NCDFI also functions as a representative of its members on

different bodies including the National Co-operative Union of India and the International

Co-operative Alliance. (NDDB, 2010)

2.3.5 Dairy Development in Kerala

Cattle rearing had been a very popular household based economic activity in Kerala

associated with agriculture where the cattle waste was the major input for all types of

agriculture. There are sufficient documentary supports to affirm that organized dairy

industry in Kerala has got a tradition of about 80 years. First dairy industrial co-operative

was registered in 1932 as a mutual help co-operative at Thirumala in Trivandrum under

Dept. of Co-operation of erstwhile Travancore-Cochin state.

Dairy co-operatives were also operational in Malabar Region which was part of the State

of Madras and the Calicut Co-operative milk supplies union was started in 1939. There

was a customer friendly practice among dairy farmers where the farmer took the cow and

calf to the houses of the customers and milked the cow in the presence of the customers

and supplied the milk to ensure the quality of milk. When the dairy co-operatives were

formed the farmers brought the cows to the dairy co-operative society and milk it in the

presence of the customers and supply the milk which was popularly known as

Kettikaravu with the intention of ensuring the quality of milk supplied.

(Gopalakrishnan, 1999)

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2.3.5.1 Dairying in Pre-Operation Flood in Kerala: 1950- 1980

The organized dairy development in Kerala commenced in 1951 through the Key Village

Scheme (KVS) of improving the genetic potential of cattle by cross breeding local cattle

with superior indigenous breeds implemented through the Dept. of Animal Husbandry.

The Key Farm Scheme followed in the period 1952-1954and cross breeding with exotic

breed was initiated in 1955.The Indo- Swiss Project Kerala (ISPK) was constituted under

a bilateral agreement between the Government of India and the Swiss Confederation in

1963 with the aim of evolving a new breed of cattle adapted to the local environment.

The project was located in Mattupetty in Idukki district aimed at developing a breed of

dairy cattle suited to the local conditions, Frozen semen technology for artificial

insemination was introduced for the for time in the country. Fodder development was

also a major component of the project. To ensure continuity and to strengthen the

organization for further expansion, the Project was converted into a Government

Department named as Indo Swiss Project Department. (Prakash, 2005)

During the Fourth Plan Period (1969-70 to 1973-74), the Intensive Cattle Development

Project (ICDP) was launched in the state with the aim of enhancing milk production

through necessary technical and infrastructural support in the rural areas and linking them

with urban dairies. ICDP had established regional artificial insemination centres and sub

centres. About 950 Artificial Insemination (AI) centres were opened in 721 Panchayats

and trained youth were deployed to deliver the AI services to the framers at their door

steps. The cattle population had changed in favour of cross breeds and milk production

too increased considerably during the period. The Indio- Swiss project was helpful for the

dairy sector in Kerala with enhance milk production in rural households.

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By mid 1970s, the Government of Kerala decided to constitute an autonomous body

named the Kerala Livestock Development and Milk Marketing Board (KLD & MMB)

under the Companies Act 1956, integrating the production, procurement, processing and

marketing of milk under one umbrella. In 1976 the Indo- Swiss project was transformed

as Kerala Live Stock Development and Marketing Board (KLD &MM Board).The

breeding policy of the government of Kerala invested monopoly right to KLD &MM

board for frozen semen distribution in the state. (Gopalakrishnan, 1999)

2.3.5.2 Department of Dairy Development and Dairy Industrial Co-operatives

The Dairy Development Department was established in 1962 by separating the dairy

development functions of Co-operative Department with the purpose of speedy and

focused implementation of the schemes under the five year plans mainly city milk supply

scheme to supply good quality milk to the urban areas. About 150 dairy industrial co-

operatives were functioning in 1962 under the control of the dept. of Co-operation. The

dairy development dept was providing technical support for establishing and running

diary co-operative societies in Kerala. First dairy plant in the state was commissioned at

Pattam, Trivandrum in 1962 under the department. Dairy Industrial co-operatives and

milk unions were established in different parts of the State. Since the Government

programme of milk sale ended in huge loss the marketing responsibility was given to the

milk unions. In 1980 there were 1600 dairy industrial co-operatives and 10 district level

co-operative milk