Agro & Food Processing Co-operatives

Processing Transformation of produce into consumable form and/or of higher value. Co-operative Processing Organising processing on co-operative basis by producers themselves.

Objective : To reduce the price spread, wastages, and increase profit to the producer.

 India is the second largest producer of fruits and vegetables Less than 5% of production is processed [Brazil - 7%, Philippines 78%, Malaysia 83%] Better care can save Rs. 17,000 crores (Study by Union Agr. Ministry)
Indian Co-operative Sector in Agroprocessing 60% of sugar production 70% of milk production 20% export of cotton yarn

Contribution of AgroProcessing in Indian Economy:

Accounts for 13.5% of the Industrial Output Generates 18% of GDP Employs 19% of Industrial Labour

Evolution
1917

1921 1933
1986-87

30 June, 2000

Co-operative Society for Ginning the cotton in Mysore. Gujarat Cotton Co-op Societies Cooperative Sugar factories in Pravaranagar (Maharashtra). More than 2500 Processing Societies of which 261 are sugar factories and 90 cotton mills. 493 sugar factories which along with Sugar produce spirits, acetic acids, alcohol, etc.

The two most important co-operative Processing Factories SUGAR & MILK

Sugar

AP, Karnataka, T.N., Maharashtra, Gujarat & Bihar produce 90% of the Sugarcane The Raw material Sugarcane is produced by thousands of individuals On an average 5,000 farmers supply cane to a factory in south, and around 20,000 farmers in North India Sugar production is in two stages:
Production of cane in the farmers field Sucrose Conversion of Sucrose into Sugar by Machines in the Sugar Factory

Each Sugar factory has a daily crushing capacity [Min 1250 tons/day] & a crushing Season [150 to 180 days]

 Coordination of harvesting with processing is crucial to avoid problem of Inversion A chemical process whereby sucrose is converted into Lactose & Fructose. These cannot be converted into sugar. If sugarcane is not crushed within 24 hrs of harvesting, the output loss may be more than 10% Therefore steady harvest & steady flow of sugar cane to the mill is the prerequisite for efficient operation Coordination of farming, harvesting, transport & processing of cane emerges as important factor in avoiding loss

 Difference between good and bad cane lies in Sucrose content. Gur and Khandsari makers also buy farmers cane. Govt. regulates all input & output prices Water, electricity, fertilizer, sugarcane, and sugar. Min. support Price of cane is based on the contents of Sucrose which can be recovered. [Min. 85%]. A factory has to sell certain % to the Govt. [levy sugar at fixed price] and remainder in the free market.

Problems of Sugar Cooperatives

1. Weak Capital Base Each member is supposed to pay @ Rs. 3.50 to Rs. 5.00 per m.t. from the amount paid to members Sugar factories do not do it Audit problems Under-utilization of capacity No profitable use of by-products - Bagasses & Molasses Neglected cane cutters & workers No return to State Exchequer Keen competition over leadership Politicisation Uneconomic operations costly sugar, no benefits to customer or cane producer

2. 3. 4. 5. 6. 7. 8.

Power Of Sugar Cooperatives

When Govt. wanted to de-license a few commodities, Sugar was exempted & the monopoly of sugar co-operatives prevailed. Powerful Sugar lobby got molasses decontrolled, again to the advantage of sugar cooperatives. Again in Feb 1995, Central Govt. provided further concession in the computation of levy Sugar quota and price, & levy sugar price was increased.

Critical Factors
1. 2. 3. 4. 5. 6. 7. Location of the Plant Plant size CANE SUPPLY and Early cane Processing Coordination of harvesting with Processing Steady flow of fresh cane to Sugar Factory The Length of crushing season (harvesting season) Scheduling of sowing and harvesting early, intermediate & late ripening variety 8. Scheduling of transport 9. Maintenance of Plant 10. Use of By-products Bagasses & Molasses

Dairy Cooperatives
A dairy co-operative is formed In each village Milk Collection Centre is opened by Dairy Cooperative Society. At Milk Collection Centre milk is graded according to the Fat Content Milk Routes are established connecting various milk collection centres with the Milk Factory Dairy Factory Dairy factory is established by Dairy Cooperative Unions/Federation At the factory, the milk is boiled, chilled, processed, packed and transported to market

 Buffalo Milk contains more total solids and the animal is robust and eats anything. Cows are sensitive to feed and fodder and cross-bred cows yield more milk The Industry is de-licensed However under the Milk and Milk Products Order, units with installed capacity in excess of 10,000 litres of milk per day or 500 tonnes of milk solids per year have to seek registration GOI has setup an advisory board under MMPO to advise on production, sale, purchase, and distribution of milk Production of Ice cream was earlier reserved for SSI, now it has been dereserved

Warana Milk Co-operatives & Women Producers

Shree Warana Sahakari Dudh Utpadak Prakriya Sangh Limited (SANGH) Sangh thought of Purchase of buffaloes from Gujarat, cross-breeding of cows, upgrading of buffaloes, vet aid, fodder production, supply of cattle feed, etc. It made efficient arrangements for milk collection, grading, chilling & transport to its own dairy plant for processing, packaging and manufacturing of milk products

A. Milk Collection
Collection of milk from Sangli and Kolhapur, & also from border districts of Karnataka Defined 18 milk routes in the morning & in the evening Annual milk collection 603 lac litres 71.5% buffalo 37.5% from Karnataka

B.

Milk & Milk Products

Supply various grades of milk Ghee Whole Milk Powder Skimmed Milk Powder Shreekhand Production Warana Spray Baby Food Cheese

Started R & D, and marketing butter, baby food, amrakhand, flavoured milk, Lassi, etc. It also started malted milk products.

 Marketing
From 1979-80 marketing milk & milk products in Pune & Mumbai

Quality Circles
12 Committees to maintain Quality Standards Kaizen Quality Circles

Its malted milk factory received Panchganga Science Award (1995) for saving raw material water, electricity & furnace oil to the tune of Rs. 74 lacs/yr through Kaizen approach

Dairy Extension Activities

A. Farmer Level
a. 15 to 30% subsidy on purchase of milch animal b. Established an independent cattlefeed mixing plant with 120 tonnes/day capacity c. Introduced Jivit Suraksha Yojana, whereby on the death of a milk producer, the Sangh provides Rs. 1,500 to Rs. 6,000 to the legal heir d. Free Vet Services to animals of milk producers through Mobile Veterinary routes Visiting villages once a week. Round the clock emergency services at nominal cost. Vaccination against foot & mouth disease every year at a nominal cost e. Since women are involved in management of animals and milk production, various seminars for rural women are organized at the village level

f. Cattle shows and calf rallies are held frequently g. Fodder seeds are provided at 50% subsidy h. Producers are paid 3 paise extra per litre for every 1% in solids non-fat contents over and above 9% i. It has also started P.F. facility

B. Society Level
a. 25% or a max. of Rs. 45,000 subsidy for construction of office building at village level b. 50% subsidy for purchase of siren for timely milk collection c. 50% subsidy for purchase of crates for examination of animals d. Training of society employees in Management e. Computers at 25% subsidy

Impact on Women Members

Average Family size is four. 69% have undergone tubectomy Most of the members of Sangh are women Empowerment They have improved health Income levels have gone up Members are happy about Sangh Services

Other Activities Of Warana

a. Warana Sugar factory b. Hand made paper c. Wholesale co-operative consumer Stores, with departmental stores d. Lijjat Papad Unit e. Wired villages f. Warna Orchestra of Children g. Distilleries

Critical Factors For Dairy Co-operatives

1. 2. 3. 4. Formation of Milk co-operatives at village level Supply of good animals, cross breeding of existing animals Vat aid, feed, fodder supply Establishment of Milk Collection Centre with Siren, Computer, Milk testing equipment, trained personnel, crates for examination of animals, prompt payment. Milk routes morning and evening Proper processing of milk, distribution & preparation of various milk products at Dairy Factory Training Marketing

5. 6. 7. 8.

Case Study Dairy

In and around Dudhwa village, there were around 50 villages, where most of the farmers were small & marginal farmers. They used to supplement their income by selling milk to private vendors. The private vendors used to pay them quite a low price & during flush season they used to buy a limited quantity. So the villagers decided to form 30 milk co-operatives & formed their Union. They contacted the nearest dairy factory, which agreed to buy their milk at reasonable rates. For the first two years, the arrangements continued & then the milk procurement from the villages declined. As a result the dairy factory refused to collect the milk. Identify the problems. Suggest their remedial measures.

1.

Benefitsofoflarge number of farmers Diary Cooperatives Involvement a

- Over 9 m. farmers, 75,000 village, of milk per day to urban consumers

2. Phenomenal Increase in Milk Production Production tripled from 1970 to 1995 3. Declining dependence on imported diary Commodities imported milk solids 4. Prospects of Sustainable growth 5. Generation of rural employment, About 75% of diary co-op. members are landless, or marginal and small farmers. About Rs. 40,000 m is paid annually to them 6. Transfer of income from urban to rural areas equitable distribution of income

7. Spin off Rural Development 8. Social empowerment of rural poor women 9. Creation of Capacities for milk products in malls, super bazaar, etc. 10.Growth of diary equipment industry 11.Expertise to export & foreign tie-ups
- With Sri Lanka & few African countries, Middle East

12.General Increase in hygiene and cleanliness

Problems of Diary Cooperatives

1. 2. 3. 4. 5. 6. 7. 8. Lack of professional management Excessive Govt Control & political interference Lack of good leadership Lack of performance based Reward System Perishablility of Milk Inadequate distribution network Irregular payment to suppliers farmers Inability to cope with competition. Corporate Sector Reliance. [Rs 25,000 cr in the sector, with a sales target of Rs. 1,00,000 cr over the next four years] Four to five times size of Amul. Dr. Verghese Kurien is likely to be associated 9. Unfair practices with poor farmers 10.Poor infrastructure

Solutions/Remedies
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Professionalisation, training Timely & Regular Audit Better HRD Application of Latest Technology Development of Adequate Infrastructure Regular payment to farmers use of computers Improvement in unorganised distribution of milk Increased production of Value added products Reduced Govt control & dependence Marketing of quality products Depoliticisation of Diary Co-op.