The Dairy Story: Latest reports from Thanjavur

Having started its operations in Thanjavur by offering dairy healthcare backed cattle insurance in partnership with Pudhuaaru KGFS (PKGFS), Dairy Network Enterprise (DNE) incubated by IFMR Ventures, has rolled out the product to cover all the Pudhuaaru KGFS branches, since February. As the delivery of cattle insurance and preventive healthcare got stabilized, DNE has slowly started to look into other aspects of dairying with the mantra of “Making dairying remunerative”.

DNE has worked towards identifying ways in which it can provide support to the dairy farmers in Pudhuaaru KGFS areas to help them in addressing the issues they face in dairy farming. Beginning with measures like cattle insurance and disease prevention through prophylactic vaccination, DNE also moved into consultation in feeding and breeding management. All advice is given only as per the issues perceived by the dairy farmers and hence the farmers adopted anything that DNE offered them with an open mind. DNE has also helped in establishing market linkage for milk sales by working with organized milk buyers to set up collection centres in the Pudhuaaru KGFS areas.

Though it is too early to expect large-scale impact, early reports from Pudhuaaru KGFS areas in Thanjavur on the dairy front is highly encouraging. Few customer stories:

1) Vedhanayaki Karananidhi, a KGFS customer from Paruthiappar Kovil near Thanjavur has dramatically reduced her feeding cost by heeding the advice given by DNE. Previously her cost of production of milk was around Rs.6.50 per litre. DNE guided her in getting seed plant for Azolla (a fern), a protein and micro-nutrients rich fodder and supported her to cultivate the same in her farm. She has now replaced almost 50% of her costly concentrate feed with Azolla. With this, her cost of production of milk now is around Rs.4.20 per litre and she is happier than ever before. She has become an evangelist and is promoting the adoption of such practices to her neighbors.

Many more such enthusiastic people are being identified and DNE hopes that after a 3 day training for them, there will be many more such evangelists on the field. Such women (called Village Animal Healthcare Workers [VAHW]) are also expected to act as local contact persons for the veterinarians and retailers for dairy inputs. Beginning June 2010, every month, DNE wishes to train a new batch of such potential evangelists-cum-VAHWs.

2) Aiyyakannu Chinathambi, an agricultural laborer from Cholapuram grapples with joblessness for 3 months in a year making it difficult for him to sustain his family of five. He has had a very bad experience in the past when dealing with local moneylenders. But he says that the situation has changed, with support from Pudhuaaru KGFS he bought a cow and with advice from DNE he now owns a cow that is earning him handsome returns. He has his cow insured, as it is his family’s prized asset.

3) Jayarajavalli Thiruganasambamthan used to sell milk at a local teashop at Rs.10/ litre. As she received such a low price for milk, she kept only one cow to meet her domestic needs. However, after organized milk buyers set up collection centres in her area, she now sells milk at Rs.13.5-Rs.14/litre. She has insured her cow and is now looking forward to buy another cow because milk business has now become a remunerative venture in her area.

Examples of success are many but the path ahead is still long. Financing for buying cattle, cattle insurance and delivery of prophylactic vaccinations, veterinary aid in feeding and disease management and market linkage for milk sales has already been initiated to varying extents. However while all this is happening, DNE is continuously trying to understand the needs of the dairy farmer to better their livelihoods so that the fruits of financial inclusion reach their doorstep.

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Dr. Gangadharan, DNE Veterinarian contributed to this post.

IFMR Ventures invests in rural supply chain companies to bridge the key financial gaps that ail the sector. Apart from Dairy, it is also involved in sectors like Rural Tourism, Crafts, Agriculture, Water, Vocational Training, and Rural Energy. For more information about it click here.

By ifmr

Comments

Puneet May 27th

Vedhanayaki Karananidhi's story questions some of my assumptions. I have seen calculations of ROE for individuals who take micro loans to invest in cattle and they typically never factor in the feeding costs.

Based on these calculations, I had assumed that the only cost of feed is the imputed cost of labour in getting the feed (and perhaps transportation cost of feed).

Is this specific to Thanjavur or have you noticed this in other parts of the country as well?
Avishek May 27th

The cost of milk production specified here is the cost of feed items (concentrates) purchased and does not include the cost of items sourced from own farmlands or those sourced free. It does not inlcude the imputed cost of labour,etc. If we consider those, the cost of milk production would be much higher. (Apologies, we need to make a correction here and write it as "cash cost of feeding" instead of "cost of milk production".Thanks for pointing that out.)

The attempt here was to point out that the cash cost (whatever it was) has come down after feeding azolla.

The point that you made is right. Farmers do not generally consider the cost of feeding (imputed or otherwise). What matters is what revenues, the sale of milk generates. However, if they purchase feed, they do tend to keep track of the expense in general and they do adjust feed components according to the availability and cost. This is the scenario across the country.

As far as I understand,the expense on feed is not considered in the expense calculations (or ROE), because they assume that it is offset by the benefits like domestic consumption, liquidity of the asset, fuel and manure.
Niraj Pareek June 2nd

We are an organized milk buyer in Uttar Pradesh named Samridhi Agri Products Pvt Ltd (www.samridhiindia.com) . We have a sister concern named Sanchetna Financial Services (www.sanchetnaindia.com), which is into the business of microfinance.

Having read your article, just wondering if we could look at a similarv synergy with your team in this part of the country?

Thanks

Niraj Pareek
Avishek June 8th

@Niraj: We would be happy to share notes with you. We have our hands full as of now but we would be keen to see how we can work with you very soon.
Niraj Pareek June 12th

No worries. Will look forward to hear from your end

Thanks

Niraj Pareek
Somasundaram August 10th

Hi Avishek/Puneet: Our survey in Thanjavur also revealed some farmers have been paying very high interest cost to purchase feed/fodder (one particular case who I met – had once 15 to 20 cows, now just 5). My sense is that if they have access to low-cost working capital for purchase of feed/fodder it would be very viable.