Agro and Food Processing Co-Operatives

7/31/2019 Agro and Food Processing Co-Operatives

http://slidepdf.com/reader/full/agro-and-food-processing-co-operatives 1/25

Agro & Food Processing Co-operatives

Processing – Transformation of produce into

consumable form and/or of higher value.

Co-operative Processing – Organisingprocessing 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 fruitsand 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 Agro–processing

60% of sugar production70% of milk production

20% export of cotton yarn



Contribution of Agro–Processing in Indian

Economy:

Accounts for 13.5% of the Industrial Output

Generates 18% of GDP

Employs 19% of Industrial Labour



Evolution1917

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 ProcessingSocieties 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 farmersin North India

• Sugar production is in two stages:- Production of cane in the farmers field – Sucrose

- Conversion of Sucrose into Sugar by Machines inthe Sugar Factory

• Each Sugar factory has a daily crushingcapacity [Min 1250 tons/day] & a crushingSeason [150 to 180 days]



• Coordination of harvesting with processing is

crucial to avoid problem of Inversion – A

chemical process whereby sucrose is convertedinto 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 pre–requisite 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 inSucrose content.

• Gur and Khandsari makers also buy farmerscane.

• Govt. regulates all input & output prices – Water, electricity, fertilizer, sugarcane, and

sugar.

• Min. support Price of cane is based on thecontents of Sucrose which can be recovered.[Min. 85%].

• A factory has to sell certain % to the Govt. [levysugar at fixed price] and remainder in the freemarket.



Problems of Sugar Cooperatives

1. Weak Capital Base – Each member is supposed topay @ Rs. 3.50 to Rs. 5.00 per m.t. from theamount paid to members – Sugar factories do notdo it

2. Audit problems

3. Under-utilization of capacity4. No profitable use of by-products - Bagasses &

Molasses

5. Neglected cane cutters & workers

6. No return to State Exchequer7. Keen competition over leadership – Politicisation

8. Uneconomic operations – costly sugar, no benefitsto customer or cane producer



Power Of Sugar Cooperatives

• When Govt. wanted to de-license a fewcommodities, Sugar was exempted & themonopoly of sugar co-operatives prevailed.

• Powerful Sugar lobby got molassesdecontrolled, again to the advantage of sugarcooperatives.

• Again in Feb 1995, Central Govt. provided

further concession in the computation of levySugar quota and price, & levy sugar price wasincreased.



Critical Factors

1. Location of the Plant2. Plant size

3. CANE SUPPLY and Early cane Processing

4. Coordination of harvesting with Processing

5. Steady flow of fresh cane to Sugar Factory6. The Length of crushing season (harvesting season)

7. 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 Co-operative Unions/Federation

• At the factory, the milk is boiled, chilled,processed, packed and transported to market



• Buffalo Milk contains more total solids and theanimal is robust and eats anything.

• Cows are sensitive to feed and fodder andcross-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 toadvise 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 PrakriyaSangh Limited (SANGH)

• Sangh thought of Purchase of buffaloes fromGujarat, cross-breeding of cows, upgrading of buffaloes, vet aid, fodder production, supply of cattle feed, etc.

• It made efficient arrangements for milkcollection, grading, chilling & transport to itsown dairy plant for processing, packaging andmanufacturing 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 startedmalted milk products.



• Marketing

– From 1979-80 marketing milk & milk productsin Pune & Mumbai

• Quality Circles

– 12 Committees to maintain Quality Standards

– Kaizen Quality Circles

Its malted milk factory receivedPanchganga Science Award (1995) for

saving raw material – water, electricity &furnace oil to the tune of Rs. 74 lacs/yrthrough Kaizen approach



Dairy Extension ActivitiesA. Farmer Level

a. 15 to 30% subsidy on purchase of milch animal

b. Established an independent cattlefeed mixingplant with 120 tonnes/day capacity

c. Introduced Jivit Suraksha Yojana, whereby on thedeath 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 producersthrough Mobile Veterinary routesVisiting villages once a week.Round the clock emergency services at nominalcost.

Vaccination against foot & mouth disease everyyear at a nominal cost

e. Since women are involved in management of animals and milk production, various seminars forrural 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 every1% 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 forconstruction 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 examinationof 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 consumerStores, with departmental stores

d. Lijjat Papad Unit

e. Wired villages

f. Warna Orchestra of Children

g. Distilleries



Critical Factors For Dairy Co-operatives

1. Formation of Milk co-operatives at village level

2. Supply of good animals, cross breeding of existinganimals

3. Vat aid, feed, fodder supply

4. Establishment of Milk Collection Centre with Siren,

Computer, Milk testing equipment, trainedpersonnel, crates for examination of animals,prompt payment.

5. Milk routes – morning and evening

6. Proper processing of milk, distribution &preparation of various milk products at DairyFactory

7. Training

8. Marketing



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 theirincome by selling milk to private vendors. The privatevendors used to pay them quite a low price & duringflush 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 dairyfactory, which agreed to buy their milk at reasonablerates. For the first two years, the arrangementscontinued & then the milk procurement from the

villages declined. As a result the dairy factory refusedto collect the milk.

• Identify the problems.

• Suggest their remedial measures.



Benefits of Diary Cooperatives1. Involvement of a large number of farmers

- 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 diaryCommodities – 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 mis 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 productsin malls, super bazaar, etc.

10.Growth of diary equipment industry11.Expertise to export & foreign tie-ups

- With Sri Lanka & few African countries,

Middle East12.General Increase in hygiene and

cleanliness



Problems of Diary Cooperatives1. Lack of professional management

2. Excessive Govt Control & political interference3. Lack of good leadership

4. Lack of performance based ‘Reward System’

5. Perishablility of Milk

6. Inadequate distribution network

7. Irregular payment to suppliers – farmers

8. 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. Professionalisation, training

2. Timely & Regular Audit

3. Better HRD

4. Application of Latest Technology

5. Development of Adequate Infrastructure6. Regular payment to farmers – use of computers

7. Improvement in unorganised distribution of milk

8. Increased production of Value added products

9. Reduced Govt control & dependence10. Marketing of quality products

11. Depoliticisation of Diary Co-op.

Documents

Agro and Food Processing Co-Operatives