Fore School of Management A Business Business Proposal on Empowering Dairy Farmers
Submitted to: Prof. Sriparna Basu
Submitted by: Ashay !arg "#$%&'#( Manish )umar "#$%&*+(
,able of -ontents Page o.
E/ecuti0e summary 1111111111..
#
2ntroduction 1111111111111..
3
Problem
1111111111111..
3
Bacground .1111111111111..
4
Purpose 11111111111111......
$
Benefits 111111111111111..
+
•
To the farmers
•
To the company
Feasibility 11111111111111..
'
Budget and time frame
1.1111111..
%&
-onclusion
1111111111111...
%%
5eferences
11111111111111.
%#
Page | 1
E6E-7,28E S7MMA59 A proof of concept application using Information Technology (IT) in the dairy sector was developed by the Centre for Electronics Governance at the Indian Institute of Management Ahmedabad! This proposal is to establish automated and technology driven mil" trading system and evolve the dairy sector of #ihar to effectively compete with the large organised dairies in the developed countries! It includes delivery of education via internet "ios"s which will be set$ up in rural areas use of information systems and involvement of %on$Government &rgani'ations to successfully eecute the initiative! The proposal also aims at helping the dairy farmers in the state of #ihar with timely messages and educating them on the care for their milch cattle and enhance the production of uality mil"! It also aims at assisting the dairy unions in effectively scheduling and organi'ing the veterinary artificial insemination cattle feed and other related services! The process uses *ersonal Computers at the mil" collection Centres of the +airy Cooperative ,ocieties (+C,) having connectivity to an Internet ,ervice *rovider (I,*)! The application includes two components +airy *ortal (+*) +airy Information ,ervices .ios"(+I,.)
Page | 2
2,5D7-,2 India is the world/s largest producer of mil" and is the leading eporter of s"immed mil" powder yet has little to no other mil" product eports! +airy farms produced about 012 million tonnes of mil" in 3244 from 352 million dairy cows! The ever increasing rise in domestic demand for dairy products and a large demand$supply gap could lead to India being a net importer of dairy products in the future! Indian dairy sector contributes the large share in agricultural gross domestic products! *resently there are around 02222 village dairy cooperatives across the country! The co$ operative societies are federated into 402 district mil" producer6s unions which is turn has 33$state cooperative dairy federation! Mil" production gives employment to more than 03mn dairy farmers! In terms of total production India is the leading producer of mil" in the world followed by 7,A! The mil" production in 4888$22 is estimated at 09mn MT as compared to 0:!;mn MT in the previous year! This production is epected to increas e to 94mn MT by 3222$24! &f this total produce of 09mn cows/ mil" constitute 15mn MT while rest is from other cattle! .eeping in view the large C,< budget possessed by the company it is proposed that a similar "ind of co$operative movement in the mil" industry be implemented in various districts in the fast developing state of #ihar ta"ing inspiration from the immensely successful movement in Gu=arat! &n these lines the application developed by >. Infotech ?td! aims at helping the dairy farmers with timely messages and educating them on the care for their milch cattle and enhance the production of uality mil"! It also aims at assisting the dairy unions ineffectively scheduling and organi'ing the veterinary artificial insemination cattle feed and other related services! The application uses *ersonal Computers at the mil" collection Centres of the +airy Cooperative ,ocieties (+C,) having connectivity to an Internet ,ervice *rovider (I,*)! The application includes two components $ a +airy *ortal (+*) and a +airy Information ,ervices .ios"(+I,.)! This proposal presents >. Infotech ?td! efforts to design and implement the +I,. and +airy *ortal! The details of the implementation of the plan and the financial are henceforth discussed!
P5B;EM &ver the last decades mar"et liberali'ation globali'ation rapid urbani'ation rising incomes and changing diets etc! have been all changing agriculture at an unprecedented speed and in diverse ways! They are creating new mar"ets stimulating demand for high$value products
Page | 3
and ma"ing it possible for farmers to produce food and other products for the mar"et! These developments offer opportunities for farmers but they also produce challenges and ris"s! 2ndia may be the world
#ihar too have potential to be at the forefront of mil" production but its inefficient business process from mil" collection to processing it seems a farfetched idea!
BA-)!57D The co$operative movement began at Amul +airy in Gu=arat and is now replicated in 02222 villages in about 322 districts of India! The village mil" co$operative is a society of primary producers formed under the guidance of a supervisor or mil" supply officer of the Co$ operative +airy 7nion (district level co$operative owning the processing plant)! A mil" producer becomes a member by buying a share from the co$operative society and agreeing to sell mil" only to the society! Co$op members elect a managing committee and a chairperson responsible for the recruitment of staff to manage the day$to$day operations of the society! Each society has a mil" collection centre where farmers ta"e their mil" in the mornings and evenings! The number of farmers organised into village mil" producers/ co$operative societies is now over one million and the daily procurement of mil" by the co$operatives is 41 million litres per day! @ollowing the repeal of uantitative restrictions on food imports by the Government of India under a T& agreement the Indian dairy sector faces a strong challenge from the large organised dairies in the developed world! To meet this challenge the co$operative dairy sector has to further improve the production collection processing and mar"eting of mil" and mil" products!
P75PSE The purpose of this proposal is to improve the production processing and mar"eting of the mil" and mil" products! It will help in increasing the profits of the farmers!
Page | 4
The rural area has sufficient production of mil" but due to poor communication and lac" of "nowledge among the farmers the production process is not that effective and efficient as it should be! The two components can greatly influence the daily sector of #ihar ma"ing it more profitable both for the farmers as well as the consumers!
Dairy 2nformation Ser0ices )ios "D2S)( ith the initiatives of %ational +airy +evelopment #oard (%++#) out of 02222 dairy cooperative societies in the country around 3;22 are using the *C connected electronic mil"o$tester machines and eposing ;22222 people daily to the benefits of IT! These systems introduced very satisfactory mil" collection methods and facilitated immediate payments to farmers based on the uality and uantity of mil" delivered! The success of these systems coupled with inepensive connectivity opportunity offered by Internet motivated IIMA to enhance the *C at the Automatic Mil" Collection ,ystems into a +airy Information ,ervices .ios" (+I,.) and offer an etensive "nowledge and service delivery mechanism through a +airy *ortal! Current developments in IT enable creation of cost effective solutions that strengthen the echange of useful information between farmers and the union in addition to opening a window to the world of opportunities! *ersonal Computers have become etremely powerful in terms of their capacity to handle comple data software and connectivity with the eternal world! Through regional language and graphic user interfaces these systems have become user friendly and can even use by less educated users! The *ersonal Computers have been in the Automatic Mil" Collection ,ystems at the mil" collection Centres to process the data collected by the electronic mil"o$testers! They have wor"ed flawlessly at several rural societies for more than five years! ?ocal agencies have gained eperience and epertise to handle such systems in rural societies! The +I,. pro=ect was conceived with two componentsB 4) an application running at the society level that could be provided Internet connectivity 3) a +airy *ortal at the district level serving transactional and information needs of all members and staff in the district co$operative structure! The software used at the society level was developed to provideB +ata analysis and decision support to help a rural mil" collection society in improving its performance i!e! increasing mil" collection! +ata analysis to improve productivity and yield of milch cattle!
Page | 5
@armers with facilities to place orders for goods and services offered by different agencies in the co$operative sector and see" information on sub=ects of interest!
Dairy Portal The +airy *ortal is designed to provide an interactive dairy information and education channel to the members of the +C, (farmers) and others in the dairy sector! The services to be offered at these centres would includeB 4) +elivery of information related to dairying including best practices in breeding and rearing milch cattle scheduling of government and other private sector agency services and collecting feedbac" on the uality of service provided to the catchment areaD 3) Access to a multimedia database on innovations captured by ,
BEEF2,S The +I,. application has been tested for two societies on the IIMA EGovernance centre platform! A portal with illustrative content in Gu=arati and English has been developed and is accessible as a beta site! Currently the application is being pilot tested in two co$operative village societies of Amul dairy in .heda district! %early 522 such systems are in operation in the .heda district in Gu=arat! There are 02222 village societies in India of which 3;22 have been computerised!
Page | 6
,o the Farmers: The benefits to mil" farmers include payments that are now based on a reliable and transparent measurement of fat content and weight! 7nder the previous system the fat content was calculated a few hours after the mil" was received because the measurement process was cumbersome! Malfeasance and under$payment to farmers were commonly alleged but difficult to substantiate! In addition mil" for testing was stored in plastic bottles which led to unhygienic conditions! @armers may now receive immediate payment for their mil" rather than waiting ten days as under the previous system! Moreover ueues at the mil" collection centres are short saving farmers considerable time! Among the benefits to the co$operative societies is a reduction in the number of employees! The computer system also is able to "eep accurate and up$to$date records reducing the li"elihood of fraud or corrupt practices (e!g! temporary use of the funds by individuals)! ith Internet connections these freuently visited co$operative centres could be used as a communication point offering services li"e email and fa! @armers also could download government forms receive documents (from a government site) and order supplies and agricultural inputs from manufacturers!
,o the company 4
2mpro0ing name recognition - Individuals will start to attach our brand or name
with the cause! If they also support that cause they6ll be more li"ely to buy your product even if it costs a bit more! 3
Boosting brand reputation among consumers - ,ocial media is huge right now and
as consumers tal" about the brands they prefer those that value socially responsible businesses with socially responsible services will discuss your brand and recommend it to others! 1
2ncreasing sales and positi0e consumer sentiment - A satisfied customer is one
who is li"ely to return again to your storefront for purchases! :
Assisting in efforts to recruit and retain talented employees for your company
;
Employees will be better motivated and staff producti0ity will increase!
5
2mpro0ing the >uality of life in communities where you do business - The
stronger you can help your community become the more revenue your business will see!
Page | 7
FEAS2B2;2,9
Porter’s Five forces model
Potential Entrants
(Low) Supplier Power
(Moderate)
&ndustr! 'ialr!
u!er Power
(Low) "#reat o$
*orter6s @ive @orces Model! *orter6s five forces industry analysis can be used to get a general over view of the threats to the profitability of the dairy business! Through the model does not help in analy'ing firm specific demandD it gives some information of its business environment! Buyer Power
Page | 8
#uyer power is determined by various factors such as switching costs the relative volume of purchases the standardi'ation of the product elasticity of demand brand identity uality of the products!
&n one end are the large instrumental buyer6s i!e! big hotels and restaurants which as" for discounts etended credit periods and the other end are small retail outlets li"e general stores which have no power to negotiate with the firms!
The power of buyers is relatively high when buyers are large consisting of individual customers grocery stores convenience stores and restaurants nationwide! ,ince retailers purchase ice cream products in large uantities this gives buyers substantial leverage over price!
Customers are able to substitute one brand to any point in time! There are many brands to choose from so the buyer6s cost of switching to competing brand is already low!
Supplier Power
The suppliers to dairy industry include dairy farmers paper container manufactures and suppliers of various products! The principal inputs are commodities available in competitive mar"ets!
@actors affecting the bargaining power of suppliers include the threat of forward integration and the concentration of suppliers! There eist numerous potential suppliers of ingredients! The ingredients provided by each supplier are not uniue or greatly differentiated! @urthermore ice cream manufactures are able to switch between suppliers uic"ly and cheaply!
Also many supplier6s viability is tied to the well$being of large established companies! Therefore the bargaining power of suppliers of ingredients is rather low!
owever being a mil" co$operative it has to empower the mil" producers and farmers so that they get a remunerative return! Therefore a certain power is vested in the hands of the farmer societies!
Page |
,hreat of Substitutes
There is no perfect substitute to Mil" because of its very nature! owever many other products are available li"e Mil" powder etc! ,ince substitute products are readily available and attractively priced the competitive pressures posed by substitute products can be considered low! Potential Entrants
The barriers to entry in the industry are moderate due to the brand preference and customer loyalty towards the larger and more established companies!
&ther obstacles to new entrants include the reuirement for large sources of capital speciali'ed miing facilities and manufacturing plants!
In addition the accessibility of distribution channels can be difficult for an un"nown firm with little or no brand recognition!
2ndustry 5i0alry
Implementing a pro=ect approved by %++# is a part of C,< plan! The pro=ect sustainability is the prime thing for the company! As it is a step by the company for the society there is no competition involved!
B7D!E, AD ,2ME F5AME *art of this investment for the pro=ect can come from the users provided they are shown the value of the information and services that rural "ios"s can deliver! #uilding useful content in local languages is necessary! In the dairy sector the district unions are willing to spend because they stand to gain as the system described above increases the efficiency and effectiveness of the services delivered by them to rural farmers! In other arenas organisations li"e Grameen #an" (which already has invested) and other %G&s can find it advantageous to invest in rural "ios"s! The budget for the C,< @ramewor" needs to be decided on the basis of the costs associated with implementing IT providing mobile and telecom services hiring %G&s and partnering with eternal organi'ations! The total cost estimate of the pro=ects which is reuired for set$ up is I%
Page | 1*
+etails of which are as followsB
P5?E-, @ield or" .ios"s construction Computer ,ystems ,oftware Contract with Telecomm i$Tech machinery <@I+ Technology
Set=7p -ost 7nits 5ate "25 @ unit( :222 hrs! ;2 4; :2222 45 3;222 32 ;222 4 ;22222 32 122222 32 42222
Amount "25( 322222 522222 :22222 422222 ;22222 5222222 322222
Subtotal
&&&&&& ngoing -ost on Monthly Basis
Folunteers6 ,alary Inspector6s ,alary
43 3
;222 32222
,otal Monthly -ost
52222 :2222 %&&&&&
--;7S2 4! The council for e$governance of IIMA has invested significant resources in conceptuali'ing developing and implementing +I,. and +air y *ortal! The Amul +airy has offered support to pilot test these proof-of$concept products and the results are very encouraging! There is still an unlimited potential to be tapped from the opportunity provided by the ICT application 3! If the Internet could be accessed from rural areas the pilots demonstrate that useful content and services from the government and other institutions can be delivered to poor rural populations through information "ios"s! ,everal state governments are indeed planning to establish such "ios"s in rural areas! In building these applications in rural areas the role of small private sector is etremely important! 1! In etending the networ" of rural "ios"s it is important to build upon the wor" done by other agencies than to start afresh! The fact that 3;22 rural locations were already using IT offered a great opportunity to etend the application and its utility!
Page | 11
:! The pro=ect can also fulfil all the purposes of the company as the company will be able to utili'e the C,< fund this will improve the image of the company and on other hand the mil" sector of the state can be converted in profitable sector within the state of #ihar! Though there are certain hurdles that we might face such as the farmers need to be educated properly about the technology and ma"e aware of the benefits the pro=ect will bring! #ut the benefits will outweigh the costs of underta"ing this pro=ect!
5EFE5E-ES •
•
•
•
•
%ational diary development board6 httpBHHwww!nddb!coopH The official site of #ihar state Mil" Co$operative @ederation ?td!BhttpBHHwww!sudha!coopH! Empowering +airy @armersB A portal and dairy information and services "ios" case study6 - International conference on achieving connectivity for the rural poor in India (3224 May 14 - >une 1) #ihar6s Mil" production on rise6 $ httpBHHwww!indiancooperative!comHdairyHbihars$ mil"$production$on$rise +istrict wise Mil" production in #ihar6 $ httpBHHwww!sudha!coopH+ata@ilesHCM,HfileH+istrictwise32Mil"32*roduction 32$32#ihar!pdf
Page | 12
