India - Dairy Projects

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6857 PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CREDIT 482-IN) RAJASTHAN DAIRY DEVELOPMENT PROJECT (CREDIT 521-IN) MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CREDIT 522-IN) NATIONAL DAIRY PROJECT (CREDIT 824-IN) June 30, 1987 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. WEIGHTS AND MEASURES 1 kilometer (km) = 0.62 miles 1 meter (m) = 1.09 yards 1 hectare (ha) = 10,000m2 (0.01 km2) = 2.471 acres 1 kilogram = 2.2 pounds 1 metric ton (mt) = 1,000 kg - 2,205 pounds ABBREVIATIONS AH - Animal Health AI - Artificial Insemination AMUL - Anand Milk Union Ltd. ARC - Agricultural Refinance Corporation BVVI - Bangalore Veterinary Vaccine Institute CST - Composite Spearhead Team DCS - Dairy Cooperative Society DLAB - Diagnostic Laboratory ERR - Economic Rate of Return FAO/CP - Food and Agriculture Organization Cooperative Program FRR - Financial Rate of Return GNP - Gross National Project GOI - Government of India GOK - Government of Karnataka GOMP - Government of Madhya Pradesh GOR - Government of Rajasthan IAHVB - Institute of Animal Health and Veterinary Biologicals ICB - International Competitive Bidding IDA - International Development Association IDC - Indian Dairy Corporation KDDC - Karnataka Dairy Development Corporation KDDP - Karnataka Dairy Development Project KMF - Karnataka Milk Federation LCB - Local Competitive Bidding LDC - Less-Developed Country lpd - Liters per day MLPD - Million Liters per day MPDDC - Madhya Pradesh Dairy Development Corporation MPDDP - Madhya Pradesh Dairy Development Project MPFDC - Madhya Pradesh Federation of Dairy Cooperatives MPU - Milk Producers' Union NDDB - National Dairy Development Board NDP - National Dairy Project NDRI - National Dairy Research Institute OF - Operation Flood RCDF - Rajasthan Cooperative Dairy Federation RDDC - Rajasthan Dairy Development Corporation RDDP - Rajasthan Dairy Development Project SAR - Staff Appraisal Report SMP - Skim Milk Powder TLPD - Thousand Liters per day WFP - World Food Program FOR OFFICIAL US ONLY THE WORLD BANK Washington. D.C. 20433 U.S.A. Ofke of DioctorCewal Operatim Evauatun June 30, 1987 SUBJECT: Project Performance Audit Report on: India Karnataka Dairy Development Project (Credit 482-IN) Rajasthan Dairy Development Project (Credit 521-IN) Madhya Pradesh Dairy Development Project (Credit 522-IN) National Dairy Project (Credit 824-IN) Attached for information, is a copy of a report entitled "Project Performance Audit Report on India: Karnataka Dairy Development Project (Credit 482-IN), Rajasthan Dairy Development Project (Credit 521-IN), Madhya Pradesh Dairy Development Project (Credit 522-IN) and National Dairy Project (Credit 824-IN)" prepared by the Operations Evaluation Department. Attachment This document hs arastfeted ditibution and may be us by ecipients only ln the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorlation. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CREDIT 482-IN) RAJASTHAN DAIRY DEVELOPMENT PROJECT (CREDIT 521-IN) MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CREDIT 522-IN) NATIONAL DAIRY PROJECT (CREDIT 824-IN) TABLE OF CONTENTS Page No. Preface ............................... Basic Data Sheets .................................................. iii Evaluation Summary .............................................. vii PROJECT PERFORMANCE AUDIT MEMORANDUM I. PROJECT SUMMARY ........................................... 1 Project Background ..............I........................ 1 Project Objectives ...................................... 2 Project Implementation ............................ 4 Results .......................... 6 Sustainability ...................................... .. 8 II. MAIN FINDINGS ............................................. 9 A. Operation Flood: Problems of External Perception ..... 9 B. Major Issues .......... ................. 10 Figures: 1. Operation Flood: Anand Pattern Dairy Cooperative Societies (DCSs) .......................................... 13 2. Operation Flood: Average Rural Milk Procurement ............. 14 3. Operation Flood: Throughput of Metro-Dairies ............... 15 4. Operation Flood: Milk Marketed in Smaller Towns ............. 16 5. India Dairy Industry: Indigenous and Imported Milk Powder ... 17 6. Per Capita Milk Consumption in India ......................... 18 7. Milk Production in India .................... ...... 19 Attachment I - Comments Received from National Dairy Development Board d.s............................................ 21 Thisdocnm aesraicteddistdbution andamaybeousedbyrfecipientBolWyintheopeWomam TABLE OF CONTENTS (Cont'd) Page No. OVERVIEW OF PROJECT COMPLETION REPORTS ............................. 51 PROJECT COMPLETION REPORTS KARNATAKA DAIRY DEVELOPMENT PROJECT (CREDIT 482-IN) Highlights ..................................................... 63 I. Background .............................................. 67 II. Project Formulation .................................... 70 III. Implementation ......... ..................... 73 IV. Institutional Performance and Development ............... 86 V. Project Impact .......................................... 87 VI. Financial and Economic Re-Evaluation .................... 89 VII. IDA Performance ...................... 91 VIII. Summary ................................................. 92 Annex Tables: 1. Comparison Between Appraisal Cost Estimates and Actual Expenditures ...................... 95 2. Disbursement of Credit by Years ......................... 96 3. Credit Allocation and Disbursements by Categories ....... 97 4. KDDC Staffing Plan ........... ........ .....o..... 98 5. DCS Registered and Membership ........................... 101 6. Training Activities of the Project ...................... 102 7. Vaccine Produced by IABVB and Animals Vaccinated in the KDDC Project Area ..................................... 103 8. Estimates of Incremental Milk Production ................ 104 9. Milk Procurement and Producers' Price ................... 105 10. Financial Performance of a Typical DCS .................. 106 11. Financial Performance of Bangalore, Mysore, Hassan, Tumkur, Kudige and Gejjalagere Dairies ......................... 107 12. Combined Income and Operating Costs of Milk Processing Plants .....*..............oo..oo.. ...e........**.. 113 13. Financial Performance of Rajakunte Cattle Feed Plant .... 114 14. Annual Consumption of Cattle Feed by Union .............. 115 15. Financial Performance by Union .......................... 116 16. Dairy Cooperative Unions/Federations Summary Income Statement ............................................. 120 17. Fodder Production ....................................... 121 18. Impact of the Project on a Typical DCS Member ....oo.ooo 122 19. Investment and Operating Costs .......................... 123 20. Economic Costs and Benefit Streams ...................... 124 TABLE OF CONTENTS (Cont'd) Page No. RAJASTHAN DAIRY DEVELOPMENT PROJECT (CREDIT 521-IN) Highlights .............. ................................... 127 I. Introduction ....................... 131 II. Project Formulation ..................................... 134 III. Implementation ....................................... 138 IV. Institutional Performance and Developments .o.....o...... 152 V. Project Impact .......................................... 154 VI. Financial and Economic Re-Evaluation ................... 155 VII. IDA Performance ......................................... 157 VIII. Summary ................................................ 159 Annex Tables: 1. Project Costs ......................... 161 2. Comparison Between Appraisal Cost Estimates and Actual Expenditures ............................................ 162 3. Disbursement of Credit by Years ........................... 163 4. Credit Allocations and Disbursements by Categories ........ 164 5. Dairy Development Corporation: Staffing Plan ............. 165 6. DCS Membership ............................................ 168 7. Training Activities of the Project ........................ 169 8. Vaccine Produced by BVVI - Animals Vaccinated ............. 170 9. Incremental Milk Production in Project Area - Projected from 1973-76 to 1981-91 ................................ 171 10. Milk Procurement and Producers Price - Average Dairy Milk Receipts ......................... 172 11. Typical Dairy Cooperative Society - Production Income and Cash Flow ............................................... 173 12. Milk Processing, by Plant Income and Operating Costs ...... 174 13. Combined Income and Operating Costs - Milk Processing Plants ............................................ 178 14. Assumptions for Computing Revenue and Costs ............... 179 15. Income and Operating Costs - Feed Mills (Ajmer and Jaipur) ................................................. 180 16. Dairy Cooperative Union - Operating Costs of Technical Services and Administration ............................ 181 17. Dairy Cooperative Unions - Income Statement ............... 182 18. Dairy Development Corporation - Income and Expenditure .... 183 19. Corporation Bull Breeding Farm - Herd Changes ............. 184 20. Cost of Fodder Production ................................. 185 21. Returns from Cross-Breeding ............................... 186 22. Costs and Income of a Typical Farmer Under the Existing and Improved System of Mixed Farming .................... 187 23. Investment and Operating Costs ............................ 189 24. Economic Costs and Benefit Streams ....................... 190 TABLE OF CONTENTS (Cont'd) Page No. MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CREDIT 522-IN) Highlights ............................ 193 I. Background ........... .......................... 197 II. Project Formulation ..................................... 200 III. Implementation .......................................... 204 IV. Institutional Performance and Development s.............. 216 V. Project Impact .......... ................ 217 VI. Financial and Economic Re-Evaluation ................... 218 VII. IDA Performance ........................... 220 VIII. Summary ................................................. 221 Annex Tables: 1. Comparison Between Appraisal Cost Estimates and Actual Expenditures .......................................... 223 2. Disbursement of Credit by Years ......................... 224 3. Credit Allocation and Disbursements ..................... 225 4. Existing Staff Structure in IDA Project ................. 226 5. DCS Membership ......................................... 228 6. Incremental Milk Production - Projected from 1975/76 to 1989/90 ............................................ 229 7. Milk Procurement and Producer Prices, Average Dairy Milk Receipts ................................... 230 8. Typical Dairy Cooperative Society - Income and Operating Costs ....................................... 231 9. Milk Processing Plants (Bhopal, Vijain and Indore ....... 232 10. Feed Mills (Bhopal/Indore) - Income and Operating Costs ................... ......................... 233 11. Madhya Pradesh Dairy Development Corporation: Income Statement ............................................. 234 12. Dairy Cooperative Union/Federation - Sumary Income Statement ........................ .... 235 13. Madhya Pradesh Corporation Bull Breeding Farm - Herd Changes ...................................... 236 14. Madhya Pradesh Dairy Development Corporation Cost of Fodder Production (Rabi Irrigated) .................... 237 15. Returns from Crossbreeding .............................. 238 16. Investment and Operating Costs .......................... 239 17. Economic Cost and Benefit Streams ....................... 240 NATIONAL DAIRY PROJECT (CREDIT 824-IN) Highlights ............................ 243 I. Background ......................................... .... 247 II. Project Formulation .................................. 250 TABLE OF CONTENTS (Cont'd) Page No. III. Implementation .................................... 251 IV. Institutional Performance and Development ............... 261 V. Project Impact .......................................... 264 VI. Financial and Economic Re-Evaluation .................... 270 VII. Summary and Lessons Learnt .............................. 272 Annexes: 1.* Status of Pre-implement at ion Actions of National Dairy Project ..................... 277 2. Operation Flood and World Bank Assisted Projects ..... 278 3. Operation Flood 11 Milkshed and Districts ..,o*....... 280 4. Progress on National Dairy Project: Number of Milksheds Covered *..,..,,.............0*000***0,*0000** 288 5. Progress on National Dairy Project: DCS Organized Anand 6. Progress on National Dairy Project: DCS Under Artifical Insemination *00 ****.... .... .... . 290 7. Progress on National Dairy Project: Societies Covered Under Animal Health Program ............. 291 7.1 Progress on Technical Inputs and Milk ProcuTement *,000*0 292 8. Progress on Technical Inputs (Veterinary Routes) o.o.... 298 9. Dairy Processing Facilities Financed Under National 10. Capacity Utilization of Liquid Milk and Powder Plants .. 300 11. Training Centres Created Under National Dairy Project . 308 12. Summary of Research and Development Worked Carried Out by NDDB .......................*,.e 309 13. Project Expenditure 313 14. Liquid Milk Throughout and Imports of SMP and BO ........ 315 15. Milch Animal Holding and Dairy Cooperative Membership by Total Operational Land Hiolding Groups of 16. Manpower Employed ......... ..... ........ 317 17.1 Cashflow of Average DCS Member .............. 318 17.2 DCS Production and Cashflow Statement .......... 319 17A Discounted Cashflow and Rate of Return-DCS ....... 321 18.1 Dairy Cooperative Union Income and Operating Cost o.oooe. 322 18.2 Union Cashflow .# ........ ............. 325 18.A Discounted Cashflow and Rate of Return - Union ...... 326 19.1 Operating Statement of Dairy Plant (City Dairy) .... 327 19.2 Operating Statement of Cattlefeed Plant .......o0*0000#00e 329 19.3 Operating Statement of Cattlefed Plant ........ 330 19.4 Trading Account - Milk and milk Product:* Federation ...331 19.5 Federation Cashflow ................... 332 19A Discounted Cashf low and Rate of Return - Federation .. 333 20. Income to Milk Producers ...........,...... 334 IBRD 19923 PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CREDIT 482-IN) RAJASTHAN DAIRY DEVELOPMENT PROJECT (CREDIT 521-IN) MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CREDIT 522-IN) NATIONAL DAIRY PROJECT (CREDIT 824-IN) PREFACE This is a performance audit of four dairy development projects in India. All of these projects were aimed at extending the successful AMUL dairy cooperative modell/ that had been developed and refined in the Kaira District of Gujarat State over a 40-year period since 1946. The four projects comprised: - The Karnataka Dairy Development Project, for which Credit 482-IN in the amount of US$30.0 million was approved in March 1974 and closed on September 30, 1984, final disbursement taking place on May 31, 1985. - The Rajasthan Dairy Development Project, for which Credit 521-IN in the amount of US$27.7 million was approved in December 1974 and closed on December 31, 1983, final disbursement taking place on June 22, 1984. - The Madhya Pradesh Dairy Development Project, for which Credit 522-IN in the amount of US$16.4 million was approved in December 1974 and closed on March 31, 1983, final disbursement taking place on October 24, 1983. - The National Dairy Project, for which Credit 824-IN in the amount of US$150 million was approved in June 1978 and closed on December 31, 1985, final disbursement taking place on August 29, 1986. The first three projects (Karnataka, Rajasthan and Madhya Pradesh), which all became effective in the mid-1970s, were directed to individual states considered by the Government of India to be receptive to the develop- ment of the innovative AMUL model. The fourth project (NDP), which became effective in late 1978, was a repeater project which provided funding for more intensive AMUL development in the three above states and for initiating the AMUL model in additional states. The four projects constituted a major effort by GOI to develop the ANUL cooperative concept outside of the state of 1/ Also referred to as the "ANAND" or "KAIRA" dairy cooperative model. - ii - Gujarat.2/ Their audit provides the first opportunity to evaluate in depth the effectiveness of the AMUL cooperative model on a multi-state basis and to examine the problems associated with replicating the model outside of its home state. The audit report consists of an audit memorandum (PPAM) prepared by the Operations Evaluation Department (OED), an Overview by the South Asia Regional Office and four project completion reports (PCRs), three of which (Karnataka, Madhya Pradesh and Rajasthan) were prepared jointly by the respective states, FAO/CP and the South Asia Regional Office, and one of which (NDP) was prepared by NDDB/IDC. The PPAM is based on a review of each project's Staff Appraisal Report, its respective President's Report and the relevant legal documents. Bank files for each project were reviewed and staff associated with their implementation were interviewed. An OED mission visited representative project areas in May 1986. The mission reviewed typical project activities in seven states and discussed individual project achievements with GOI, state and project officials, particularly staff of the National Dairy Development Board (NDDB) and the Indian Dairy Corporation (IDC). The audit paid particular attention to the organization, management and functioning of the village milk producers' cooperatives (DCSs), the basic building block of the AMUL model. Twenty-seven of these were visited during the audit mission. The information gathered in the course of the field mission was used to test the validity of the conclusions presented in the respective PCRs. A copy of the draft report was sent to the Borrower on April 8, 1987 for comments. Comments received from the National Dairy Development Board have been incorporated in the final report and are included as Attachment I. The audit finds the four PCRs comprehensive and accurate in their descriptiun of implementation achievements and shortcomings, and it supports their principal findings. The PPAM provides an overall analysis of the combined project experience, the impact on dairy production at the village level, the overall contribution to India's national dairy development program (Operation Flood), and the benefits to the poorest sectors of village society. The PPAM also discusses organizational and management problems at union and federation levels in various states, socio-economic outreaches of Operation Flood, and problems of replicability of the AMUL development approach in India and in other countries. Several alleged negative aspects of Operation Flood which have attracted local and international attention are also discussed. The mission acknowledges the valuable help it received from officials in India, the assistance of NDDB/IDC staff in arranging field travel, and the prompt provision of all available data and information requested. 2/ Operation Flood I, which was implemented in states outside of Gujarat, was initiated in 1970. PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CREDIT 482-IN) BASIC DATA SNET EY PROJECT DATA Appraisal Actual or Actual as % of Estimate Estimated Actual Appraisal Estimate Project Cost (a million) 509.9 465.1 91 Credit Amount (US$ million) 30.0 29.2 97 Date Board Approval - 06/13/74 - Date Effectiveness 10/21/74 12/23/74 - Closing Date 09/30/82 09/30/84 - Economic Rate of Return (z) 33 22 67 Number of Direct Beneficiaries 2,500,000 1,740,000 70 CUMULATIVE DISBURSEMENTS FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 Appraisal Estimate (Us$ million) 0.7 5.9 11.8 15.8 22.2 28.7 30.0 - - - - Actual (US$ million) - - 0.4 6.4 8.4 10.2 14.1 15.9 18.1 21.3 29.2 Actual as of Estimate (2) - - 3 41 38 36 47 53 60 71 97 Date of Final Disbursement May 31, 1985 STAFF INPUTS FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 TOTAL Preapprateal .5 8.6 9.1 Apppralaal .2 128.4 128.5 Negotiacion 4.2 4.2 Supervision 12.0 10.7 7.8 818 8.2 12.4 12.1 6.1 6.8 9.3 2.2 11.4 107.8 .7 141.1 12.0 10.7 7.8 8.8 8.2 12.4 12.1 6.1 6.8 9.3 2.2 11.4 249.6 MISSION DATA Date No. of Mandays Specializations Performance Types of Mission (mo./Yr.) Persons in Field Represented/a Ratingb Trend/c Problems/d Preparation I 02-03/73 n.a. n.a. n.S. Preparation II 04-05/73 n.a. n.a. n.a. Appraisal 11-12/73 5 180 a,b,e,f Supervision 1 10/74 3 n.a. a.b 1 2 0 Supervision 2 03/75 2 8 a,b 1 2 T Supervision 3 07/75 1 16 b 2 1 F,M Supervision 4 04/76 3 21 a,b 2 2 M Supervision 5 08/76 1 8 b 2 1 M Supervision 6 01/77 1 10 b 2 1 K,T Supervision 7 07/77 2 22 a,b 2 2 M,F Supervision 8 04/78 1 5 b 2 2 N,P Supervision 9 08/78 2 10 a,b 2 2 M Supervision 10 05/79 1 4 a 2 1 M Supervision 11 11/79 3 66 /s a,b 2 1 14 Supervision 12 05/80 2 8 a,d 2 2 M Supervision 13 12/80 2 50 If b 2 1 0 Supervision 14 09/81 3 90 7, a,b,f 2 2 0 Supervision 15 08/82 2 10 a,b 2 2 0 Supervision 16 08/83 1 8 a 2 1 0 Supervision 17 07/84 1 12 a 2 2 0 Total 31 348 OTHER PROJECT DATA Borrower - Government of India Executing Agency - Karnataka Dairy Development Corporation Follow-on Project - National Dairy Project (Cr. 824-IN) Fiscal Year of Borrower - July 1 - June 30 CURRENCY EXCHANGE RATES Name of Currency (Abbreviation) - Rupee (Re) Appraisal Year Average - US$1.00 - Ra 8.00 Intervening Years Average - US$1.00 - Re 8.611 Completion Year Average - US$1.00 - Re 10.812 A a - agriculturalist; b - agricultural economist; c - cooperative specialist; d - financial analyst; a - credit specialist; f - dairy technologist. b 1 - problem free or minor problems; 2 - moderate problems; 3 - majdr problems. e 1 I mproving; 2 - stationary; 3 - deteriorating. f - Financial; K * Managerial; P - Political; T * Technical; 0 - Other. a Includes time spent on supervision of Cr. 521-IN and 824-IN. 7- Includes time spent on supervision of Cr. 521-IN. Includes tias spent on supervision of Cr. 521-IN, 522-IN and 824-IN. - 19 - PROJECT PERFORMANCE AUDIT REPORT INDIA RAJASTHAN DAIRY DEVELOPHENT PROJECT (CREDIT 521-IN) BASIC DATA SNE8T KEY PROJECT DATA Appraisal Actual or Actual as I of Estimate Estimated Actual Appralsal Estimate Project Coat (US$ million) 51.8 39.0 75 Credit Amount (US$ million) 27.7 23.3 84 Date Board Approval - 12/05/74 - Date Sffectivenese 05/15/75 08/08/75 - Closing Date 12/31/82 12/31/83 - Econotic Rate of Return (%) 31 28 90 Number of Direct beneficiaries 1,300,000 457,000 35 CUMULATIVE DISBURSEMENTS FY76 FY77 PY78 FY79 PY80 FY81 FY82 FY83 FY84 Appraisal Estimate (US$ million) 2.2 11.3 16.6 19.8 22.6 26.4 27.7 - - Actual (Us$ million) 0.1 0.3 2.5 9.7 13.3 15.3 17.1 21.3 23.3 Actual as of Estimate (%) 5 3 15 49 59 58 62 77 84 Date of Final Disbursement June 22, 1984 STAFF INPUTS FY74 FY75 FY76 VY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 TOTAL Preappraisal 14.8 .2 15.0 Apppralsal 25.4 14.2 39.6 Negotiation 3.8 3&8 Supervision 10.3 10.7 13.9 3.7 7.4 4.7 5.4 7.6 6.6 4.5 .8 11.2 86.7 Other .7 .7 40.2 28.5 10.7 13.9 3.7 8.1 4.7 3.4 7.6 6.6 4.5 .8 11.2 145.8 MISSION DATA Date No. of Mandays Specialisations Performance Types of ission (mo./Yr.) Persons in Field Represented/a Rating/b Trend/c ProblesId Preparation 1 02-03/73 n.a. n.a. n.a. Preparation II 04-05/73 n.a. n.a. A.a. Appraisal 03/04/74 5 150 a,b,c,d,e Supervision 1 03/75 2 14 asb 2 2 M,P Supervision 2 06/75 1 10 a, 2 1 M,P Supervision 3 04/76 3 14 a,b 1 2 N,T Supervision 4 08/76 1 2 b 1 2 x Supervision 5 05/77 2 24 /4 s,b 1 2 H Supervision 6 12/77 2 76 7? a'c 2 2 F Supervision 7 11/78 1 447 - 2 2 0 Supervision 8 05/79 1 3 b 2 2 0 Supervision 9 02/80 2 6 a,d 2 2 0 8**pervision 10 12/80 1 25 /h b 2 2 0 Supervision 11 09/81 3 60 ri a,boe 2 1 0 Supervision 12 03/83 2 12 s,d 2 1 0 Supervision 13 08/83 1 7 a 2 1 0 Total 22 297 OTHER PROJECT DATA Borrower - Government of India Executing Agency - Rajasthan Dairy Development Lorporation Follow-on Project - National Dairy Project (Cr. 824-IN) Fiscal Year of Borrower - July 1 - June 30 CURRENCY EXCHANGE RATES Name of Currency (Abbreviation) - Rupee (Re) Appraisal Year Average - US$1.00 - Rs 8.00 Intervening Years Average - US$1.00 a is 8.61 Completion Year Average - US$1.00 * Re 10.81 /a a - agriculturalist; b - agricultural economist; c - cooperative specialist; da financial analyst; e a credit specialist; f - dairy technologist. /b 1 - problem free or minor problems; 2 * moderate probles; 3 * major problems. 7e 1 - Improving; 2 - stationary; 3 - deteriorating. d F Financial; M * Managerial; P * Political; T * Technical; 0 - Other. - 7e Includes time spent on supervision of Cr. 522-IN. Includes tie spent on supervision of Cr. 522-IN and preappraisal of National Dairy Project. Incindes time spent on supervision of Cr. 526-IN and 824-11. Includes time spent on supervision of Cr. 482-IN. Includes ties spent on supervision of Cr. 482-IN, 522-IN and 824-IN. PROJECT PERFORMANCE AUDIT REPORT INDIA MADHYA PRADESt DAIRY DEVEIOPMENT PROJECT (CREDIT 522-IN) BASIC DATA SEET KEY PROJECT DATA Appraisal Actual or Actual as X of Estimate Estimated Actual Appraisal Eatimate Project Cost (US$ million) 31.2 24.1 77 Credit Amount (USS million) 16.4 16.4 100 Date Board Approval - 12/03/74 - Date Etfectiveness 04/15/75 07/23/75 - Closing Date 06/30/82 03/31/83 - Economic Rate of Return (2) 34 negative - Number of Direct Beneficiaries 860,000 216,000 25 CUNILATIVE DISBURSEMENTS FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 Appraisal Estimate (USe million) 1.4 7.4 9.7 11.7 15.4 16.4 - - - Actual (US$ million) - 0.7 2.5 6.3 10.2 11.6 14.9 15.7 16.4 Actual as of Estimate (t) - 9 26 54 66 71 92 96 100 Date of Final Disbursement October 24, 1983 STAFF INPUTS FY74 FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 TOTAL Preappraisal .7 .2 .9 Apppraisal 18.3 18.5 36.9 Negotiation 2.4 2.4 Supervision 9.8 9.2 19.2 11.3 6.1 4.5 1.3 11.1 6.7 5.0 1.9 13.8 106.1 Other .1 .1 .2 Total 19.0 30.9 1 9.2 19.2 11.3 6.1 4.5 7.4 11.1 6.7 5.1 1.91 13.8 146.4 MISSION DATA Date No. of Nandays Specializations Performance Types of Mission (Mo./Yr.) Persons in Field Represented/a Rating/b Trend/c Probleas/d Preparation 1 02-03/73 noa. n.a. Preparation I 04-05/73 n.a. n.a. Appraisal 03/04/74 5 175 a,b,c0e,f Supervision 1 03/75 2 20 a 2 2 0 Supervision 2 10/75 1 7 a 1 2 T Supervision 3 04/76 2 10 a,b 1 1 F,M Supervision 4 09/76 1 2 b 1 2 X Supervision 5 05/77 2 24 a,b 1 1 M Supervision 6 12/77 2 76 /e a,c 2 1 M,T Supervision 7 08/78 1 39 7! a 2 2 M,F Supervision 8 03/79 3 15 a,b 2 2 X,P Supervision 9 11/80 2 8 a,d 1 2 N Supervision 10 07/81 1 4 a 1 1 M Supervision 11 09/81 3 30 asb,e I I M Supervision 12 03/83 2 12 a,d 1 2 M Total 22 247 OTHER PROJECT DATA Borrower - Government of India Executing Agency - Madhya Pradesh Dairy Development Corporation Follow-on Project - National Dairy Project (Cr. 824-IN) Fiscal Year of Borrower - July 1 - June 30 CURRENCY EXCHANGE RATES Name of Currency (Abbreviation) - Rupee (Re) Appraisal Year Average - US$1.00 - Re 8.00 Intervening Years Average - US$1.00 - Rs 8.61 Completion Year Average - US$1.00 - Re 10.81 /s a - agriculturalist; b a agricultural economist; c a cooperative specialist; d financial analyst; e a credit specialist; f * dairy technologist. I 1 problem free or minor problems; 2 - moderate problems; 3 - major problems. /I a imtproving; 2 * stationary; 3 - deteriorating. 7-d F - Financial; N - Managerial; P a Political; T a Technical; 0 a Other. 7o- Includes appraisal of National Dairy Project and supervision of Rajasthan Dairy Project. 7T Includes appraisal of ARC Third Credit Project and supervision of Karnataka and National Dairy Projects. PROJECT PERFORMANCE AUDIT REPORT INDIA NATIONAL DAIRY PROJECT (CREDIT 824-IN) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Actual as % of Estimate Estimated Actual Appraisal Estimate Project Cost (Re million) 3128.1 3003.9 96 Credit Amount (US$ million) 150.0 150.0 100 Date Board Approval 06/08/78 06/08/78 - Date Effectiveness 09/19/78 12/20/78 - Cloing Date 12/31/85 12/31/85 - economic Rate of Return (2) 25 not calculated - Number of Direct Beneficiaries (No. of Households) 3.4 million 3.7 million 109 CUMULATIVEBDISBURSEMENTS PY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 Appraisal Estimate (US$ million) 6.24 28.56 70.72 110.69 133.69 155.05 150.00 150.00 Actual (US$ million) 2.24 10.84 19.40 46.60 47.90 68.10 99.90 150.00 Actual as of Estimate (2) 36 38 27 42 36 44 67 100 Date of Final Disbursement June 20, 1986 STAFF INPUTS FY77 FY78 FY79 PY80 FY81 FY82 FY83 FY84 FY85 FY86 TOTAL Preappraisal 1.7 18.8 20.5 Apppraleal 110.5 110.5 Negotiation 3.2 3.2 Supervision 31.2 22.2 14.2 22.1 18.7 9.3 5.7 10.1 133.7 other 1.4 1.4 Total 1.7 133.9 31.2 22.2 14.2 22.1 18.7 9.3 5.7 10.1 269.2 MISSION DATA Date No. of Mandays Specialisations Performance Types of Mission (mo./Yr.) Persons in Field Represented/a Ratingb Trend/c Problems/d Preparation I 06-07/77 2 20 a,b n.a. n.a. t.a. Appraisal 11-12/77 6 180 a,b,c,d,e n.a. n.a. n.a. Supervision 1 10-11/78 1 14 a 2 2 F Supervision 2 03/79 3 12 a,b,g 2 2 P Supervision 3 10-11/79 3 33 a,b 1 1 - Supervision 4 04/80 1 7 a 1 1 P Supervision 5 12/80 2 8 a,d 1 1 P Supervision 6 08-09/81 3 24 a,b,f 2 2 P Supervision 7 08/82 2 13 a,b 2 2 P Supervision 8 03/83 2 12 b 2 2 P Supervision 9 06/84 1 13 a 2 1 P,O Supervision 10 07-08/85 1 30 a 2 1 P,M Total 19 166 OTHER PROJECT DATA Borrower - Government of India Executing Agency - Indian Dairy Corporation Follow-on Project - National Dairy II Project (Proposed Appraisal 03/87) Fiscal Year of Borrower - April 1 - March 31 CURRENCY EXCHANGE RATES Name of Currency (Abbreviation) - Rupee (Re) Appraisal Year Average - US$1.00 - Es 11.4 Intervening Years Average - US$1.00 Es 9.8 Completion Year Average - US$1.00 - Re 12.5 /a a - agriculturalist; b * agricultural economist; e * cooperative specialist; d financial analyst; e = credit specialist; f - dairy technologist; g - livestock specialist. /b 1 * problem free or minor problems; 2 * moderate problems; 3 - major problems. 7 I Improving; 2 - stationary; 3 * deteriorating. 7T F - Financial; M - Managerial; P - Political; T - Technical; 0 * Other. - vii - PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CREDIT 482-IN) RAJASTHAN DAIRY DEVELOPMENT PROJECT (CREDIT 521-IN) MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CREDIT 522-IN) NATIONAL DAIRY PROJECT (CREDIT 824-IN) EVALUATION SUMMARY Background India's livestock sector accounts for 18% of total agricultural output; about two-thirds of the value of livestock output is accounted for by milk. Nearly half of India's rural households are estimated to own milk animals, generally in small herds of one to three. The national herd numbers some 200 million cattle and 75 million buffaloes (about 36% as breedable females) and is the largest in the world accounting for one-sixth of the world's cattle and about one-half of the world's buffaloes. The Indian dairy industry produces about 40 million mt of milk per year and is the third largest milk producer in the world. The four projects covered in this performance audit supported Operation Flood, which had been initiated in 1970 but had its roots in 1946 in Kaira district, Gujarat. In response to Government-supported monopoly marketing practices of a private dairy, a group of producers organized their own cooperative milk marketing scheme so as to obtain better milk prices and access to the Bombay market. This cooperative became known as the Anand Milk Union, Ltd., or AMUL, and has been used as a model for subsequent dairy cooperative development in India. The model consists of a three-tier cooperative structure owned and managed by the member farmers. At the base is the Dairy Cooperative Society (DCS), a village level cooperative which receives milk twice a day, pays each producer regularly based on the quantity and quality of milk delivered, and organizes production services to farmers (sale of cattle feed concentrate, promotion of fodder seed, artificial insemination and veterinary services). DCSs are members of a Milk Producers' Union (MPU) of cooperatives, usually one MPU per district. The MPU organizes milk collection and processing at the Union dairy (pasteurization and packaging of fresh milk, some conversion to other products), distribution and marketing in urban centers, and provides production inputs and technical services to the DCSs. MPUs in most states are members of a Federation, which may also own and operate some larger dairy plants. Aggregate planning of cooperative sector input services, milk marketing, pricing policy, and participation in the National Milk Grid for transport and storage of milk is organized at MPU and Federation levels. Under the AMUL Model, the Boards of DCSs, MPUs, and Federations are from farmer representatives elected by the - viii - members and are intended to have full autonomy over operations, pricing and marketing policy, with all technical management personnel appointed by and responsible to the boards. Objectives The individual state projects in Karnataka (KDDP), Rajasthan (RDDP), and Madhya Pradesh (MPDDP), approved in FY74 and FY75 were the first Bank-assisted efforts to develop India's livestock subsector. They sought to extend the use of the well-tested AMUL dairy development cooperative model beyond its home state of Gujarat in keeping with the Government of India's livestock development strategy under its Five Year Development Plans. The fourth Bank-assisted livestock project, the National Dairy Project (NDP) approved in FY78, was a repeater project providing additional funding for more intensive dairy development in Karnataka, Rajasthan and Madhya Pradesh, and to initiate intensive cooperative dairy development following the AMUL model in other states. Total costs of the four projects were estimated as follows: KDDP, US$63.7 million, of which US$30.0 million (47%) was Bank-financed; RDDP, US$51.8 million, of which US$27.7 million (53%) was Bank-financed; MPDDP, US$31.2 million, of which US$16.4 million (53%) was Bank-financed; and NDP US$364 million, of which US$150 million (41%) was Bank-financed. Implementation Experience Central organization and funding of Operation Flood was provided through two Government bodies under a common board and chairmanship: the National Dairy Development Board (NDDB) which provides technical assistance, planning and training support, and the Indian Dairy Corporation (IDC) which channels loans and grants to the sector. Under the Government's trade and commodity assistance policy, which is designed to develop a competitive and efficient modern dairy industry, IDC is also responsible for importing milk products through commodity aid to supplement urban milk supplies and generate funds through sale revenues to finance cooperative development. The use of funds generated through commodity aid is an integral part of Operation Flood (OF) and has historically been the main source of OF financing. Overall, each of the projects had significant achievements. Growth in cooperative dairying was particularly rapid in the 1981-86 period, corresponding to the main years of implementation under the National Dairy Project (NDP). As with the state projects, considerable delays were encountered initially by NDP. For NDP these related to execution of the agreements between IDC and the state governments, in the constitution of the Federations, in the finalization of state dairy plans and in the adoption of cooperative by-laws. Significant implementation progress only began in 1981, but accelerating implementation resulted in the project's closing on time. Appraisal targets of NDP were attained or surpassed with respect to the number of milksheds covered, the number of DCSs organized, the provision of - ix - milk processing capacity, and the additional number of farmers covered. Milk procurement, growing at 17% per annum over the past several years, is expected to exceed appraisal estimates by 1988. All four completion reports show substantial shortfalls on animal productivity enhancement, in part because appraisal objectives were over-ambitious and did not adequately recognize the time required to introduce technological changes at the farm level (Overview para. 11 and the PCRs). The three state-level projects were closed from nine months to two years behind schedule with a total unused balance of US$5.2 million. The National Dairy Project closed on schedule, December 1985, and was fully disbursed. Project costs at completion were 9% below appraisal estimates in the case of Karnataka and 16% to 18% below in the case of the other three projects. Results With respect to the state projects, Rajasthan and Karnataka proved to be economically viable with recalculated economic rates of return (ERRs) of 28% and 22% respectively. For Madhya Pradesh, low incremental production resulted in a negative economic rate of return. For the National project, recalculated financial rates of return for landless families with crossbred cows was 37%, and this was estimated to be higher for small farmers who could provide their own fodder. For DCSs the FRR was estimated at 28% and for MPUs, 17%. An overall economic rate of return was not estimated for NDP, however, it is expected that it would be significantly higher than the opportunity cost of capital in India, which is estimated at 12%. Other indicators of national dairy cooperative development show the following increases from March 1981 to 1986. 1981 1986 Liters Milk Procured Daily (millions) 2.6 7.9 Farm Families (millions) 1.8 4.5a/ Dairy Cooperative Societies (thousands) 10.4 42.7f/ Milk Producers' Unions 27 164 State Federations Involved 10 22 a/ Including about 35% of existing societies converted to AMUL pattern. Sustainability Under Operation Flood III, the Government is encouraging the extension of the AMUL model throughout India and to this end has pledged continued support to NDDB/IDC. The Second National Dairy Project would aim principally at consolidation of the OF program while expansion in processing capacity, milk procurement, village societies and number of farmers covered would continue. To sustain progress already made and also to expand would require renewed attention by NDDB/IDC and the cooperatives to a number of points mentioned in the PCRs, including management and technical aspects, measures for enhancing animal productivity, technical assistance and training for cooperatives, improvements in financial management, auditing and cost accounting, better market promotion, and field monitoring and evaluation. Continuing emphasis is needed on commercial viability and institutional self-reliance. - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (Credit 482-IN) RAJASTHAN DAIRY DEVELOPMENT PROJECT (Credit 521-IN) MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (Credit 522-IN) NATIONAL DAIRY PROJECT (Credit 824-IN) I, PROJECT SUMMARY Project Background 1. The three state-oriented projects were the first Bank-assisted efforts directed to development of India's livestock subsector. They sought to develop the well-tested AMUL dairy development cooperative model in the states of Karnataka (KDDP), Rajasthan (RDDP) and Madhya Pradesh (MPDDP) which were considered by the Government of India (GOI) to be the most suitable in which to extend the AMUL model outside of its home state, Gujarat. Nation- wide expansion of the AMUL model was the central plank of Government's live- stock development strategy under the three most recent Five-Year Development Plans. The fourth Bank-assisted livestock project, the National Dairy Proj- ect (NDP), was a repeater project providing additional funding for more intensive AMUL development in Karnataka, Rajasthan and Madhya Pradesh and for initiating intensive development of the AMUL model in other states.1/ The four projects in effect constituted the first concerted effort of GOI to expand the AMUL dairy cooperative concept nation-wide. 2. The country's collective national effort to develop its significant dairy resources (named Operation Flood), initiated in 1970, was a serious, carefully-planned, ambitious effort which was accorded the highest develop- mental priority by the Central Government. It involved: - creation of milk producer cooperative entities at village (DCS), district (MPU) and state (Federation) levels along AMUL lines with ownership at all levels intended to be in the hands of elected farmers with professional managers employed by them; 1/ As of May 1986, 23 states/union territories besides Karnataka, Rajasthan and Madhya Pradesh had signed agreements to cooperate in the national dairy development plan, Operation Flood. They included: Andaman and Nicobar, Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jamau and Kashmir, Kerala, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Pondicherry, Punjab, Sikkim, Tamil Nadu, Tripura, Uttar Pradesh and West Bengal. With the three original states, these 23 additional states/union territories collectively comprised the Operation Flood development area. - 2 - - development of an MPU/DCS-controlled support system to provide technical inputs for increased milk production (balanced cattle feed, veterinary health services, artificial insemination services, fodder, seed and planting material); - expansion/creation of milk procurement, processing, and storage in the rural milksheds, and provision of long distance transportation linking rural production to urban consumption centers; and - expansion/creation of processing/marketing infrastructure in the urban centers. 3. A crucial aspect of the overall Flood program involved the sale of reconstituted milk powder and butter oil (donated by WFP and EEC) to generate local funds. The availability of the commodities and the funds they gener- ated also allowed processing/storage infrastructure to be established in advance of the procurement network, thus facilitating a more orderly, phased development of milk production/procurement and processing/marketing activi- ties. Overall, the commodities were effectively utilized as were also the resulting funds -- together they contributed significantly to Operation Flood's success. The exercise constitutes a highly positive example of the successful use of commodity aid in development. 4. Operation Flood I (OF-I), which the three state projects supported, was implemented June 1970 through March 1981. Operation Flood II (OF-II), of which NDP was the first phase, was implemented April 1980 through March 1985. Implementation was the responsibility of two statutory bodies created by GOI specifically for the purpose -- the National Dairy Development Board (NDDB) responsible for technical assistance aspects, and the Indian Dairy Corporation (IDC) responsible for financial/promotional aspects. Operation Flood III (OF-III), seeking to extend the success of the earlier programs, was recently launched as part of GOI's Seventh Five Year Plan. Project Objectives 5. As appraised, the four projects were similarly structured. Their essential components comprised: (a) establishment of village DCSs, grouped into district dairy coopera- tive unions and federated, in turn, into a state dairy cooperative federation--i.e. the typical three-tier AMUL organization (see also footnote 2); (b) provision through the unions of balanced feedstuffs, animal health services, AI, forage seed and supporting extension activities to all DCSs; (c) organization through the DCSs and unions of village milk collection and payment, chilling facilities (where needed), and milk transpor- tation services; (d) construction/expansion of union dairy processing infrastructure to facilitate packaging, storage, distribution and marketing; (e) provision where applicable of specialized storage and long-distance refrigerated transport facilities to support the establishment/ expansion of a buffer stock of various dairy products (principally milk powder), and of a national milk grid; and (f) development/strengthening of training, research and technical assistance (TA). 6. From the outset the AMUL concept was already a well-established locally-developed organizational structure with proven success in Gujarat in improving family income and village living standards. A particular feature was its demonstrated ability to collect milk from, and to raise the incomes of, the smallest milk producers (producing one to two liters per day typi- cally), who commonly comprised the majority of families in most DCSs. Furthermore, the procedures for establishing DCSs through the use of NDDB-trained "spearhead" teams were already tested and refined and the methods of combining village DCSs into district unions was already established as a routine, with smoothly-functioning models operating successfully throughout Gujarat State.2/ The aims and objectives of the four projects thus tended to be clearly7defined from their inception and the means of reaching project targets were along well-established and time-tested paths. 7. The AMUL model is characterized by several innovative features. These include: (a) cooperative ownership/control of all facilities at DCS, union and federation levels by participating farmers; (b) control of cooperative activities at all levels by participating farmers' representatives, and management by professional managers appointed by and responsible to them; and (c) the pricing of all inputs and outputs, including the procurement prices of DCS milk and disposal prices of processed milk and milk products, as an entirely cooperative (union) function, free from outside control. 8. The essential feature of the model requires ideally that the in- struments of dairy development (production, physical infrastructure, process- ing, distribution, pricing, general policy) be placed in the hands of rural milk producers and their professional managers who are employed to run each union enterprise along sound financial lines. The success of the original 2/ The concept of a state federation of unions was introduced in Gujarat only in 1975 and was thus less well tested. In the three Bank-assisted state projects the apex organization of unions comprised state Dairy Development Corporations in the first instance, which were subsequently reorganized and redesignated as Cooperative Federations. AMUL model in the Kaira District, Gujarat, is attested by its growth in that district from two village DCSs in 1946 with an annual turnover of just US$15,000 to 880 DCSs in 1984-85 with an anaual turnover of some US$100 million, in which time annual milk procurement increased from about 90,000 liters to some 250 million liters. This in effect was the basic demonstration model on which GOI decided to build its national dairy development strategy through the mounting of the Operation Flood program. 9. Total costs of the four projects were estimated at: - KDDP (Credit 482-IN), US$63.7 million, of which US$30.0 million (47%) was Bank-financed. - RDDP (Credit 521-IN), US$51.8 million, of which US$27.7 million (53%) was Bank-financed. - MPDDP (Credit 522-IN), US$31.2 million, of which US$16.4 million (53%) was Bank-financed. - NDP (Credit 824-IN), US$364 million, of which US$150 million (41%) was Bank-financed. Project Implementation 10. Overall, the individual projects made impressive progress, notwith- standing that each fell somewhat short of appraisal targets. In the mid-1970s when the three state-oriented projects were launched, the main thrust of OF-I, which the projects were designed to support, was the development of milk supplies to the four largest cities (Bombay, Calcutta, Delhi and Madras). The OF-I task was huge, involving the rapid establishment of hundreds of DCSs in 18 of the country's best milkshed areas located in 10 states, and development of the physical infrastructure to link them with con- sumers in the main centers and of the marketing infrastructure to dispose of huge volumes of milk and milk products. This particular Flood phase was mainly financed from WFP commodity grants; as noted earlier, overall such grants were efficiently used and the local funds generated were, in turn, effectively utilized. There is no question that the provision of the com- modity grants by WFP and their effective utilization by NDDB/IDC were both pivotal to OF-I's success. Parallel to the overall OF-I commodity program, the three state-oriented Bank-assisted projects established AMUL-style models in the major milk-producing states of Karnataka, Rajasthan and Madhya Pradesh, linking 12 more milksheds (making 30 in all) to three more major centers (making seven in all). 11. This large program went well but it was not without its problems. There were delays in the procurement of land and materials for dairy plant construction; also in construction schedules and plant equipment deliveries. There were also bureaucratic delays, particularly at the state level where widespread AMUL cooperative development was often perceived as a threat to state functionaries and to entrenched milk industry interests. Aspects of the program were even deliberately sabotaged and an active propaganda - 5 - campaign was directed against it both inside and outside the country. Notwithstanding these many obstacles and the fact that NDDB/IDC as imple- menting agencies were relatively new and still actively expanding and train- ing staff,3/ implementation proceeded surprisingly well, given the size and complexity of the operation. 12. In June 1977, with OF-I firmly launched, NDDB prepared a seven-year follow-up OF-II proposal aimed at extending development of AMUL cooperatives to all state/union territories in India. NDP (Credit 824-IN), appraised in December 1977, became in effect the first phase of OF-II, seeking to increase AMUL cooperative activity in all areas reached under OF-I and to expand them to promote AMUL development in a further 125 milksheds (making 155 in all). The project provided for major emphasis on processing/marketing infra- structure (89% of project cost); DCS/union infrastructure, services and equipment (8% of project cost); and TA (3% of project cost). 13. As in the case of OF-I, OF-II was successfully implemented overall and its gains were impressive. It too experienced considerable implementa- tion difficulties. Like OF-I, its successful implementation depended on an ever-increasing staffing and training effort by NDDB4/ and the support and cooperation of state governments. Such state government collaboration was not always forthcoming and, depending on individual state attitudes, the pace of implementation varied and shortfalls were frequent, particularly in states where highly traditional attitudes and/or deeply entrenched milk industry interests prevailed. Nevertheless in OF-II, as in OF-1, implementation pro- ceeded well overall, despite implementation constraints and the program's size, geographical dispersion and complexity. An overview of progress made under OF-I and II is provided in Figures 1-7. 14. In general, as went Operation Flood, so went the four Bank-assisted projects. They, to greater or lesser degree, all experienced some implement- ation delays and shortfalls in attainment of appraisal targets. Such short- falls were also partly a problem of overly optimistic appraisal expectations, based no doubt on the outstanding achievements of the AMUL model seen at the time of appraisal in its home state, Gujarat. Even though appraisal targets were optimistic, they would probably have been achieved if states had cooperated fully which, as noted, they did not to varying degrees, for various reasons. A central plank of the AMUL cooperative organization is farmer ownership/control at DCS, union and federation level and, most impor- tantly, freedom of the cooperative organizations to manage all aspects of milk procurement, processing, marketing and pricing. This requires transfer 3/ NDDB's professional staffing increased from 118 to 1019 in the Flood I plan period 1970-81, for example, and the institution trained over 25,000 technical support staff for Flood I facilities in the same period. 4/ In the period 1981-85 during OF-II NDDB expanded its professional staff from 1019 to 1322 and in the same period trained some 18,500 technical support staff for OF-II facilities. - 6 - of state ownership and control of the milk industry to farmer participants, which the majority of states have been either outright reluctant, or extreme- ly slow, to do. In fact, as of March 1986, Gujarat was the only state in the nation in which milk industry ownership and control was completely in the hands of farmer participants at all three (DCS, union and federation) levels. All other states continue to exercise some control through appointed administrators at union/federation level (usually the latter). Most states are now reportedly working to regularize the situation, but progress generally is slow, thus delaying application of the full AMUL model nation-wide in line with GOI development priorities. 15. A major negative result of this situation is that many unions have not been able to generate the funds normally accruing under the fully functioning AMUL organization to finance operations effectively and in the most timely and cost-effective manner. Additionally, the unions have not been able to organize themselves as expeditiously as they would have wished nor to build up the infrastructure for providing technical inputs, particularly animal health coverage, AI and forage development, at the level anticipated. The federations have not been able to fulfill effectively their promotional and coordination roles, for the same reasons. This is viewed by the audit as the most serious constraint to more successful implementation of both Operation Flood and the Bank-assisted projects supporting it. The states involved have contravened both the letter and spirit of the legal agreements into which they entered with GOI and the Bank, on the basis of which IDA funds were provided to the projects. They at the same time have contravened both the letter and spirit of agreements with NDDB/IDC, on the basis of which they have been supplied with numerous inputs by these organizations. These contraventions, and the attitudes underlying them, have in the audit's view been the most detrimental constraint on Operation Flood generally and remain major outscanding issues in all four Bank-financed projects. Without their negative influence, the outcome of Flood and the Bank-assisted projects doubtless would have been greater than that actually attained. 16. Much of the credit for the major advances made in milk industry development since 1970 must go to NDDB/IDC who together acted as program promotors, consultants and financiers (see following section). Together they have provided a high level of promotional ability, technical skills, finan- cial expertise and overall control, without which the substantial gains made would not have been possible. Their original approach to milk production and rural development, their innovative skills and their management, marketing and coordination expertise are all highly commendable in the audit's view. It is also pertinent that the two institutions' abilities to recognize and define problems and to identify practical, effective solutions have contri- buted significantly to the improving momentum of the Flood Program and the projects supporting the Program. Results 17. It is not appropriate to consider the progress of the four Bank- assisted projects in isolation from that of OF-I and II, details of which are -7- summarized graphically in Figures 1-7. GOI reviews of overall progress under the two phases of Flood5/ concluded that, while OF-I missed some of its targets due to slow start-up and implementation delays, OF-II progress accelerated and- most key targets measuring progress at the milk procurement, processing and marketing levels were exceeded, as the summary of key indica- tors in the following table shows. Operation Flood I and II Thrgts , Achievenmmts , Percent Acievenant OF-11 OF-I Percent Achieve- Pre-project OF-I Achieve- Achieve- OF-II ment Percent (July 1970) 'lhzet mEnt ment Thrget (March 1985) Achievenant DCS Established (thousands) 1.35 14.42 13.27 92 29.00 34.52 119 Farm Fanlies Covered (M4llions) 0.11 1.00 1.75 175 3.48 3.63 104 bral Dairy Plant capacity (Wllion 1/day) 0.66 2.98 4.53 152 7.60 8.78 115 Rural Dairy Plant Peak Shroput (million 1/day) 0.46 2.75 3.38 123 5.53 7.89 142 Urban M1k Murketed (Allion 1/day) 0.90 2.75 2.27 83 4.30 5.0 116 Per Capita Milk conwsption (g/day) 107 - 128 - - 142 - Source of Data: NODB 18. The results of the four Bank-assisted projects are presented in appropriate tables in the PCRa. All of these projects fell short of appraisal targets in some key indicators. As already noted, however, appraisal targets were set at highly optimistic levels. Again, the three state-oriented projects were very much spearhead efforts in which the AMUL model was being actively extended outside Gujarat for the first time. All 5/ "Report of the Evaluation Committee on Operation Flood-II", December 28, 1984. Report commissioned December 2, 1983 by the Minister of State for Agriculture under the chairmanship of Mr. L. K. Jha, former Chairman, Economic Administration Reforms Commission, Government of India. - 8- projects suffered delays occasioned by slow decisions from the state bureaucracies, and from plant construction and equipment delays which in turn slowed formation of DCSs and constrained organization of village milk procurement. The same delays slowed development by unions of supporting technical services and inputs to DCSs (balanced feedstuff supply, animal health services, AI, forage development). This latter situation was exacerbated in most cases by failure of state governments to provide full authority and autonomy to the developing unions/federations, thus limiting their operational effectiveness and their ability to generate funds for development and for financing services at village level. 19. Given the circumstances, there were shortfalls, but the reasons for them have been identified and for the most part are being rectified. Also, the shortfalls were less significant because the projects were part of a larger, ongoing and successful national program, other parts of which progressed faster than anticipated. Furthermore, nearly all apprai3al targets (with the exception of the development of AI/crossbreeding) have been exceeded in the period since the projects closed. 20. The slower-than-expected development of AI/crossbreeding, which is a national problem, is currently being given special attention by NDDB. Part of the problem is due to traditional farmer opposition to AI methods; part to the perceived unsuitability of non-humped animals for draft purposes; part concerns the need for ancillary veterinary and animal husbandry extension services along with increased availability of feed, to make crossbreeding initiatives worthwhile. It is a problem that the audit notes will be addressed further within the on-going OF-III program. Sustainability 21. Given the significant overall achievements of the four Bank-assist- ed projects, and GOI and NDDB/IDC commitment to country-ide extension of the AMUL dairy development model as the central plank of national livestock development strategy, it is the audit's judgement that the gains achieved are sustainable. The more so given the solid gains of OF-I and II and the fact that OF-III is already prepared and GOI is actively seeking donor financing for its implementation. Further, taking into account the widespread and enthusiastic support that the AMUL cooperative organization already enjoys amongst Indian villagers, noted in the course of the audit mission's field travel, the approach clearly has a solid grassroots base. The direct benefits presently accruing to participating DCS members -- a remunerative, reliable market for milk and a higher family income being the most signifi- cant -- already have a high profile nationally and are serving as strong incentives for establishing AMUL dairy cooperatives throughout India. Furthermore, the pipeline of additional benefits being developed in the older-established DCSs -- village communal facilities, improved educational opportunities, group life insurance, medical treatment and recreational facilities to name the principal ones -- is touching a highly responsive nerve amongst Indian villagers who see, for the first time, opportunities actually being realized which heretofore have been beyond their reach. It is because of this groundswell of support at the grassroots level, and Govern- ment and NDDB/IDC support of it, that sustainability of Operation Flood - 9 - concepts, which the four Bank-assisted projects have so ably strongly supported, is considered by the audit to be well based. A further tranche of commodity assistance and Bank financing for consolidation is considered essential by the, audit to ensure that sustainability can definitely be achieved. II. MAIN FINDINGS A. Operation Flood: Problems of External Perception 22. In a program as complex and far reaching as Operation Flood, criti- cisms directed to the program itself, its objectives, its implementation, its achievements, its failings and its staff are to be expected, but the vehemence of the allegations leveled against it over the years both from within and outside India has been noteworthy. At the same time, the program has also drawn strong praise and support from many government and academic sources, Criticisms of the overall effort are criticisms also of its component parts, of which Bank-assisted projects were significant. The audit therefore spent some time reviewing the most important of these criticisms, which included amongst others: - Operation Flood has made India more dependent on imported milk powder to maintain liquid milk supplies to the urban centers and in so doing has undermined the local milk industry; - in view of the advanced state of cooperative dairy development in Gujarat compared with other states/union territories, the Flood program has diverted development funds from those areas to unfairly favor one state; - through overly generous procurement pricing the Flood program has deprived the rural population of milk and lowered villagers' nutri- tional status, particularly that of the young, the old, the poor, and of pregnant women and nursing mothers; - the Flood program has raised milk prices beyond the reach of poor urban dwellers; - the crossbreeding exercise, particularly using AI, has destroyed the adaptability and productive characteristics of the country's indigenous cattle breeds; and - the Flood program has purchased large quantities of inappropriate foreign dairy equipment, wasting foreign exchange and depressing local dairy equipment manufacturing capacity. These and other criticisms reached such a level in late 1983 that the Minis- try of Agriculture, GOI set up a committee of six eminent individuals headed by Mr. L, K. Jha, former chairman of the Economic Reforms Commission, to evaluate the program overall and to investigate whether there was a basis for - 10 - the allegations.6/ The committee received and studied the range of criti- cisms and concluded "... that in the instance of the more important of such criticisms there is little accuracy or substance". 23. Because of the implications of such criticisms for the four proj- ects under audit and for possible later Bank involvement in the ongoing Flood III program, the audit also carefully considered the allegations in consulta- tion with Government and NDDB/IDC staff. The latter are obviously concerned at such negativism toward the Flood program -- they answered all the audit's questions fully and explained the basis of the apparent misconceptions clearly and succinctly. On the basis of those explanations ard the audit mission's observations during field travel, the audit also concluded that the substance of the many criticisms levelled by the program's detractors is largely without foundation and appears to be based mainly on personal or other grievances independent of the overall performance of the Flood prog- ram. NDDB/IDC staff were very open with the audit on the matter of program shortfalls over the years. It is openly acknowledged that there have been problems, misjudgements and slippage. But the errors have been largely of omission rather than commission and, in a program so large and so complex and so geographically spread, it is unreasonable in the audit's view to unduly accent Operation Flood's negative aspects as some have done, given the enormous overall progress made to date and the clear evidence available of an acceleration of the program with time and of the wealth of benefits accruing in participating cooperative villages. 24. In the latter context, not only are the level and nature of the benefits flowing to members of established DCSs impressive overall, but the extent to which such benefits are reaching the extremely poor and needy (destitutes, widows, landless and near-landless) in certain "spearhead" villages is unusually noteworthy; and also indicative of the AMUL model's potential to benefit a target group which is widely espoused by all donors, including especially the Bank, but which has proved elusive to reach in practice. When viewed against Operation Flood's impressive overall gains and the latter potential in particular, it is difficult for the audit to accept that so much credence, on such little solid substance, should have been accorded Operation Flood's detractors. B. Major Issues 25. Replicability within India. Under OF-III, GOI wishes to expand the AMUL model as quickly as possible in all states and union territories in the nation and to this end has pledged maximum support to NDDB/IDC. The audit was told by NDDB/IDC senior management that: "We plan to repeat in the next five years a program of expansion similar to that which we achieved in the last 40 years." Such aims are indeed ambitious, but they may well not be beyond NDDB/IDC's inherent abilities, given their experience, competence and commitment. The strong support of village participants is also undoubtedly there. A key constraint would appear to be the reluctance of many individual 6/ See also footnote number 5. - 11 - state Governments to support fully the concept of farmer control at the union and federation levels, which is central to the successful functioning of the AMUL model.7/ Unless the district cooperative unions are controlled by elected boards of farmer representatives and run by professional managers appointed by and responsible to them, and unless the revenue-earning infrastructure (principally the milk plants) are in their hands, the vital veterinary, AI, balanced feed, fodder and TA inputs cannot be reliably supplied, The audit mission saw examples of such problems in its field travels. Again, unless the state federations are directed by elected individuals made up of farmer representative from the unions with professional managers responsible to them, their crucial promotional and coordinating role, particularly in marketing, becomes constrained, as seen by the mission in several states while in the field. The AMUL model depends for its efficient functioning on autonomous farmer control at all levels. The record shows that as long as the financing of the interdependent aspects of AMUL operations continue to be dependent on individual state budgeting procedures, then coordination, efficiency and financial viability are impaired. The AMUL model is in fact a finely tuned farmer-owned business entity requiring professional management by staff with highly developed management and financial skills. It is directly market-oriented, and its management requires a degree of autonomy and flexibility not usually evident in the public sector in India or anywhere. In the absence of such autonomy and flexibility the model will suffer the well-known constraints common to many parastatals. Successful functional replicability of AMUL throughout India in the future will thus finally depend on the individual state/union governments agreeing to transfer the instruments of dairy development, particularly the all-important processing and marketing infrastructure, into the hands of elected AMUL cooperative representatives and their designated professional staff. The record shows that, short of this, the AMUL cooperative model will not deliver benefits to the economy at its full potential. 26. Replicability Outside of India. As implied above, establishment of the AMUL model and development of its full potential requires a degree of altruism amongst politicians and bureaucrats which may be impracticable in the political settings of many Bank-member LDC countries. Those political systems which insist on government control over the allocation of productive inputs, over commodity movements and over commodity pricing, cannot be con- sidered candidates for the introduction of AMUL-style operations, at least based on Indian experience to date. Again, systems which dictate cooperative organization from the top down, rather than vice-versa, would also be poor candidates since elected farmer control from the grassroots is considered by AMUL's developers as central to the successful functioning of the model. These various considerations would be crucial in any future move by the Bank to support extension of the AMUL model outside of India and Sri Lanka, to which countries application of the model is so far limited. A special Bank study on the potential for development of the model in other environments is recommended by the audit before further replication outside of India is 7/ In contrast, bureaucratic reluctance to grant farmer control at the village DCS level appears seldom, if ever, to be a problem. - 12 - contemplated. India, unlike practically every other developing country, has a long tradition of dairying and major emphasis is not on milk production per se but on marketing the milk which is already there. DAIRY COOPERATIVE SOCIETIES (DCSs) ANAl PATRN- OPERATMO FLOOD 45- 40- 35- 3D- 25- 20- 10 5- TO 72 74 7o 78 a0 82 84 as YEM 0 CtMa"TIE DCSS + DCSs CUE WAR -oad $Ay ay + 'WiMn lleed'00S0ød 0 OLO u~ ul UV- 6 98 *8OS Så Så *å~å0O JJEIEIßOOI rIB WIh 3DVElAV GOO-.d Nl.l.èl3d 祖V」A 珊姆瀚叩魷以令必必必O之 卜〕― S」艙階杳心吆U網刃U細賺瑜O暘U 0001」N以上VU刁do 袖隊」么 糰姆甜闐以以令之以O必 ！引〕！ 勃鯽心么誠了nw紛細C勵」咸州啊闐奮州 0001」N以工V廿」do 17 Figure 5 ~1 CRUM JO SMVM~ - 18 - FRr 8 0. I i ii i ii i1 0 l§ 2§ 8 MLK PRODUCTION IN INDIA 44- 42- 40- 38- 36- | 34- 32- 30- 28- 2 - 24- 22- 18 61 m m 66 a 71 M 7 81 3 8 YEAR T HIS PAGE IS BLANK -21- Attachment I Page 1 of 29 National Dairy Development Board ORHAtAWSOfFCS CHsNlDDBsPsNDPs " 13th May, 1987. Mr. Graham Donaldson Chief Agriculture and Human Resources Division Operations Evaluation Department The World Bank 1818 H Street N.W. Washington DC 20433 U.S.A. Res Project Performance Audit Reports India National Dairy Project (Credit 824-IN) Dear Mr. Donaldson, Thank you for your letter, dated the 8th April, 1987 enclos- ing copy of the draft Project Performance Audit Report prepared by the Operations bvaluation Department, an Overview prepared by the South Asia Regional Office of the World Bank and the draft project Completion Report on the National Dairy Project (Credit - 824 IN). I am particularly pleased to observe that the Audit has addressed itself to the various criticisms voiced against Opera- tion Flood and has concluded that these criticisms levelled by the Progreame's detractors are largely without foundation and appear to be based mainly on personal or other grievances independent of the overall performance of Operation Flood. I as also pleased that by and large the report has been a fair one and has shown understanding of the magnitude and scope of the Project and therefore, the problems in implementing such a Programme In such a large developing country as India. There are, however, a few comments I would like to make. The first is in regard to the views expressed by Audit of the need to have cooperatives function independent of govern- mental interference and unnecessary control. I mst point out that the system of funding that is practised by the World Bank which reqires it to make its funds available through the Government to the Indian Dairy Corporation and we, in turn, as a creature of the Government naturally being required to fund it through the State Cooperative Federations that are created in the States against Government guarantees, naturally invites governmental interference. That by and large the Government WV* aso wrIf" I([V: Moo0 * a ti * t*M:017w &A.%D MOM 14t1 % % PHO14Y .10MD * ARAM DAtIDYWAltD * TLX 0171 Or -22- Attachment I Page 2 of 29 NATIONAL DAtIR DaVELOPMNT BOARD cONTATt OS 0xt09 of India and the State Governments have now agreed to relax their control over cooperatives and to allow them to function free of governmetal control through professional management employed by them, is a measure of the maturity shown by the State and Central Governments. * I enclose a copy of the letter that the Prime Minister has written to the Chief Ministers of all the States it. India. I mat point out that we have more or less aohieved milk procurement targets under OF II with fewer animals and fewer farmers brought within the aabit of our cooperatives. Also during the last flush season, in six States milk oculd not be processed for lack of processing and marketing capacity. I have always been inhibited in pressing on with additional processing and marketing capacity by everyone who reviewed the Project, including the World Bank and the Government, because their view has always been that we should concentrate on in- creasing production of milk. It is a pity that it was not fully recognised that milk production increase to to be achieved by the farmers participating in the programme and the real in- oentive to increase the production of their animals is a good price and an assured market. Unfortunately, too such emphasis has always been placed on technical inputs such as artificial insemination, fodder production, etc. I am one of those who who believe that we mast rely more on the good sense of the far- mers and we should erect structures that would respond to the demands for such inputs. In any case, it is my view that when the productivity per animal is as low as it is in India, the stimulus of a market would play the most important role in in- creasing the productivity per animal. In these reports, the base year for project start up has been considered as 1981, You would agree that since the staff Appraisal for the National Dairy Project was prepared in 1978, the base year, for the purpose of comparison between appvaisal targets and achievements should logically be as March, 1979. Taking March, 1979 as the base, we have provided the corrected figures for Table 1 in the Overview. Similarly, we have also updated information on the number of DOS, farmer membership milk procurement for the National Dairy Project Completion Report. Also some of the statements and data in the referred documents have been correqted to reflect the actual status. As regards the project completion reports for Karnataka, Madhya Pradesh and Rajasthan, these were prepared jointly by YAO, the World Bank's South Asia Regional Office and/or the Government of India. It is expected that the comments on these reports would be provided by the respective State autho- rities, Nevertheless, we have updated some of the data related to the number of DOS, farmer membership and milk -23- Attachment I NATIONAL DAIRY 09VELOPMEN? BOARD Page 3 OoTxxuAzox suzET procurement in these reports. In view of the considerable damage that the recent World Bank/EEC consultants report kCingolant Report) has done, as it has been leaked to the press, it would be extremely useful if the findings of the Wov1d Bank evaluation could be published widely through a press release. With kind regards, y s sincerely, (V. Kurien) Enos* Attachment I Page 4 of 2Q * .......... PRIME MINISTifR New Mlsh March 12, 1987 I am concerned about the present state of the cooperdt§ve movVment. We have made revitalsation of cooperatives a part of the 20-Poont lPrograimime, 1986. Together, we, the Centre and the States, have to improve the functioning of the cooperatives to achieve the objectaves we have set before ourselves. I understand that the Conference of State Ministers of Cooperation held in December, 1986, made a number of recommendations. These must be under your active consideration. I would, however, suggest that to start with the State Government may focus on the following four major problem. areas:- (.) Elections to Cooperatives-must be held regularly and elected office bearers allowed to manage the cooperatives without undue intrference fromo the State Goternment. Frequent supersession! of these bodies hate Impaired the functioning of elected cooperatives. Such action must be taken only when corrective action has failed to produce results. (is) Overdues in cooperative credit organisations- need to be brought down substantially to re-oper clogged channels of credit. .'n%) Wsth the expansion in scope and size of operations tPrough marketing and processing by cooperitives, there is a need for more professional management of the bodies. -25- Attachment 1 Page 5 of 29 (iv) lie cooptratlive laow lieeds teview and aisesidmsent Itp provide for nion-färus 'artivstjes ai dilso to ensuit demtocrato und professionil lmianagement. 5 am told that the report of the Comittee on imeoc ratuad Professional Management of Cooperatsves så to be sent to the State Govern- ments by the Ministry of Agrs<ulture :oon. You m~y w$sh to review the functioning of the cooperstiveS m your State at your own level bo that effecive step! can be taken to give the cooperatsve movenent the primary which it deserves. l siall appreciate your keeping the Union Minister of Agriculture informed of the action taken by the State Government. Your: sreerely, All Chief Ministers as per lis ttac . opy to Secretary,Agriculture(Shri C. Srinivasa Sastry, with the request that he may ensure wide publicity. (iajahat I abullah) Joint Secretary to the Pzime Linister -26- Attachment I Page 6 of 29 __ge/__a Rank's view To be read as 1/2 Pifth 3argest milk powauer Third 3argest milk producer.(Data on maJor målk oducing countries attaohed) * 2/4 As domestio poduotion has increased It is no more than % ot. the total commodity said milk poduct jarts thromChpt of the country's dalry have declned in recent years and Inaustry. now reposente e1s than % of national consuaption. 3/MUabe..1 is compred as belowt Maroh March Inre. Inore. otal a % Appisal 1979 1986 1979-86 Targut at Tarset Appvalal mm 25 164 139 50 278 C8S( '000) 8.2 42.7 34.5 20 172 ~arm families 1.20 4.48 3.28 3.5 94 (million) Avg. milk poc. (MID) 2.0 7.9 5.9 8.0 74 ' »fg3l ggg Actual fa of taraet Number of om 12 12 100 No. of DOSs 4084 4800 85 o. of tara fil9es(9000) 435 851 51 IncremOntal Average eilk Poouement('000 LaD) 529 4800 11 6/10 Nevertheless, given its still The cooperative Xogramme has played ~ma11 overgis...... India a ~inificant rola in enhancing the dairy woduction of recent years milk availabolity in cittes and toba and has contributed to the groth in Tndinn dairy production of recent years Which is estimated at 4-J Per annu. 6/11 (a) OP futume g~letto ulgrading OF fcrure ogamme shoul4 focus pogra sbiuov foous on the on the mor* ptetial milk poduers mor* oductive tarmer an milk- ana milkeda.... sheds and introduce a Buffalo ImIrovement Programme. 6/11(b) Sis speoifioation of eet milis... The ost differential between a 50 M Gattli fee ill in most areas. and 100 m/day capcity oattle feed ~lant beig M1, (a 50 I/D pInt costa around t.8 M111,on k. R8.10 million for a 10< M/ plmnt) a iargmr capaoity plant bas alays been considered. -27- Attachment I Page 7 of 29 MeLa Iank 's viev To be a ag 9/15 The report of the Ja Commission The bruary, 1986 reput from (G01 1984) and the 1986 DEC the Co9ission to the Counil Consultanto review mission ara European hrliaumnt shoux4 be mentioned instead of 1986 EEC Consultants revoiw atsion. >oect 7*rfor noe Auit Roport Ueg. WbnAed aLO To Le Mea ag II The toum rojeota-constituted the The foi wojects constituted as concerted effort by 001 to develop the major effort by GOI(Operation the AMUL Cooperativs conept out- ood I that bgun in 1970 was side the State of Gujrat. already under implementation in the States outside Gujaat when thse four åojeots were pxoposed). VII No. of Direct beneficiaries (No. of hovpeholas 2.8 million 340 mlun 70-93% 100 VIII Bakgrounå : Fifth largest Third Iargest milk oducer Ist Para - 8 Milk odumer as mentioned in Overview. lagt line XIII SustaiMbility: A Stated goal ls to A stated goal is to further 32d line double ex~,i. 4/6 *.... the smallest mi2k oduers ... one to to lUtrea per day. (voducin one to tive litres per day typicaly) 15, Ira 22 inistry of State for inistry of ågriculture, 5th line Agriculture Govt . of India. 16, Ara 25 to double to enlarge 4th line 7igure 1 DOS for 1985-86 40,000 42,692 7igure 2 ak Poo, £or 9.30 M Kg# 10.00 Kg4. 1985-86 Av. P~.for 6.50 NKg 7.90 EKgP. 1985-66 7igure 3 ThrovahiMt of 3.10 Mip 3.00 Mlpa Metro for 1985-6 Figure 4 MIlk narketed in 2.30 X14 3.00 Ml1. analler towwn for 1985-86 -28- Attachment I Page 8 of 29 ge Ng ]PNAed as Tg be read as Figre -5 Domestic prod. 120.00 ('000 W) 130.00 (0000 O) for 1985-86 (Estimted) (Estimated) Figure -6 Ier capita consumption Year-4981-42 132 gas. 137 gas. 1985-86 147 gs. 154 gs. Figure -7 Milk prod. (Million mr) 1981-e2 33.30 34.30 1985-86 41.00 42.30 -29- Attachment I Page 9 of 29 !ational Dairy Project Proe.t Completim epart Printed as To be read as 1, Para 3 7,5 RM 7,9 MM 1, Para 3 32000 )CS 32500 DCs 2, Point (a) environmental envirorment Inruction 1 Para 2 7.47 million 7,9 million 1, -do- 10.5 RM 10.9 UM 1, -do- 3.5 RM&D 3.55 YLPD 6, Para 3.06 Federation Federations 7, Para 3.07 32766 DoS 32593 DOS's 7, Para 3.12 (g) Produced Procured 8, Para 3.14 Produced Procured 8, Para 3.17 8581 DCS 8748 DCS 8, -do- 337220 Female calves 339300 8, -do- 513530 calves 551530 8, Para 3.18 725 regular 715 regular -do- 27184 DoS 27334 DOS 9, Para 3.22 10.58 1MI 10.9 nPD 9, Para 3.23 10.85 XLPD 10.9 - KLpIi 10, Para 3.30 Naster Eastern 18, Para 5.02 7.47 mld 71.9 m1pd 21, Table-9 7.47 XWED 7.-9 KLPI) 21, Table-9 120.00 130.00 22 Para-5.12 4.52 million 4.48 22, para 5.12 2.78 million 3.28 22, para 5.12 93A ' 25, Para 6.07 Qaantity wuantity -30- Attachment I Page 10 of 29 Prnieat Cnmletina.e1ant-_laiaathan bPanaa rinted A Te be road.n. HiSliets (a) 1549 DOS 1360 DOS as on Dec.1983 12/3.19 1549 DCS 1360 DOS 3.19 86,200 membership 82,748 members 18/3.44 Table- 3.3 Year 1, 2, 3 Year 1,5, 10 32/7.04 Implicated Implemented line 5 46 The Average prioe/kg.fat It any be deleted as it does not reflect two-axis pricing, Project completion report - Nadlya Pradesh Page 37 - Table-5s DCS formd )SembershLp W &ember 1977-78 11904 11898 1979-80 336 19155 367 19700 1980-81 471 24370 441 24000 1981-82 624 29363 622 29400 1982-83 39915 39321 39- Table-7s Column Average procurement Ejay Printed.ao IseJ..=ad." 1975-76 66 60 1976-77 17260 17660 1977-78 30411 32000 1978-79 Missing 37000 1979-80 43013 43000 1980-1 56986 68000 1981-82 56164 79000 1982-83 109315 141000 Proent Camleti oni nort- hrnataka 5, 2.04 (Lin 5) Chicknagalur ChickmSlzr Poiet o ntion enort - KamntakT - . - - . . - . - - -n~ ~ ~ - ~ - - - o -<--e T-_ k_r__~ ~ ~ ns ----ee- Year DOS MembeZ- DOS Membe-r- DS Nember- DOS embei- DS Membe- K0 x- ship ship ship ship a ship ship - - -l - - 1975-76 200 50000 35 3440 24 1358 22 1%6 22 1658 103 8422 1976-77 400 150000 91 9530 108 6710 49 6961 65 49% 313 28197 1977-7c 400 250000 185 23237 171 20731 102 16159 1953 11135 651 70902 1978-79 600 400000 273 36160 270 29197 136 23014 139 17034 818 105405 1979-80 200 450000 320 49400 331 47300 163 33600 172 24600 986 154900 190-81 - - 390 62600 419 61700 255 40500 203 30200 1267 195000 11-2 - - 441 73200 488 71300 279 44800 234 35700 1442 225000 1982-83 - 550 85790 549 79970 400 58430 304 42530 1803 26Ø720 1983-84 - - 551 92%5 550 90699 407 67913 328 45570 1836 297147 Upto Søpt. 84 1800 450000 571 98626 560 94904 408 72691 336 46799 1875 313020 - -- - ----- ---------------------------------------------- ------ Iwf P 4 2 Tabie-6 PRoJLC2 Ccal@IA?ION Ebæo1- RAJASTHAN - DSmmesi Year IDA A=Mial 'JAImUi Aam DCS ~ebers DCS klmbes DCS Membrs »CS Members •>CS M~mbers DC8 Members DCS Menbs 1975-76 300 17,400 80 2,241 160 6282 73 2,250 - - - - 73 - 1976-77 650 63,050 96 6,464 197 9989 87 5,899 79 2332 - - 459 24,684 1977-78 1050 121,800 167 9,241 217 14424 130 6,715 122 3602 20 1098 656 35,080 1978-79 1450 168,200 183 12,027 226 16062 147 7,540 172 5218 71 2407 799 43,254 1979-W0 1800 244,800 247 15,400 270 17000 240 11,000 146 6400 71 5400 974 55,200 1980-1 319 17,800. 279 17900 320 13,200 161 7600 74 7000 1153 63,500 1981-82 332 20.400 294 18900 379 14,000 171 8200 75 7000 1251 68,500 1982-83 367 23,300 297 19270 429 22,110 200 10650 94 7410 1387 82,740 1983-84 386 24,270 259 15526 387 23,567 205 11846 123 7-59 1-6 82,748 taas e tqs> =ammeoý ý nen~ ~~mma -33- Attachment I Page 13 of 29 Milk Produotion for 1985 (Estimsted) (*ooo r) 1. USSR 98200 2. United States 65166 3* Indsa 42300 4, France 27000 5. West Geramy 25675 Sources Foreign Agricultwe Chroular may, 1986 (US Dept. of Agriculture) -34- Attachment 1 Paga 14 of 29 Annexure-4 Proges of Nattonal Duti Pro ect Numer orf?aisd as Won 3lst March) Cuulative Milkshed/ Stat mm 80-8~1 81-P 8-~~8 44 85-86 OPERATION FLOO PROJeCTS Andhra Pradesh 1 1 1 2 8 10 10 10 Assa - • • 1 1 1 1 1 BIr 1 1 1 1 1 1 4 4 Gujarat 6 6 6 14 16 16 16 16 Haryans 2 2 2 2 7 10 11 10 mimhal Pradesh - - - • 2 2 2 Jau & Kashmir • - - - 1 1 1 Karnataka • - - • 1 2 7 Kerala - - 2 2 2 2 2 adhya Pradesh 4 4 4 4 4 waharashtra 2 2 2 2 11 15 16 18 Orioa • • 4 4 4 4 4 Punjab 2 3 3 9 10 11 11 11 Rajasthan 1 1 1 1 1 1 1 11 Sikklia • • 1 1 1 1 1 Tamil Nadu 5 6 6 7 9 9 9 12 Tripura m• 1 1 1 1 1 Utttar Pradösh 2 2 2? 4 6 19 28 West sengal 3 3 3 4 4 4 6 6 Andema&Ntoqbar • • - 1 1 1 Goa •f'l 1 1 1 1 1 Pondiherry • - 1 . 1 1 1 1 Project Total 25 27 27 59 86 103 124 152 IDA PROJECTS -arnataka 4 4 4 4 4 4 4 4 Madhya Pradesh 3 3 3 3 3 3 3 3 Rajasthan 5 5 5 5 5 5 5 5 Project Total 12 12 12 12 12 l 12 12 Irand Total 37 39 39 71 98 115 136 164 Provisional. a354. 35 Attachment T Page 15 of 29 Annexure-5 P@qs* of National Dairy P t Sed ~IEi8Pittern iason 3is. March) Cumulative 1"alkshed/ Staite name 17- 79-80 80-81 81-82 82-8L_83-$84 84-85 85-86 awe n aaaeeeemeaaafaa**aemaaa********************** OPERATION FLOOD PROJECTS Andhra Pradesh 161 210 298 340 1236 2175 2518 3158 Assam * * * 50 99 113 124 12V Bibar 117 118 118 162 244 380 765 1030 Gujarat 4038 4501 4798 6156 7034 7577 7973 8356 "aryana 344 325 505 622 988 1891 2383 2867 Himeachal Pradesh - 40 78 9 Jaun & Kashr - a - - - 47 86 100 Karnataka f t * * a 76 486 143 Kerala * - - 74 242 359 468 535 adh Pradesh 130 233 518 836 143. Naharaahtra 420 565 718 956 1072 1244 1950 261 Ortsa w 74 165 228 285 354 Punjab 178 193 490 1755 2357 3437 3818 4094 Rajesthan 267 265 280 239 282 452 677 242 Sikkaim * * 73 82 98 107 11. TaMil Nadu 1820 2218 2384 3185 4024 3732 4249 495( Tripura a a a 56 56 51 61 75 Utter Pradesh 105 195 248 598 588 1241 2503 57o- West Bengal 465 519 570 637 723 809 978 1024 Andaman & Nicobar * * a a 20 20 20 Goa a a 31 52 66 76 Pondioherry * a * 1 1 35 53 6U Project Total 8215 9109 10409 15107 19457 24575 30484 3865 IDA PROJECTS Karnataka 818 986 1267 1442 1803 1803 1803 1803 Madhya Pradesh 267 367 441 822 849 849 849 849 Rajasthan 799 974 1153 1251 1387 1387 1387 138? Project Total 1884 2327 2861 3315 4039 4039 4039 4039 Grand Total 10099 11436 13270 18422 23496 28614 34523 4269. -36- Attachment I Paga 16 of 29 Annexur-6 WC4 UndOr nrtfricil iina <on (s on .39t jarob) Cumulative MIlkahed/ State nw 8 0-8.8-82 _ 2-83 834 84-85 85-86 OPERATION FLOOD PROJECTS Andhra Pradesh - 16 63 56 179 180 121 163 Aggam - - - 4 18 6 9 Sthar 19 3 - - -- 61 91 Oujarat 1169 1202 1248 1983 1367 1466 1686 1819 Haryans 22 15 39 154 93 143 150 257 Karntakas - - - - 526 798 1037 Kerala • - - - 199 143 Mdhya Pradesh - - - 53 166 922 823 637 Maharashtra 113 63 38 97 111 142 214 504 Orisa - - - 29 64 111 133 1.18 Punjab 50 21 73 341 477 697 776 pajathan 55 55 19 22 47 241 346 547 Sikkim - - 18 15 29 34 30 Tamil Nadu 999 1440 1617 1305 1187 1308 1319 1742 Tripura - -- 5 - 7 Uttar Pradesh - 9 19 27 96 240 500 626 West Bengal 280 180 229 231 331 349 424 40 Andaman & Ntobar - - - - - 6 6 7 0oa - - - - 9 11 9 Pondioherry - - - - - - 15 20 -Project Total 2707 2991 3293 4051 3967 6172 t543 8254 IDA PROJECTS Karnataka 752 901 991 1108 - - - Madhya Prades - 268 309 447 743 - Rajasthan - 575 365 306 291 - - - Project Total • 1534 1575 1744 2142 - - - Grand Total 2707 4525 4868 5795 6109 6172 7543 254 -37- Attachment I Page 17 of 29 Annexure-7 ä progremåt Cuaulative Mil ksbed/ Statt new1~7-9 7980 80-8 81-U 82-83 83-VI 84-85 85-86 OPERATION FLOOD PROJECTS Andbre Pradosh 121 160 286 287 386 420 396 597 Assam om • 19 48 11 11 12 Bibar 67 -- - - - 9 Gu3arat 3476 3466 3578 4058 4255 4695 5114 5761 Haryana 314 298 309 158 531 442 503 806 Karnataka • - - - - 305 812 1440 Kersla - - - 50 168 231 284 413 Mdhy& Pradesh - - 113 207 365 551 885 waharasbtra 312 452 524 700 749 1029 1137 1558 Orissa •- 49 112 133 137 148 Punjab 360 175 461 1586 1869 2682 3419 3773 Rajasth n 160 179 123 175 266 179 482 2071 Sikki • - - 69 76 71 80 65 Tl Ndu 2806 1742 1951 1992 1866 2243 2768 3189 Tripura - 22 29 34 41 65 Uttar Pradest 364 281 388 458 598 932 2193 :5175 est 8al 298 342 418 385 477 553 579 591 om- - - 45 66 76 Pondiohr'ry •. - - - 17 - 33 33 Projeot Total 8263 7095 8039 10121 11653 14670 18605 24667 IDA PROJECT. Karnataka - 853 914 978 1017 1017 1017 1017 Madhya Prades - 293 383 530 757 757 757 757 Rajasthdn • 790 852 834 958 958 958 958 Project Total - 1936. 2149 2342 2732 2732 2732 2732 *r(ind Total 8263 903 10188 12463 14385 17402 21337 27399 -38-Attacent Page 18 of 29 Proeo h u Annexure-7.1 roo_____T_ o¯Wa_n aig Proe.eet mf- - - M1 l DCS under Milk prooure- Milk marketed --------- ment (Avg.for (Avg. for Sr. NO.or A.H. A.I. Maroh'86) Mareh'86) No. State/milkshed DCS (as F'86) (as FT86) (TLPD) (TLPD) l. ANDHRA PRADSSH 1. Chitoor 432 - - 147.96 6.00 2. Cudappah 186- - - 53.88 3.83 3. Godavari 373 - 2 48.84 30.79 4. Guntur 524 480 99 147.41 29.07 5. Krishne 307 - 11 113.57 71.16 6. Kurnool 244 - 1 53.34 19.07 7. Kalgonda 249 50 - 38.37 230.68 8. Nizamabad 252 - - 42.56 3.48 9. Prakasam 202 - 92.24 3.73 10. Visaka 389 - 50 71.25 72.22 State Total 3158 530 163 859.42 470.03 II. ASSAN 1. Gauhati 125 12 9 6.93 2.39 III. BIHAR 1. Muzaffarpur 142 - - 2.43 17.71 2. Patna 589 - 72 16.02 28.39 3. Beguaarat 167 - 10 7.57 0.32 4. Samastipur 132 9 9 2.44 1.24 Milk marketing to other dairies '- . i - 13.33 6. Bokaro - - - 5.89 7. Ranchi - - - - 2.95 State Total 1030 9 91 28.96 69.83 X. 0GJARAT 1. Ahmedabad 403 - 29 68.33 285.83 2. Banaa 1114 753 64 141.11 13.34 3. Bharuch 453 65 47 16.68 15.90 4. Bhavnagar 188 35 24 29.00 26.17 5. Gandhinagar 53 53 11 22.21 16.34 6. Junagdh 213 72 51 47.72 12,19 7. Kaira 882 874 759 741.18 53.62 8. Kutab 190 47 11 17.36 10.95 9. M 9haana 889 904 347 655.36 47.35 10. Panhahal 447 186 89 40.28 19.98 11. Rajkot 423 141 21' 79.17 10.68 12. Sabar 1284 1284 94 334.95 25.27 13. Surat 661- 442 66 172.60 147.22 14. Surendranagar 275 240 43 37.15 3.78 15. Baroda 881 685 101 133.71 135.18 16. Valsad • - 62 31.16 28.73 State Total 8356 5761 1819 256797 841.66 -39- Attachment I Paete 19 of 29 Annexure-7.1 roontd) DCS under Milk prooure- Milk marketed ment (Avg.for (Av&. for Sr. NO.of A.H. A.I. March'86) March'86) No. State/malkshed DCS (as X-Fr86) (a brE86) (TLPD) (TLPD) V. HARTANA 1. Ambala 482 207 58 45.77 15.58 2. Chiwant 208 - - 5.6 0.56 3. Gursaon 336 - - .8.40 28.95 4. Hissar 270 80 7 26,60 6.39 5. Jind 158 - 34 13.90 0.50 6. Karnal 221 156 37 94.24. 0.95 7. Kurukahetra 282 155 26 29.18 8. Pahendragarh 315 - - 2.43 - 9. Rohtak 329 - 9 23.03 2.01 10. Stras 266 208 86 39.9 0.37 State Total 2867 806 257 218.84 54.40 Y IHIMAGHAL PRADESH 1. KandI 42 - - 3.53 3.66 2. Sila 56 - - 6.85 4.01 State Total 98 - - 10.38 7.67 VII. JAMU & KASHMIR 1. Srinagar 100 - - 6.80 7.48 VIII.KNATAA 1. Bangalore 845 712 315 248.87 263.95 2. Belgha 176 127 51 18.99 10.58 3. Oljapur 98 94 12 9.75 21.90 4. Dharwad 214 155 61 . 21.26 24.36 5. Gulbarga 127 70 11 -10.74 19.70 6. Hassan 386 275 146 35.05 36.36 7. ycore 678 564 250 141.92 52.63 8. Ralehur 68 - 3 10.36 - 9. South Kanara 65 • 8 12.76 19.32 10. Shimoga 85 52 5 7.72 12.18 11. Tumkur 494 402 175 74.41 42.98 State Total 3236 2457 1037 591.83 -503.96 IX. KERALA 1. Eranakula 262 207 11 50.70 39.10 2. Trivandrum 273 206 132 55.54 50.64 X. AW 535 413 143 106.24 89.74 1. Shopal 577 326 162 28.05 69.67 2. walior 127 94 34 17.70 13.28 3. Indore 651 484 194 66.42 34.34 4. Jabalur 193 132 47 7.75 10.73 5. Raipur 176 95 28 11.49 9.35 6. Sagar 75 54 20 1.66 1.63 7. Ujiain 484 457 152 93.21 9.81 State Total 2283 1642 637 222.28 148.81 Attachaent j -40- Page 20 of 29 Annexure-7.1 (contd) DCS under MIlk procure- til k marketed ment (Avs.for (Avg. ror Sr. NO.or A.H. A.I. Mrch'86) March'86) No. State/mIlkshed OCS (es IEF86) (as ffir'86) (TLPD) (TLPD) XI. MANARASHTRA 1. Ahednagar 90 • 375.00 13.25 2. Aurangebad 99 76 10 43.93 9.27 3. Bhandara • • - 54.93 1.62 4. Deed 107 79 16 63.61 0.28 5. Buldhana 84 - - 45.34 0.38 6. Chandrapur - - - 8.75 11.39 7. Dhule • 113 145.46 8. Jalgaon 804 685 124 174.25 14.85 9. Kolnøpur 775 259 68 143.29 12.51 10. Nasik - - •56.54 7.87 11. Usaanabad 139 125 32 88.34 2.90 12. Pune 238 113 348.88 50.99 13. Ratnagiri -l 11.38 3.91 14. Sangli 51 - . 149.66 1.23 15. Satara - - 115.50 6.33 16. Sholapur 146 108 39 38.45 4.81 17. Vardha 3 - - 43.82 1.37 18. yavatmal 81 - 15 20.65 0.82 State Total 2617 1558 504 1927.78 141.78 XII. ORISSA 1. Cuttack 128 - 30 6.13 - 2. Dhenkanal 83 46 23 2.01 0.17 3. Keonjhar 53 35 24 2.24 1.89 4. Purt 88 4-0. 41 3.43 15.57 State Total 352 121 118 13.81 17.63 XIII .PUNJAB 1. Afritaar 459 343 35 73.27 9.65 2. Bhatinda 381 351 128 31.21 7.56 3. Fardkot 335 335 51 33.57 0.69 4. Ferozepur 256 256 27 32.45 - 5. Gurdaspur 280 280 47 33.46 1.02 6. Hoehierpur 425 360 98 41.46 0.26 7. Jelandhar 566 551 104 1!5.39 9.35 8. Ludhlana 450 450 120 120.19 23.27 9. Pattala 249 215 56 43.80 10. Roper 364 358 62 46.10 47.77 11. Sangrur 329 274 48 37.15 0.06 State Total 4094 3773 776 618.05 99.65 XIV. RAJASTAN 1. Ajuer 271 226 92 100.50 12.65 2. Alwar 466 381 88 57.18 1.99 3. Banswara 65 - 0.75 0.49 4. Dharatpur 184 124 19 14.50 - 5. ShIlwara 320 310 56 106.82 5.59 Attachmant X Annexure-7 OMS under Nilk orocure- Milk turketed --- ent (Avg.for (Avg. for Sr. NO.of A.H. A.I. March'86) Marchi'86) No. State/ilkhed DCS (as $EFT86) (as UVrr86) (TLPD) (TLPD) 6. Btkanr 574 518 31 137.89 1.22 7. Churu 88 88 5 42.47 .0.25 8. Ganganagar 189 141 5 23.17 - 9. Jalpur 427 320 150 112.14 37.06 10. Jalore 41 7.69 - 11. Jodhpur 391 24 Ø6 .45 9.71 12. Kota 87 54 11 13.67 2.52 13., Pall 130 111 8 38.45 0.01 14. Tonk & S.Modhpur 156 96 25 17.71 0.19 15. Sikar 70 73 9 3.99 0.39 16. Udalpur 165 155 24 16.02 1.53 State Total 3813 3029 547 789.40 73.60 XV. SIUKI 1. Sikidm 112 49 30 2.50 4.29 XVI. TAMIL NADU 1. Chinleput 594 246 76 36.95 1.75 2. Coimbatore 389 315 119 69.80 50.35 3. Dharmapurt 514 319 230 77.76 18.90 4. Erode 528 463 210 160.81 24.78 5. Madurat 794 40? 241 98.85 75.23 6. Ooty 121 118 70 21.83. 19.55 7. North Arcot 779 396 295 153.33 7.67 8. Pudukkottat 13 - - 2.61 1.28 9. Thanjavur 54 - 13.73 17.75 10. Triehy 80 - - - 39.79 33.08 11. Salem 639 509 282 181.91 29.87 12. ouh Aroot 451 416 20 5.71 18.86 State Total 4958 3189 1743 916.08 299.05 XVII.TRIPURA 1. Agartala 75 65 7 2.61 5.60 XVIII.UTTAR PRADESH 1. Agra 141 111 13 12.04 2.57 2. Algarh 69 69 32.87 - 3. Allahabad 185 185 31 12.36 11.65 4. Ballla 131 127 38 5.93 1.39 5. aarabani 267 253 28 14.90 - 6. Bulandamhar 254 226 54 49.62 - 7. Etab 19 - - 1.35 - 8. Etwan 93 93 11 5.75 9. farrukhabad 16 12 - 2.88 - 10. Fatehpur 214 190 37 20.86 - 11. GazIabad 232 190 51 28.04 - 12. Gaztpur 32 22 1.26 - 13. Hardot 33 33 3.49 - -42- Attachent 1 Page 22 of 29 Anexure-7.1 (contd) DCS under Milk prooure- KlIk marketed ment (Avg.for (Avg. for r. - NO.ot A.. A.I. Maroh'86) Mareh'86) te. State/milkahed DCS (as MFT86) (as wr-86) (TLPD) (TLPD) 14. Jaunpur 13 13 - 0.40 0.04 ,5. Kanpur 85 • - 6.93 53.93 16. Lucknow 102 95 10 4.2. 32 93 17. MaInpuri 17 - 1. . 18. Methura 87 69 10 8. 0.26 19. Meerut 539 440 128 76.32 16.9 20. Ntrzpur 98 53 11 1.23 -- 21. Moradabed 276 265 98 50.90 3.81 22. Muzatfrnagar 156 138 17 20.40 23. Raebarell 151 120 23 5.25 0.83 24. Saharanpur 87 87 - 10.22 - 25. Sitapur 17 17 - 0.46 - 26. Sultanpur 113 90 23 2.22 0.48 27. Unnao 22 - - 0.85 P8. yaranat 25 172 43 7.14 15.39 state Total 3701 3070 626 388.21 139.34 mix. WES BEMGA 1. DJaeeling 311 223 135 19.27 36.12 2. Huglit 31 14 2 0.06 4.68 3. Malda 96 41 35 0.75 0.79 4. Midnaporg 104 52. 52 1.56 3.88 S. urshidabad 285 163 129 9.45 1.58 6. Total 1 4 3: 47.05 XX. ANDAmA & NICOSAR 1. South Andaan 20 - 7 0.55 0.48 XXI. GOA 1. PondaGoa 76 76 9 10.99 21.12 MII.PONDICERRY 1. Pondtoherry 62 33 20 12.60 9.43 GRAND TOAL 27184 8254 9339.16 3056.98 -43- Attachnent I Page 23 of 29 hAnnexure*8 National Dai Project 7r 0rs os (as on March) At performed Female calves born mobile ('000) ('o0) veterinary Year **************** ************* clinIce Cow Buff. Cow Buft. (a + E) 78-79 61.15 254.95 18.88 46.90 242 79-80 114.34 280.88 14.63 60.33 247 80-81 374.79 447.83 32.03 44.18 346 81-82 337.71 456.83 35.00 52.63 387 8283 307.43 458.04 39.13 72.33 431 83-84 393.59 599.94 42.97 78.54 476 84-85 590.45 739.00 60.56 81.95 569 85-86 970.40 93873 96.10 113.67 .715 Note: 1. Figures given for the year 1985-86 are provisional. 2. RA Regular, E x Emergency. 3. Figures for AI & temale calves born have been rounded off to the nearest decimal point. -44- Attachament I Page 24 of 29 Annexure-10 Måtl~na22 Proeco Ca tiluton or ly l& poal ~der planta(as on Maroh'86) Processn8 Mili powder Cppacty utiliat.orf oepacity Throughput manufacture lquld TIEi~~W'i (TLPD) (LPD) (MT) plant pi.t A. Andbra Pradesh 1.5 ittoor 150 (12) 143.64 183.33 96 49 2. Cudappah 150 (12) 96v0.7 252.79 64 68 3. Godsveri 25 6.71 - 2b7 - 4. Guntur 25C (22 191.66 246.63 77 36 5. KrIohne 200 20 204.11 283.34 136. 46 6. Kurnool 175 7 108.72 - 72. - 7. algonda 250 (1) 268,16 20.19 179 7 8. Nizamabad 12 42.19 352 - 9. prakasam -• - - - 10. Visakha 100 73.64 - 74 - State Total 1312 (93) 1194.91 986.28 102. 34 B. Assam 11. -äu5ati 10 6.72 - 67 - C. Bihar 12.'%i~attarpur 25 19.48 . 78 13. Patna 100 5) 32.48 7.15. 32 5 14. euaaral 100 (5) 7.66 - 8 - 15. Samastipur - - - State Total 225 (10) 59..62 7.-15 26 2 C. arat 16. A~bad 200 410.01 - 2,05 - 17. Banaa 350 (-12.5) 139.43 226.69 40 59 18. Bharuch 60 16.19 - 27 - 19. Mhavnagar 16 29.99 - 187 - 20. Gandhinagar 30 21.96 - 73 - 21. Junagadh 25 46.35 - 185 - 22. Kaira 800 (65) 719.59 1766.20 90 88 23. Kutch 10 16.85 169 - 24. Mehaana 750 (82) 638..70 1858.73 85 73 25. Panhahal 30 41.00 - 137 26. Rajkot 40 (2) 79.55 199 - 27. Sabar 400 (42) 327.16 876.81 82 74 28. Surat 150(1.5) 175..95 - 117 - 29. Surendranagar. 30 36.06 120 - 30. Baroda 100 141.17 - 141 - 31. Valad 30 37.15 124 - Stae Total 3021(205.5) 2877.07 4728.43 95 75 45 Actachm~ent t -45- Ta-e 25 of 29 Annexure- 10 (_co.td). Processing Nilk powder Caaiy utilisation(1 capacity Throughput manurectired lquiJk Dyng (TLPD) (TLPD) (MT) plant pla F. He yang 32. n la 50 69.76 - 140 - 33. Ohbuani 15 6.13 - 41 34. Gurgaon 50 55.40 - 71 35. Hiasar - - - - - 36. Jind 100 (10) 70.82 203.69 71 66 37. Karnal - - - - 3b. Kurukshetra - - - - - 39. Mahendragary - 40. Rohtak 100 (5) 64,00 93.85 64 61 41. Sirsa - - - - Statt Total 315(15) 246,31 297.54 78 6q F. H~Uaqh) Pradesb 42. 0*d~ 10 3.70 - 37 13. Sala 10 6.96 - 70 - State Total 20 10.66 - 53 0. Jasu & Kostmir 44. UI**Sar 10 7.41 - 75 - . Kairnataka 45.~~aan1g'iore 350 (5) 263.95 4.99 66 3 46. Belöato 10 194- 194 -47. Bapur - - - -l 48.Dard----- 49. Glbrga 10 19.70 -- 197 - 50. 0a3san 60 51.62 - 86 - 51. Mysore 160· (10) 137.78 26.19 86 24 SP. Raichur .. - - -- 53. South Kanara 10 26.19 - 262 - 54. Sht=Sa 10 12.18 - 122 - 55. Tumkur 60 72.24 f. 120 - State Total 670 (15) 603.09 79.04 90 17 t. Kel9 56.~F-0ual8 t 56 49.89 89 - 57. TrIvandr=m 104 55.49 - 53 State Total 160 105.38 66 Attachment 7. -46- Page 26 of 29 vnegure-10 (contd) ProOessing Milx1 powder jCa aatty utilisation(i) pCity Thrughpu t manlifacturd q d Ilir'iffP (TLPD) (TLP) (M) plant plant J. _fMadbyt Pradesh 58100 70.06 - - 59. Owalior . 10 14.44 - saa - 60. Indore 200 (10) 100.53 131.34 50 61. Jabalpur 4n 10.73 •7- 62. Raipur 20 14.07 70 - 63. Sasar -- 64. Uajatn 60 * 91.09 - 152 - Stat* Total 430 (10) 300.92 131.34 70 42 K. Maharashtra 65. A"dnagar 100 369.94 - 370 - 66. Aurnsabad 50 51.81 1 0 67. Bhandara 20 5.5 - 267 68. seed 120 61.75 - 51 - 69. huldhana 50 44.48 89 - 70. Chandrepur 20 11.39 57 - 71. Dhule 200 203.05 102 - 72. Jalgon 200 (15) 171.69 263.76 86 57 73. Klhapur 200 (10) 139.11 78.17 70 25 74. Nasik 70 56.51 - 81 75. Osmanabd 170 (10) 65.76 - 50 76. Pune 170 (3) 338.71 - 1 77. Ratnagirt 40 14.28 36 - 78. Sansti 2¥P (20) 218.64 421.85 9.1 68 79. Satare 125 118.59 95 80. Sholapur 75 38.46 - 51 - 81. wardha 50 - 42.54 - 85 ' 1900 (58) 2020.02 763:78 106 42 L. Orisa 83.'Tiaoc 10 6.01 - 60 84. Dhenkaral . - - . 85. Komjhar - - - - - 86. Purt 60 15.57 - 26 - State Total 70 21.58 - 31 Pase 27 of 29 neure-10 (on) Prooe~tsng flk po~der caacity utillsation(1) copaetty .PTrougput mnufatured g iiTrq-iTäk 75 (TLPD) (TI.PD) (MTl) plant piart?t m. Punjöb 87. A sar 60 (5) 76.01 130.26 127 84 88. batinda 100 (7) 76.04 126.85 76 58 89. Farldkot - - - - 90. Perozpur - 91. Gurda4pur . (10) 101.57 - 33 92. Hoshiarpur 90 (9) 83.17 217.20 91 78 93. Julandhar 150 (10.0) 1p1.73 81 54 94. Ludhiana 100(6.5) 154.50 232.08 155 115 95. Pattala - 96. Ropar 100 106.16 1 97. Sångrur 150 (10) 73.41 190.32. 49 61 State Total 750(57.5) 675.02 1164.13 90 65 98. AJmer 100 (10) 97.57 120.65 98 39 99. Alwar 100 (10) 62.19 203.71 62 92 100. 8an~swara - - 101. Bharatpur . - - 102. Bhilwara 100 103.70 104 103. Oikaner- 150 (10) 148.24 8.84 99 29 104. Churu . - - 105. Gonganaar . - - 106. Jalpur 150 (10) 221.00 196.13 147 63 107. Jalore - - - 108. Jodhpur 100 (5) 93.64 . 94 ' 109. Iota 25 13.27 53 - 110. Pall . • - - • . 111. Tonk & 3.~dhopur . . - - 112. Stkar - - - - 113. Udalpur 25 15.55 - State Total 750 (40) 755.16 689.33 101 56 0. Sikkig 15 4.37 - 29 - 48-Attachent I Page 28 of 29 *Annsexure-.10, _o,t) Processing NUIM poder Capse=ty util_s*tion(Ø • spaty Throughput. uanuractured 0Iquid .lk r~&$fn< (TLPD) (1LPS) (M7) plant plat P. Tamil kadu 11'f~MCfirnj1iut - - - 116. Coimbatore 30 67.76 226 117. Dorapurl 100 (10) 84.99 141.62 85 46 118. Erode 150 (10) 165.22 217.12 110 70 119. Moduret 150(10) 171.07 194.02 114 66 120. Onty 50 21.19 - 42 - 121. North Areot 70 156.37 223 - 122. Pudukottai - - 123. Thanjavur 20 17.80 89 124. Triehy 80 39.37 - 197 125. Sale« 100 (10) 178.04 187.58 176 61 126. Suth Arcot - - - - State Total 690( 40) 901.81. 740.34 131 60 0. Ti re 27 ala 10 5.60 - 56 R. Uttar Prad*sh 128-"gFa 5 14.56 - 291 129. Aligart - - - 130. Allahabad 20 15.31 - 77 131. Ballta - - 132. Barabanki t - 133. Sulandsahar - - 134. Itab. - - - f 135. Etewah l--- 136. Farrukhabad - -- 137. Fatehpur • - - 138. Oaiabad - -l- 139. Gazipur - - 140. Hardo - - - 141. Jaunpur -l-f- - 142. Kanpur 50 57.12 - 114 143. Luoknow 40 34.85 •l -. 144. Kainpuri - - 145. Mathura 10 8.60 - 86 - 146. Meerut 100 (10) 95.93 136.37 96 43 147. Mirzapur - - - - 148. Moradabad 60 (15) 62.98. - 105 - 149. Nuffarnagar . -l- 150. Raebareli - -- 151. Saharanpur - - - - - 152. Sitepur - - 153. Sultanpur • .l -l 154. Unnao - - - - - 155. Vøranasi 100 (5) 31.33 45.52 31 29 State Total 385 (30) 320.68 181.89 83 271 49- Attachment I Pag 29 of 29 Anne xur-O (.cont_( Promessing Milk powder Caa.t uttliatton(1 capasty ThrufflpUt omnuractured . (T.PD CTLP0) (mT) piant ptent 5. West cenkal 1wireOffäg 1o (10) 36.12- 157. Noogly - --- 158. Malda • .. -l - 159. Midnapore - - - - 1öd. Murshidabad - - - 1 6 1 . Ms d 1 9 - - - State Total 100 (10) 36.12 - T. Adan & wicobar t62'.5iif5 At'diii - - - - 163on4s-Gca 30 21.12 70 - V. Pondte e tIe ond1eherry 10 12.32 - 123 - Gand Total 10883 (583.5) 10183.96 9769.25 93 53 tLP 9 Thousund- ittrea per day. 0: lndicates drying capecity In 1<T Per day. THIS PAGE IS BLANK - 51 - BANK FINANCED DAIRY PROJECTS IN INDIA OVERVIEW Introduction 1. The completion reports cover tour IDA assisted projects in India's livestock sector: Karnataka Dairy Development Project (Cr. 482-IN of US$30 million, FY74), Rajasthan Dairy Development Project (Cr. 521-IN of US$27.7 million, FY75), Madhya Pradesh Dairy Development iroject (Cr. 522-Ifi ot US$16.4 million. FY75) and the National Dairy Project (Cr. 824-IN of USS1b million, FY78); in all, credits of US$224.1 million. The three state level projects were closed from nine months to two years behind schedule with a total unused balance of US$5.2 million. The National Dairy Project closed on schedule, December 1985. and was fully disbursed. Project costs at completion were 9% below appraisal estaates in the case ot YKarnataka and 16 to 18% below in the case of the other three projects. All four projects have been directed towards supporting India's development program for dairy cooperatives which at the national level has become known as "Operation Flood." As a continued support to the dairy sector, the Bank is scheduled to appraise a Second National Dairy Project in April 1987. Bac*cground 2. These projects have supported an important rural activity with sub- stantial =mpact on generating rural incomes and employment. India's livestock sector accounts for 18Z of total agricultural output; about two thirds of the value of livestock output is accounted for by milk. Nearly half or India's rural households are estimated to own milch animals, generally in small herds of one to three milch animals. The national cattle and buffalo herd numbers some 200 million cattle and 15 million buftaloes (about 36% as breedable females) and is the largest in the world accounting for one-sixth of the world's cattle and about one-halt of the world's buftaloes. The Indian dairy sector produces about 40 million mt of milk per year and is the third largest milk producer in the world. 3. Operation Flood was tormally initiated in 1970 but had its roots in 1946 in Kaira District, Gujarat. In response to Government supported monopoly marketing practices of a private dairy, a group of producers organized their own cooperative milk marketing scheme so as to obtain better milk prices and access to the Bombay market. This cooperative became known as the Anand Milk Union. Ltd., or AMUL, and has been used as a model for subsequent dairy cooperative development in India, and more recently in other developing countries. The model consists of a three tier cooperative structure owned and managed by the member farmers. At the base is the Dairy Cooperative Society (DCS), a village level cooperative which receives milk twice a day, pays each producer regularly based on the quantity and quality of milk delivered, and organizes production services to tamers (sale of cattle feed concentrate, promotion of todder seed, artiticial insemination and veterinary services). DCSs are members of a Milk Producers' Union (MPU) of cooperatives, usually one -52- MPU per district. The MPU organizes milk collection and processing at the Union dairy (pasteurization and packaging of fresh milk, some conversion to other products), distribution and marketing in urban centers, and provides production inputs and technical services to the DCSs. MPUs in most states are members of a Federation, which may also own and operate some larger dairy plants. Aggregate planning of cooperative sector input services, milk market- ing, pricing policy, and participation in the National Milk Grid for transport and storage of milk is organized at MPU and Federation levels. Under the Anand Model, the Boards of DCSs, MPUs, and Federations are from farmer representatives elected by the members and are intended to have full autonomy over operations, pricing and marketing policy, with all technical management personnel appointed by and responsible to the boards. 4. The dairy cooperative sector is now represented in almost all of India's states and union territories; 22 Federations, 164 MPUs, 43,000 DCS and some 4.5 million participating rural families as of March 1986. It involves about 5% of India's rural households and markets an average of 8 million liters of milk per day, representing about 7% of national milk production and 20% of the milk marketed in urban areas. The remaining production and market- ing is accounted for by the traditional subsector. Central organization and funding of Operation Flood has been provided through two Government bodies under a common board and chairmanship: the National Dairy Development Board (NDDB) which provides technical assistance, planning and training support and the Indian Dairy Corporation (IDC) which channels loans and grants to the sector. Under the government's trade and commodity assistance policy, which is designed to develop a competitive and efficient modern dairy industry, IDC is also responsible for importing milk products through commodity aid to supplement urban milk supplies and generate funds through sale revenues to finance cooperative development. The use of funds generated through commodity aid is an integral part of Operation Flood and has historically been the main source of OF financing. However, as domestic production has increased reliance on commodity aid milk product imports has declined in recent years and imports now represent less than 5% of national dairy industry throughput. Project Achievements 5. Growth of Cooperatives and Milk Procurement. The four IDA-supported projects have played a substantial role in promoting development of dairy cooperatives during the past decade, thus meeting the broad objectives of the projects: substantially expanding the dimensions of the dairy cooperative program and cooperative milk procurement; establishing secure market outlets for surplus milk from cooperative villages; increasing provision of milk to urban centers; setting in place measures for increasing farm level produc- tivity; and encouraging the growth of a modern and competitive domestic dairy industry. Implementation achievements are detailed in the respective comple- tion reports and summarized in their highlight sections. The broad dimensions of OF operations can be illustrated by the table below. -53- Table 1: KEY INDICATORS OF DAIRY COOPERATIVE DEVELOPMENT Actual as March Increment Increment Percentage 1979 1981 1986 1979-86 Target at of Appraisal Appraisal Target Federations (States) Involved 10 10 22 12 n.a. - MPUs 25 27 164 139 50 278 DC8s (thousands) 8.2 10.4 42.7 34.5 20 173 Farm Families (millions) 1.2 1.8 4.5 3.3 3.5 94 Aver. Milk Procurement (million liters/day) 2.0 2.6 7.9 5.9 8.0 74 NB: Figures refer to "Anand Pattern" cooperatives. The increase in DCSs and membership includes about 35% of existing cooperatives converted to the Anand pattern. 6. Growth in cooperative dairying was particularly rapid in the 1981-86 period, corresponding to the main years of implementation under the National Dairy Project (ND-I). As with the state projects, considerable delays were encountered initially by ND-I. For ND-I these related to execution of the agreements between IDC and the state governments, in the constitution of the Federations, in the finalization of state dairy plans and in the adoption of cooperative by-laws. Significant implementation progress only began in 1981 but progressively accelerated implementation resulted in the project closing on time. Appraisal targets of ND-I were attained or surpassed with respect to the number of milksheds covered, the number of DCSs organized, and the provision of milk processing capacity. The additional number of farmers covered is, however, slightly lower than the increment expected at appraisal. Milk procurement, growing at 17% per annum over the past several years, is expected to exceed appraisal estimates by 1988 and farmers covered should also have reached appraisal estimates. A number of shortfalls on measures to increase farm level productivity are discussed at para 11. 7. On the other hand, the earlier appraised state projects had more difficult implementation progress (Table 2 below) against what can retrospec- tively be considered greatly over-ambitious development targets. After delays, except for Rajasthan, in getting underway, difficulties were encountered in establishing the institutional framework, acquisition of land and shortages of building materials and electrical power. Build-up of processing facilities and corresponding DCS development was therefore slow. Nevertheless, by project completion good progress had been made in estab- lishing the basic cooperative institutions structure. Milk procurement increased from 58,000 to 640,000 lpd, but was was nevertheless well below the -54- far too ambitious appraisal estimates. As with the National Project, live- stock productivity measures were established but impact was well below expec- tations. 1/ Table 2: Combined Cooperative Development Achievements of Karnataka, Rajasthan and Madhya Pradesh Dairy Development Projects Project Closure a/ Actual as Percentage Actual Target of Target Number of MPUs 12 12 100 Number of DCSs 4,084 4,800 85 Number of Farm Families ('000) 435 851 51 Incremental Average Milk Procurement ('000 lpd) 529 4,800 11 a! Sum of achievements at respective project closure dates. Rates of Return and Socio-Economic Impact 8. Economic Viability. The economic viability is satisfactory for the National Project, Rajasthan and Karnataka. The recalculated economic rate of return for Rajasthan was 28% and for Karnataka 22%. For the National project, recalculated financial rates of return for landless families with crossbred cows was 37%, and this was estimated to-be higher for small farmers who could provide their own fodder. For DCSs the FRR was estimated at 28% and for MPUs 17%. Although an overall economic rate of return was not estimated for ND-I, it would be reasonable to expect that the rate of return would be significantly higher than the opportunity cost of capital in India, which is estimated at 12%. For Madhya Pradesh, low incremental production resulted in a negative economic rate of return. 1/ Two detailed sample surveys in Madhya Pradesh and Karnataka provide further insights on the achievements and field impact in the state projects concerned. In Karnataka, production was found to have increased substantially in dairy cooperative villages whilst in Madhya Pradesh more modest but statistically significant increases were also found. Both studies concluded that the projects increased productivity, partly due to the stimulus of increased prices due to increased competition and partly to the technical inputs provided by the projects. (The Impact of Dairy Development, A Case Study from Madhya Pradesh, India; G. Mergos and R. Slade, World Bank 1986 and The Impact of Cooperative Development in Karnataka, H. Alderman, World Bank,IFPRI, 1986). -55- 9. Socio-Economic Impact. Beyond such rate of return indicators and the physical achievements above, the completion reports point out the broader perspective in which the impact of India's dairy cooperative development must be assessed. Firstly, for beneficiary villages and farmers, OF has had a substantial impact on poverty and social objectives. Participation is open to all social groups, irrespective of sex, religion or caste providing that the obvious requirement, ownership of a milch animal, is present. This excludes the destitute (though credit schemes do exist through the Integrated Rural Development Program for purchase of animals), but as ownership of milch animals is much more evenly spread through the population than ownership of land, dairy development tends to reach further down the income and social scale than most crop development programs. 1/ Women are also substantial beneficiaries and often handle the bulk of a household's dairy activity. Cooperatives also act as a cohesive source for community interaction and improvement and self management of development actions. Also, for many rural dwellers, participation in a dairy cooperative and access to regular cash income and dairy intensification measures (e.g., veterinary services, feed) often provide a first inroad into a modern perspective of agricultural production possibilities. 2/ 10. Secondly, dairy cooperative development has had a beneficial impact on urban milk supplies and consumer and producer prices. Milk from the cooperative sector is now a substantial (21% and increasing) component of urban milk consumption. The competition introduced has helped result in consumer milk prices rising more slowly than the general and food price indices while offering an alternative market outlet for rural producers. The cooperative dairy program has played a significant role in enhancing the availability of good quality milk in cities and towns and has contributed to the overall growth in India's dairy production estimated at 4-5% per annum in 1/ Statistical background to this can be found in NDDB's 1984 survey of 6,000 households in 110 cooperative unions, where it was found that of the households owning milch animals, 35% were landless and 451 had hold- ings of less than five acres. Similar indications are available from other sources; a survey by the Reserve Bank of India (1972) found that 23% of the rural households in the bottom 40% of the income scale owned milch animals, this percentage rose to 34% for the bottom 20-30% of the income scale. 2/ Specific quantification of all of these impacts is made difficult by the scarcity of statistically sound socio-economic surveys. Additionally, little reliable information is available on some of the more complex second-round impacts of village dairy development. For instance, some observers believe that creation of a market outlet for milk in a village may reduce rural milk consumption levels. Others dispute this and point to further second-round impacts (increased numbers of milch animals, increased yields) and to the impact of higher incomes on other aspects of the diet and rural welfare. The World Bank/IFPRI study in Karnataka supports the latter viewpoint; per capita milk consumption decreased by 3% but net impact on nutrient (calories and protein) consumption was positive. -56- recent years. With milk consumption estimated to be growing at over 4.5% per year and urban consumption projected to grow at over 6%, dairy cooperative development offers a proven vehicle for helping meet projected demand and increasing the competitiveness of the Indian dairy sector. Based on the preliminary analysis undertaken during the preappraisal of the proposed Second National Dairy Project, Indian dairy production costs and prices are now competitive with other major world producers; significantly lover than in Europe, competitive with the United States and only slightly greater than in New Zealand. This is not due to the technical productivity of the Indian dairy herd, which is still very low, but to the low cost of the resources involved. In most areas, except for buffaloes, dairying is still generally of subsidiary importance to the more important motive for keeping cattle, animal traction. Dairying offers a supplementary usage of the existing animal resource and usage of agricultural by-products and crop residues, while incremental household labor requirements for a small herd are low. Shortfalls in Project and Dairy Cooperative Development 11. Notwithstanding the achievements of Operation Flood and the IDA financed projects noted above, a number of shortfalls are notable and have been discussed in the completion reports. Firstly, all four completion reports show substantial shortfalls on farm level animal productivity enhan- cement objectives, in part because appraisal objectives were over-ambitious and did not adequately recognize the time required to introduce technological changes at the farm level. (a) Cattle crossbreeding, a central plank in the objectives for the state projects, proceeded much more slowly than anticipated. At the same time the importance of the buffalo and prospects for genetic uprad- ing of buffaloes was given insufficient prominence. While crossbreeding linked with an upgraded animal husbandry, veterinary and feeding regime can substantially increase the productivity and incomes of participating farmers, and is steadily gaining acceptance (from 32,000 recorded female crossbred births in 1981 to 94,000 in 1986), it is not appropriate until a farmer has reached a certain level of expertise and interest. OF's future cattle crossbreeding program should focus on those farmers and milksheds with the most potential and give increased attention to buffalo improvement. The rearing of crossbred male calves for breeding and animal traction purposes should also be given greater prominence. (b) Objectives to expand concentrate feed usage and production of green fodder were sound and inroads have been made (from 1981 to 1986 usage by OF participants of cattle concentrate has increased from 205,000 mt per day to 590,000 mt per day, hectarage changes under green fodder are not accurately recorded though it is estimated that still only 5% of India's cultivated area is under fodder crops), but tar- gets were over-ambitious. To date, overall capacity utilization of feed mills has been low (currently about 50% on average) In the future, mill expansion and installation of new mills should be more carefully assessed against current and projected concentrate usage levels and options for transport of feed from existing underutilized mills should also be analyzed. Additionally, more attention is -57- needed .to animal husbandry extension efforts on optimizing the nutri- tional balance in cattle feeding. NDDB's planned use of urea/molasses blocks will be a useful input in such efforts. (c) The veterinary program was well accepted but costs when borne by the cooperative structures proved a major financial burden and services should increasingly be directly charged to the farmers. Current initiatives to make more effective use of existing state veterinary services should also be encouraged. (d) 'Animal husbandry extension has received inadequate attention both in the cooperative structures and in state services which for live- stock have tended traditionally to focus almost entirely on veteri- nary services. (e) Dovetailing where practical of cooperative technical services and state livestock services is now being examined by NDDB and the state Governments. This initiative would allow more effective use of Government services and reduce cooperative sector costs and should be encouraged as a general principle with implementation programs designed on a state by state basis wherever practical applications can be found. 12. Secondly, new Federations and MPUs encountered a number of implemen- tation problems not fully foreseen in the project development programs, particularly for the state projects. The completion reports refer to the new cooperatives' inexperience, leadership not always being effective and a frequently excessive Government involvement which hampered decision making. Plant construction programs often took much longer than anticipated and the managements of new plants took time to work out initial operating problems. Additionally, management problems were exacerbated by the overly frequent transfer of managing directors of state Federations. NDDB's strong technical assistance and training emphasis and the passage of time have resulted in progressive improvement in technical and management expertise in the state cooperative structures. Continued emphasis on training and management development will be important for OF's future and the time is now well over- due for release of Government involvement in cooperative management deci- sions. 13. Thirdly, a number of management aspects were underemphasized and are now recognized by NDDB as requiring greater emphasis in the future. Finan- cial management and commercial personnel at NDDB/IDC and in the cooperatives' need reinforcement with similar increased emphasis on general accounting, auditing, cost accounting and financial management. While general account- ing and auditing has progressively been built up and first steps towards a cost accounting/financial monitoring system have been established, further emphasis is required towards the standards of commercial undertakings. Monitoring and evaluation of field impact also needs much greater emphasis. No baseline surveys were conducted at the beginning of these projects and only limited field impact monitoring has taken place. A dearth of such work makes it difficult to assess progress in the field and to statistically evaluate socio-economic impacts. A problem encountered by the state level projects and subsequently adjusted under the national project was the system -58- of provision of credit to the cooperatives. This was initially to be through the national and state level credit banks, a procedure which involved too many institutional layers for credit approval and disbursements, but subsequent handling through IDC has improved timeliness and appraisal analysis. Also, market promotion has only recently been recognized as an important element of cooperative milk development. The chronic milk scarcity situation of the past resulted in the chief concern being the physical release of milk in urban centers with only limited attention by the coopera- tive sector to consumer promotion and convenience retailing. With the rapid build-up in cooperative milk procurement, market promotion techniques and analysis now require much peater attention. 14. Fourthly, and most importantly, a theme that emerges throughout the four completion reports, concerns the need for further developing a policy and institutional environment conducive to sustained dairy cooperative development. For their long-term viability the cooperatives need to evolve towards independent, financially viable commercial undertakings. This was so from the outset with the initial Anand cooperative but rapid development over the past decade has resulted in a tendency for a top down approach and sub- stantial Government involvement at the levels of the Federations and Unions. Civen GOI's chosen development rate for the cooperative dairy sector, central government and state assistance has been necessary and can be considered a valuable intervention particularly in the first several years after estab- lishment of a new Federation or union. The emphasis now must be on progres- sively phasing out the involvement of central (GOI and NDDB/IDC) and state governments leaving autonomous producer owned and operated structures. In fact, while significant steps have occurred in some states, in most states this change is long overdue. Key objectives should be: (a) to hold elec- tions from farmer representatives for the Boards of MPUs and in turn for the Boards of the Federations; (b) in most states, approRriate cooperative by-laws still need to be established; (c) Assets.(dairies, feed plants, etc.) held by Governments but used by the cooperative sector should also be transferred to cooperative management and ownership on appropriate financial terms; and (d) in order to properly manage their own affairs, the coopera- tives will require autonomy in management, employment and milk pricing and marketing decisions. Additionally, measures to improve financial viability both at the levels of the cooperatives and at the level of IDC will need increased attention. At the level of IDC, continued provision of part of cooperative funding in the form of grants would reduce the long-term finan- cial viability of IDC, and a hardening of lending terms is appropriate. For the cooperatives, appraisal criteria for new unions or for expansion of existing unions need to be more stringent to ensure that only financially strong development proposals are accepted. Key Themes for Future Dairy Cooperative Development 15. Both the attached completion reports and two recent assessments of the Operation Flood program--the Report of the "Jha Commission" (GOI, 1984) and the 1986 Report from the Commission of the European Communities to the Council and the European Parliament--conclude that Operation Flood is basi- cally sound, and represents an impressive development achievement. In view of the current Government and NDDB/IDC initiative to launch a third phase of Operation Flood, for which Bank Group funding has been requested, the lessons -59- highlighted in the Completion Reports and in the other assessments merit particular attention. At the level of NDDB/IDC and the cooperatives a number of management and technical aspects require improvement on continued emphasis. Greater emphasis on and some changes in orientation are needed in animal productivity enhancement measures and more realistic targeting of anticipated achievements, continued technical assistance and training for cooperatives, improvements in financial management, accounting, auditing and cost accounting, .establishment of field monitoring and evaluation and better market promotion. Beyond this, cooperative development should promote com- mercial viability and institutional self reliance. This would require con- tinued efforts and some difficult institutional adjustments at the level of state governments, cooperative federations and unions and at NDDB/IDC, but would immeasurably increase the prospects that the benefits from Operation Flood can be a permanent and financially and institutionally strong feature of Indian rural society. The importance of Operation Flood as a model for cooperative development goes well beyond the dairy sector and India's own borders. Sustained growth of an efficient dairy industry merits continued Government and donor support and the political will to carry the sector through the institutional adjustment and consolidation phase that now appears appropriate. THIS PAGE IS BLANK -61 PROJECT COMPLETION REPORT INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CREDIT 482-IN) General Agriculture II Division South Asia Projects Department - 63 - PROJECT COMPLETION REPORT INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR. 482-IN) Highlights The Karnataka Dairy Development Project was the first of a series of three projects designed to make a significant contribution to the development of India's dairy industry. The purpose of the project was to finance an integrated system for increasing the production of milk in rural areas through a cooperative development program which included better animal feeding and management, quality crossbreeding, animal health improvement, and the estab- lishment of facilities for milk collection, processing and marketing. The project was appraised in October/November 1973 and became effective December 23, 1974. Project cost was estimated at US$63.7 million with a foreign exchange component of US$13.6 million. The IDA credit of US$30 million was expected to finance about 47 percent of project cost. Total expenditure on the project was Rs 465.1 million, or 91.2 percent of the appraisal estimate, amd the IDA credit (US$29.2 million) financed about 53 percent of the total. The major reasons for the lower actual cost were the very low use of funds for the purchase of crossbred cattle and the nonutilization of the calf rear- ing grant. The project was plagued with major problems during the early years and project implementation was slower than anticipated due mainly to extended delays in the construction of the milk plants which in turn constrained DCS formation and milk procurement. The project closed on September 30, 1984, following a two-year extension. While the physical targets set at appraisal were not met on time, the project did establish: (a) 1,875 dairy cooperative societies, 4 milk producers' unions, and the Karnataka Dairy Development Corporation against the appraisal targets of 1,800 societies and 4 unions; (b) an extension program which included provision of artificial insemina- tion and veterinary health services; and (c) the necessary facilities for milk collection, processing, and market- ing. The slower than anticipated production of crossbred cows through the artifi- cial insemination of local cows with semen from exotic dairy bulls severely reduced the expected incremental milk production. Nevertheless, despite the shortfall on expected targets, the project's economic rate of return is estimated at 22 percent. The dairy cooperatives established under the project formed a center for village cohesiveness and gave their members a sense of control over their - 64 - economic activities. Through their participation in the operation of the cooperatives, the villagers' knowledge and management capabilities were enhanced and they gained confidence in their ability to manage their on affairs. The cooperatives were of particular importance to the weakest seg- ments of the rural population, the small/marginal farmers and the landless laborers (about 80% of the membership) who, on their own, could never avail themselves of the advantages offered by the cooperatives. Furthermore, the village cooperatives also helped to break down social barriers since all members are treated as equals, irrespective of sex, caste, creed or religion. The following points and/or lessons may be of particular interest: (a) The basic concept of the project was sound as was the project design which was based on the successful AMUL model. However, it should be appreciated that whereas the project was organized from the top down, the AMUL model developed .from the bottom up. The rate at which cooperative development can be implemented and the viability of the institutions created needs to be more realistically taken account of in future programs for the cooperative sector. (b) The appraisal report placed too much emphasis on the crossbred cow as the agent of change, and was overoptimistic regarding the accept- ance by project participants of crossbreeding using artificial insemi- nation as the chief means of increasing milk production. (c) The report was also overoptimistic with respect to the willingness or ability of the small farmer to use a portion of his land for the production of green fodder, and the use of balanced cattle feed for milk production. (d) The appraisal underestimated the importance of the buffalo as a milk producing animal. (e) Project risks, particularly the possibility of excessive Government involvement in project implementation and operation, farmers' accept- ance of artificial insemination and crossbreeding, and the likelihood that project participants could attain the assumed production parameters, were given insufficient attention at appraisal. (f) The project should have given greater attention to the rearing of crossbred male offspring both for breeding and draft purposes. (g) The proposals for milk plants and feed mills were unrealistic with respect to capacities to be created and construction schedules. Greater emphasis should have been given to ongoing reassessments reassessments of the program during implementation. (h) It was unrealistic to expect that a newly created institution -- the Karnataka Dairy Development Corporation -- could implement complex civil and engineering works spread over different sites within a two-year period. - 65 - (i) Benchmark surveys should have been conducted, and monitoring activities needed to assess the impact of the project on milk and crop production and productivity, and on the socio-economic conditions of project participants, should have been undertaken on a routine basis. (j) The success of such a project requires continuous strong support (without excessive involvement or interference) of state government officials. (k) The services of a centralized technical organization such as the National Dairy Development Board, which contributed substantially to the successful implementation of the project, are needed to accelerate development. H -4 - 67 - PROJECT COMPLETION REPORT INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR. 482-IN) I. BACKGROUND A. Introduction 1.01 The Karnataka Dairy Development Project, for which Cr. 482-IN for US$30 million was approved on June 13, 1974, was to be implemented over a five year period. It was the first IDA assisted livestock project in India and was intended to help Government of India (COI) implement its plans to diversify agriculture and focus attention on an important rural activity which had been neglected. B. Agriculture in India 1.02 India is a large and diverse country with a population of about 780 million (in mid-1986) and an average per capita income of about US$260. Agriculture is the dominant sector of the Indian economy and contributes about 37% of GNP. It engages about two thirds of the labor force and agricultural production accounts for about 24% of the country's merchandise exports. India has a total of about 90 million operational land holdings and the average size holding is about Z ha. Marginal farmers (with less than 1 ha of land) occupy approximately 57% of the holdings and account for 12% of the land, while large farmers (with 10 ha or more land) occupy less than 3% of the holdings but con- trol 23% of the land. About 30% of the rural population are landless agricul- tural laborers. C. Agriculture in Karnataka Demographic Features 1.03 Situated in southwest India, Karnataka has an area of about 19 million ha (6% of India's total) and a population of some 37 million (5% of country's total). About 71% of the population reside in the rural areas in some 27,000 villages with an average population of 977 persons per village. For most of the population, agriculture provides the major source of livelihood, and the owner- ship of land is one of the most important criteria of status in the village. Approximately 3.6 million people, equivalent to about 14% of the rural popula- tion, are landless agricultural laborers. Scheduled Castes account for about 15% and Scheduled Tribes about 5% of the total population. While the former are distributed throughout the state, Scheduled Tribes reside mainly in the hills and forests of Mysore, Kodagu, North and South Cannada, and Chickmagalur dis- tricts. Generally, members of the Scheduled Tribes occupy the lowest social and economic statuses in society. - 68 - Agroclimatic Conditions 1.04 The state forms the southwestern part of the Deccan peninsula. Most of the state lies on a plateau, bordered in the west by a coastal strip (about 30 km wide with average annual rainfall ranging from 3,000 to 3,700 mm) and the Western Ghats (low hills with altitudes of up to 1,500 m and average annual rainfall of 2,500 mm). Average rainfall elsewhere in the state is about 1,350 mi. The state enjoys a bimodal rainfall pattern with the major portion of its rainfall coming from the southwest monsoon which starts in early June and con- tinues till September (peak in June-July). The northeast monsoon commences in October and ceases by the end of December (peak in October). There are, however, considerable variations in both amount and distribution of monsoon rains, and as many as 135 out of 175 taluks are classified as drought prone. Land Use Classification and Utilization 1.05 About 11.9 million ha, equivalent to 63% of the state's total area, is under cultivation (net cropped area 9.9 million ha and fallow 2 million ha), of which about 1.4 million ha are under irrigation. The total cropped area is about 10.7 million ha giving a cropping intensity of 108. Approximately 1.3 million ha (7% of the total area) are classified as permanent pastures and other grazing land, and 3 million ha (16% of the total) are forests. Foodgrains occupy the major portion of the cropped area (Table 1.1). Table 1.1: DISTRIBUTION OF MAJOR CROPS IN KARNATAKA (1980-81) Crop Area Distribution ('000 ha) (%) Sorghum 1,991 18.7 Millet 1,621 15.2 Pulses 1,531 14.4 Oilseeds 1,425 13.4 Paddy 1,114 10.4 Wheat 322 3.0 Maize 157 1.5 Vegetables 98 0.9 Other 2,401 22.5 Gross Cropped Area 10,660 100.0 Farm Size 1.06 There are about 3.6 million holdings in the state and the average farm size is around 3.2 ha (Table 1.2). Nearly 55% of the holdings are less than 2 ha and cover only 15.5% of the cultivated area. At the other extreme, a little over 6% of all holdings cover nearly 32% of the cultivated area. Approximately - 69 - 90% of all holdings are wholly owned and self operated; 5% are wholly rented, and about 5% are partly rented. Table 1.2: DISTRIBUTION OF LANDHOLDINGS IN KARNATAKA (1976-77) No. of Percentage Share Average Size Category Holdings Area of Total Holding (ha) ('000) ('000 ha) Number Area (ha) Less than 1 1,081 548 30.4 4.8 0.51 1 - 2 840 1,221 23.7 10.7 1.45 2 - 4 788 2,205 22.2 19.4 2.80 4 - 10 623 3,792 17.5 33.4 6.09 Above 10 219 3y600 6.2 31.7 16.44 Total 3,551 11,366 100.0 100.0 3.20 The Dairy Subsector 1.07 Karnataka has about three million breedable cows and two million breedable female buffaloes. Forty five% of the cows and 52% of the buffaloes are in milk at any one time. Since appraisal, the number of cows has decreased about 2% while buffalo numbers have increased 12%. The numbers of cows and buffaloes in milk have both increased about seven%. Total milk production is estimated between 3.5 and 4 million liters per day (lpd), giving a per capita availability of approximately 100 gm compared to the national average of about 130 gn. D. The AMUL Model 1.08 In 1946, the Kaira District Cooperative Milk Producers' Union Ltd., Anand, Gujarat state, was formed with two village milk producers' societies. The union subsequently became known as the Anand Milk Union Ltd., or AMUL, and the organizational structure as the AMUL pattern or model. By the mid 1960s, a number of milk producer cooperatives based on the AMUL pattern had been formed and the National Dairy Development Board (NDDB) established to assist in initiating new cooperatives in some of the major milksheds of the country. In 1970, a specialized institution, the Indian Dairy Corporation (IDC), was estab- lished to promote and finance cooperative dairy development. To date, some 40,000 AMUL type dairy cooperatives have been formed, mostly under a program known as Operation Flood. 1/ 1/ OF-I (July 1970 to March 1981); OF-II (April 1981 to March 1985); OF-III (April 1985 to March 1990). - 70 - 1.09 The essential elements of the AMUL model involve the formation of a cooperative society of milk producers at the village level, the selection of a board of management which sets the policies of the society within the framework of a general set of bylaws, and the appointment of a local individual as the paid cooperative secretary. Each morning and evening the society buys milk from all producers in the village who wish to sell it and makes payment to each producer based on the fat content of the milk. The cooperative also sells balanced cattle feed to its members, and provides artificial insemination (AI) and veterinary first aid services to cattle and buffaloes. All milk producers in the village are eligible to become members of the society. Cooperatives within a 50-75 km radius are members of a collectively owned milk union. The union manages and operates facilities for milk collection and processing, as well as feed processing, and provides its members with the technical inputs needed to sustain and increase milk production. The union is governed by a board of directors elected / the producer members which employs a professional manager as the union's chief executive. II. PROJECT FORMULATION A. Preparation and Appraisal 2.01 The project was prepared by the staff of the Animal Husbandry and Veterinary Services Department in Karnataka along guidelines from the GOI Animal Husbandry Division of the Ministry of Agriculture. Two Bank Group prepara- tion/preappraisal missions, in February/March and April/May 1973, helped prepare the project. 2.02 According to the preparation report, the project basically aimed at the improvement of unproductive local cattle, uplift of the rural economy, financial support to the weaker sections of the rural society, and improvement in the general nutritional standards of the population. To accomplish these aims the project proposed to: (a) establish 2,000 dairy cooperative societies (DCS), 4 milk producers' unions (MPU) and the Karnataka Dairy Development Corporation (KDDC); (b) establish a milk plant and feed mill in each union; (c) establish an improved milk herd of 500,000 crossbred cows and 100,000 buffaloes; (d) establish a milk production enhancement program; and (e) provide for the training of the necessary manpower for project implemen- tation. Total project cost was estimated at Rs 487.8 million, including 27% cost escala- tion. Processing facilities accounted for nearly 50% of total cost. 2.03 The project was appraised in October/November 1973. - 71 - B. Project Area 2.04 The project was located in the southern part of Karnataka and covered four milksheds, viz. Bangalore (Bangalore and Kolar districts), Mysore (Mysore district and part of Mandya district), Hassan (Hassan, Coorg and Chickmagalur districts), and Tumkur (Tumkur district and part of Mandya district). At appraisal, the total rural population in the project area was about 5.5 million, distributed among 8,000 villagqs, each of about 110 households, or 600 individuals. Breedable cows and buffaloes totaled 980,000 and 349,000 respec- tively, or an average of one breedable cow and 0.36 breedable buffaloes per household. The total geographic area is 6.2 million ha (32% of state total); the cultivated area is 2.8 million ha (27% of state total); and the irrigated area is 500,000 ha (37% of state total). About 500,000 ha are classified as permanent grazing land. The average size holding in the project area is 1.9 ha (compared with 3.2 ha for the state), and about half of the holdings are less than 1 ha (compared with about one third for the state). Milk production at appraisal was estimated at 800,000 lpd and the combined processing capacity of the 2 plants in the project area was about 10% of this total. C. Project Description 2.05 The project was to develop an integrated program for increasing milk production in rural areas of Karnataka by providing milk collection, processing and marketing facilities, and technical services for artificial insemination and animal health. It was to organize village cattle owners into DCS which were to be grouped into unions following the AMUL scheme. The unions were to employ the necessary managers and technicians and were to be controlled by the members of the DCS. Each union was to own and manage its own dairy and feed plants and would have the capability of providing technical and advisory services, as well as milk collection, processing, and marketing services to its member societies. The KDDC was to be set up to implement and coordinate project activities. It was also to build dairy plants and feed mills for the unions who would operate them once they became adequately capitalized and staffed and a sufficient number of DCS organized. 2.06 The project as appraised included the following components: (a) establishment of about 1,800 DCS, 4 MPU, and the KDDC; (b) an Al program of crossbreeding native cattle with high producing exotic dairy bulls, and associated programs for the production of exotic breed- ing stock and green fodder; (c) expansion of two existing dairy plants and construction of two new dairy plants and four new cattle feed mills, and the establishment of milk collection routes and chilling centers; () establishment of two regional diagnostic laboratories, support for an animal health research program, and the production of veterinary biologicals and vaccines; - 72 - (e) provision of consultant services to assist KDDC in conducting applied research on fodder production and milk marketing studies, and the opera- tion of demonstration farms; and (f) provision of medium term credit for the purchase of crossbred cows. 2.07 Total project cost was estimated at US$63.7 million, with a foreign exchange component of US$13.6 million. The IDA credit of US$30.0 million was to finance about 47% of project costs. Government contribution (US$20 million) was to finance about 31% of project costs. GOI/GOK was to subscribe all of KDDC's capital and provide equity financing for KDDC investments. They were also to finance as equity 20% of the unions' investments and, in addition, GOK was to provide equity to cover the unions' startup costs. It was expected that by the tenth year of the project the unions would become major shareholders in the KDDC and the DCS major shareholders in the unions. D. Project Objectives and Expected Outcomes 2.08 The basic objectives of the project were to raise the level of income of the rural poor through improved milk production and marketing, and establish an integrated cooperative organizational structure for dairy development. 2.09 The direct economic benefit of the project was to be the increased production of milk estimated at one million tons by year ten. Furthermore, the project was expected to benefit, through increased incomes, about 450,000 agricultural households, or approximately 2.5 million people. The typical smallholder in the project area was to increase his annual net income from milk from about Rs 100 to Rs 400 by replacing his native cow with a crossbred cow. In addition, he was to have the opportunity to adopt a mixed farming system through the integration of a profitable livestock enterprise (dairying) into his traditional farming system. Since.such a change was to involve the introduction of a pasture/fodder crop rotation, it was expected to result in a long term improvement in soil structure and fertility largely compensating for some diver- sion of land from food crop production to fodder. 2.10 Social benefits were to be derived after the village DCS became firmly established and had a regular surplus of funds. These funds were expected to be used to augment or initiate village development schemes such as education, health, family planning, minor public works and infrastructure (AMUL model). A further benefit was to accrue from improved nutrition due to increased intake of milk, particularly by children and infants. Also, benefits to consumers were to come from an improvement in nutrition due to increased availability of unadulterated pasteurized milk in the urban areas. The estimated economic rate of return was 33%. E. Negotiations and Effectiveness 2.11 Negotiations were held in Washingten May 13-15, 1974, and were attended by the Deputy Secretary, Department of Economic Affairs, GOI the Director of Agriculture, Ministry of Agriculture, GOI; the Managing Director, Agricultural Refinance Corporation (ARC); the Secretary (Agriculture), GOK; the Director of Animal Husbandry, GOK; and the Project Coordinator. - 73 - 2.12 At negotiations the following events were specified as conditions of credit effectiveness: (a) a Subsidiary Loan Agreement had been executed and delivered on behalf of the borrower and ARC; (b) KDDC had been established under the laws of the borrower and under a memorandum and articles of association satisfactory to the Association; (c) the borrower had subscribed to shares of KDDC in an amount of not less than Rs 4,400,000 and paid in such shares in an amount of not less than Rs 2,500,000; (d) GOK had subscribed to shares"of KDDC in an amount of not less than Rs 5,700,000 and paid in such shares in an amount of not less than Rs 3,800,000 (payment of shares would be made by transfer to KDDC of the buildings, cattle and equipment of the government livestock farms at Hessarghatta, Lingadahalli, Ajjumpur and Habbanaghatta); (e) KDDC had employed consultants to assist in the training of cooperative extension specialists and at least eight extension specialists had been employed; and (f) GOK had transferred to KDDC the Bangalore and Mysore dairy plants and all GOK milk chilling and artificial insemination equipment located in the project area. 2.13 No special difficulties arose at negotiations. The credit became effec- tive December 23, 1974, two months later than expected, although the recruitment of consultants and cooperative extension specialists, and the transfer of GOK assets (farms and dairy plants) to KDDC, had not been completed by that date. III. IMPLEMENTATION A. Project Start-up 3.01 The first supervision mission that visited the project in October 1974, two months prior to the date of effectiveness, reported most favorably on the progress made in implementing the project. The KDDC had been established and incorporated and a managing director and general manager appointed. While the tropical pasture/forage specialist and animal production specialist had not been employed, KDDC had engaged NDDB as training consultants and, reportedly, had employed the eight cooperative extension specialists as per Section 5.01 of the DCA. NDDB would also provide consultant services for the design and specifica- tions of new dairy plants and feed mills and expansion of existing plants in compliance with Section 2.08 of the Karnataka Agreement. 3.02 In the next four months, little progress was made and, in March 1975 (the time of the second supervision mission), KDDC staff still consisted only of the managing director and general manager. No action had been taken on - 74 - recruiting the technical consultants, the cooperative extension specialists had not been employed as previously reported, and project planning and implementa- tion were essentially at a standstill because of the lack of project staff. DCS formation began in August 1975, eight months after credit effectiveness. B. Changes in Project Design 3.03 There was no formal mid-term review of the project. However, during the course of project implementation several organizational and technical chan- ges were introduced. 3.04 Since, initially, the semen requirements of the project were provided by the GOK Central Semen Bank at Hessaraghatta, the union bull farms and AI production centers were not established as envisaged. Furthermore, KDDC did not take over operation of the existing GOK farms which inter alia were to be used to produce the bulls for the union farms. In the latter years of the project, the semen supply from GOK proved inadequate and a decision was taken to establish a Central Bull Breeding Farm and Frozen Semen Center for the project. 3.05 The appraisal report proposed the creation of 920,000 lpd incremental milk processing capacity through the expansion of two existing plants and the construction of two new plants. The total incremental capacity actually created was 562,000 lpd through the two expansions and the construction of five new plants (one 20,000 lpd plant replaced an outdated 8,000 lpd plant). 3.06 Based on the estimated demand for balanced cattle feed, the number of feed mills was reduced from four (400 tons per day total capacity) to two (200 tons per day total capacity), and the number of diagnostic laboratories was increased from two to four to more effectively service the needs of the four milk producers' unions. 3.07 Contrary to expectation, and the concept of the project, KDDC did not transfer control of the dairy plants and feed mills to the MPU. 3.08 Although not part of theaproject originally, IDA subsequently agreed to the construction of two training centers, quarters for key project staff, and four MPU complex buildings. 3.09 Credit funds for KDDC and the MPU were to be made available by GOI to ARC, which in turn was to onlend the funds to participating banks. This proce- dure proved to be exceedingly cumbersome resulting in extended delays in project implementation.. Project lending arrangements were subsequently changed by channelling funds directly to KDDC/MPU through the Indian Dairy Corporation (IDc). C. General Implementation Experience 3.10 The project was plagued with major problems during the initial years. These problems stemmed mainly from a lack of political commitment by GOK result- ing in the appointment of a weak managing director of KDDC and failure to ade- quately staff the Corporation and the MPU. As a consequence, needed project - 75 - action was not taken on time and project implementation was considerably delayed. Over the life of the project, KDDC had six different managing direc- tors which proved disruptive to project progress. 3.11 While the establishment of new cooperative societies did not commence for almost a year after the credit became effective, over the succeed'ig 12 months, progress in DCS formation and milk procurement was very good. However, the construction of dairy processing facilities did not proceed as scheduled because of administrative and technical (para 3.35) reasons and, as a result, the organization of DCS and the procurement of milk had to be curtailed b.cause of inadequate processing capacity. 3.12 Because of the delays in implementation, the project was extended for two years and closed September 30, 1984. D. Implementation of Main Components Institutions and Organizational Structure 3.13 As envisaged (para 2.06),,the entities established under the project were the KDDC, the MPU, and the DCS. 3.14 The KDDC was incorporated on October 11, 1974, two months prior to credit effecEiveness, as the main body for the coordination of project activities, and a managing director and general manager were appointed. However, staffing of KDDC was a major problem and no significant improvement was made in this area until about two years after effectiveness. The managing director was assisted by five division thiefs. As projected, share contribu- tions were received from 001 and GOK, however, the transfer of existing govern- ment farms to KDDC, which was intended to represent Rs 3 million of GOK's Rs 3.0 million capital subscription to KDDC, never took place. 3.15 One of KDDC$s earliest functions was the appointment of NDDB as con- sultant for the training of spearhead teams to implement the village dairy cooperatives and, subsequently, to conduct feasibility studies and design, construct, and commission the dairy plants and feed mills to be built under the project. In May 1975, KDDC, with the assistance of NDDB, appointed 4 spearhead teams of 68 officers who, after being trained by NDDB, were posted to the project area to initiate formation of DCS and establish milk routes. 3.16 In May 1984, KDDC was reconstituted as the Karnataka Milk Federation (KMF), which became the apex coordinating and implementin, authority for all dairy development activities in the state. 3.17 Four MPU, one each in the Bangalore, Mysore, Tumkur and Hassan milkshed were formed. While it was expected that all unions would be established by December 31, 1975, formation was not completed until about a year later. 3.18 As envisaged at appraisal, the principal functions and responsibilities of the MPU were to: (a) organize and effect the implementation of DCS; - 76 - (b) assist the DCS with organization, management, inspection, and auditing; (c) establish and supervise milk and cattle feed transportation; (d) process and market DCS members' milk and operate the feed mills; (e) provide animal health and AI services; and * (f) organize training for village extension workers and DCS management committee members. Despite assurances being given that each MPU would be free to set the sale price of its products, the procurement price of milk, and charges for services to members, these prices were controlled by COK. Thus the unions were not autonomous units as intended. Also, as mentioned elsewhere (para 4.04), the functions listed under (d) above were carried out by KDDC/KMF. This deprived the unions of'their major source of income and further reduced their role in decision making and development. 3.19 Each union is governed by a 16 to 18 member board of directors the majority (11) of whom represent the member DCS (i.e., they are elected presi- dents of the DCS). The managing'director is the chief executive of the union and is responsible for its day to day operation. He is assisted by a team of project officers who look after specialized activities like DCS organization and management, organization and delivery of inputs, and training and extension. 3.20 At appraisal it was envisaged that a total of 1,800 DCS would be estab- lished during the first 5 years of the project and that some 450,000 farm households, or approximately 2.5 million iural people, would be involved. The number of DCS formed during the first year was close to the appraisal. By year 5, only 986 DCS (with 155,000 member households) had been organized, and the targetted number of 1,800 was not reached until year 8, when a total of 267,000 households had been enrolled. By project closing, there were 1,875 DCS with 313,000 members (about 1.7 million individuals). The number of DCS averaged about 470 per union and varied from about 335 (46,800 members) in Hassan to 570 (98,600 members) in Bangalore. The slower than expected rate of DCS formation was due mainly to the delay in construction of the required milk processing facilities. 3.21 Average membership per DCS was about 170 households compared with the target of 250. Approximately 70% of the members were marginal and small farmers and 12% were landless laborers. Scheduled Castes' and Scheduled Tribes' households accounted for about 11% of the total members. As envisaged, most DCS have duly elected management committees which govern the operations of the societies. Livestock Improvement and Milk Production 3.22 It was expected that initially milk production would be increased from existing native cattle and buffaloes through the adaption of better feeding and management practices; but the greatest increase would come from an intensive program of crossbreeding native cattle with high producing exotic dairy bulls. Crossbred animals were expected to completely replace the native cows in DCS herds by year 8 of the project. - 77 - 3.23 At appraisal it was assumed that each DCS would purchase six locally produced crossbred heifers during the first year and two heifers annually in years 2 through 6. This was intended to increase milk output particularly during years 2 and 3 before DCS members' own crossbred animals come into produc- tion. Accordingly, the project provided Rs 100.5 million (IDA Rs 61.5 million) for the purchase of these animals. Credit was to be made available through the cooperative and commercial banking system with cofinancing by ARC. Because of procedural problems in channelling the credit, implementation of this component was delayed and did not commence until March 1979 after more satisfactory lend- ing arrangements had been made. A total of only Rs 3.5 million was disbursed for the purchase of crossbred animals. Non-utilization of the credit can be attributed to the following factors; the limited availability of crossbred animals at prices which producers were willing to pay, the availability of credit for the purchase of milk animals through normal banking schemes and special government programs 1/ at concessional rate, and the preference of producers to raise crossbred calves out of their own local cows. 3.24 As per Section 4.04 of the Karnataka Agreement, GOK was to transfer to KDDC four of its livestock farms which KDDC would use, inter alia, to breed and raise exotic and crossbred cattle (heifers and bulls) and to establish a semen processing and storage center. However, since GOK assured the project authorities that the required quantities of semen could be supplied from its existing semen bank at Hessarghatta, and since KDDC considered that the govern- ment units would not be viable operations, the farms were never transferred to the Corporation. Subsequently, the semen supply from GOK proved inadequate and the decision was taken for KDDC to establish a Bull Breeding Farm and Frozen Semen Station under the project. A total of 119 animals (19 Holsteins and 70 Jersey in-calf heifers and 5 Holstein and 25 Jersey bulls) were imported as initial stock. 3.25 Initially, the project distributed only chilled semen. However, in June 1979, frozen semen was introduced, and in March 1984, the use of chilled semen was phased out. Conception rates were low, particularly with chilled semen. The project authorities attributed the low rates to a high incidence of infer- tility among village cows and buffaloes. Undoubtedly, poor semen quality resulting from inadequate transport and storage facilities and the problem of getting animals inseminated at the proper time were contributing factors. 3.26 Approximately 120,000 inseminations (both cattle and buffaloes) were carried out during the last year of the project and about 600,000 over the entire project period. The birth of some 33,000 crossbred female calves were recorded, which is lower than the number actually born since an undetermined number of births are never reported. By year 10 of the project, an estimated 5,700 crossbred cows were in milk, or about three per DCS. This compares with the SAR estimate of 380 crossbred cows in milk per DCS. Since the cow popula- tion did not increase as predicted, incremental milk production fell far short 1/ Including the Small Farmers' Development Agency (SFDA), Marginal/Small Farmers and Agricultural Laborers (MFAL), Drought Prone Area Program (DPAP), and the Intensive Cattle Development Program (ICDP). - 78 - of appraisal targets (para 5.01). Furthermore, many of the crossbred heifers produced by project farmers were sold outside the state. 3.27 To assist disadvantaged DCS members in rearing crossbred dairy animals that might otherwise die or be severely stunted in growth, and also to encourage the spread of crossbreeding, the project made provision for a calf rearing program. Under the scheme, landless agricultural laborers and small/marginal farmers were to be given balanced cattle feed at subsidized rates. Only one female calf per farmer would be eligible for the subsidy and the maximum amount per calf would be Rs 600, disbursed in kind. The MPU was to administer the program and be reimbursed for the cost of the feed by GOI and GOK. Since the Animal Husbandry Department of COK was already implementing a similar scheme within the project area, the question arose as to whether the project should take over the subsidy program or GOK would continue to have responsibility for the scheme. The matter was finally decided only in late 1980 when it was agreed that the state government would have sole responsibility for implementing the calf retring program. Thus, no project funds were used for this purpose. Fodder Production and Feed Millp 3.28 The appraisal report recognized that the low quality crop residues, which traditionally comprise the main components of the native animal's diet, would be inadequate to maintain crossbred animals and recommended that such diets be supplemented with high quality green fodder and balanced concentrate feed. The forage development activities of the project included the estab- lishment of fodder production and demonstration farms, establishment of fodder demonstration plots on farmers' fields, and supplying planting material to DCS members. The University of Agricultural Sciences, Bangalore, was retained by KDDC as consultant to assist the project staff in carrying out these activities. 3.29 Under the project, 4 fodder farms were set up, 1 in each union, and approximately 90,000 fodder plots were established on DCS members' farms. Over the project period, about 94,000 kg of fodder seeds, about 41 million root slips, and some 2 million seedlings were distributed to farmers. While the total additional has devoted to fodder crops as a result of the project are not known, it is estimated that an extra 4,500 ha of irrigated land were planted to forage in the project area. No reliable estimates of the incremental fodder production due to the project are available. However, it is clear that produc- tion was far below the annual requirement of about 2,000 tons green feed per DCS estimated at appraisal. 3.30 It was projected that the demand for concentrated feed by a typical DCS would increase from 30 tons in year 1, when the herd consisted of 183 milking animals (138 local cows and 45 buffaloes), to 327 tons in year 8 when the herd was composed of 258 milking crossbred cows and 45 buffaloes. To meet this demand, provision was made for the construction of a feed mill in each MPU. Each mill, with an initial capacity of 100 tons per day, would be constructed during years 1 and 2, commence operation in year 3, and undergo expansion (to 150 tons per day) in year 5. 3.31 Subsequently, following a survey carried out by NDDB in collaboration with KDDC in which it was found that the potential demand for feed in the project area did not warrant the construction of a mill for each union, the - 79 - decision was taken to build only 2 feed plants, 1 at Rajanakunte in the Ban- galore Union and 1 at Gubbi in the Tumkur union, each with a capacity of 100 tons per day. The construction and commissioning of both mills were inor- dinately delayed mainly because of problems in the acquisition of land and in obtaining electrical power to operate the plants. As a consequence, the first plant (at Rajanakunte) was 4ommissioned in February 1983, five years later than anticipated, and the Gubbi plant was commissioned only in December 1984, seven years after the expected date. Prior to the commissioning of these plants, feed was purchased from an existing mill in Mandya district. Over the 21 month period from April 1983 to December 1984, the Rajanakunte plant produced a total of 11,840 tons of feed. Production increased from 586 tons for the quarter ending in June 1983 to about 2,700 tons for the quarter ending in December 1984. 3.23 Balanced cattle feed was sold to livestock owners through the DCS. Total sales increased from about 2,000 tons in 1978-79 (first year data avail- able) to 5,200 tons in 1983-84, and averaged about 2,960 tons annually. Feed sales varied widely between the different milksheds, ranging from 300 to 350 tons per year in the case of Hassan and Tumkur to 1,550 tons for Bangalore. The difference reflects in large measure the difference in the crossbred cattle population in the respective milksheds. In 1983-84, feed sales per DCS averaged 2.8 tons, or about 16 kg per member. On a per milking animal basis, this repre- sented about 10 kg per head compared with the 1,000 kg or so estimated at appraisal. The extend of the purchase of feed (i.e., cottonseed cake, rice bran) on the open market is not known; however, it may have been significant despite the generally higher open market price. Milk Processing Plants 3.33 The project provided for the creation of an additional 920,000 liters of milk processing capacity through the expansion of the dairy plants at Bangalor (from 70,000 to 300,000 lpd) and Mysore (from 10,000 to 300,000 lpd), and the construction of 2 new plants at Tumkur and Hassan, each of 200,000 lpd capacity. The existing plants were to undergo expansion during years one, three, four and five, and the new plants would be built during years one and two, commence operation in year three, and undergo expansion in years four and five. 3.34 As a result of feasibility studies carried out in each milkshed, NDDB recommended that: (a) the existing Bangalore dairy be expanded to only 150,000 lpd and that a new plant of 150,000 lpd capacity be constructed in Bangalore; (b) the existing Mysore dairy be expanded to only 60,000 lpd; and (c) two 20,000-30,000 lpd plants be constructed, one in the Tumker and one in the Hassan milkshed. These recommendations were accepted by KDDC. However, by the 1977-78 flush season, milk collection from establised DCS exceeded the existing processing capacity and milk procurement projections indicated that processing capacity would be grossly inadequate by 1981-82. Therefore, it was decided to increase the capacity of the new Bangalore dairy to 200,000 lpd, increase the capacities of the Tumkur and Hassan dairies to 60,000 lpd, and establish a new products - 80 - plant of 100,000 lpd capacity in the Mysore ailkshed. This created an addi- tional processing capacity of 550,000 lpd, or 60% of the appraisal estimate. Subsequently, it was decided to replace the old 8,000 lpd plant at Kudige with a 20,000 lpd plant. 3.35 Construction of the new facilities (with the exception of the Kudige plant which was constructed by KDDC), as well as expansion of the existing plants, was carried out by NDDB on a turnkey basis. Work on all the facilities was initially delayed by the unsatisfactory arrangements made for the channell- ing of credit funds under the project (paras 3.59, 3.60). In addition, dif- ficulties in the acquisition of land (particularly in the case of the new Ban- galore dairy) and periodic shortages of building materials and electrical power also delayed completion of the expansion and construction work. Expansion of the Bangalore and Mysore plants was completed in February 1981, construction of the Tumkur dairy in July 1981, Hassan dairy in October 1982, the products plant in Mysore in March 1983, and the new Bangalore dairy only in November 1984. The Kudige plant was completed after project closing. Milk Collection, Processing and Marketing 3.36 Traditionally, farmers in the project area converted their surplus milk to ghee, wasting most of the skim milk, or disposed of it through private traders who operated mainly in villages comparatively close to the urban areas. It was a major aim of the project to provide a secure market outlet for surplus milk in the rural areas,thus stimulating production and increasing farmers' cash income. 3.37 Milk was collected morning and evening from the DCS by a fleet of hired trucks along 119 well defined and economically viable routes and transported directly to the milk plants or to chilling centers in 40 liter cans. Project-owned road tankers were used to transport milk from the chilling centers to the dairies. The number of milk routes ranged from about 25 in the Hassan and Tumkur milksheds to 35 in the Bangalore and Mysore milksheds and, by the end of the project, the milk procured per route varied from about 1,100 lpd in Hassan to about 4,400 lpd in Bangalore. 3.38 Milk collection was projected to increase from 6.8 million liters in the first year of the project to 205.6 million liters in year 5 and 902.4 mil- lion liters in year 9. A total of 3.9 million liters were collected over about 240 days in year 1, giving an average of 15,860 lpd, or 85% of the appraisal estimate. In 1976-77, the first full year of the project, 25 million liters of milk were collected, or 95% of the projected quantity. Procurement during years 5 and 9 was 70.1 and 111.2 million liters respectively, or only 34% and 12% of appraisal targets. After 1976-77, milk collection was constrained by the slower than expected rate of DCS formation which resulted from the delays in construc- tion of the milk processing facilities. 3.39 At appraisal it was envisaged that milk collection per DCS would increase from 34,900 liters in the first year of the project to 720,900 liters in year 9. Actual collection per DCS ranged from about 52,000 liters in 1976-77, the first full year of the prcject, to about 60,540 liters in 1983-84. The considerably smaller than expected increase reflects the much smaller actual number of crossbred cows produced under the project and the extension of the - 80 - plant of 100,000 lpd capacity in the Mysore silkshed. This created an addi- tional processing capacity of 550,000 lpd, or 60% of the appraisal estimate. Subsequently, it was decided to replace the old 8,000 lpd plant at Kudige with a 20,000 lpd plant. 3.35 Construction of the new facilities (with the exception of the Kudige plant which was constructed by KDDC), as well as expansion of the existing plants, was carried out by NDDB on a turnkey basis. Work on all the facilities was initially delayed by the unsatisfactory arrangements made for the channell- ing of credit funds under the project (paras 3.59, 3.60). In addition, dif- ficulties in the acquisition of land (particularly in the case of the new Ban- galore dairy) and periodic shortages of building materials and electrical power also delayed completion of the expansion and construction work. Expansion of the Bangalore and Mysore plants was completed in February 1981, construction of the Tumkur dairy in July 1981, Hassan dairy in October 1982, the products plant in Mysore in March 1983, and the new Bangalore dairy only in November 1984. The Kudige plant was completed after project closing. Milk Collection, Processing and Marketing 3.36 Traditionally, farmers in the project area converted their surplus milk to ghee, wasting most of the skim milk, or disposed of it through private traders who operated mainly in villages comparatively close to the urban areas. It was a major aim of the project to provide a secure market outlet for surplus milk in the rural areas,thus stimulating production and increasing farmers' cash income. 3.37 Milk was collected morning and evening from the DCS by a fleet of hired trucks along 119 well defined and economically viable routes and transported directly to the milk plants or to chilling centers in 40 liter cans. Project-owned road tankers were used to transport milk from the chilling centers to the dairies. The number of milk routes ranged from about 25 in the Hassan and Tumkur milksheds to 35 in the Bangalore and Mysore milksheds and, by the end of the project, the milk procured per route varied from about 1,100 lpd in Hassan to about 4,400 lpd in Bangalore. 3.38 Milk collection was projected to increase from 6.8 million liters in the first year of the project to 205.6 million liters in year 5 and 902.4 mil- lion liters in year 9. A total of 3.9 million liters were collected over about 240 days in year 1, giving an average of 15,860 lpd, or 85% of the appraisal estimate. In 1976-77, the first full year of the project, 25 million liters of milk were collected, or 95% of the projected quantity. Procurement during years 5 and 9 was 70.1 and 111.2 million liters respectively, or only 34% and 12% of appraisal targets. After 1976-77, milk collection was constrained by the slower than expected rate of DCS formation which resulted from the delays in construc- tion of the milk processing facilities. 3.39 At appraisal it was envisaged that milk collection per DCS would increase from 34,900 liters in the first year of the project to 720,900 liters in year 9. Actual collection per DCS ranged from about 52,000 liters in 1976-77, the first full year of the project, to about 60,540 liters in 1983-84. The considerably smaller than expected increase reflects the much smaller actual number of crossbred cows produced under the project and the extension of the - 80 - plant of 100,000 lpd capacity in the Mysore nilkshed. This created an addi- tional processing capacity of 550,000 lpd, or 60% of the appraisal estimate. Subsequently, it was decided to replace the old 8,000 lpd plant at Kudige with a 20,000 lpd plant. 3.35 Construction of the new facilities (with the exception of the Kudige plant which was constructed by KDDC), as well as expansion of the existing plants, was carried out by NDDB on a turnkey basis. Work on all the facilities was initially delayed by the unsatisfactory arrangements made for the channell- ing of credit funds under the project (paras 3.59, 3.60). In addition, dif- ficulties in the acquisition of land (particularly in the case of the new Ban- galore dairy) and periodic shortages of building materials and electrical power also delayed completion of the expansion and construction work. Expansion of the Bangalore and Mysore plants was completed in February 1981, construction of the Tumkur dairy in July 1981, Hassan dairy in October 1982, the products plant in Mysore in March 1983, and the new Bangalore dairy only in November 1984. The Kudige plant was completed after project closing. Milk Collection, Processing and Marketing 3.36 Traditionally, farmers in the project area converted their surplus milk to ghee, wasting most of the skim milk, or disposed of it through private traders who operated mainly in villages comparatively close to the urban areas. It was a major aim of the project to provide a secure market outlet for surplus milk in the rural areas,thus stimulating production and increasing farmers' cash income. 3.37 Milk was collected morning and evening from the DCS by a fleet of hired trucks along 119 well defined and economically viable routes and transported directly to the milk plants or to chilling centers in 40 liter cans. Project-owned road tankers were used to transport milk from the chilling centers to the dairies. The number of milk routes ranged from about 25 in the Hassan and Tumkur milksheds to 35 in the Bangalore and Mysore milksheds and, by the end of the project, the milk procured per route varied from about 1,100 lpd in Hassan to about 4,400 lpd in Bangalore. 3.38 Milk collection was projected to increase from 6.8 million liters in the first year of the project to 205.6 million liters in year 5 and 902.4 mil- lion liters in year 9. A total of 3.9 million liters were collected over about 240 days in year 1, giving an average of 15,860 lpd, or 85% of the appraisal estimate. In 1976-77, the first full year of the project, 25 million liters of milk were collected, or 95% of the projected quantity. Procurement during years 5 and 9 was 70.1 and 111.2 million liters respectively, or only 34% and 12% of appraisal targets. After 1976-77, milk collection was constrained by the slower than expected rate of DCS formation which resulted from the delays in construc- tion of the milk processing facilities. 3.39 At appraisal it was envisaged that milk collection per DCS would increase from 34,900 liters in the first year of the project to 720,900 liters in year 9. Actual collection per DCS ranged from about 52,000 liters in 1976-77, the first full year of the project, to about 60,540 liters in 1983-84. The considerably smaller than expected increase reflects the much smaller actual number of crossbred cows produced under the project and the extension of the - 81 - project in the latter years to the more backward villages within the project area where the milk production potential was relatively low. 3.40 Because of the delays in plant construction, capacity utilization of the processing facilities was fairly good. During the last year, when about two thirds of the total installed capacity was operative, average utilization was approximately 70% and peak utilization about 90%. 3.41 With the exception of occasional sales of butter and ghee to neighbour- ing states, most project milk was processed as pasteurized milk and marketed in the local urban markets in half liter and one liter sachets. In Bangalore City, milk was also retailed through bulk vending booths which were intended to dis- tribute milk from the new Bangalore dairy. However, by project closing only about 15 of the original 200 booths were operating. Construction of the booths was severely delayed because of problems in acquiring appropriate building sites. Even after completion, and before the new dairy in Bangalore was commis- sioned, only a limited number of the booths could be operated because the exist- ing Bangalore dairy did not have the chilling facilities necessary to bring the temperature of the milk down to the required level before delivery to the booths. 3.42 Approximately 70-80% of project milk was sold in Bangalore City, and KMF's share in the Bangalore milk market is presently estimated at 35%. The project provided for the carrying out of milk marketing studies in the major urban centers in the project area to provide information for establishing a marketing and distribution system for milk and milk products. Only one such study was undertaken which revealed a large unsatisfied demand for milk. The study recommended that, while more attention should be given to the Bangalore market, special efforts should be made to develop the markets in the other major cities of the state. In general, project authorities took a too conservative approach to milk marketing, especially with regards to the introduction of new products, catering to different consumer groups, and the exploration of new markets both within and outside the state. There is a need for detailed market research to determine the appropriate product mix, packaging, and marketing channels. 3.43 Over the project period, the average producer price of mixed milk (5% fat, 9% solids not fat) varied from Rs 1.63 to Rs 2.76 per liter. The current procurement price is Rs 3.34. In some years, a 10 paise per liter premium was paid during the lean season, but there was no consistent policy on pricing. The present consumer price for full cream milk (4.5% fat, 8.5% solids not fat) in sachets is Rs 4.00 per liter, while milk sold in bulk (cans) is Rs 4.50 per liter. Tonned milk (3% fat, 8.5% solids not fat) retails for Rs 3.60 per liter in sachets and Rs 3.50 if purchased through bulk vending booths. Prices charged by private vendors varies from Rs 4.00 to Rs 5.00 per liter, depending upon the quality of the milk. Animal Health Supporting Activities 3.44 The Bangalore Veterinary Vaccine Institute (BVVI), subsequently renamed the Institute of Animal Health and Veterinary Biologicals (IAHVB), was assisted under the project to expand its production of vaccines against rinderpest (RP), haemorrhagic septicaemia (HS), blackquarter (BQ), and anthrax (AX). Although some renovation of existing facilities was carried out and certain items of much - 81 - project in the latter years to the more backward villages within the project area where the milk production potential was relatively low. 3.40 Because of the delays in plant construction, capacity utilization of the processing facilities was fairly good. During the last year, when about two thirds of the total installed capacity was operative, average utilization was approximately 70% and peak utilization about 90%. 3.41 With the exception of occasional sales of butter and ghee to neighbour- ing states, most project milk was processed as pasteurized milk and marketed in the local urban markets in half liter and one liter sachets. In Bangalore City, milk was also retailed through bulk vending booths which were intended to dis- tribute milk from the new Bangalore dairy. However, by project closing only about 15 of the original 200 booths were operating. Construction of the booths was severely delayed because of problems in acquiring appropriate building sites. Even after completion, and before the new dairy in Bangalore was commis- sioned, only a limited number of the booths could be operated because the exist- ing Bangalore dairy did not have the chilling facilities necessary to bring the temperature of the milk down to the required level before delivery to the booths. 3.42 Approximately 70-80% of project milk was sold in Bangalore City, and KMF's share in the Bangalore milk market is presently estimated at 35%. The project provided for the carrying out of milk marketing studies in the major urban centers in the project area to provide information for establishing a marketing and distribution system for milk and milk products. Only one such study was undertaken which revealed a large unsatisfied demand for milk. The study recommended that, while more attention should be given to the Bangalore market, special efforts should be made to develop the markets in the other major cities of the state. In general, project authorities took a too conservative approach to milk marketing, especially with regards to the introduction of new products, catering to different consumer groups, and the exploration of new markets both within and outside the state. There is a need for detailed market research to determine the appropriate product mix, packaging, and marketing channels. 3.43 Over the project period, the average producer price of mixed milk (5% fat, 9% solids not fat) varied from Rs 1.63 to Rs 2.76 per liter. The current procurement price is Rs 3.34. In some years, a 10 paise per liter premium was paid during the lean season, but there was no consistent policy on pricing. The present consumer price for full cream milk (4.5% fat, 8.5% solids not fat) in sachets is Rs 4.00 per liter, while milk sold in bulk (cans) is Rs 4.50 per liter. Tonned milk (3% fat, 8.5% solids not fat) retails for Rs 3.60 per liter in sachets and Rs 3.50 if purchased through bulk vending booths. Prices charged by private vendors varies from Rs 4.00 to Rs 5.00 per liter, depending upon the quality of the milk. Animal Health Supporting Activities 3.44 The Bangalore Veterinary Vaccine Institute (BVVI), subsequently renamed the Institute of Animal Health and Veterinary Biologicals (IAHVB), was assisted under the project to expand its production of vaccines against rinderpest (RP), haemorrhagic septicaemia (HS), blackquarter (BQ), and anthrax (AX). Although some renovation of existing facilities was carried out and certain items of much - 81 - project in the latter years to the more backward villages within the project area where the milk production potential was relatively low. 3.40 Because of the delays in plant construction, capacity utilization of the processing facilities was fairly good. During the last year, when about two thirds of the total installed capacity was operative, average utilization was approximately 70% and peak utilization about 90%. 3.41 With the exception of occasional sales of butter and ghee to neighbour- ing states, most project milk was processed as pasteurized milk and marketed in the local urban markets in half liter and one liter sachets. In Bangalore City, milk was also retailed through bulk vending booths which were intended to dis- tribute milk from the new Bangalore dairy. However, by project closing only about 15 of the original 200 booths were operating. Construction of the booths was severely delayed because of problems in acquiring appropriate building sites. Even after completion, and before the new dairy in Bangalore was commis- sioned, only a limited number of the booths could be operated because the exist- ing Bangalore dairy did not have the chilling facilities necessary to bring the temperature of the milk down to the required level before delivery to the booths. 3.42 Approximately 70-80% of project milk was sold in Bangalore City, and KMF's share in the Bangalore milk market is presently estimated at 35%. The project provided for the carrying out of milk marketing studies in the major urban centers in the project area to provide information for establishing a marketing and distribution system for milk and milk products. Only one such study was undertaken which revealed a large unsatisfied demand for milk. The study recommended that, while more attention should be given to the Bangalore market, special efforts should be made to develop the markets in the other major cities of the state. In general, project authorities took a too conservative approach to milk marketing, especially with regards to the introduction of new products, catering to different consumer groups, and the exploration of new markets both within and outside the state. There is a need for detailed market research to determine the appropriate product mix, packaging, and marketing channels. 3.43 Over the project period, the average producer price of mixed milk (5% fat, 9% solids not fat) varied from Rs 1.63 to Rs 2.76 per liter. The current procurement price is Rs 3.34. In some years, a 10 paise per liter premium was paid during the lean season, but there was no consistent policy on pricing. The present consumer price for full cream milk (4.5% fat, 8.5% solids not fat) in sachets is Rs 4.00 per liter, while milk sold in bulk (cans) is Rs 4.50 per liter. Tonned milk (3% fat, 8.5% solids not fat) retails for Rs 3.60 per liter in sachets and Rs 3.50 if purchased through bulk vending booths. Prices charged by private vendors varies from Rs 4.00 to Rs 5.00 per liter, depending upon the quality of the milk. Animal Health Supporting Activities 3.44 The Bangalore Veterinary Vaccine Institute (BVVI), subsequently renamed the Institute of Animal Health and Veterinary Biologicals (IAHVB), was assisted under the project to expand its production of vaccines against rinderpest (RP), haemorrhagic septicaemia (HS), blackquarter (BQ), and anthrax (AX). Although some renovation of existing facilities was carried out and certain items of much - 82 - needed equipment purchased, a major portion of the money allocated went towards the construction of a large laboratory complex, which is still not completed. Over the period 1975-76 to 1983-84, approximately 106 million doses of RP, HS, BQ and AX vaccine were produced and some 25 million vaccinations were carried out in the project area, including about 0.5 million vaccinations for foot and mouth disease using vaccines purchased by KDDC from sources outside the state. 3.45 Assistance was also provided to the Faculty of Veterinary Science (FVS), Bangalore University of Agricultural Sciences, to improve its animal health research and support program, including the establishment of two regional diag- nostic laboratories in the project area. Two laboratories were considered insufficient to cater to the needs of the project so, in fact, four were estab- lished, one in each MPU. Over the project period, these laboratories conducted a total of about 600 post mortem examinations and processed 142,500 clinical specimens. As a result of research carried out by FVS, the incidence of rinder- pest, infertility and parasitic diseases in dairy animals in the project area was reduced. Training, Extension and Animal Health 3.46 Training and Extension. As originally designed, the project made no provision for training and extension. Although the project engaged in training and extension activities from the'initial year, it was not until the DCA was formally amended in 1978 (para 3.61) that IDA disbursements could be made for expenditures incurred on these activities. 3.47 At the village level, training involved short visits of prospective DCS members to Gujarat state to observe AMUL societies and to learn firsthand about the workings and benefits of dairy cooperatives. Upon return to their villages, the farmers participated in village base camps which were organized during the period of pre DCS activity to communicate cooperative principles and AMUL experience, identify potential leaders, and build membership in preparation for DCS operation. Some 1,520 farmers visited Gujarat and about 83 base camps, involving around 1,800 farmers, were organized. In addition, 111 women's train- ing camps were organized in which 1,300 women who were members of DCS par- ticipated. 3.48 The project established two training centers, one for the Mysore union and a central training center in Bangalore, which were responsible for training DCS staff in AI, animal first aid, milk testing, and basic record keeping, as well as DCS management committee members. About 2,150 DCS staff and 360 manage- ment committee members received training. Since training in extension was heavily oriented towards animal health and AI, other activities such as general animal husbandry, fodder production, calf rearing, and milking hygiene did not receive the attention of extension workers that they deserved. 3.49 Finally, the training of MPU/KDDC staff, including the project implemen- tation teams (spearhead teams), was carried out mostly at NDDB headquarters; however, about 30 project staff members were granted fellowships for short term training abroad. 3.50 Animal Health. As envisaged, each MPU provides emergency veterinary services to its respective DCS. Society members pay Rs 25 per visit for these services while non members are charged Rs 50. However, because of logistical - 82 - needed equipment purchased, a major portion of the money allocated went towards the construction of a large laboratory complex, which is still not completed. Over the period 1975-76 to 1983-84, approximately 106 million doses of RP, HS, BQ and AX vaccine were produced and some 25 million vaccinations were carried out in the project area, including about 0.5 million vaccinations for foot and mouth disease using vaccines purchased by KDDC from sources outside the state. 3.45 Assistance was also provided to the Faculty of Veterinary Science (FVS), Bangalore University of Agricultural Sciences, to improve its animal health research and support program, including the establishment of two regional diag- nostic laboratories in the project area. Two laboratories were considered insufficient to cater to the needs of the project so, in fact, four were estab- lished, one in each MPU. Over the project period, these laboratories conducted a total of about 600 post mortem examinations and processed 142,500 clinical specimens. As a result of research carried out by FVS, the incidence of rinder- pest, infertility and parasitic diseases in dairy animals in the project area was reduced. Training, Extension and Animal Health 3.46 Training and Extension. As originally designed, the project made no provision for training and extension. Although the project engaged in training and extension activities from thelinitial year, it was not until the DCA was formally amended in 1978 (para 3.61) that IDA disbursements could be made for expenditures incurred on these activities. 3.47 At the village level, training involved short visits of prospective DCS members to Gujarat state to observe AMUL societies and to learn firsthand about the workings and benefits of dairy cooperatives. Upon return to their villages, the farmers participated in village base camps which were organized during the period of pre DCS activity to communicate cooperative principles and AMUL experience, identify potential leaders, and build membership in preparation for DCS operation. Some 1,520 farmers visited Gujarat and about 83 base camps, involving around 1,800 farmers, were organized. In addition, 111 women's train- ing camps were organized in which 1,300 women who were members of DCS par- ticipated. 3.48 The project established two training centers, one for the Mysore union and a central training center in Bangalore, which were responsible for training DCS staff in AI, animal first aid, milk testing, and basic record keeping, as well as DCS management committee members. About 2,150 DCS staff and 360 manage- ment committee members received training. Since training in extension was heavily oriented towards animal health and AI, other activities such as general animal husbandry, fodder production, calf rearing, and milking hygiene did not receive the attention of extension workers that they deserved. 3.49 Finally, the training of MPU/KDDC staff, including the project implemen- tation teams (spearhead teams), was carried out mostly at NDDB headquarters; however, about 30 project staff members were granted fellowships for short term training abroad. 3.50 Animal Health. As envisaged, each MPU provides emergency veterinary services to its respective DCS. Society members pay Rs 25 per visit for these services while non members are charged Rs 50. However, because of logistical - 82 - needed equipment purchased, a major portion of the money allocated went towards the construction of a large laboratory complex, which is still not completed. Over the period 1975-76 to 1983-84, approximately 106 million doses of RP, HS, 'BQ and AX vaccine were produced and some 25 million vaccinations were carried out in the project area, including about 0.5 million vaccinations for foot and mouth disease using vaccines purchased by KDDC from sources outside the state. 3.45 Assistance was also provided to the Faculty of Veterinary Science (FVS), Bangalore University of Agricultural Sciences, to improve its animal health research and support program, including the establishment of two regional diag- nostic laboratories in the project area. Two laboratories were considered insufficient to cater to the needs of the project so, in fact, four were estab- lished, one in each MPU. Over the project period, these laboratories conducted a total of about 600 post mortem examinations and processed 142,500 clinical specimens. As a result of research carried out by FVS, the incidence of rinder- pest, infertility and parasitic diseases in dairy animals in the project area was reduced. Training, Extension and Animal Health 3.46 Training and Extension. As originally designed, the project made no provision for training and extension. Although the project engaged in training and extension activities from thelinitial year, it was not until the DCA was formally amended in 1978 (para 3.61) that IDA disbursements could be made for expenditures incurred on these activities. 3.47 At the village level, training involved short visits of prospective DCS members to Gujarat state to observe AMUL societies and to learn firsthand about the workings and benefits of dairy cooperatives. Upon return to their villages, the farmers participated in village base camps which were organized during the period of pre DCS activity to communicate cooperative principles and AMUL experience, identify potential leaders, and build membership in preparation for DCS operation. Some 1,520 farmers visited Gujarat and about 83 base camps, involving around 1,800 farmers, were organized. In addition, 111 women's train- ing camps were organized in which 1,300 women who were members of DCS par- ticipated. 3.48 The project established two training centers, one for the Mysore union and a central training center in Bangalore, which were responsible for training DCS staff in AI, animal first aid, milk testing, and basic record keeping, as well as DCS management committee members. About 2,150 DCS staff and 360 manage- ment committee members received training. Since training in extension was heavily oriented towards animal health and AI, other activities such as general animal husbandry, fodder production, calf rearing, and milking hygiene did not receive the attention of extension workers that they deserved. 3.49 Finally, the training of MPU/KDDC staff, including the project implemen- tation teams (spearhead teams), was carried out mostly at NDDB headquarters; however, about 30 project staff members were granted fellowships for short term training abroad. 3.50 Animal Health. As envisaged, each MPU provides emergency veterinary services to its respective DCS. Society members pay Rs 25 per visit for these services while non members are charged Rs 50. However, because of logistical - 83 - difficulties and the high cost involved, not all DCS have access to routine (weekly) veterinary services. Through the operation of 10 emergency mobile units and 33 weekly mobile units a total of 106,000 animals received emergency veterinary treatment and 1.8 million received routine health care over the project period. In addition to these services provided by graduate veterinarians, approximately 190,000 animals were given first aid treatment by trained DCS staff. Technical Assistance, Contractors and Suppliers 3.51 It was envisaged that two expatriate consultants in tropical pasture agronomy and pasture management/fodder utilization would be recruited to assist KDDC/MPU in developing forage production programs and in the design and execu- tion of small farm management system studies. In addition, NDDB would be entrusted with the responsibility of training spearhead teams, carrying out feasibility studies on the location and design of the milk and feed processing facilities and supervision of their construction, carrying out milk supply/demand studies, and conducting animal feed resource surveys. 3.52 Expatriate consultants were not recruited. Instead, KDDC engaged the services of the University of Agricultural Sciences in Bangalore. Over a period of about six years (September 11, 1976 to June 30, 1982), UAS staff carried out a number of applied research studies and demonstration trials on fodder produc- tion and utilization, the results of which were communicated to project exten- sion personnel and farmers. No small farm management system studies were con- ducted. While NDDB was employed by KDDC for training and the design, construc- tion, and commissioning of processing facilities, NDDB did not carry out any milk supply/demand studies or feed resource surveys. In 1982, KDDC contracted with the Indian Institute of Marketing and Management to conduct a milk market- ing study in the project area. In general, the performance of all consultants was judged satisfactory. 3.53 No major difficulties were encountered with any of the contractors engaged under the project and the overall performance of the suppliers of equip- ment, spare parts, and utilities was satisfactory. E. Project Cost and Financing 3.54 The total expenditure on the project was Rs 465.1 million, 91% of the appraisal estimate of Rs 509.9 million (Annex Table 2). The major reasons for the lower actual cost were the very low use of funds for the purchase of crossbred cattle and the nonutilization of the calf rearing grant. Although the milk processing and feed milling capacities established under the project were both less than projected, the expenditure on these facilities was slightly more than estimated. Expenditures on training and extension and KDDC establishment were also more than anticipated. 3.55 The proposed and actual financing of the project are summarized in Table 3.1. - 83 - difficulties and the high cost involved, not all DCS have access to routine (weekly) veterinary services. Through the operation of 10 emergency mobile units and 33 weekly mobile units a total of 106,000 animals received emergency veterinary treatment and 1.8 million received routine health care over the project period. In addition to these services provided by graduate veterinarians, approximately 190,000 animals were given first aid treatment by trained DCS staff. Technical Assistance, Contractors and Suppliers 3.51 It was envisaged that two expatriate consultants in tropical pasture agronomy and pasture management/fodder utilization would be recruited to assist KDDC/MPU in developing forage production programs and in the design and execu- tion of small farm management system studies. In addition, NDDB would be entrusted with the responsibility of training spearhead teams, carrying out feasibility studies on the location and design of the milk and feed processing facilities and supervision of their construction, carrying out milk supply/demand studies, and conducting animal feed resource surveys. 3.52 Expatriate consultants were not recruited. Instead, KDDC engaged the services of the University of Agricultural Sciences in Bangalore. Over a period of about six years (September 11, 1976 to June 30, 1982), UAS staff carried out a number of applied research studies and demonstration trials on fodder produc- tion and utilization, the results of which were communicated to project exten- sion personnel and farmers. No small farm management system studies were con- ducted. While NDDB was employed by KDDC for training and the design, construc- tion, and commissioning of processing facilities, NDDB did not carry out any milk supply/demand studies or feed resource surveys. In 1982, KDDC contracted with the Indian Institute of Marketing and Management to conduct a milk market- ing study in the project area. In general, the performance of all consultants was judged satisfactory. 3.53 No major difficulties were encountered with any of the contractors engaged under the project and the overall performance of the suppliers of equip- ment, spare parts, and utilities was satisfactory. E. Project Cost and Financing 3.54 The total expenditure on the project was Rs 465.1 million, 91% of the appraisal estimate of Rs 509.9 million (Annex Table 2). The major reasons for the lower actual cost were the very low use of funds for the purchase of crossbred cattle and the nonutilization of the calf rearing grant. Although the milk processing and feed milling capacities established under the project were both less than projected, the expenditure on these facilities was slightly more than estimated. Expenditures on training and extension and KDDC establishment were also more than anticipated. 3.55 The proposed and actual financing of the project are summarized in Table 3.1. - 83 - difficulties and the high cost involved, not all DCS have access to routine (weekly) veterinary services. Through the operation of 10 emergency mobile units and 33 weekly mobile units a total of 106,000 animals received emergency veterinary treatment and 1.8 million received routine health care over the project period. In addition to these services provided by graduate veterinarians, approximately 190,000 animals' were given first aid treatment by trained DCS staff. Technical Assistance, Contractors and Suppliers 3.51 It was envisaged that two expatriate consultants in tropical pasture agronomy and pasture management/fodder utilization would be recruited to assist KDDC/MPU in developing forage production programs and in the design and execu- tion of small farm management system studies. In addition, NDDB would be entrusted with the responsibility of training spearhead teams, carrying out feasibility studies on the location and design of the milk and feed processing facilities and supervision of their construction, carrying out milk supply/demand studies, and conducting animal feed resource surveys. 3.52 Expatriate consultants were not recruited. Instead, KDDC engaged the services of the University of Agricultural Sciences in Bangalore. Over a period of about six years (September 11, 1976 to June 30, 1982), UAS staff carried out a number of applied research studies and demonstration trials on fodder produc- tion and utilization, the results of which were communicated to project exten- sion personnel and farmers. No small farm management system studies were con- ducted. While NDDB was employed by KDDC for training and the design, construc- tion, and commissioning of processing facilities, NDDB did not carry out any milk supply/demand studies or feed resource surveys. In 1982, KDDC contracted with the Indian Institute of Marketing and Management to conduct a milk market- ing study in the project area. In general, the performance of all consultants was judged satisfactory. 3.53 No major difficulties were encountered with any of the contractors engaged under the project and the overall performance of the suppliers of equip- ment, spare parts, and utilities was satisfactory. E. Project Cost and Financing 3.54 The total expenditure on the project was Rs 465.1 million, 91% of the appraisal estimate of Rs 509.9 million (Annex Table 2). The major reasons for the lower actual cost were the very low use of funds for the purchase of crossbred cattle and the nonutilization of the calf rearing grant. Although the milk processing and feed milling capacities established under the project were both less than projected, the expenditure on these facilities was slightly more than estimated. Expenditures on training and extension and KDDC establishment were also more than anticipated. 3.55 The proposed and actual financing of the project are summarized in Table 3.1. - 84 - Is Table 3.1: PROJECT FINANCING (Rs million) SAR Source Estimate Actual OI 64.20 65.55 GOK 95.90 148.30 Banks 66.60 3.50 Farmers 43.20 3.40 IDA 240.00 244.35 Total 509.90 465.10 F. Procurement 3.56 At appraisal it was expected that KDDC would be the sole procurement agent for all items financed by IDA, except for onfarm investment. However, since the services of NDDB were utilized for the construction, installation, and commissioning of all processing facilities on a turnkey basis, NDDB was given the responsibility for procuring under ICB procedures all major items needed for these facilities. This relieved KDDC of a considerable work load and resulted in significant cost savings since NDDB was able to procure in bulk on a global tender basis. Minor items of equipment, farm machinery, and sup- plies were procured by KDDC/KMF following LCB procedures. Limited international competitive bidding (i.e. quotations from three international suppliers) was followed in the procurement of imported cattle as stipulated at appraisal. 3.57 Procurement was satisfactorily carried out and no difficulties were encountered in following the Bank's guidelines. Neither were any changes in procurement requested. G. Disbursements 3.58 Out of the US$30.0 million credit, an amount of US$29.2 million (97%) was disbursed. Disbursements were projected to be completed by IDA FY81. However, actual disbursements in that year reached only about 47% of the credit, and the final disbursement was not made until the third quarter of FY85 (Annex Table 3). The slow rate of disbursement was due mainly to extended delays in the construction of milk processing facilities. H. Adjustments in Legal Agreements 3.59 Under the project, US$26.2 million of IDA funds were to be channelled by GOI to KDDC through ARC and the participating banks. This multitiered finan- cial arrangement proved to be cumbersome and, in the case of dairy plant con- struction, resulted in frustration, multiple appraisal of subproject loan - 93 - 8.06 A major achievement of the project was the pro-ision of a secure market outlet for surplus milk thus providing farmers a steady cash income and an alternative to converting milk to ghee or selling it to private traders. As a result of the project, the traditional milk traders now offers better prices for milk than before resulting in an improvement in the economy of those producers who do not supply milk to cooperatives. 8.07 Although the project failed to fully reach the physical targets set at appraisal, all major project components were initiated and are considered a souLd basis for successful continuation. The project's economic rate of return is re-estimated at 22%. While this is some 10% below the rate of return estimated at appraisal, it still represents an attractive investment. To this assessment must be added a number of important social achievements. Through their participation in the operation of the cooperative societies, the vil- lagers' knowledge and management capabilities were enhanced and they have gained confidence in their ability to manage their own affairs. The cooperatives were of particular importance to the weakest segments of the rural population, the small/marginal farmers and the landless who, on their own, could never avail themselves of the advantages offered by the DCS. Furthermore, the cooperatives helped to break down social barriers since all members and suppliers of milk to the societies are treated as equa,s, irrespective of sex, caste, creed or religion. Lastly, the project increased women's importance and involvement in the community and enhanced the awareness of their role in dairying. T-HIS PAGE IS BLANK T HIS PAGE IS BLANK T HIS PAGE IS BLANK KARNAFAKA DAIRY ULVELOPMENI P0JECI (CR.482-IN) Comoarison Between Aurtisat Cost_jsIjt and Actual Exoenditures (Rs million) sroject Component IDA A Loraisal Estimate Actual Exoenditure Actual ExDnnitre, Includina Price and at Current Psices at Current 1wrices Physical Continuencies asf..0h.oar._alaAA Tarnts On-teet investment 100.05 3.5u 3.49 Milk plants/feed Mills 213.31 271.05 127.06 importation of cattle and 8.40 7.60 90.47 related equipment KDOC investments in farm and 30.56 37.66 123.23 technical services reeining. uwtension and 7.80 27.90 358.00 consultancies DVVI an FVS 26.90 25.IU 93.30 Calt rearing scheme 40.00 - - DCS equipment, establishment 17.08 62.50 84.18 union services, seed Subsidy 8VVI 1.80 - - KDOC establishment 4.00 29.70 742.63 1OTAL 609.90 465.09 St.21 ......... ..... I tQI A KARNATAKA OAlRV ptVeLOP ENI PROJtL) (CR.482-IN) Comoarison Between Auftalsal COL-1Estmates and Actual Enend"tures (Ps million) Prolect Comoonent kA AEornisat estimate Actual Exoenditure Actual Exounjiture Includina Price and at Current Pices At Current -rices Physical Contincencies AA-%of A)rAtAil Ott-taem investment 100.05 3.50 3.49 Milk plants/fOed mills 213.31 271.05 127.06 31mportation Of cattle ad 8.40 7.60 90.47 related equipment KOOC investments in fare and 30.56 37.66 123.23 technical services r.aleing. extension and 7.80 27.90 358.00 LD consultanciesl I BVVI aosd PVS 26.90 25.1U 93.30 CaSt rearing scheme 40.00 - DCS equipment. establishment 17.01 62.5u 84.18 union services, seed subsidy 8VVI 1.80 - KDOC establishment 4.00 29.70 742.63 TOTAL 609.90 465.09 ... a.....m.a. ....... ........... IMIA KARNAtAKA DAtRV UkV*LOPMEN PROJtCl (CR.482-INI Comoarison Between Au faisat Cost___* A_simSats and Actual Enenditures (Rs million) Proect Comoonent IDA AEsraisal stimate Actual Expenditure Actual Enouniturg Including Price and at Current Ptices at Current -rices Physical Continuencies Aj_ A nataiaa - ~Taroel*t& On-term investment 100.05 3.60 3.49 Milk plants/feed mills 213.31 27I.05 127.06 Importation of cattle and 8.40 7.60 90.47 related equipment KDOC investments in fare and 30.56 37.66 123.23 technical services Yettnin . estension and 7.80 27.90 358.00 consultancies BVVI ad FVS 26.90 25.1l 93.30 Calt rearing scheme 40.00 - OCS equipment. establishment 17.00 62.58 bl.18 union services. seed subsidy aVVI 1.80 - - AOOC establishment 4.00 29.70 742.63 TOIAL 609.90 465.09 91.21 - . Aa a ..........b ..b = .....b.S ~ . ..a~,a:~ .~ef= TABLE 2 - 96 - INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR. 482-IN) PROJECT COMPLETION REPORT Disbursement of Credit by Years (US$ Million) IDA Fiscal Appraisal Estimate Actual Year Annual Cumulative Annual Cumulative 1975 0.75 0.75 - - 1976 5.16 5.91 - - 1977 5.88 11.79 0.40 0.40 1978 -4.05 15.84 6.00 6.40 1979 6.40 22.24 2.05 8.45 1980 6.47 28.71 1.79 10.24 1981 1.29 30.00 3.90 14.14 1982 - - 1.77 15.91 1983 - - 2.23 18.14 1984 - - 3.13 21.27 1985 - - 7.97 29.24 Date of effectiveness: 12/23/74 Estimated closing date: 09/30/82 Actual closing date: 12/31/84 Date of final disbursements 05/31/85 TABLE 2 - 96 - INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR. 482-IN) PROJECT COMPLETION REPORT Disbursement of Credit by Years (US$ Million) IDA Fiscal Appraisal Estimate Actual Year Annual Cumulative Annual Cumulative 1975 0.75 0.75 - - 1976 5.16 5.91 - - 1977 5.88 11.79 0.40 0.40 1978 *4.05 15.84 6.00 6.40 1979 6.40 22.24 2.05 8.45 1980 6.47 28.71 1.79 10.24 1981 1.29 30.00 3.90 14.14 1982 - - 1.77 15.91 1983 - - 2.23 18.14 1984 - - 3.13 21.27 1985 - - 7.97 29.24 Date of effectiveness: 12/23/74 Estimated closing date: 09/30/82 Actual closing date: 12/31/84 Date of final disbursement: 05/31/85 TABLE 2 - 96 - INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR. 482-IN) PROJECT COMPLETION REPORT Disbursement of Credit by Years (US$ Million) IDA Fiscal Appraisal Estimate Actual Year Annual Cumulative Annual Cumulative 1975 0.75 0.75 - - 1976 5.16 5.91 - - 1977 5.88 11.79 0.40 0.40 1978 -4.05 15.84 6.00 6.40 1979 6.40 22.24 2.05 8.45 1980 6.47 28.71 1.79 10.24 1981 1.29 30.00 3.90 14.14 1982 - - 1.77 15.91 1983 - - 2.23 18.14 1984 - - 3.13 21.27 1985 - - 7.97 29.24 Date of effectiveness: 12/23/74 Estimated closing dates 09/30/82 Actual closing dates 12/31/84 Date of final disbursement: 05/31/85 - 97 - TABLE 3 INDIA KARNATAKA DAIRY DBYELOPMENT PROJECT (CR. 482-IN) PROJECT COMPLETION REPORT Credit Allocation and Disbursements by Categories (US$ Thousand) Actual Revised Revised Disburse- Original 4/27/78 8/3/84 Ment 1. Civil Works 3,900 900 2,797 2.371 2. Equipment and Materials (ICB) 8.100 2.100 3,930 2,112 3. Equipment and Materials (other than ICB) 4,400 2,400 1,338 1,035 4. Imported Cattle, Semen and Equipment 800 800 657 970 5. Loans for Purchase of Crossbred Cattle 6.100 6.100 295 295 6. Consultants' Services 700 700 582 593 7. Construction of Dairy and feed Plants Under Turnkey Contracts - 15,000 18.527 20.072 8. Project Support Activities - 1,500 1,874 1,792 9. Unallocated 6,000 500 - - Total 30,000 30,000 30,000 29.240 - 97 - TABLE 3 INDIA SAWNMTAKA DAIRY DEVELOPMENT PROJECT (CR. 482-IN) PROJECT COMPLETION REPORT Credit Allocation and Disbursements by Categories (US$ Thousand) Actual Revised Revised Disburse- Original 4/27/78 8/3/84 Ment 1. Civil Works 3,900 900 2,797 2,371 2. Equipment and Materials (ICB) 8,100 2.100 3,930 2.112 3. Equipment and Materials (other than ICB) 4.400 2.400 1,338 1.035 4. Imported Cattle, Sesen and Equipment 800 800 657 970 5. Loans for Purchase of Crossbred Cattle 6.100 6,100 295 295 6. Consultants' Services 700 700 582 593 7. Construction of Dairy and Feed Plants Under Turnkey Contracts - 15.000 18.527 20,072 8. Project Support Activities - 1,500 1.874 1,792 9. Unallocated 6,000 500 - - Total 30,000 30.000 30,000 29,240 - 97 - TABLE 3 INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR. 482-IN) PROJECT COMPLETION REPORT Credit Allocation and Disbursements by Categories (US$ Thousand) Actual Revised Revised Disburse- Original 4/27/78 8/3/84 ment 1. Civil Works 3.900 900 2,797 2,371 2. Equipment and Materials (ICB) 8,100 2.100 3.930 2.112 3. Equipment and Materials (other than ICB) 4.400 2.400 1.338 1.035 4. Imported Cattle, Semen and Equipment 800 800 657 970 5. Loans for Purchase of Crossbred Cattle 6.100 6,100 295 295 6. Consultants' Services 700 700 582 593 7. Construction of Dairy and Feed Plants Under Turnkey Contracts - 15.000 18,527 20,072 8. Project Support Activities - 1,500 1.874 1.792 9. Unallocated 6,000 500 - - Total 30,000 30,000 30,000 29.240 Table 4 Page 1 - 98 - fkNIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482-IN) KDDC - Staffing Plan Actual (as at end of the project) Managing Director 1 Divisions: Administration Deputy Director 3 Assistant Manager 1 Assistant Director 1 Engineering Division Chief (D.E.) 1 Project Engineer 2 Assistant Manager 1 Junior Engineer 1 Institutional Development and Procurement Division Chief (Dev.) 1 Joint Division Chief (CD) 1 Joint Division Chief (Trg. & Extn.) 1 Officer on special duty 1 Purchase Officer 1 Stores Officer 1 Animal Husbandry Joint Division Chief (AN) 1 Project Analyst Project Analyst 1 Marketing Consultant (Marketing) - Accounts Division Chief (Finance) 1 Accounts Officers 4 Staff for All Divisions Clerical 46 Technical 7 Supporting 16 TOTAL 93 ANDIA KARNATAKA DAIRV DEVELOPMENT PffOJECT (CR.482.1h Financial Performance of Banaalore Dairy - Ifts mittion 1976/77 197L 121ALM 1i2a 12ARL.1 R191/1 a982/ ; 1983/84 (Total milk procured in 33.658 39.273 46.538 62.b86 69.249 65.446 /1.668 79.813 million litees) Milk sales 73.758 88.590 106.6't 135.415 188.b09 205.057 244.8S4 Other income 0.624 0.798 1.186 1.830 2.030 2.849 .1.609 Total Income 4382 .3AAS 187,797 137,305 190.,69 208.006 24i.4ts - OPERATING COSTS: Direct Costs Milk purchase 56.516 71.656 84.604 104.962 143.783 147.898 177.981 Direct tabour - - - - - - - Utilities 0.931 0.976 1.392 2.502 3.111 2.76 2.561 Materials and retailing 4.245 7.022 10.878 15.286 21.638 25.595 24.794 treight 2.999 4.718 5.779 9.221 13.109 1t.231 12.750 1*41" tax - - - - - - - jVQ-total A4 AAA 84.232 1a2.ess 121,Z11 ILL.A4 187.505 217.886 OVERnEAD COSTSz Maintenance - tabour - - - - - - Maintenance - materials 0.470 0.744 0.366 1.353 0.868 0.411 0.979 Staff cost* 3.974 4.333 5.261 6.429 7.801 10.453 14.333 Administrative expenses 1.731 1.644 2.147 4.186 2.922 6.94t 4.370 Central office charges - 1.386 1.737 2.047 1.963 2.303 sulk-total AIl 6,7S 6-21 9,150 11jtal I11 1j. A63 12IZ70 Total Operatina Costs IQ-866 M1g0g tiLt813 14A-b? 19S42§ ;-0L-27 239.671- Net Operating Surplus/(Deficit) 3.516 (1.705) (4.016) te.aL4) (4.939) d.7J1 8.742 Depreciation 1.697 1.275 1.275 4.354 3.641 0.130 2.217 P rnterest 1.280 1.280 2.591 1.606 1.775 2.684 1.646 - 'us'(Deficit) 0.539 (4.260) (7.882) (14.37s) (10.365) (2.083) 4.0- BEST.COPY AVAILABLE KARNATAKA DAIRY DEVELOPMENT PRJECT (CR.482.1h) Financial Performance of Mysore Dairy - URs million) 1975/76 1976177 lg7178 1978/79 1979/BO 1980/81 1981/82 1982/83 1983/84 (Total milk procured in 1.180 4.729 8.016 13.-41 1b.789 19.991 18.977 21.021 - million litres) 1NCOME: Milk sal4a 1.464 9.107 17.193 27.950 37.106 49.699 68. 16 63.167 - Other indome 0.001 0.052 0.133 0.046 0.045 0.054 0.187 0.342 . - Tot.i Income i-A. 115 17326 21.992 37.11 A2,153 5.A l ±4 tj) OPERATING COSTS: Direct Costs Milk purchase 1.310 8.780 16.405 26.233 32.107 40.596 44.261 45..359 - Direct labour 0.020 0.095 0.106 0.236 0.242 0.250 U..141 U.bos 0.46 Utilities 0.021 0.055 0.094 0.214 0.296 1.147 1.4:. 1.*58 - Materials and retailing 0.064 0.951 0.891 1.943 3.897 4.488 5.Ub !.:299 - 0reit 0.3S6 1.265 1.876 2.527 3.797 4.726 5.S80 5.849 - %ales tax - - - 0.025 - - - o CD kub-total 1.771 1 .372 31.177 40339 5b./ue U11 OVEF_tHfAD COSTS: Maintenance - tabour - - - - - Maintenance - materials 0.019 0.028 0.082 0.100 0.09t5 0.10 a 0.245 - Staff costs 0.179 0.357 0.644 0.756 1.309 2.046 i..912 4.191 - Administrative expenses 0.042 0.163 0.225 0.325 0.431 0./Ul U.7b0 U.728 - Central office charges - - - 0.277 0.375 0.495 0.486 0.581 Sub-total 0.240 0 0 L51-1452 1 .3.35 4.341 5745 - Total Operatina Costs 201122 1694 A 54562 61041 64.315 - Net Operating Surplus/ (0.546) (2.535) (2.997) (4.639) (5.399) (4.809) (2.C93) (0.80G) ODeficit) 04 a jepreciation 0.208 0.195 0.239 0.246 0.234 0.234 0.234 o..4 . a sterest 0.106 0.182 0.182 0.367 0.364 2.307 1.67U lejaptu k(Deficit) (0.860) (2.912) (3.418) (5.252) (5.997) (7.350) (4.597) (.*'3.) BEST.COPY AVAIlABLE INDIA KARNATAKA DAIRY DEVELoPMENT PROJECT (CR.482.IN) Financial Performance of Mysore Dairy - (Rs million) 1975/76 1976/77 1211/1A 1978179 197.L8 1980/81 1981/82 1982L" 1983/84 (Total milk procured in 1.180 4.729 8.016 13.Z41 1b.789 19.99i 18.977 21.021 - million litres) Milk sales 1.464 9.107 17.193 27.950 37.106 49.691 b8.161 63.167 - Other inCome 0.001 0.052 0.133 0.046 0.045 0.054 0.187 0.342 - Tot-i Income ..5 ....226 2.Li9 317.151 A.3 5&-.iQ AX.J9 - OPERATING COSTS: 0irect Costs Milk purchase 1.310 8.780 16.405 26.233 32.107 40.596 44.?I' 45.359 - Direct labour 0.020 0.095 0.106 0.236 0.242 0.25u 0..341 0.b05 0.456 Utilities 0.021 0.055 0.094 0.214 0.296 1,147 l.4. 3.558 I Materials and retailing 0.064 0.951 0.891 1.943 3.897 4,488 .6 .299 - Feight 0.356 1.265 1.876 2.527 3.797 4.72G 5.58C 5.949 %ales tax - - - 0.025 - - - - - 0 ,kUb-tota I 11771 AM ij...9,32 31,177 40339 1 W2 >- YM .570 - QylpHEAD COSTS: Maintenance - labour - - - - - Maintenance - materials 0.019 0.020 0.082 0.100 0.096 0.10 U I.Jj 0.245 - ft fF costs 0.179 0.357 0.644 0.756 1.309 2.046 /.9/2 4.191 - Administrative expenses 0.042 0.163 0.225 0.325 0.431 0.707 U.7tu L1.72t - Central office charges - - - 0.277 0.37S 0.495 0.48r 0.581 - S1b-total 240 0,J48 0.J51 1.458 2.2.5 43.J3.1. 4..345 - Total oerating Costs 2,011 11,694 223 312635 42,550 54562 bi.041 64.31b - Net Operating Surplus/ (0.546) (2.535) (2.997) (4.639) (5.399) (4.809) (2.C93) (0.806) (Oeficit) jepreciation 0.208 0.195 0.239 0.246 0.234 0.234 U.234 u.-44 'terost 0.106 0.182 0.182 0.367 0.364 2.307 l.670 t.-'D; Spt is*,(Deficit) (0.860) (2.912) (3.418) (5.252) (5.997) (7.350) (4.597) (2..3.) BEST. COPY AVAIlABLE INDIA KARNATAKA DAIRY DEVELOPMENT PROJECI (CR.482.IN) Finanjgpalerformance of Hassan Oairy - (Rs milionl) 1976/77 1977/78 1978,/19 179/R110 1980/81 1981/82 1982/83 1983/84 (Total milk procured in 1.280 2.530 4.590 6.570 7.720 6.430 5.710 8.190 million litres) Milk sales 1.896 4.945 8.960 13.016 18.163 18.899 16.887 29.449 Other income 0.001 0.002 0.006 0.008 0.009 0.068 0.027 0.018 .Income 1,897 4.78.0 13,024 18.172 ?8.927 16.914 29.467 OPEFATTNG C0qTu: 0i;2ct Costs Milk purchase 3.294 4.667 8.112 11.801 15.959 15.568 13.518 21.840 Direct labour 0.023 0.036 0.047 0.058 0.104 0.185 0.266 0.286 C Utilities 0.024 0.029 0.042 0.081 0.085 0.097 0.261 0.233 Materials and retailing 0.098 0.177 0.143 0.160 0.181 1.650 0.614 1.104 freight 0.406 0.754 0.971 1.513 2.141 2.192 2.733 2.894 S.tes tax - 0.002 - - - 0.012 0.018 Sub-total 3.845 566 ..11 13,.612 13.4L0 19.692 7...4 26.375 OvERMEAD COSTS: Maintenance - labour - - - - -- - Maintenance - materials 0.004 0.009 0.024 0.012 0.0*5 0.016 0.030 0.015 Staff costs 0.070 0.144 0.216 0.238 0.500 0.696 1.118 1.059 Administrative eupenses 0.037 0.070 0.120 0.322 0.437 0.601 0.417 8.533 Central office charges - - 0.562 8.0/b 0.1ub 8.101 0.097 8.112 Se-tta10.111 0,23 0.430 01.G4 I .H!11 4 1 64 1,739 7otal Ooeratina Costs 2. 5,88A 9.740 J.ij Li%.-8 ,1,0061906 28114 2 9 Net Operating Surplus/(Deficit) (1.059) (0.941) (0.774) teiJ/) 41.406) to ta) (2.154; 1.353 * r Ovpretiation 0.020 0.027 0.038 0.186 ).td1 0.061 0.977 1.205 Interest 0.009 0.009 0.019 0.012 0.012 0.012 0.012 0.012 St'- .. eJ,Ui iLlt) (1.068) (0.977) (0.841) (1.41bi (>. ,9) t/.Zbz1 (J.14 .5 b.t3b BEST.COPY AVAlABLE KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482.IN) Finanigl Prformance of Hassan Dair.y -(RS mit ion) 1976/77 1977/78 1978/9 1179/80 1980/8l 1981/82 1982/83 1983/84 (Total milk procured in 1.280 2.530 4.590 6.570 7.720 6.430 5.710 8.190 million litres) INCOME: Milk sales 1.896 4.945 8.960 13.016 18.163 18.899 16.a87 29.449 Other income 0.001 0.002 0.006 0.008 0.009 0.068 0.027 0.018 1.-j Income 1,897 4,9A 8.2ko 13.024 18.172 !8.927 16.914 29 467 QPERATING COSTq: Direct Costs Milth purchase 3.294 4.667 8.112 11.801 15.959 15.568 13.518 21.840 Ofrect labour 0.023 0.036 0.047 0.058 0.104 0.185 0.266 0.286 C Utilities 0.024 0.029 0.042 0.081 0.085 0.097 0.261 0.233 ' Materials and retailing 0.098 0.177 0.143 0.160 0.181 1.650 0.614 1.104 freight 0.406 0.754 0.971 1.513 2.141 2.192 2.733 2.894 S.les tax - 0.002 - - - 0.012 0.018 Sub-total 3,845 5,665 9.31 13,612 1240 li.e2 17.404 2I375 OVERHEAD COSTS: Maintenance - tabour - - - - - - - - Maintenance - materials 0.004 0.009 0.024 0.012 0.025 0.016 0.030 0.015 Staff costs 0.070 0.144 0.216 0.238 0.500 0.696 1.118 1.059 Administrative eupenses 0.037 0.070 0.120 0.322 0.437 0.601 0.417 8.533 Central office charges - - 0.562 8.0/b 0.106 8.10u 0.097 8.112 Soh- t o tas 1.1 10 2 30 4 0.u-t l!,d 1 4 14 , 4173 Total Goeratin Costs 2.95 ,88A 9.74 JA- Zil Li53 a - 20 19,06A 28.114 OV Net Operating Surplus/(Deficit) (t.059) (0.941) (0.774) (I.Z37) It..j obJ2.1/9) (2.154, 1.353 a Oepre-iation 0.020 0.027 0.038 0.186 0.98d1 0.061 0.977 1.205 La litterest 0.009 0.009 0.019 0.1012 0.012 0.012 0.012 0.012 Nt *S usituen it) (1.068) (0.977) (0.841) (1.4Jb) (d. ; .b/) (3. 1d'l) b.13b KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482.N) Financial Performance gf Tumkur Dgiry - (Rs million) 1981/82 1982/83 VOLUMC: (Total milk procured in 10.591 11.557 million litres) INCOMEt Milk sales 29.580 31.825 Other income 0.042 0.088 Total Income 296221913 OPERATING COSTS: Direct Costs I Milk purchase 26.088 27.915 Direct Labour C I Utilities 0.270 0.307 Materials and retailing 0.498 0.653 Freight 2.853 3.791 Sub-tota) 29.709 32.666 OVERHEAD COSTS: Maintenance - labour - - Maintenance - materials 0.466 0.303 Staff costs 0.694 1.191 Administrative expenses 0.268 0.558 Central office charges 0.055 - Sub-total 1. 2 052 Total Goerating Costs 1 12 34.718 0 Net Operating Surplus/(Deficit) (1.570) (2.805) Depreciation 1.598 1.347 Interest - Surplus/(Deficit) (3.168) (4.152) IND.A KARNATAKA DAIRY DEVELOPMENT PROJECT (CR,482,IN) Financial Performancogf Tumkur Diry - (Rs million) 1981/82 1982/83 VOLUME: (Total milk procured in 10.591 11.557 million litres) INCOMEt Milk sales 29.580 31.825 Other income 0.042 0.088 Total Income 3222 31.913 OPERATING COSTS: Direct Costs Milk purchase 26.088 27.915 Direct Labour 0 Utilities 0.270 0.307 Materials and retailing 0.498 0.653 Freight 2.853 3.791 Sub-total 29.709 32.666 OVERIJEAD COSTS: Maintenance - labour - - Maintenance - materials 0.466 0.303 Staff costs 0.694 1.191 Administrative expenses 0.268 0.558 Central office charges 0.055 - Su§-tgtat 1A3 2.052 Total Oerating Costs 4192 34,718 Net Operating Surplus/(Deficit) (1.570) (2.805) Depreciation 1.598 1.347 Interest - Surplus/(Deficit) (3.168) (4.152) I.tDIA KARNATAKA DAIRY DEVELOPMENT PROJEjL_(CR.4b2. N) financial Pertormance of Kudime Dairy -- (Rs million) 197s/16 1976/77 1977178 1978zg 1979/80 1980/81 ALA 1982/83 (Total milk procured in 0.904 1.680 2.235 2.641 2.817 2.928 :.630 2.607 million litres) Milk sales 1.132 3.434 4.519 6.379 7.701 8.575 9.7>.b Other income - 0.019 0.017 0.017 0.022 0.033 (.04 ..037 Total Income 1,132 25AIX 6.i39 722 8 A l.Y*.Q OPERATLNG COSTS: Direct Costs Milk purchase 0.996 3.473 4.038 5.842 6.590 7.053 7.46d 6.934 Direct labour 0.075 0.137 0.140 0.140 0.130 0.237 U.380 0.498 Utilities 0.024 0.031 0.056 0.072 0.112 0.107 0.105 0.127 Materials and retailing 0.020 0.064 0.108 0.167 0.201 0.245 0.194 0.187 Fruight 0.198 0.480 0.540 0.668 0.968 1.139 1.110 1.164 Sales tax - - - - - - - - Sub-total J1J[13 1-.1 4,,882 8.Jg9 1.0-1 .781 9.2bt. (i1 OVERHEAD COSTSt Maintenance - labour 0.U0Z 0.012 0.020 0.035 0.0b7 0.088 0.038 0.063 Maintenance - materials 0.004 0.003 0.014 0.012 0.011 0.02b 0.021 0.014 Statf costs 0.041 0.091 0.114 0.124 0.126 0.;!l 0.373 0.525 Administrative expenses 0.031 0.055 0.065 0.092 0.082 0.172 0.106 0.171 Central office charges - - - 0.079 0.085 0.08a 0.078 0.078 Sun-total 9L.078 01.1 0.113 0J34 9a. LtL* U.JU. 0.851 Total Operating Costs 1.391 4,246 r2 g7231 8A37 2 VA.Jb i.AI 9AlIl Net Operating Surplvs/(Deficit) (0.259) (0.893) (0.559) (0.835) (0.649) (0./58) (0.082) (0.331) Uepreciation 0.035 0.032 0.047 0.052 0.070 0.11 0.0b3 0.062 Interest 0.037 0.064 0.064 0.138 0.082 0.082 0.082 0.082 Surplus/(Oeficit) (0.331) (0.989) (0.670) (1.017) (0.881) (0.956) (0.227) (0.475) I NP. KARNATAKA DAIRY DEVELOPMENT PROJE L..(CR.4b2.IN) Financial Pertormance ot Kudi-g Dairy -- (Rs million) 197,/16 1976/77 1977/78 197 /19 197y/8 1980/81 19-LLL92 1982/83 (Total milk procured in 0.904 1.680 2.235 2.641 2.817 2.928 :'.630 2.607 million litres) Milk sales 1.132 3.434 4.519 6.379 7.701 8.575 9.74b -SV3 Other income - 0.019 0.017 0.017 0.022 0.033 0.0418 ..137 Total Income 1,1 2 A.53 L396 _2A 8,608 OPERATLNG COSTSt Direct Costs Milk purchase 0.996 3.473 4.038 5.842 6.590 7.053 7.46d 6.934 Direct tabour 0.075 0.137 0.140 0.140 0.130 0.237 U.300 0.498 Utilities 0.024 0.031 0.056 0.072 0.112 0.107 0.105 0.127 Materials and retailing 0.020 0.064 0.108 0.167 0.201 0.245 0.194 0.187 Freight 0.198 0.480 0.540 0.668 0.968 1.139 t.110 1.164 Sales tax - - - - - - - sub-total 1 213 A.JA 4&&.8Z IA"R Isk.i781 9 2!1 & 918 OVERHEAD COSTS. Maintenance - labour 0.002 0.012 0.020 0.035 0.067 O.Ubb 0.038 0.063 Maintenance - material 0.004 0.003 0.014 0.012 0.011 0.026 0.021 0.014 Statf costs 0.041 0.091 0.114 0.124 0.126 0.231 0.373 0.525 Administrative expenses 0.031 0.055 0.065 0.092 0.082 0.172 0.106 0.171 Central Office charges - - 0.079 0.085 0.088 0.078 0.078 5ub-tatal P.078 0.161 0.213 034.2 .171 !L618 0A8.1 Total Operating Coats 1.391 LA .9 7, L.221 8.312 U,bb is.7 9,lAl Net Operating Surplus/(Deficit) (0.259) (0.893) (0.559) (0.835) (0.649) (0./58) (0.082) (0.331) Uepreciation 0.035 0.032 0.047 0.052 0.070 0.11b 0.063 0.062 Interest 0.037 0.064 0.064 0.138 0.082 0.082 0.082 0.082 Surplus/(Deficit) (0.331) (0.989) (0.670) (1.017) (0.881) (0.956) (0.227) (0.475) KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482.IN) Financial Performance of Geiia)aAere Dairy - (Rs million) 1982/83 1983/84 INCOME: Milk sales 6.347 30.352 Other income - 0.019 Total Income 6.347 30,371 OPERATING COSTS: Direct Costs Milk purchase 5.649 25.104 Direct labour 0.102 0.308 Utilities 0.175 0.545 Materials and retailing 0.066 0.225 Freight 0.450 1.431 Sales tax Sut4-ttal 27.613 OVERHEAD COSTS: Maintenance - labour Maintenance - materials 0.016 U.022 Staff costs 0.281 U.530 Administrative expenses 0.087 1.463 Central office charges sub-total t,8 1.015 Total GoeratinA Costs 6826 26 Net Operating Surplus/(Deficit) (0.479) 1.743 Depreciation 4.479 Interest Surplus/(Deficit) (0.479) (2.736) INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.462.,N) Financial Performance of Geiialagere Dairy - (Rs million) 1982/83 1983/84 1NCOME: Milk sales 6.347 30.352 Other income - 0.019 Total Income 6,347 30.371 OPERATING COSTS: Direct Costs Milk purchase 5.649 25.104 Direct labour 0.102 0.308 Utilities 0.175 0.545 Materials and retailing 0.066 0.225 Freight 0.450 1.431 Sales tax Sub-tatat .442 27.613 OVERHEAD COSTS: Maintenance - labour Maintenance - materials 0.016 0.022 Staff costs 0.2ai U.530 Administrative expenses 0.087 t.463 Central office charges - Sub-tota 034 0 .15 Total _oeratinQ Costs 2 to 9 Net Operating Surplus/(Deficit) (0.479) 1.743 O% Depreciation 4.479 Interest Surplus/(Deficit) (0.479) (2.736) INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482-IN) Combined In4.ome gow Operating Cogts - Milk Pruceqst-ing pantb (RaS*000) 197b/76 197e/17 1977/78 1078/19 1970/8U 8qeull leL2 1982/83 VDLMMi Milk procured 2.084 41..347 47.289 67.410 88.Y62 99.888 104.074 127.032 (aditioi litres) FQT6A INCOMg 2.597 88.891 116.117 151.155 195.BU3 Z67.072 324.642 376.526 VPeRATING COSTS Drect Costs Milk purchase 2.306 72.063 96.768 124.816 155.460 207.38 241.284 276.974 *ther costs 0.778 10.804 17.523 25.213 38.464 52.910 61.619 64.704 Avj.Lanl 3,0A4 82L8A7 114.291 150,029 IU3.9S4 4bu.298 302.903 341.676 'tA6j.QP,RATIHG COSTS 32g 82,862 123.199 161,412 210,859 11_..944 330,289 374.359 OVLAIHJn !9U4j6_ (0.805) (0.971) (6.202) (10.264) (15.b!6) 11.812) (5 793) 2.167 (DEFICIT) &P-eciation 0.243 1.944 2.388 1.611 4.844 4.9/2 2.086 4.837 ft-fwet.t 0.143 1.S35 1.535 3.107 2.Ob4 4.176 4.448 3.232 SURPLUS (DEFICIT) (1.191) (4.450) (9.325) (14.982) (22.604) t21.060) (12.127) (5.902) .NDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482-IN) Combined Iicome ad Operpting Costs - Mik Proctssuing klantb (Rs*000) 1975/7U 1976//7 1977/78 1o78i9 1979/8 !.!geu/l 191/2 1982/83 v.L.YMA Milk proCureO 2.084 41-.347 47.289 67.410 88.162 99.888 104.074 127.032 (m llion litres) TQTAL LK.QOk 2.597 88.891 116.117 151.155 195.ou3 267.072 324.642 376.526 uPERATING COSTS Milk purchase 2.306 72.063 96.768 124.816 155.460 207.388 241.284 276.974 *ther costs 0.778 10.804 17.523 25.213 38.464 52.910 61.619 64.704 LQ.Wuotgd 3,084. a2.867 114.,291ji 150.022 193.9Z4 ;:b.298 302.903 341.678 't)tA _QPL8ATjiS4L 3Q$TS21 89,862 123,199 161,41l% 210,859 21 L§.94 219-aka8 374,359 V1142A-UNmk kS?LL (0.805) (0.071) (6..202) (10.264) (15.b6) I11.b12) (5.793) 2.167 (DEFICIT) Oep,eciation 0.243 1.944 2.388 1.611 4.844 4.4/2 2.086 4.837 0.143 1.535 1.535 3.107 2.0b4 4.176 4.448 3.232 SURPLUS (DEFICIT) (1.191) (4.450) (9.325) (14.982) (22.604) (21.060) (12.127) (5.902) KARNATAKA DAIRY DEVgjELOMENLPROJECT (CR.482.Lil) Financial Performance of Ra-lanhunte Cattle Feed Plant - (Rs miIoIn) Total Productiun ('000 tons) 1.384 *.675 I,COME Sale of cattle feed 0.819 7.402 Other income - 0.093 Total Income 0.AAA LA9 OPERATING COSTS: Direct Costs Raws materials 0.840 6.88S Direct labour 0.028 0.110 Utilities 0.033 0.125 P. Material freight 0.147 0.766 Sub-total ,04871 A 498 QYU.EtifAD_=011 Mintenance - tabour - 0.054 Maintenance - materials 0.010 0.019 Staff costs 0.057 0.291 Administrative expenses 0.028 0.494 Sub-total 0,292 0,t5A Total Oeratina Costs 1,135 8.J44 Net Operating Surplus/(Deficit) (0.316) (1.249) Revenues 0.819 7.495 Operating costs 1.135 8.744 Surplus/(Deficit) (0.316) (1.249) Depreclatiots 0.694 0.621 Nett Sutt#lus/(D"ffLIt) (1.010) (3.870) 1t1D1A KARNATAKA DAIRY DEVELOEMENT PROJECT (CR.482-IN) Fodder Production (Total) Seed Material Sunolied Year Number of Fodder Seeds Root Slips Seedlinas Area under foder Cultivation July to Plots Raised (kg) (takhs) ('000) (ha) June) 1976-77 1.065 275 16.42 - 220.50 1977-78 2.692 542 43.37 - 475.18 1978-79 8.630 1.715 99.00 102.0 1.324.50 1979-80 17,033 3.825 160.00 103.3 996.68 1980-81 24.856 8.212 213.75 237.8 t.388.61 1981-82 37.535 31.073 269.80 418.4 2.047.75 1982-83 54.260 53.612 321.15 848.2 2,772.81 1983-84 79.009 83.748 391.47 1.611.5 4.077.97 Up to 89.146 93.958 414.67 1.838.5 4,491.32 Sep. 84 1/ All tigurab cumulative. Z/ Specfficatly created by the project. - 122- TABLE 18 INOIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482-IN) Impact of the Project on a Typical OCS Member Particulars 1974-75 1983-84 Number of local cows in milk 0.70 0.44 Number of local buffaloes in milk 1.00 0.74 Number of crossbred cows in milk 0.20 0.34 Milk yield per local cow per 525 600 lactation (litres) Milk yield per local buffalo per 825 950 lactation (litres) Milk yield per crossbred cow 1,825 2,200 per lactation (litres) Total milk production per arium (lit) 1,558 1,715 Price realised (Rs/litre) 1.50 3.00 Gross returns per annum (Rs) 2,337 5,145 Total cost of milk production per 1,437 3,440 animal per annum (Rs) Net returns per animal per annum (Rs) 900 1,705 - 122- TABLE 18 INDIA KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482-IN) Impact of the Project on a Typical OCS Member Particulars 1974-75 1983-84 Number of local cows in milk 0.70 0,44 Number of local buffaloes in milk 1.00 0.74 Number of crossbred cows in milk 0.20 0.34 Milk yield per local cow per 525 600 lactation (litres) Milk yield per local buffalo per 825 950 lactation (litres) Milk yield per crossbred cow 1,825 2,200 per lactation (litres) Total milk production per annum (lit) 1,558 1,715 Price realised (Rs/11tre) 1.50 3.00 Gross returns per annum (Rs) 2,337 5,145 Total cost of milk production per 1,437 3,440 animal per annum (Rs) Net returns per animal per annum (Rs) 900 1,705 1 m a zua am om a mum imn em u mm E « m ... . 5:#3.1 :31 2M: :.:#9 7.12 ra ýøi .4.7 27 1.36 0.71 4.16 i.i-mg a o ma na a la a Ua - - - - - mCl 8.1& .45 2.47 3.9 7.03 t.32 12.30 4.94 20.86 23.92 27.86 31.93 35.41 38.59 38.59 : 2 t:. : : ::11 : 3: 3:4 3:.32 45.52 5.62 54.81 54.81 t nt ap a n 9n 53 12 16 170. 192.23 211.52 215,5 . U M9 , l."- ~a ~y4 3 M. MnM 1: I 1 #:R U:" 5 f. ' 2: 1:" 51:1? 5.57 - - - - : tUOSI eet 5:8 1: nA.å :Il u1. ID*-U 46.01 1384 1 194.10 219.04 247.78 278.2& 3t4.92 38.9" 1"4 a,- 3. 1.:237 : : .92 3.1 33.36 29.58 31. 4.93 : : : : : Lt. .cut? GPINK 25 2. ' A. 15.33 .. 1. 1 ..56 17.0 22.92 mE~ ost t gLe: I :tu2 EUIc~ MorItent 5.N8 t.9" 43.07 66.13 95.39 93.5 105.13 IM7.6 134.93 t39 75 157.71 178.40 288.35 219.54 222.41. UAx ad 94se 11 e åtfjjjtm re/I t based en 1W> M8 ad "listen østiates. ed etmru.t-aqtaxhs, !~ Yhbllwgg ta:, auddm19 ale, rm mmd: 11 for CI aqlpiæt; 43Z for dalpp plant;a e, dml; 1f fer suuu I acMng:år1 101 i fer traiai.q# et1er iemetru8 custs amd retrret køsts. h..am 8:11 J:n J:n J:n 4:9 34:3 4:9 A:2 4:0 J:n ME952111 fi : 1:#7 1:5 l: 1:# 9 :0 0: -1:R E:ff 1:, -meai ai u a n a a n& ma -a - m 8.14 8.45 2.47 3.2 73 11 12.3D 14.94 28.86 23.82 27.6 31.93 3 5.41 3 .9 38.9 Mu .P f: J·: 4: 7:.1 6 . 2:.: : 2:8 3:1 3:.41 3 :. 5 38 am : "8 J4 k f 91 89.5 N53 ff 13.8615186 33192.23 211.52 215,8 am:f el S:M . a l 1 18:" 1943 219.04 .78 M.92 398 4.53 461 8 M4 27 7.63 Pre av 428 A I IL.3 . 11 cn t. y m Ccidt :i 1#: .-" : :9 .. :m :26 meluia..,- 31. f6 21:ffl 9 :,, i:5 L. t 9: - JUuM"-rurt 5.98 29.98 43.67 16.13 80.39 1M.5 105.13 117.96 134.93 139A7 157.71 178.48 2U0.35 219.58 2M.41. olmeu..m a. a . bens KW# A and .isla u st s. .PTh-e r ead: 159 ter 9M equiomt$ 432 for dölry plat ad fed Gilk; 151 ft per t faits 102 far tainiagi etber inmeå um tsi and receurtt Com. 1 KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482-IN) Economic Costs and Benefit Streams (Ra million) I/ Protect Costs Fodder Production Total Costs IncrementaL ealance r.tA Benefits 3/ Investment Costs Recurrent Costs 1975/76 3.87 5.98 - 9.85 (9.85) 1976/77 31.31 29.90 0.35 s1.56 3.35 (58.21) 1977/78 26.06 43.67 1.26 70.99 12.19 (b.t0j 1978/79 23.54 66.13 2.97 92.64 28.71 (b3.93) 1979/80 44.66 85.39 5.51 13b.bb 63.16 (12.40) 1980/81 30.97 93.56 8.93 133.4b 86.23 (47.23) 1981/82 28.69 105.13 12.10 145.92 116.78 (29.14) 1982/83 25.43 117.96 17.24 160.b3 166.bO b.01 1983/84 27.46 134.93 22.88 185.27 220.92 J5.65 1984/85 35.20 139.75 31.96 206.91 308.59 101.68 1985/86 157.71 40.23 197.94 388.39 190.45 1986/87 - 178.40 58.48 236.88 564.62 327.74 1987/88 - 200.35 62.84 263.19 606.77 343.56 1948/89 - 219.54 75.39 Z94.93 727.90 432.97 1989/90 - 222.41 88.81 311.22 1.095.30 4/ 784.08 ERN - 22.4% 1/ See Table 20. ,/ Two kg for a litre of milk at RsO.18 per kg adjusted by SCF of 0.80. 2/ See Table 8 for incremental milk production. The economic price for milk is a weighted average (1984/85) assuming that 60% of incremental milk production is supplied to OCS for processing and 401 sold to vendors, the former priced dt Ra4.40 per litre and the latter at R.%2.20. These prices have been adjusted by SCF ot 0.80 in dUerivitig the weigitted average price of Rs2.80 per litre. 4/Including residual herd value of crossbreds - Rs237.79 moillion. KARNATAKA DAIRY DEVELOPMENT PROJECT (CR.482-IN) Economic Costs and Benefit Streams (Rs million) L/2/ year Protect Costs fodder Production Total Cost Incremental Balance Costs Benefits I/ Investment Costs Recurrent Costs 1975176 3.87 5.98 - 9.85 (9.85) 1976/77 31.31 29.90 0.35 61.56 3.35 (58.21) 1977/78 26.06 43.67 1.26 70.99 12.19 (b.80) 1978/79 23.54 66.13 2.97 92.64 28.7i (63.93) 1979/80 44.66 85.39 5.51 13b.bb 63.16 (82.40) 1980/81 30.97 93.56 8.93 133.4b 86.23 (47.231 1981/82 28.69 105.13 12.10 145.92 116.78 (29.14) 1982/83 25.43 117.96 17.24 160.b3 1b6.bO b.81 1983/64 27.46 134.93 22.88 185.27 220.92 35.65 1984/85 35.20 139.75 31.96 206.91 308.59 301.68 1985/86 - 157.71 40.23 197.94 388.39 190.45 1986/87 - 178.40 58.48 236.88 564.62 327.74 1987/88 - 200.35 62.84 263.19 606.77 343.58 I8du/89 - 219.54 75.39 294.93 727.90 432.97 1989/90 - 222.41 88.81 311.22 1.095.30 4/ 784.08 ERR 22.4% 1/ See Table 20. Z/ Two kg for a litre of milk at RsO.18 per kg adjusted by SCF of 0.80. 3/ See Table 8 for incremental milk production. The economic price for milk is a weighted average (1984/85) assuming that 60% of incremental milk production is supplied to DCS for processing and 40% sold to vendors. the former priced at Ra4.40 per litre and the latter at R.%2.20. Tfiese prices have been adjusted by SCF ot 0.6U is* Uerivitig t1se weigisted average price of Rs2.80 per litre. 4/ Including residual herd value of crosubreds - Rs237.79 million. - 125 - PROJECT COMPLETION REPORT INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (Cr. 521-IN) General Agriculture II Division South Asia Projects Department - 125 - PROJECT COMPLETION REPORT INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (Cr. 521-IN) General Agriculture II Division South Asia Projects Department THIS PAGE IS BLANK THIS PAGE IS BLANK - 127 - PROJECT COMPLETION REPORT INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (CR. 521-IN) Highlights i. The Rajasthan Dairy Development Project was the second of a series of three projects designed to make a significant contribution to the development of India's dairy industry. The purpose of the project was to finance an integrated program for increasing the production of milk in rural areas through a cooperative development program which included better animal feeding and management, quality crossbreeding, animal health improvement, and the development of facilities for milk collection, processing and marketing. The project was appraised in March/April 1974 and became effective in August 1975. Project cost was estimated at US$51.8 million, with a foreign exchange component of US$12.7 million. Total actual project cost of US$39 million was only 75 percent of the appraisal estimate. The reduction was attributed to the fewer numbers of feed mills constructed (one vs four), deletion of the diagnostic laboratory, low utilization of the calf rearing grant, and lower than expected expenditures for technical services. ii. The project established the following: (a) 1,360 dairy cooperative societies, 5 milk producers' unions, and the Rajasthan Dairy Development Corporation, compared with appraisal targets of 1,800 societies and 5 unions; (b) an extension program which included provision of artificial insemination and veterinary health services; and (c) the necessary facilities for milk collection, processing, and marketing. Despite a good start, project implementation was slower than anticipated due mainly to extended delays in the construction of the milk plants, which, in turn, constrained the formation of village cooperatives and milk procurement. The slower than anticipated production of crossbred animals through the artificial insemination of local cows with semen from exotic dairy bulls severely reduced the expected incremental milk production. Nevertheless, despite the shortfall in expected targets, the project's economic rate of return is re-estimated at 28 percent, just 3 percentage points below that estimated at appraisal. iii. The dairy cooperatives established under the project formed centers for village cohesiveness and gave their members a sense of control over their activities. Through their participation in the operation of the cooperatives, - 127 - PROJECT COMPLETION REPORT INDIA RAJASTHAN DAIRY DEVEWPMENT PROJECT (CR. 521-IN) Highlights i. The Rajasthan Dairy Development Project was the second of a series of three projects designed to make a significant contribution to the development of India's dairy industry. The purpose of the project was to finance an integrated program for increasing the production of milk in rural areas through a cooperative development program which included better animal feeding and management, quality crossbreeding, animal health improvement, and the development of facilities for milk collection, processing and marketing. The project was appraised in March/April 1974 and became effective in August 1975. Project cost was estimated at US$51.8 million, with a foreign exchange component of US$12.7 million. Total actual project cost of US$39 million was only 75 percent of the appraisal estimate. The reduction was attributed to the fewer numbers of feed mills constructed (one vs four), deletion of the diagnostic laboratory, low utilisation of the calf rearing grant, and lower than expected expenditures for technical services. ii. The project established the followingS (a) 1,360 dairy cooperative societies, 5 milk producers' unions, and the Rajasthan Dairy Development Corporation, compared with appraisal targets of 1,800 societies and 5 unions; (b) an extension program which included provision of artificial insemination and veterinary health services; and (c) the necessary facilities for milk collection, processing, and marketing. Despite a good start, project implementation was slower than anticipated due mainly to extended delays in the construction of the milk plants, which, in turn, constrained the formation of village cooperatives and milk procurement. The slower than anticipated production of crossbred animals through the artificial insemination of local cows with semen from exotic dairy bulls severely reduced the expected incremental milk production. Nevertheless, despite the shortfall in expected targets, the project's economic rate of return is re-estimated at 28 percent, just 3 percentage points below that estimated at appraisal. iii. The dairy cooperatives established under the project formed centers for village cohesiveness and gave their members a sense of control over their activities. Through their participation in the operation of the cooperatives, - 128 - the villagers' knowledge and management capabilities were enhanced and they gained confidence in their ability to manage their own affairs. The village cooperatives also helped to break down social barriers since all members are treated as equals, irrespective of sex, caste, creed or religion. iv. The following points and/or lessons may be of particular interest: (a) The basic concept of the project was sound as was the project design which was based on the successful AMUL model. However, it should be appreciated that whereas the project was organized from the top down the AMUL model developed from the bottom up. The rate at which development can be implemented and the viability of the institutions created need to be more realistically taken account of in future projects. (b) The appraisal report placed too much emphasis on crossbred cow as the agent of change, and was overoptimistic regarding the acceptance by project participants of crossbreeding using artificial insemination as the chief means of increasing milk production. (c) The report was also overoptimistic with respect to the willingness or ability of the small/marginal farmer to use a portion of his land for the production of fodder and the use of balanced cattle feed for milk production. (d) The appraisal gave insufficient importance to the buffalo as a milk producing animal. (e) Project risks, particularly the possibility of excessive government involvement in project implementation and operation, farmers' acceptance of artificial insemination and crossbreeding, and the likelihood that project participants could attain the assumed production parameters, were not given adequate attention at appraisal. (f) The project should have given greater attention to the rearing of crossbred male offspring both for breeding and draft purposes. (g) The appraisal proposals for milk plants and feed mills were unrealistic with respect to capacities to be created and construction schedules. Detailed feasibility studies, including marketing surveys, should have been carried out prior to appraisal, or greater recognition accorded to the need for ongoing reassessments of the program during implementation. (h) It was unrealistic to expect that a newly created institution, the Rajasthan Dairy Development Corporation could implement complex civil and engineering works spread o.er different sites within a two-year period; - 135 - 2.03 The project was appraised in March/April 1974 together with the appraisal of the Madhya Pradesh Dairy Development Project (Cr. 522-IN). B. Project Area 2.04 The project area was located in eastern Rajasthan and covered the districts of Jaipur, Bharatpur (subsequently replaced by Bhilwara district), Alwar, Ajmer, Tonk and Sawaimadhopur. The June-September monsoon accounts for most of the rain, varying from about 500 mm (Ajmer) to 700 mm (Sawaimad- hopur). Total rural population is about 7.6 million distributed among some 9,550 villages, each of about 112 households. The project area covers approximately 5.8 million ha (17.3% of the state); 3.7 million ha are under cultivation, of which about 1.2 million ha are irrigated. The average size holding is about 4.5 ha, with about 90% of less than 5 ha (Table 2.1). The breedable stock is about 0.21 million cows and 0.16 million female buffaloes, and the average household maintains about 2 cows and 1 buffalo. At appraisal there were about 100 dairy cooperative societies operating in the project area. Table 2.1: LAND USE AND DISTRIBUTION OF LANDHOLDINGS IN THE PROJECT AREA (Thousands) Area (ha) Landholdings (Units) District Total Culti- Irri- Less 1-5 5-10 10 ha vated gated than 1 ha ha ha & Above Alvar 766 471 182 127 134 17 3 Ajmer 833 710 192 89 94 17 8 Bhilwara 1,040 460 194 72 72 1 - Jaipur 1,396 974 405 73 131 36 18 Sawaimadhopur 1,054 619 161 100 145 19 6 Tonk 719 497 96 36 67 20 8 Total 5,808 3,730 1,230 497 643 110 43 C. Project Description 2.05 The project as appraised comprised the following components: (a) establishment of about 1,800 DCS, 5 MPU, and the RDDC; (b) importation and multiplication of purebred exotic breeding stock and an associated AI program of crossbreeding native cattle with high producing exotic breeds, and the provision of extension programs to encourage the production of fodder, mixed farming and improved animal husbandry; - 136 - (c) construction of 5 union dairy plants and 5 cattle feed mills and the establishment of milk collection routes and milk chilling centers; (d) establishment of a regional diagnostic laboratory and a plant for the production of biological veterinary vaccines; (e) provision of a training center for each MPU, a program for developing instructors for training technical and field staff, and fellowships for key personnel; and (f) provision of consultant services. 2.06 RDDC was to be the main body for implementation and coordination of project activities and was to play an essential role in the initial estab- lishment of the DCS and MPU. It was to also have responsibility for building the dairy plants and other facilities under the project for the MPU, which was to operate them once the unions became adequately capitalized and staffed and a sufficient number of DCS had been organized. 2.07 Total project cost was estimated at US$51.8 million, with a foreign exchange component of US$12.7 million. The IDA credit of US$27.7 million was to finance about 54% of project cost. GOI and Government of Rajasthan (GOR) together was to provide equity capital to RDDC (approximately US$125,000 equivalent) and the MPU (approximately US$10 million equivalent). Eventually, the MPU was to qcquire at least 75% of government's shares in RDDC, and the DCS was to acquire at least 75% of government's shares in the unions. D. Project Objectives and Expected Outcomes 2.08 The basic objectives of the project were to ra'se the level of income of the rural poor through improved milk production and marketing, and estab- lish an integrated cooperative organizational structure for dairy development. 2.09 The direct economic benefit of the project was to be the increased production of milk, estimated at 475,000 tons by year 10. Furthermore, the project was expected to benefit, through increased income, about 245,000 agricultural households, or approximately 1.3 million people. The typical smallholder in the project arpa was to increase his net income from milk from about Rs 100 to Rs 400 annually by replacing his native cow with a crossbred cow. In addition, he was to have the opportunity to adopt a mixed farming system through the integration of a profitable livestock enterprise (dairying) into his traditional farming system. Since such a change was to include the introduction of a pasture/fodder crop rotation, it was expected to result in the long term improvement in soil structure and fertility, largely compensat- ing for some diversion of land from foodcrop production to fodder. 2.10 Social benefits were to be derived after the village DCS became firmly established and had a regular surplus of funds (estimated at appraisal at Rs 8,000 annually by year 8). These funds were expected to be used to augment or initiate village development schemes such as education, health, family planning, minor public works, and infrastructure. A further benefit was to accrue from improved nutrition due to increased intake of milk, particularly by children and infants. Also, benefits to consumers were to come from an - 136 - (c) construction of 5 union dairy plants and 5 cattle feed mills and the establishment of milk collection routes and milk chilling centers; (d) establishment of a regional diagnostic laboratory and a plant for the production of biological veterinary vaccines; (e) provision of a training center for each MPU, a program for developing instructors for training technical and field staff, and fellowships for key personnel; and (f) provision of consultant services. 2.06 RDDC was to be the main body for implementation and coordination of project activities and was to play an essential role in the initial estab- lishment of the DCS and MPU. It was to also have responsibility for building the dairy plants and other facilities under the project for the MPU, which was to operate them once the unions became adequately capitalized and staffed and a sufficient number of DCS had been organized. 2.07 Total project cost was estimated at US$51.8 million, with a foreign exchange component of US$12.7 million. The IDA credit of US$27.7 million was to finance about 54% of project cost. GOI and Government of Rajasthan (GOR) together was to provide equity capital to RDDC (approximately US$125,000 equivalent) and the MPU (approximately US$10 million equivalent). Eventually, the 'MPU was to Acquire at least 75Z of government's shares in RDDC, and the DCS was to acquire at least 75% of government's shares in the unions. D. Project Objectives and Expected Outcomes 2.08 The basic objectives of the project were to ra*se the level of income of the rural poor through improved milk production and marketing, and estab- lish an integrated cooperative organizational structure for dairy development. 2.09 The direct economic benefit of the project was to be the increased production of milk, estimated at 475,000 tons by year 10. Furthermore, the project was expected to benefit, through increased income, about 245,000 agricultural households, or approximately 1.3 million people. The typical smallholder in the project area was to increase his net income from milk from about Rs 100 to Rs 400 annually by replacing his native cow with a crossbred cow. In addition, he was to have the opportunity to adopt a mixed farming system through the integration of a profitable livestock enterprise (dairying) into his traditional farming system. Since such a change was to include the introduction of a pasture/fodder crop rotation, it was expected to result in the long term improvement in soil structure and fertility, largely compensat- ing for some diversion of land from foodcrop production to fodder. 2.10 Social benefits were to be derived after the village DCS became firmly established and had a regular surplus of funds (estimated at appraisal at Rs 8,000 annually by year 8). These funds were expected to be used to augment or initiate village development schemes such as education, health, family planning, minor public works, and infrastructure. A further benefit was to accrue from improved nutrition due to increased intake of milk, particularly by children and infants. Also, benefits to consumers were to come from an - 137 - improvement in nutrition due to increased availability of unadulterated pas- teurized milk in the urban areas. The estimated economic rate of return was 31%. E. Negotiations and Effectiveness 2.11 At negotiations, which were held in Washington in October 1974, the following major events were specified as conditions of credit effectiveness: (a) RDDC established and its managing director appointed; (b) the borrower subscribed to equity shares of RDDC in an amount of not less than Rs 390,000 and purchased such shares in an amount of not less than Rs 300,000; (c) GOR subscribed to equity shares of RDDC in an amount of not less than Rs 390,000 and purchased such shares in an amount of not less than Rs 300,000. Also, it subscribed to redeemable shares of RDDC in an amount of not less than Rs 550,000 and purchased such shares in an amount of not less than Rs 505,000; (d) RDDC made arrangements satisfactory to IDA to: (i) train executive staff of RDDC and the unions and spearhead teams for DCS implementation; (ii) provide first year field supervision; (iii) furnish consulting services to carry out a dairy marketing study; and (iv) assist in the preparation of specifications and in the evalua- tion and award of tenders for construction of the dairy plants and feed mills. (e) RDDC recruited the RDDC divisional managers for institutional develop- ment, livestock development, and engineering, and recruited consult- ants for dairy plant engineering, mass media communications, and fodder/dairy production; and (f) loan agreements satisfactory to IDA concluded between the Agricultural Refinance Corporation (ARC) and participating banks. 2.12 No special difficulties arose at negotiations and most conditions of effectiveness were met on schedule. However, delays were experienced in the appointment and training of key project staff; recruitment of project consult- ants; and finalization of lending arrangements. As a result, the credit was declared effective on August 8, 1975, three months later than expected. - 137 - improvement in nutrition due to increased availability of unadulterated pas- teurized milk in the urban areas. The estimated economic rate of return was 31%. E. Negotiations and Effectiveness 2.11 At negotiations, which were held in Washington in October 1974, the following major events were specified as conditions of credit effectiveness: (a) RDDC established and its managing director appointed; (b) the borrower subscribed to equity shares of RDDC in an amount of not less than Rs 390,000 and purchased such shares in an amount of not less than Rs 300,000; (c) (OR subscribed to equity shares of RDDC in an amount of not less than Rs 390,000 and purchased such shares in an amount of not less than Rs 300,000. Also, it subscribed to redeemable shares of RDDC in an amount of not less than Rs 550,000 and purchased such shares in an amount of not less than Rs 505,000; (d) RDDC made arrangements satisfactory to IDA to: (i) train executive staff of RDDC and the unions and spearhead teams for DCS implementation; (ii) provide first year field supervision; (iii) furnish consulting services to carry out a dairy marketing study; and (iv) assist in the preparation of specifications and in the evalua- tion and award of tenders for construction of the dairy plants and feed mills. (e) RDDC recruited the RDDC divisional managers for institutional develop- ment, livestock development, and engineering, and recruited consult- ants for dairy plant engineering, mass media communications, and fodder/dairy production; and (f) loan agreements satisfactory to IDA concluded between the Agricultural Refinance Corporation (ARC) and participating banks. 2.12 No special difficulties arose at negotiations and most conditions of effectiveness were met on schedule. However, delays were experienced in the appointment and training of key project staff; recruitment of project consult- ants; and finalization of lending arrangements. As a result, the credit was declared effective on August 8, 1975, three months later than expected. - 138 - III. IMPLEMENTATION A. Project Start-Up 3.01 Prior to credit effectiveness, two supervision missions assisted government and RDDC in complying with conditions of effectiveness. In addi- tion, these missions assisted RDDC in the initiation of project activities. Due to very capable management and strong government support, the project had a good start. The concept of village dairy cooperatives was well received by farmers and the formation of DCS and milk procurement in the first year of the project exceeded appraisal estimates. B. Changes in Project Design 3.02 At an early stage, the Bharatpur district was substituted by the Bhilwara district to streamline logistical operations. This change in the project area resulted in an adjustment in the location of the dairy plants and feed mills. 3.03 As a result of the survey carried out under the project, the number of new dairy plants was reduced from 5 to 4, resulting in an overall reduction in processing capacity from 500,000 lpd to 450,000 lpd (first stage of construc- tion), which remained unchanged throughout the project period. The survey also recommended a decrease in the number of chilling centers to be built from 15 to 8. Furthermore, the number of feed mills was reduced from five (total capacity of about 375 tons per day) to one, 100 ton per day plant, plus the expansion of an existing mill. 3.04 Since the project took over an existing GOR exotic cattle breeding farm, the need to import exotic dairy animals did not arise. In addition, with the introduction of frozen semen technology, operation of the MPU bull farms was discontinued for economic reasons. 3.05 The foreseen Diagnostic Laboratory (DLAB) was not constructed as existing diagnostic facilities of the GOR Department of Animal Husbandry were made available to the project. 3.06 Contrary to the origina! project concept (the AMUL model), the MPU were divested of the ownership of dairy plants and feed mills, which were expected to be their main income earning assets. 3.07 Credit funds for RDDC and MPU investments in facilities were to be made available by COI to ARC, who in turn would onlend the funds to par- ticipating banks. This procedure proved to be exceedingly cumbersome result- ing in extended delays in plant construction. Project lending arrangements were subsequently changed by channelling funds directly to RDDC/MPU through the Indian Dairy Corporation (para 3.65-3.67). - 138 - III. IMPLEMENTATION A. Project Start-Up 3.01 Prior to credit effectiveness, two supervision missions assisted government and RDDC in complying with conditions of effectiveness. In addi- tion, these missions assisted RDDC in the initiation of project activities. Due to very capable management and strong government support, the project had a good start. The concept of village dairy cooperatives was well received by farmers and the formation of DCS and milk procurement in the first year of the project exceeded appraisal estimates. B. Changes in Project Design 3.02 At an early stage, the Bharatpur district was substituted by the Bhilwara district to streamline logistical operations. This change in the project area resulted in an adjustment in the location of the dairy plants and feed mills. 3.03 As a result of the survey carried out under the project, the number of new dairy plants was reduced from 5 to 4, resulting in an overall reduction in processing capacity from 500,000 lpd to 450,000 lpd (first stage of construc- tion), which remained unchanged throughout the project period. The survey also recommended a decrease in the number of chilling centers to be built from 15 to 8. Furthermore, the number of feed mills was reduced from five (total capacity of about 375 tons per day) to one, 100 ton per day plant, plus the expansion of an existing mill. 3.04 Since the project took over an existing GOR exotic cattle breeding farm, the need to import exotic 4airy animals did not arise. In addition, with the introduction of frozen semen technology, operation of the MPU bull farms was discontinued for economic reasons. 3.05 The foreseen Diagnostic Laboratory (DLAB) was not constructed as existing diagnostic facilities of the GOR Department of Animal Husbandry were made available to the project. 3.06 Contrary to the origina! project concept (the AMUL model), the MPU were divested of the ownership of dairy plants and feed mills, which were expected to be their main income earning assets. 3.07 Credit funds for RDDC and MPU investments in facilities were to be made available by COI to ARC, who in turn would onlend the funds to par- ticipating banks. This procedure proved to be exceedingly cumbersome result- ing in extended delays in plant construction. Project lending arrangements were subsequently changed by channelling funds directly to RDDC/MPU through the Indian Dairy Corporation (para 3.65-3.67). - 139 - C. General Implementation Experience 3.08 Despite a good start, physical implementation of the project was considerably slower than anticipated. Although DCS formation and milk procurement during the first year exceeded appraisal estimates, construction of dairy processing facilities did not proceed as scheduled because of techni- cal (para 3.40) and administrative (paras 3.65, 3.67) reasons. Thus, at the end of year one, formation of new DCS had to be curtailed and, as a conse- quence, implementation of other project components fell behind schedule. 3.09 Project management was generally satisfactory and GOR/GOI support to the project was good throughout. 3.10 The credit closed on December 31, 1983, following a one year extension. D. Implementation of Main Components Institutions and Organizational Structure 3.11 As envisaged (para 2.05), the entities established under the project were the RDDC, the MPU, and the DCS. 3.12 The RDDC was registered on March 31, 1975 as a private limited company under the Indian Companies Act of 1956. It was organized into 4 divisions (finance and management, development, projects, and marketing) and a managing director was appointed as the chief executive officer. 3.13 RDDC performed well during the first 2 years of the project. However, in view of the fact that dairy development in Rajasthan was supported by several funding arrangements 1/ apart from the IDA dairy project, GOR decided to set up a statewide organization which was to be the apex coordinating and implementing authority for all dairy development activities. Accordingly, the Rajasthan Cooperative Dairy Federation (RCDF) was established in October 1977, and the functions and responsibilities of RDDC were transferred to the new entity. In addition, and contrary to the concept of the project, RCDF took over the ownership and operation of the dairy plants, feed mills and chilling centers, as well as the marketing of milk and milk products. With this change the MPU had responsibility only for DCS formation, milk collection, supply of inputs for milk production enhancement, and the training of village extension workers, DCS management committee members, and farmers. 3.14 Initially, RCDF was governed by a 12 member board consisting of 5 representatives of the MPU, 3 GOR nominees, 1 nominee each from GOI and IDC, a dairy expert, and the managing director of RCDF. In mid-1984, the board was dissolved for political reasons and the managing director appointed as administrator. RCDF has 6 divisions: administration, accounts, marketing, 1/ The IDA assisted DPAP project (Cr. 525-IN), the WFP supported OF-I program, and GOR directly were supporting the formation of DCS and unions in other districts of the state. - 139 - C. General Implementation Experience 3.08 Despite a good start, physical implementation of the project was considerably slower than anticipated. Although DCS formation and milk procurement during the first year exceeded appraisal estimates, construction of dairy processing facilities did not proceed as scheduled because of techni- cal (para 3.40) and administrative (paras 3.65, 3.67) reasons. Thus, at the end of year one, formation of new DCS had to be curtailed and, as a conse- quence, implementation of other project components fell behind schedule. 3.09 Project management was generally satisfactory and GOR/GOI support to the project was good throughout. 3.10 The credit closed on December 31, 1983, following a one year extension. D. Implementation of Main Components Institutions and Organizational Structure 3.11 As envisaged (para 2.05), the entities established under the project were the RDDC, the NPU, and the DCS. 3.12 The RDDC was registered on March 31, 1975 as a private limited company under the Indian Companies Act of 1956. It was organized into 4 divisions (finance and management, development, projects, and marketing) and a managing director was appointed as the chief executive officer. 3.13 RDDC performed well during the first 2 years of the project. However, in view of the fact that dairy development in Rajasthan was supported by several funding arrangements 1/ apart from the IDA dairy project, GOR decided to set up a statewide organization which was to be the apex coordinating and implementing authority for all dairy development activities. Accordingly, the Rajasthan Cooperative Dairy Federation (RCDF) was established in October 1977, and the functions and responsibilities of RDDC were transferred to the new entity. In addition, and contrary to the concept of the project, RCDF took over the ownership and operation of the dairy plants, feed mills and chilling centers, as well as the marketing of milk and milk products. With this change the MPU had responsibility only for DCS formation, milk collection, supply of inputs for milk production enhancement, and the training of village extension workers, DCS management committee members, and farmers. 3.14 Initially, RCDF was governed by a 12 member board consisting of 5 representatives of the MPU, 3 GOR nominees, 1 nominee each from GOI and IDC, a dairy expert, and the managing director of RCDF. In mid-1984, the board was dissolved for political reasons and the managing director appointed as administrator. RCDF has 6 divisions: administration, accounts, marketing, 1/ The IDA assisted DPAP project (Cr. 525-IN), the WFP supported OF-I program, and GOR directly were supporting the formation of DCS and unions in other districts of the state. - 140 - livestock development, institutional development, and engineering, each headed by a divisional manager. 3.15 Five MPU were established, one in each of the milksheds of Ajmer, Alwar, Bhilwara, Jaipur, and Sawaimadhopur-Tonk, and registration of all unions was completed by June 1975. 3.16 As envisaged at appraisal, the principal functions and respon- sibilities of the MPU were to: (a) organize and effect the implementation of DCS; (b) assist the DCS with organization, management, inspection, and audit- ing; (c) establish and supervise milk and cattle feed transportation; (d) collect, process and market DCS members' milk and operate the feed mills; (e) provide animal health and AI services; (f) demonstrate improved mixed farming and fodder production techniques; and (g) organize training for village extension workers and DCS management committee members. Despite assurances being given that each union would be free to set the sale price of its products, procurement price of milk, and charges for services to members, prices were controlled by GOR. Thus, the MPU were not autonomous units as intended. Also, as mentioned above (para 3.13), the functions listed under (d) were subsequently taken over by RCDF. This further reduced the unions' role in decision making and development. 3.17 Each union is governed by a 9 member board, 5 of whom are repre- sentatives of the DCS and 3 are GOR nominees. The remaining member represents the banking community. The manager of a union is the chief executive and is responsible for day to day operations. He is assisted by a team of project officers who look after specialized activities like DCS organization and management, organization and delivery of inputs, and training and extension. 3.18 The DCS are the basic organizational units at the village level. Their major functions and responsibilities are to: (a) act as centers for milk collection; (b) effect regular payments to producers; (c) sell balanced cattle feed; (d) provide AI and veterinary first aid services to members' cows and buffaloes; and - 140 - livestock development, institutional development, and engineering, each headed by a divisional manager. 3.15 Five MPU were established, one in each of the milksheds of Ajmer, Alwar, Bhilwara, Jaipur, and Sawaimadhopur-Tonk, and registration of all unions was completed by June 1975. 3.16 As envisaged at appraisal, the principal functions and respon- sibilities of the MPU were to: (a) organize and effect the implementation of DCS; (b) assist the DCS with organization, management, inspection, and audit- ing; (c) establish and supervise milk and cattle feed transportation; (d) collect, process and market DCS members' milk and operate the feed mills; (e) provide animal health and AI services; (f) demonstrate improved mixed farming and fodder production techniques; and (g) organize training for village extension workers and DCS management committee members. Despite assurances being given that each union would be free to set the sale price of its products, procurement price of milk, and charges for services to members, prices were controlled by GOR. Thus, the MPU were not autonomous units as intended. Also, as mentioned above (para 3.13), the functions listed under (d) were subsequently taken over by RCDF. This further reduced the unions' role in decision making and development. 3.17 Each union is governed by a 9 member board, 5 of whom are repre- sentatives of the DCS and 3 are GOR nominees. The remaining member represents the banking community. The manager of a union is the chief executive and is responsible for day to day operations. He is assisted by a team of project officers who look after specialized activities like DCS organization and management, organization and delivery of inputs, and training and extension. 3.18 The DCS are the basic organizational units at the village level. Their major functions and responsibilities are to: (a) act as centers for milk collection; (b) effect regular payments to producers; (c) sell balanced cattle feed; (d) provide AI and veterinary first aid services to members' cows and buffaloes; and - 141 - (e) communicate cooperative and technical information to their members. 3.19 At appraisal, it was envisaged that a total of 1,800 DCS (average of 360 per MPU) were to be established during the first 5 years of the project. Furthermore, it was expected that these DCS at maturity (year 7) would involve an estimated 245,000 rural households (about 1.3 million individuals). While the number of DCS formed during the first year exceeded expectations (313 vs 300), by project year 5 (1979-80), only 974 DCS (with 55,200 members) had been organized, and by the end of the project (1983-84), only 1,360 societies had been established with a total membership of 82,748 (Annex Table 6). Forty eight percent of the members are small/marginal farmers and landless agricul- tural laborers and 17% belong to Scheduled Castes and Scheduled Tribes. 3.20 The slower than expected rate of construction of milk processing facilities (para 3.40) was the main constraint to the formation of DCS. However, the poor road infrastructure in the districts of Sawaimadhopur and Tonk was also a major factor. The percentage of villages in these districts which were accessible by fair weather roads was found to be considerably less than the 60% assumed at appraisal for all villages in the project area. As a consequence, only 122 DCS could be established in the Sawaimadhopur/Tonk milkshed, compared with an average of 357 for the other four milksheds (Annex Table 6). 3.21 It should be pointed out that although DCS formation significantly increased following commissioning of the first milk plant constructed under the project, the rate at which societies were formed after year 5 never reached the pace set during the first 3 years of the project. Presumably, this was due to the fact that the initial farmer enthusiasm for cooperatives, which the project was unable to maintain, was never regained. To date, just over 1,800 DCS have been organized and indications are that the growth in numbers will be substantial over the next 5 years. 3.22 As envisaged at appraisal, each DCS is managed by a committee of 9 members, elected for a 3 year term, with provision that one third of the members retire each year. The committee elects a chairman from among its members and it appoints a paid secretary who is responsible for day to day operations of the society. The secretary may be assisted by 1 to 2 persons depending upon the size and the volume of business of the DCS. The DCS staff is trained in milk testing, basic record keeping, veterinary first aid, and AI at the MPU training centers. During the training period they are paid by the MPU and, thereafter, they are paid out of the revenues of the society. Livestock Improvement and Milk Production 3.23 It was expected that initially milk production would be increased from existing native cattle and buffaloes through the adoption of better feeding and management practices; but the greatest increase would come from an inten- sive program of crossbreeding native cattle with high producing exotic dairy breeds. 3.24 The first crossbred animals would come into production in year 4 and were expected to increase in significant numbers thereafter. In a typical DCS, crossbred cows in milk were to increase from 8 in year 4 to 46 by year 6 and 158 by year 12. Simultaneously, local cows in milk were to increase from - 141 - (e) communicate cooperative and technical information to their members. 3.19 At appraisal, it was envisaged that a total of 1,800 DCS (average of 360 per MPU) were to be established during the first 5 years of the project. Furthermore, it was expected that these DCS at maturity (year 7) would involve an estimated 245,000 rural households (about 1.3 million individuals). While the number of DCS formed during the first year exceeded expectations (313 vs 300), by project year 5 (1979-80), only 974 DCS (with 55,200 members) had been organized, and by the end of the project (1983-84), only 1,360 societies had been established with a total membership of 82,748 (Annex Table 6). Forty eight percent of the members are small/marginal farmers and landless agricul- tural laborers and 17% belong to Scheduled Castes and Scheduled Tribes. 3.20 The slower than expected rate of construction of milk processing facilities (para 3.40) was the main constraint to the formation of DCS. However, the poor road infrastructure in the districts of Sawaimadhopur and Tonk was also a major factor. The percentage of villages in these districts which were accessible by fair weather roads was found to be considerably less than the 60% assumed at appraisal for all villages in the project area. As a consequence, only 122 DCS could be established in the Sawaimadhopur/Tonk milkshed, compared with an average of 357 for the other four milksheds (Annex Table 6). 3.21 It should be pointed out that although DCS formation significantly increased following commissioning of the first milk plant constructed under the project, the rate at which societies were formed after year 5 never reached the pace set during the first 3 years of the project. Presumably, this was due to the fact that the initial farmer enthusiasm for cooperatives, which the project was unable to maintain, was never regained. To date, just over 1,800 DCS have been organized and indications are that the growth in numbers will be substantial over the next 5 years. 3.22 As envisaged at appraisal, each DCS is managed by a committee of 9 members, elected for a 3 year tet-m, with provision that one third of the members retire each year. The committee elects a chairman from among its members and it appoints a paid secretary who is responsible for day to day operations of the society. The secretary may be assisted by 1 to 2 persons depending upon the size and the volume of business of the DCS. The DCS staff is trained in milk testing, basic record keeping, veterinary first aid, and AI at the MPU training centers. During the training period they are paid by the MPU and, thereafter, they are paid out of the revenues of the society. Livestock Improvement and Milk Production 3.23 It was expected that initially milk production would be increased from existing native cattle and buffaloes through the adoption of better feeding and management practices; but the greatest increase would come from an inten- sive program of crossbreeding native cattle with high producing exotic dairy breeds. 3.24 The first crossbred animals would come into production in year 4 and were expected to increase in significant numbers thereafter. In a typical DCS, crossbred cows in milk were to increase from 8 in year 4 to 46 by year 6 and 158 by year 12. Simultaneously, local cows in milk were to increase from - 142 - 38 (year 1) to 101 (year 4), and thereafter gradually decrease with a complete phasing out by year 10. At the same time, the numbers of milking buffaloes were to inc:aase from 31 (year 1) to 94 (year 5), and thereafter stabilize. 3.25 Against these forecasts a typical DCS under the project developed as shown in Table 3.1. Table 3.1: ANIMALS IN MILK IN TYPICAL DCS Year a/ In Milk 1 4 6 12 Local Cows 104 102 101 101 Crossbred Cows - 3 9 34 Buffaloes 95 103 109 134 a/ Estimates. Several important differences between what was predicted and the actual situa- tion should be noted: (a) the actual number of local cows and buffaloes in milk in the first year was considerably higher than estimated; (b) lcal cow numbers did not increase initially as predicted, neither were they replaced by crossbred animals; (c) the number of crossbred cows increased at a significantly slower rate than expected; and (d) buffalo numbers increased steadily over the project period. Thus, while the overall growth of the typical DCS herd closely paralleled that predicted at appraisal, there was a major shift in herd composition. The SAR assumed that crossbred cows would increase from 4% of the total herd in year 4 to 60% in year 10, and that native cows would decrease from 52% to zero. In fact, the number of crossbreds only increased from 1% to 10%, and native cows decreased only slightly from 49% to 40%. 3.26 At appraisal, details of the project's AI program were not worked out. It was anticipated that RDDC would own and operate an exotic bull breeding farm which would supply bulls to the bull farms (AI centers) set up in each MPU. Further, it was assumed that chilled liquid semen from the MPU centers would be delivered daily to all DCS by the milk collection trucks. This system worked fairly well during the initial years of the project when DCS were established in the more accessible villages. Even so, only slightly more than half of the societies were covered under the AI program. As DCS forma- tion moved into the more remote villages, the rate of coverage decreased. Conception rates were low because of poor semen quality resulting from inade- quate transport and storage facilities coupled with the problem of getting - 149 - 3.56 The demand for veterinary servinc-, is growing and the MPU are prepared to expand their animal health activiti, However, increasing costs will probably require an upward adjustment oL the fee structure and/or more effi- cient use of existing government veterinary services. Technical Assistance, Contractors and Suppliers 3.57 A total of 13 manyears was provided for consultancy services in dairy plant engineering (3), mass media communications (3), forage/livestock produc- tion (3), dairy processing (2), and dairy marketing (2). Recruitment of the first 3 consultants was a condition of credit effectiveness. All consultants were recruited locally and all were employed for the times specified with the following exceptions: the marketing consultancy was reduced to one year, and separate individuals were employed for forage production and livestock produc- tion, each for a 3 year period. As envisaged, all consultants, except the dairy plant engineer, devoted a major portion of their time to training activities. 3.58 In general, the performance of the consultants was judged satisfac- tory. An exception was the mass media communication specialist who encountered difficulties in designing and producing visual aids and other materials to effectively reach the rural population. 3.59 No major difficulties were encountered with the civil contractors engaged by NDDB except in the case of the Ajmer dairy plant expansion. Here the poor performance of the contractor led to an extended delay in the comple- tion and commissioning of the plant and to an increase in cost. 3.60 Although the delivery of boilers for most dairy plants was delayed by 4 to 5 months, as was the provision of the switchboard for the Alwar plant, the overall performance of the suppliers of equipment, spare parts, and utilities was satisfactory. E. Project Costs and Financing 3.61 The total expenditure on the project was Rs 343.2 million (US$39 million) compared with the appraisal estimate of Rs 414.4 million (US$51.8 million) (Annex Table 2). Most of the cost reduction can be attributed to the fewer number of feed mills constructed, lower than projected expenditure on technical services, low utilization of the calf rearing grant due to the small number of crossbreds in the project, and deletion of the diagnostic laboratory. Although the number of milk processing facilities was reduced almost 50%, the delay in constructing these facilities resulted in a modest increase in their cost. - 150 - 3.62 Project financing is summarised in Table 3.3. Table 3.3: PROJECT FINANCING (Rs '000) Source SAR Estimates Actual GOI 67,280 59,930 GOR 78,560 101,680 ARC/Banks 44,960 DCS Members 2,000 950 IDA 221,600 180,665 Total 414,400 343,225 F. Procurement 3.63 At appraisal it was expected that RDDC would be the sole procurement agent for all RDDC and MPU investment items financed by IDA. However, since the services of NDDB were utilized for the construction, installation, and commissioning of all processing facilities on a turnkey basis, NDDB was also given responsibility for procuring under ICB arrangements all major items needed for these facilities. Not only did this relieve RDDC of a considerable work load, it also resulted in significant cost savings since NDDB was able to procure in bulk on a global tender basis. Minor items of equipment and sup- plies were procured by RDDC/RCDF following LCB procedures. BWI equipment was procured through normal GOR channels as stipulated in the SAR. Procurement was satisfactorily carried out and the borrower had no difficulties following the Bank's Guidelines. Neither did he request any changes in procurement procedures. G. Disbursements 3.64 Disbursements were projected to extend over 7 years, beginning in the first quarter of IDA FY76. Because of delays in the construction of process- ing facilities, resulting mainly from the cumbersome arrangements set up under the project for channelling of credit funds, actual disbursements extended over 9 years (Annex Table 3). US$23.3 million, or about 84%, of the credit was disbursed. H. Adjustments in Legal Agreements 3.65 Under the project, US$22.3 million of the IDA credit would be chan- nelled by GOI to RDDC and the MPU through ARC and the participating banks. This multitiered financial arrangement proved to be cumbersome and, in the case of dairy and feed plant construction, resulted in frustration, multiple - 150 - 3.62 Project financing is summarized in Table 3.3. Table 3.3: PROJECT FINANCING (Rs '000) Source SAR Estimates Actual GOI 67,280 59,930 GOR 78,560 101,680 ARC/Banks 44,960 - DCS Members 2,000 950 IDA 221,600 180,665 Total 414,400 343,225 F. Procurement 3.63 At appraisal it was expected that RDDC would be the sole procurement agent for all RDDC and MPU investment items financed by IDA. However, since the services of NDDB were utilized for the construction, installation, and commissioning of all processing facilities on a turnkey basis, NDDB was also given responsibility for procuring under ICB arrangements all major items needed for these facilities. Not only did this relieve RDDC of a considerable work load, it also resulted in significant cost savings since NDDB was able to procure in bulk on a global tender basis. Minor items of equipment and sup- plies were procured by RDDC/RCDF following LCB procedures. BVVI equipment was procured through normal GOR channels as stipulated in the SAR. Procurement was satisfactorily carried out and the borrower had no difficulties following the Bank's Guidelines. Neither did he request any changes in procurement procedures. G. Disbursements 3.64 Disbursements were projected to extend over 7 years, beginning in the first quarter of IDA FY76. Because of delays in the construction of process- ing facilities, resulting mainly from the cumbersome arrangements set up under the project for channelling of credit funds, actual disbursements extended over 9 years (Annex Table 3). US$23.3 million, or about 84%, of the credit was disbursed. H. Adjustments in Legal Agreements 3.65 Under the project, US$22.3 million of the IDA credit would be chan- nelled by GOI to RDDC and the MPU through ARC and the participating banks. This multitiered financial arrangement proved to be cumbersome and, in the case of dairy and feed plant construction, resulted in frustration, multiple - 151 - appraisal of subproject loan requests, and lengthy delays. NDDB subcontrac- tors frequently operated on advance payments and provided NDDB with a series of running bills as each subcontract progressed. The accounts were finalized only at job compldtion. As turnkey contractor, NDDB retained title to all machinery and equipment until final plant acceptance by project authorities. The multitude of small contracts, the use of local languages in billing proce- dures, the lack of photocopy equipment, and the impracticality of the task of forwarding to RDDC periodic documentation on partly paid jobs, made it vir- tually impossible for RDDC to provide proper documentation to the participat- ing banks until each plant was completed. Without this documentation, the banks could not obtain refinancing from ARC, which in turn could not claim refunding from GOI. As a result, IDA disbursements were severely delayed. 3.66 After discussing the matter with GOI/GOR, NDDB, ARC, and RDDC, Bank staff advised that the problem could be overcome by making provision in the DCA for financing turnkey contracts, including advances under such contracts. Accordingly, on April 27, 1978, Schedule 1 of the DCA was amended through the addition of another category, which provided for US$16 million to be disbursed for "construction of dairy and feed plants under turnkey contracts", with 80% of total expenditures eligible for refinancing (Annex Table 4). This enabled mobilization funds to be passed to the contractors, which greatly enhanced the speed of project works and improved project disbursements. Payment under this new category was based on NDDB statements of expenditure, with supervision missions checking on physical progress in relation to expenditures. NDDB submitted quarterly progress statements of expenditure together with final detailed billings for each construction as and when completed. These state- ments indicated the progress of expenditures against advances, and claims for further financing by NDDB from RDDC were met only when expenditures approximated advances. On June 12, 1980, Schedule 1 was further amended by increasing the new category from US$16 million to US$17.4 million and decreas- ing the unallocated category accordingly (Annex Table 4). 3.67 On May 19, 1978, GOI proposed that the project financing arrangements be streamlined by allowing the project to borrow under similar terms and conditions to those proposed for the National Dairy Project (Cr. 824-IN), by drawing funds directly from ARC or from IDC, rather than through intermediary banks. IDA accepted the proposal and an Amending Agreement between IDA, GOI, GOR and IDC was signed in June 1980. A Subsidiary Loan Agreement between GOI and IDC was signed on November 10, 1980. The Subsidiary Loan Agreement between GO and ARC was also amended to reflect IDC's participation in the project. This change in financing arrangements further enhanced project progress and credit disbursements. 3.68 In May 1983, IDA agreed to extend the credit closing date to Decem- ber 31, 1983 in respect of expenditures incurred in connection with the con- struction of dairy plants, union training centers and staff quarters, and the purchase of certain items of milk processing equipment. - 151 - appraisal of subproject loan requests, and lengthy delays. NDDB subcontrac- tors frequently operated on advance payments and provided NDDB with a series of running bills as each subcontract progressed. The accounts were finalized only at job completion. As turnkey contractor, NDDB retained title to all machinery and equipment until final plant acceptance by project authorities. The multitude of small contracts, the use of local languages in billing proce- dures, the lack of photocopy equipment, and the impracticality of the task of forwarding to RDDC periodic documentation on partly paid jobs, made it vir- tually impossible for RDDC to provide proper documentation to the participat- ing banks until each plant was completed. Without this documentation, the banks could not obtain refinancing from ARC, which in turn could not claim refunding from GOI. As a result, IDA disbursements were severely delayed. 3.66 After discussing the matter with GOI/COR, NDDB, ARC, and RDDC, Bank staff advised that the problem could be overcome by making provision in the DCA for financing turnkey contracts, including advances under such contracts. Accordingly, on April 27, 1978, Schedule 1 of the DCA was amended through the addition of another category, which provided for US$16 million to be disbursed for "construction of dairy and feed plants under turnkey contracts", with 80% of total expenditures eligible for refinancing (Annex Table 4). This enabled mobilization funds to be passed to the contractors, which greatly enhanced the speed of project works and improved project disbursements. Payment under this new category was based on NDDB statements of expenditure, with supervision missions checking on physical progress in relation to expenditures. NDDB submitted quarterly progress statements of expenditure together with final detailed billings for each construction as and when completed. These state- ments indicated the progress of expenditures against advances, and claims for further financing by NDDB from RDDC were met only when expenditures approximated advances. On June 12, 1980, Schedule 1 was further amended by increasing the new category from US$16 million to US$17.4 million and decreas- ing the unallocated category accordingly (Annex Table 4). 3.67 On May 19, 1978, GOI proposed that the project financing arrangements be streamlined by allowing the project to borrow under similar terms and conditions to those proposed for the National Dairy Project (Cr. 824-IN), by drawing funds directly from ARC or from IDC, rather than through intermediary banks. IDA accepted the proposal and an Amending Agreement between IDA, OI, GOR and IDC was signed in June 1980. A Subsidiary Loan Agreement between GOI and IDC was signed on November 10, 1980. The Subsidiary Loan Agreement between GOI and ARC was also amended to reflect IDC's participation in the project. This change in financing arrangements further enhanced project progress and credit disbursements. 3.68 In May 1983, IDA agreed to extend the credit closing date to Decem- ber 31, 1983 in respect of expenditures incurred in connection with the con- struction of dairy plants, union training centers and staff quarters, and the purchase of certain items of milk processing equipment. - 152 - IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENTS 4.01 The overall performance of the institutions engaged in project implementation was satisfactory, although a number of delays and shortfalls in quantitative project targets can be attributed in part to institutional weaknesses. A. Implementing Agencies 4.02 RDDC/RCDF. RDDC was set up in a timely manner, headed by a very capable managing director, and was staffed appropriately. Thus it served effectively in its role as the center for coordination and implementation of project activities during the initial years of the project. 4.03 In 1977, a statewide federation of milk unions (RCDF) was established and RDDC's functions and activities were transferred to the federation The federation assumed control and operation of the dairy plants and feed mills. This decision was taken by GOR mainly because projections indicated that the unions would not become financially viable ir time to service their debt obligations. 4.04 This change in institutional framework and asset structure brought with it a number of disadvantages: (a) it deprived the MPU of potential sources of income and, thus, reduced their developmental role; (b) it eliminated healthy competition between MPU; (c) it led to duplication in certain managerial and administrative staff with an increase in overhead costs; and (d) management became centralized and more remote. Furthermore, since the MPU controlled no assets, the DCS had no incentive to purchase shares in the unions and, therefore, producer influence on dairy development beyond the village level was limited. Finally, the overall thrust of the project was diluted since RDCF was given responsibility for overall dairy development in the state as opposed to RDDC's mandate which was confined to the project area. 4.05 The change did, however, offer certain advantages: (a) it allowed a more coordinated and integrated approach to dairy development in the state;i (b) it resulted in better utilization of transport and processing facilities; (c) it provided some relief to those processing units which encountered operational losses since RCDF balanced profits and losses among the different dairies and feed mills; and - 152 - IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENTS 4.01 The overall performance of the institutions engaged in project implementation was satisfactory, although a number of delays and shortfalls in quantitative project targets can be attributed in part to institutional weaknesses. A. Implementing Agencies 4.02 RDDC/RCDF. RDDC was set up in a timely manner, headed by a very capable managing director, and was staffed appropriately. Thus it served effectively in its role as the center for coordination and implementation of project activities during the initial years of the project. 4.03 In 1977, a statewide federation of milk unions (RCDF) was established and RDDC's functions and activities were transferred to the federation The federation assumed control and operation of the dairy plants and feed mills. This decision was taken by GOR mainly because projections indicated that the unions would not become financially viable ir time to service their debt obligations. 4.04 This change in institutional framework and asset structure brought with it a number of disadvantages: (a) it deprived the MPU of potential sources of income and, thus, reduced their developmental role; (b) it eliminated healthy competition between MPU; (c) it led to duplication in certain managerial and administrative staff with an increase in overhead costs; and (d) management became centralized and more remote. Furthermore, since the MPU controlled no assets, the DCS had no incentive to purchase shares in the unions and, therefore, producer influence on dairy development beyond the village level was limited. Finally, the overall thrust of the project was diluted since RDCF was given responsibility for overall dairy development in the state as opposed to RDDC's mandate which was confined to the project area. 4.05 The change did, however, offer certain advantages: (a) it allowed a more coordinated and integrated approach to dairy development in the state; (b) it resulted in better utilization of transport and processing facilities; (c) it provided some relief to those processing units which encountered operational losses since RCDF balanced profits and losses among the different dairies and feed mills; and - 153 - (d) it provided a guaranteed centralized debt service (lender has to deal only with the RCDF instead of with the separate unions). 4.06 While it may be argued that up to this point of dairy development in Rajasthan the advantages have outweighted the disadvantages, the original concept of a cooperative organizational structure, which is producer owned and controlled, should be reintroduced, and it is encouraging to note that this is in fact now under consideration by GOR. 4.07 In general, the services provided by RCDF were satisfactory. However, its milk pricing and marketing role is severely limited by the absorptive capacity and price offered by the Delhi market, and by the fact that producer and local retail milk prices. 4.08 MPU. The 5 MPU were organized and registered on schedule by RDDC. Also, the staffing pattern suggested at appraisal was generally adhered to; however, when the unions' activities were reduced, their staff numbers were decrease considerably (transferred to RCDF). Although the services provided to the DCS by the MPU were constrained by escalating costs and other factors, the unions' milk collection and transport system was quite efficient. Fur- thermore, the MPU performed their training functions satisfactorily. 4.09 DCS. The village societies carried out well the functions they were established to perform. Farmer participation was good and management of the societies is generally of a high standard as indicated by the fact that most of the DCS show annual profits. 4.10 The project did not include a farm credit component as crossbred animals were not available in the state for purchase and credit requirements for increasing fodder production were expected to be available through exist- ing ARC schemes for minor irrigation involving dug wells. A number of wells were dug and minor irrigation schemes established over the project period, however, it appears that few of these were used for producing fodder. The most important credit institution used for this purpose was the Primary Land Development Bank whose performance was reported as satisfactory. B. Auditing and Reporting 4.11 Auditing of accounts and submission of financial statements and audit reports were far from satisfactory. While RDDC accounts were timely submitted and audited, the change from a corporation to a federation created a number of difficulties which considerably delayed the preparation of audit reports. Even today the audit of RCDF accounts is 4 years behind schedule although accounts have been prepared up to 1983-84. 4.12 The accounts of cooperative institutions in Rajasthan are audited by the Department of Audit and Inspection under the Registrar of Cooperatives. A major reason for the unsatisfactory audit situation was the failure of the Department to strengthen its staff (as envisaged at appraisal) to carry out the additional auditing functions imposed by the project. - 153 - (d) it provided a guaranteed centralized debt service (tender has to deal only with the RCDF instead of with the separate unions). 4.06 While it may be argued that up to this point of dairy development in Rajasthan the advantages have outweighted the disadvantages, the original concept of a cooperative organizational structure, which is producer owned and controlled, should be reintroduced, and it is encouraging to note that this is in fact now under consideration by GOR. 4.07 In general, the services provided by RCDF were satisfactory. However, its milk pricing and marketing role is severely limited by the absorptive capacity and price offered by the Delhi market, and by the fact that producer and local retail milk prices. 4.08 MPU. The 5 MPU were organized and registered on schedule by RDDC. Also, the staffing pattern suggested at appraisal was generally adhered to; however, when the unions' activities were reduced, their staff numbers were decrease considerably (transferred to RCDF). Although the services provided to the DCS by the MPU were constrained by escalating costs and other factors, the unions' milk collection and transport system was quite efficient. Fur- thermore, the MPU performed their training functions satisfactorily. 4.09 DCS. The village societies carried out well the functions they were established to perform. Farmer participation was good and management of the societies is generally of a high standard as indicated by the fact that most of the DCS show annual profits. 4.10 The project did not include a farm credit component as crossbred animals were not available in the state for purchase and credit requirements for increasing fodder production were expected to be available through exist- ing ARC schemes for minor irrigation involving dug wells. A number of wells were dug and minor irrigation schemes established over the project period, however, it appears that few of these were used for producing fodder. The most important credit institution used for this purpose was the Primary Land Development Bank whose performance was reported as satisfactory. B. Auditing and Reporting 4.11 Auditing of accounts and submission of financial statements and audit reports were far from satisfactory. While RDDC accounts were timely submitted and audited, the change from a corporation to a federation created a number of difficulties which considerably delayed the preparation of audit reports. Even today the audit of RCDF accounts is 4 years behind schedule although accounts have been prepared up to 1983-84. 4.12 The accounts of cooperative institutions in Rajasthan are audited by the Department of Audit and Inspection under the Registrar of Cooperatives. A major reason for the unsatisfactory audit situation was the failure of the Department to strengthen its staff (as envisaged at appraisal) to carry out the additional auditing functions imposed by the project. - 154 - 4.13 Reporting by RDDC/RCDF was good. Quarterly progress reports generally covering all project activities were submitted in a timely manner. V. PROJECT IMPACT A. Incremental Production 5.01 According to agricultural census data, the number of cattle and buf- faloes in milk in the project area increased by 19% between 1977 and 1983, against a statewide increase of 101. The steeper increase in the former case is attributed to the establishment by the project of a market outlet for surplus milk coupled with reduced mortality rates in stock as a result of improved animal health services. No milking crossbred animals were reported in 1977, while in 1983, 24,000 were recorded for the entire state, about 90% of which were in the project area. 5.02 Total milk production in the project area is estimated to have increased from about 50 million liters in 1975-76 to about 400 million liters in 1983-84, the year the project closed. At appraisal, incremental milk production was projected to reach 106 million liters in year 5 and 512 million liters in year 10. The estimated actual incremental production was approximately 13 million liters and 90 million liters, respectively. Whereas 73% and 26%, respectively, of the milk produced under the project was expected to come from crossbred cows and buffaloes, their estimated actual contribution was 14% and 60%. 8. Technological Change 5.03 The project contributed substantially to improved animal health serv- ices. It also introduced a number of new and improved technologies (crossbreeding, AI, frozen semen, high yielding fodder, balanced cattle feed); however, the uptake of these to date has not been widespread. The provision by the project of a secure market outlet for farmers' surplus milk together with the establishment of the necessary milk processing and marketing infrastructure, has been the most important single factor in dairy development in Rajasthan. 5.04 While farmer acceptance of new technology introduced by the project was not as rapid as expected, there are indications that the limits of milk production under existing traditional technology may have been reached and that new production practices will be taken up by an increasing number of producers in the future. Thus, it is expected that producers will increas- ingly adopt better feeding and management practices, as well as improved breeding practices, and that production and productivity will increase sub- stantially as a consequence. - 154 - 4.13 Reporting by RDDC/RCDF was good. Quarterly progress reports generally covering all project activities were submitted in a timely manner. V. PROJECT IMPACT A. Incremental Production 5.01 According to agricultural census data, the number of cattle and buf- faloes in milk in the project area increased by 19% between 1977 and 1983, against a statewide increase of 101. The steeper increase in the former case is attributed to the establishment by the project of a market outlet for surplus milk coupled with reduced mortality rates in stock as a result of improved animal health services. No milking crossbred animals were reported in 1977, while in 1983, 24,000 were recorded for the entire state, about 90% of which were in the project area. 5.02 Total milk production in the project area is estimated to have increased from about 50 million liters in 1975-76 to about 400 million liters in 1983-84, the year the project closed. At appraisal, incremental milk production was projected to reach 106 million liters in year 5 and 512 million liters in year 10. The estimated actual incremental production was approximately 13 million liters and 90 million liters, respectively. Whereas 73% and 26%, respectively, of the milk produced under the project was expected to come from crossbred cows and buffaloes, their estimated actual contribution was 14% and 60%. B. Technological Change 5.03 The project contributed substantially to improved animal health serv- ices. It also introduced a number of new and improved technologies (crossbreeding, AI, frozen semen, high yielding fodder, balanced cattle feed); however, the uptake of these to date has not been widespread. The provision by the project of a secure market outlet for farmers' surplus milk together with the establishment of the necessary milk processing and marketing infrastructure, has been the most important single factor in dairy development in Rajasthan. 5.04 While farmer acceptance of new technology introduced by the project was not as rapid as expected, there are indications that the limits of milk production under existing traditional technology may have been reached and that new production practices will be taken up by an increasing number of producers in the future. Thus, it is expected that producers will increas- ingly adopt better feeding and management practices, as well as improved breeding practices, and that production and productivity will increase sub- stantially as a consequence. - 160 - in their ability to manage their own affairs. The cooperatives were of par- ticular importance to the weakest segments of the rural population, the small/marginal farmers and the landless who, on their own, could never avail themselves of the advantages offered by the DCS. Furthermore, the coopera- tives helped to break down social barriers since all members and suppliers of milk to the DCS are treated as equals, irrespective of sex, caste, creed or religion. Lastly, the project increased women's importance and involvement in the community and enhanced the awareness of their role in dairying. The project's economic rate of return is re-estimated at 28%, only 3 percentage points below that estimated at appraisal. - 155 - C. Social Impact 5.05 The project was expected to provide direct employment for about 8,000 individuals. However, by the end of the project only about 5,000 new sobs had been created, of which approximately 3,500 were in the rural areas. 5.06 As a result of the project's activities in providing routine and emergency veterinary services, in improving animal feeding through the increased use of green fodder and balanced cattle feed, and in upgrading the quality of milk animals through the use of AI, the producer (husband and wife) has become more aware of and interested in family health and nutrition, as well as in family planning. 5.07 The village society influences the lives of its members in more ways than assisting in their milk business. The DCS forms a center for village cohesiveness and gives the villagers a sense of control over their own des- tinies. Since the cooperative members have a predictable cash flow from their milk sales, they can more adequately meet family needs as they arise. Thus, there is less reliance on the village money lender or the merchant who extends credit at high rates of interest. Through their participation in the opera- tions of the DCS, the villagers' knowledge and management capabilities have been enhanced, and they have gained confidence in their ability to manage their own affairs. 5.08 The cooperatives have been of particular importance to the weakest segments of the rural population, the small/marginal landholders and the landless agricultural laborers (para 3.19) who, on their own, could never avail themselves of the advantages offered by the DCS. The DCS have also helped to break down social barriers since all members and suppliers of milk to the societies are treated as equals, irrespective of sex, caste, creed or religion. Lastly, since women are involved to a significant extent in dairy operations at the village level, the project has increased women's importance and involvement in the community and enhanced the awareness of their role in dairying. VI. FINANCIAL AND ECONOMIC RE-EVALUATION A. Financial Performance Farm Level 6.01 At appraisal, the typical smallholder owned 1 nondescript cow yielding about 500 liters of milk per lactation, and his cash income from the sale of surplus milk seldom exceeded Rs 100 per lactation. It was anticipated that by year 10, all cows in a DCS would be replaced by crossbred animals resulting in an incremental farm income of Rs 350 per year. Although the incremental income for farmers keeping crossbred animals is now estimated at Rs 1,486, or about 4 times higher than the appraisal estimate (Annex Table 21), hardly any replacement of indigenous cattle took place and only a few additional crossbred anials were acquired (paras 3.29 and 3.31). For a total of 86,000 DCS members (1983/84), only 29,000 crossbred animals were registered, whereas the SAR envisaged involving about 240,000 farm families with 170,000 crossbred - 156 - cows. Thus, the overall benefit of introducing crossbred cows was much smaller than anticipated. Nevertheless, a small nucleus of crossbred animals has been created which is expected to grow in the future. The project also provided much better access to production inputs and, above all, provided greatly improved milk marketing opportunities to producers through the 1,549 village cooperative societies established. Dairy Cooperative Societies (DCS) 6.02 The SAR envisaged that all institutions set up under the project would be financially viable and would generate satisfactory returns. This held true for the DCS which in most cases generated an operating surplus from year 1 onwards. The net income of a typical DCS increased from Rs 4,179 in 1975/76 to Rs 11,407 in 1983/84 (Annex Table 11). Unions (MPU) 6.03 Contrary to expectation, the unions incurred persistent net losses during the first 8 years of the project (Annex Table 17). They generated a net surplus of Rs 3.06 million in 1983/84 and achieved a surplus of Rs 18.8 million in 1984/85. This unsatisfactory performance was attributable mainly to low utilization of dairy plant capacities and high cost of technical serv- ices. The cost of union technical services increased from Rs 1.1 million in FY1975/76 to over Rs 8.1 million in FY1983/84 (Annex Table 16) and indications are that this trend will continue due mainly to increasing costs of AI and veterinary services. These costs,represented about 6 per cent of the total operating costs of the project and nearly 50 per cent of the annual expendi- tures of the unionso Federation (RDDC/RCDF) 6.04 The SAR anticipated that the main source of revenue for the RDDC/RCDF would be the sale of bulls to the unions. However, the size and scope of the Bull Breeding Farm was much reduced since the project took over the existing GOR exotic cattle breeding farm and, with the introduction of frozen semen technology, the operation of the union bull farms was discontinued for economic reasons. Thus, the RDDC/RCDF realized essentially no income from this source. It was further anticipated that the MPU would pay a levy to RDDC/RCDF to cover its administrative expenses for services provided to the unions. Since, however, most of the unions' revenue creating activities were taken over by RCDF, it was decided not to impose any levy on them. For the above reasons, the RDDC/RCDF incurred net losses (net of depreciation and interest) throughout the project period, increasing from Rs 0.45 million in 1975/76 to Rs 3.92 million in 1983/84. B. Economic Performance 6.05 Re-calculation of the project's economic rate of return followed essentially the method adopted at appraisal and was based on the following assumptionq: (a) actual and estimated actual cost and production data were used for project years 1-9 (1975/76 LO 1984/85); 6 -Table 3 , - 163 - INDIA EAJASTRAN DAIRY DEVELOPMENT PROJECT (CREDIT 521-IN) ' PROJECT COMPLETION REPORT Disbursements of Credit by Years (Us$ Million) IDA Fiscal Appraisal Estimate Actual Tear Annual CMulative Annual Cumulative 1976 2.18 2.18 0.10 0.10 1977 9.13 11.31 0.20 0.30 1978 5.28 16.59 2.20 2.50 1979 3.19 19.78 7.23 9.73 1980 2.84 22.62 3.61 13.34 1981 3.81 26.43 1.99 15.33 1982 1.27 27.70 1.81 17.14 1983 f 4.12 21.26 1984 - * 2.06 23.32 Date of effectiveness * /81/75 Estimated closing date 12/31/82 Actual closing date - 12/31/83' Date of final disbursement - .6/22/84 Table 4 - 164 - INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (CREDIT 521-IN) PROJECT COMPLETION REPORT Credit Allocation and Disbursements by Categories Credit Allocation Revised Revised Actual Category Original 4/27/78 6/12/80 Disbursements ---u-----------US$'000----------------- 1. Civil Works 5,370 1/ 1,370 2/ 1,370 2/ 1,308 2. Equipment and Materials (ICB) 6,870 1/ 1,870 2/ 1,870 2/ - 3. Equipment and Materials 7,110 1/ 3,110 2/ 3,110 2/ 1,175 (other than ICB) 4. Imported Cattle, Semen 120 120 120 - and Equipment 5. Training and Extension 1,940 1,940 1,940 4,918 6. Consultants and Fellowships 790 790 790 123 7. Construction of Dairy and Feed Plants Under Turnkey Contracts - 16,000 17,450 15,791 8. Unallocated 5,500 3/ 2,500 1,050 - 27,700 27,700 27,700 23,315 1/ Included dairy plants and feed mills. 2/ Does not include dairy plants and feed mills. 3/ Originally Category 7. Table 4 - 164 - INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (CREDIT 521-IN) PROJECT COMPLETION REPORT Credit Allocation and Disbursements by Categories Credit Allocation Revised Revised Actual Category Original 4/27/78 6/12/80 Disbursements ------**-----**US$ 000----------------- 1. Civil Works 5,370 1/ 1,370 2/ 1,370 2/ 1,308 2. Equipment and Materials (ICB) 6,870 1/ 1,870 2/ 1,870 2/ - 3. Equipment and Materials 7,110 1/ 3,110 2/ 3,110 2/ 1,175 (other than ICB) 4. Imported Cattle, Semen 120 120 120 - and Equipment 5. Training and Extension 1,940 1,940 1,940 4,918 6. Consultants and Fellowships 790 790 790 123 7. Construction of Dairy and Feed Plants Under Turnkey Contracts - 16,000 17,450 15,791 8. Unallocated 5y500 3/ 2,500 1,050 - 27,700 27,700 27,700 23,315 1/ Included dairy plants and feed mills. 21 Does not include dairy plants and feed mills. 3/ Originally Category 7. Table 5 -165- Page 1 INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (CR.521-IN) Dairy Development Corporation : Staffing Plan Actual Managing Director Support staff 4 Divisions Administration Controller/Treasurer 1 Personnel Officer 1 Auditor Audit and Accounts Assistants 6 Support staff 20 Engineering Chief Engineer 1 Consultant Dairy Plant Engineer Consultant Dairy Plant Operations Construction Supervisors 8 Technical staff 21 Support staff 24 Livestock Development Manager 2 Livestock/Fodder Consultant 1 Breeding Farm Supervisor 2 Livestock Officers 1 Farm Officers 3 Institutional Development Manager 1 Cooperative Consultant Field Supervisor 2 Support staff 4 Marketing Manager 1 Marketing Consultant 1 Marketing Assistants 3 Support staff 3 Table 5 - 165 -Page 1 INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (CR.521-IN) Dairy Development Corporation : Staffing Plan Actual Managing Director Support staff 4 Divisions Administration Controller/Treasurer 1 Personnel Officer 1 Auditor Audit and Accounts Assistants 6 Support staff 20 Engineering Chief Engineer 1 Consultant Dairy Plant Engineer Consultant Dairy Plant Operations Construction Supervisors 8 Technical staff 21 Support staff 24 Livestock Development Manager 2 Livestock/Fodder Consultant 1 Sreeding Farm Supervisor 2 Livestock Officers 1 Farm Officers 3 Institutional Development Manager I Cooperative Consultant Field Supervisor 2 Support staff 4 Marketing Manager I Marketing Consultant 1 Marketing Assistants 3 Support staff 3 Table 5 - 166- Page 2 Actual General Manager 2 Administrative Assistant 2 Clerical staff 2 Division Administration Manager 4 Support staff 20 Director, Manpower - Personnel Officer 1 Labour Officer Clerical staff 15 Director. Budget and Finance Accounts Officer 4 Accountants 4 Clerical staff 8 Internal Auditor 10 Auditor Assistants 4 Clerical staff 4 Livestock Development Manager 5 Fodder Specialist 4 Livestock Specialist 5 Support staff 5 Director, Extension Services - Extension Supervisors 29 Village Extension Worker 119 Clerical staff 5 Animal Husbandry Officer Veterinary Officer mobile units 29 Veterinary Field Assistant 61 Bull Farm Supervisor - Stockman/Laboratory Assistant 5 Livestock Assistants 62 Institutional Development Manager 1 Spearhead Team Staff 64 Support staff 6 Director, Training Centre 4 Union Training staff 16 Training Assistants 4 Clerical staff 4 Table 5 - 166 - Page 2 Actual General Manager 2 Administrative Assistant 2 Clerical staff 2 Division Administration Manager 4 Support staff 20 Director, Manpower - Personnel Officer 1 Labour Officer - Clerical staff 15 Director, Budget and Finance Accounts Officer 4 Accountants 4 Clerical staff 8 Internal Auditor 10 Auditor Assistants 4 Clerical staff 4 Livestock Development Manager 5 Fodder Specialist 4 Livestock Specialist 5 Support staff 5 Director, Extension Services Extension Supervisors 29 Village Extension Worker 119 Clerical staff 5 Animal Husbandry Officer Veterinary Officer mobile units 29 Veterinary Field Assistant 61 Bull Farm Supervisor - Stockman/Laboratory Assistant S Livestock Assistants 62 Institutional Development Manager Spearhead Team Staff 64 Support staff 6 Director, Training Centre 4 Union Training staff 16 Training Assistants 4 Clerical staff 4 - 167 - Actual Director, Organization Services - Evaluation Officer Mass Communication Officer Member Relation Officer - Clerical staff Plant Operations Manager 5 Assistant Manager, Milk Plant 10 Administrative Personnel 39 Technical Personnel 65 Supervisor Personnel 33 Operator/Labour 160 Assistant Manager, Feed Mill 2 Administrative Personnel 4 Technical Personnel 7 Supervisory Personnel 5 Operator/Labour 13 Marketing and Procurement Manager, Marketing and Procurement - Marketing Analyst - Marketing Officer 4 Procurement Analyst 8 Procurement Officers Clerical staff 4 - 167 - Page 3 Actual Director, Organization Services Evaluation Officer - Mass Communication Officer Member Relation Officer - Clerical staff - Plant Operations Manager 5 Assistant Manager, Milk Plant 10 Administrative Personnel 39 Technical Personnel 65 Supervisor Personnel 33 Operator/Labour 160 Assistant Manager, Feed Mill . 2 Administrative Personnel 4 Technical Personnel 7 Supervisory Personnel 5 Operator/Labour 13 Marketing and Procurement Manager, Marketing and Procurement - Marketing Analyst Marketing Officer 4 Procurement Analyst 8 Procurement Officers Clerical staff 4 PROJECT COMPLETION REPORT INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (Cr. 521-IN) DCS Membership 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 Up to 12/83 IDA Applaisal DCS 300 650 1.050 1.450 1,800 - - - - Memoership 17.400 83.050 121.800 168,200 244.800 - - - - Jd ipuAr OCS 80 96 167 183 247 319 332 367 306 Memoe-ship 2,241 6,464 9,241 12,027 15,400 17,800 20.400 23,300 24.270 Ajmer OCS 160 197 217 226 270 279 294 297 259 Membership 6.282 9.989 14,424 16,062 17,000 17,900 18,900 19.270 15.526 Alwar OC DCS 73 87 130 147 240 320 379 429 387 Membership 2.250 5,899 6.715 7,540 11,000 13,200 14,000 22,110 23,567 8hilward OCS - 79 122 72 146 161 171 200 205 Membership - 2,332 3.602 5,218 6,400 7,600 8,200 10,650 11.846 Tonk/Sawaimadhopur OCS - 20 37 71 71 74 75 94 123 Membership - 726 1.753 2,407 5,400 7,000 7,000 7.410 7,539 Total OCS 313 479 673 799 974 1,153 1,251 1,387 1,360 Membership 10,773 25,410 35.735 43,257 55,200 63,500 68,500 82.740 82,748 14 PROJECT COMPLETION REPORT INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (Cr. 521-IN) OCS Membership 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 Up to 12/83 IDA App,aisal DOS 300 650 1,050 1.450 1,800 - - - Memoe-ship 17.400 83.050 121.800 168.200 244.800 - - - - DCS 80 96 167 183 247 319 332 367 306 Memoe-ship 2.241 6.464 9,241 12.027 15.400 17.800 20,400 23,300 24,270 Ajmer OCS 160 197 217 226 270 279 294 297 259 1 Membership 6.282 9.989 14.424 16.062 17,000 17.900 18,900 19,270 15,526 Alwar o OCS 73 87 130 147 240 320 379 429 387 Membership 2.250 5.899 6.715 7.540 11,000 13,200 14,000 22,110 23,567 Shilwara DCS - 79 122 72 146 161 171 200 205 Membership - 2.332 3.602 5.218 6,400 7.600 8.200 10,650 11,846 Tonk/Sawaimadhopur OCS - 20 37 71 71 74 75 94 123 Membership - 726 1,753 2,407 5,400 7,000 7.000 7,410 7,539 Total OCS 313 479 673 799 974 1,153 1,251 1,387 1,360 Membership 10,773 25.410 35.735 43,257 55,200 63,500 68,500 82,740 82,748 ABRAA naJaminbam 0alav VRêMT avtoaoaaa c i .21-inIÊ Tratnina Acttuti5df tha Protect i-ra l 7 - 7.8-IA ra-:A AL-A2 22-83 U3-134. palm*,0 -* us w$ Set 120 840 1.400 1.110 1.241 8s3 202 137 126 tlt#g* *eo comeo vg itI 148 109 193 191 129 130 102 OCI *tee# basic comroe (treineee) 223 282 220 273 zt 375 284 530 383 OCI stop# refrefr course - 100 227 207 175 305 313 162 227 100 meomlttent e4ttee beet course 20 102 57 70 • 104 111 95 104 130 ee»e coatttoe retreshor course - - - - - - - - .to b*tSiL 49"oe. vtw tralned 30 10 21 65 - - wto •erener cOMre - 2 2 2 2 - - - - eeernee 1. tooU otentotten 3 2 - - - - - .oveae (nummr of team&) alfenen centro tnotructora course 2 2 - - - - - - -one.Ite^te Domineeaend opprociO- 2 - - - - tien couree oIoreho t o 4^ep udtove - - - supervisors j1' $Seerneee teams tacIueed estftnsWin SuperviOerê. ei ~ måstan nåa¥ na8~ nntpnaste.r-u Trlfnin Activit e mf tha Prolect 7IL-ra2 112 ZI 71- 12:.82 i0:Aa Q:Q Q-Q a- ,¥,.4, e.iu ,,aSt 120 o40 1.400 .110 1.241 953 202 137 120 %$flaga eo e0S0e 1 tie 948 109 193 191 129 130 102 Dc$ at*# 98esC cour** (troo"<S) 223 202 220 273 291 375 294 $sl 303 Ocs .etaf rOreneD courga - 100 227 207 175 305 313 162 227 180 99.o-eftq cofttoo DesC coureo 20 102 57 70 104 fii 95 104 130 Genog cOaMttOo refrehr courSO - - - - - - - - - .ILM jös*L Lumre. vaW tröInod 30 lo 2l 8s - - - - - ,e ..Dproofter coeur*e - 2 2 2 - - - - searbeea jt toSo Orientttfn 3 2 -- - - - ,.oe (ninor or te*e) I-.en§^9 conra ahetrutoep couS@ 2 2 - - - - - - CO^t*Utate setn ene epractB- 2 - - - - - - - - lIe cours Ps$10m9ne 0 A O@oper0tive - - - - - - - - - sv aerhood tS94 stcluce6 emtenoson susrvferg. *I Table 8 -170- INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT (CR.521-IN) Vaccine Produced by SVVI - Animals Vaccinated Year Vaccine Production Animals Vaccinated H.S. B. H.S. 8.O. F.M. 1975-76 13.61 9.53 n.a. n.a. 21,647 1976-77 22.98 16.28 n.a. n.a. 37,039 1977-78 26.17 12.45 n.a. n.a. 73,751 1978-79 23.22 10.54 n.a. n.a. 33,348 1979-80 25.94 13.96 n.e. n.a. 48,839 1980-81 25.82 11.50 n.a. n.a. 61,286 1981-82 25.58 5.03 195,682 63,288 19,691 1982-83 31.18 14.10 83,577 38,672 18,971 1983-84 21.96 6.70 125,994 49,077 39,056 1/ Animals vaccinated in project area. I/ Vaccine obtained from outside. Milk Proceasina Plant Datry Plant - ALWAR Income and aeratina Costs (As '000) IIeZL-=8 Isi1s- o A-L.20a 1981-112 1982atS3 1384A Grand jot"a II2,L2 (up to Total milk processed (oil. It) - 473 763 671 1.087 900 4.094 las.am Pasteur4sed milk in bulk (tnk. - 9.663 18.647 26,298 42.616 27.249 124.573 CanS, bottles) Milk Oy products (butter and ghe) - 101 2.129 2,032 2.643 8.744 13.649 Milk powder - 637 220 2.624 5,877 9,358 TOTAiL SALES- 9-194 2.11 2AJASR A&JA3 Ali 14-M OPERATING COSTS Direct Costs Cow and buffalo milk purchased - 8.058 17.838 24.608 40.450 32.443 123.397 Direct tabour 27 40 7S 115 144 401 utilities - 490 690 411 1.820 1.15 4.526 4 Material and retailing expenses - 217 460 - 592 2.354 3.623 Freight - 12 271 65 282 268 918 Encise tau ~ - 40 40 11 723 774 Sub*tatal Direct COnts * 11gg .Zg 3LJ.ag az..g., gnalgga overhead Costa Maintenance labour and Materials - 143 570 719 669 924 3.245 Supervisory personnel - * - - - Technical persennel - - - - - Administrative personnel * 296 S74 569 974 1.304 - Administrative expense - 85 250 293 385 400 3.797 Plant manager and assistent - - * - - . - SubstatatROvarJead. Coata - Agg 1,ag .LggL L.Z A LAI rain anamATnna costs L AIAA ZLARA IAUB AalaA.z 14.074.Z we OPRATING SURPLUS 436 720 1,750 2.585 19 506 cr 1 e11Ae OPE e e e e e e s e s s w a e a e s s e eSaa m s s s a s a as e s-s . usafwousau Aj - 178 - Table 13 INDIA RAJASTAN DAIRY DEVELOPMENT PROJECT (CR.591-1) Combined Income and Operating Costs - Milk Processing Plants (Rs Million) 79-80 80-81 81-82 82-83 83-84 84-85 Total milk processed 25.46 18.90 30.45 29.30 32.24 76.71 (million litres) Current Prices REVENUE Pasteurized milk, 8.00 24.40 full cream Toned milk 33.58 41.60 S5.94 116.57 54.45 42.69 Milk in bulk 70.72 99.52 Milk powder SMIP - 0.68 2.19 6.78 9.10 49.47 Whole milk powder - - - - - 29.55 Table butter - - - - - Ghee 2.91 2.97 7.56 11.02 19.33 94.17 Malted food - - - - - - Sub-total 36.87 45.25 95.69 134.37 161.60 339.82 OPERATING COSTS Direct Costs Milk purchase 27.26 33.82 78.02 109.40 118.16 237.80 (5.2% fat, 8.5% SNF) Direct labour 0.05 0.09 0.48 0.44 - 0.47 0.76 Utilities 1.12 1.19 3.15 4.63 5.05 7.67 Material & retailing 5.14 4.35 2.04 8.55 9.24 20.25 Freight 0.01 0.27 0.07 0.28 0.30 0.38 Taxes, excise duty - - 0.25 0.01 0.01 0.40 Sub-total Direct Costs 33.59 39.71 84.01 123.31 133.23 267.26 Administration and other 3.14 3.50 5.55 8.16 8.78 15.34 expenses TOTAL OPERATING COSTS 36.73 43.21 89.56 131.47 142.01 282.60 OPERATING SURPLUS 0.14 2.04 6.13 2.90 19.59 57.22 1/ Provisional. MIA 11"Allow VM3 PrALOPOW P"WK 0151-11' aasssse mos V# a C~WO t adspt*" An4ese.e* ta.etsa angag as tet I"- IV-7 fvw 1"9-0 "IFe ma** ;00+L 1004 MOWB Z l MISR MWt 11012 B*S a""0e411w1 3 as % M 106 S 1,1 I .SR 1.4" IW 1" 1.0 2.08 IW 2.31 2.4 MR O.ws. pae..r to If on PIS NOe 51 9 a s s a s I'8m ate4* Isoleshnowra-mat s 17.10 X.S? as" 4o9 a." arms aX RAe 61n W" W.n sa.e o.e se.6 sA OWIstNG tos!a au "eools it w ol lams W5 WI *0 * * $.4 1.6t T.9 35 V.A ?.A 9.at ffl." 368 .0 .R 31.101 a."s .79 3VAG SI.X V.F* 7s.71 a5." Mt.3 IVP." toil 192.33 Ma.1t Onossese ash * * * * *.0 6*88 *t ** t o. *9 A Wi.t 169 9.11 St.W teoed an8 * 5.30 1#.5 9.88 i8.40 13.95 p9.t IWat te.8 21.89 2.91 LSB 60.41 4.99 3J ful ss**16* * 2.4 89 08 N3 18.0, 28.15 fl.04 25.0 25.5 .X 15.11 9.39 4.61 . WttOe 9~s t lmatoesl *IA *Sls4.8 2N9 8.9* Mlo.t 2.151.10 l.5@.3 4.095.s 3.4"JI S.im." 6ACO88 @136 aoloo*owmbfster 60 W M *NO * $ A 80 A SO ON8 ON bows TV *o *o *W * * 10 1 @ 3 311 Obe Of * * * i.8 f.40 St."g 95.9 24.5 439 Ett .9e.lol ti".4 2.674.A I'.9*.3 4010.0 40."0 4.019JO 110M (as * *t o W Manufacturing Loss on products -3%. The quantities envisaged above are after accounting for 3% Losses in fat and SKF. Nkote: Producers price based on Rs2.5/kg fat and Rsl6.70/kg SNF (6.5% fat and 8.8% SNF). Union is paid on an averagea 38 paisa per Litre overhead on transport, cattLe development and DCS commissioned. * 1/ MiLk procurement of DCS organised in project area. 2/ MiLk from other mitksheds - i.e. from non-proJect area to project area. D/ SaLe price: Pasteurized miLk - Rs4/- Litre, tonned mitk Rs3/- Litre. T/ MiLk in buLk is suppLies to Dethi dairies in tankers at Rs4.15/Litre from 1984-85 onwards. I/ SHP price - Rs23/kg. 6/ WMP price - R*34/kg. 7/ Butter price - 4835/kv. 8/ Ghee price - 4s32/kg. 9l Matted food - Rs40/kg. - **The producers price is Rs3.10 for miLk with 6.5% fat and 8.8% SNF. Since average fat and SNF is 5.25 S ad 8.50 respectiveLy. The producer witt get Rs2.72 and the union is given overhead of Rs0.38 making Landed cost of aiLk at plant Rs3.10. RAJASTMAN DAIRY DEVELOPMENT PROJECT ICR.521-IN) løpaffif and Oaratinn Coata - faed Mill <AI.r and .im.nrI (Ra '000) ZOZ 12-7A9E -a3-8 B3-4, 845 Aå;A §:A J;1 A,A 9-90 90±91 Total Productton 8.111 7.158 8.712 13.847 18.318 9.387 13.120 18.124 25.000 35.000 40.000 45.000 45.000 (~etrc tons) 7tt steg (G) 5.183 8.927 9.000 16.022 21.340 12.002 17,712 24.407 35.000 49.000 56.000 03.090 63.000 Dirmet eonta "a lstiriat 4.948 8,704 8,490 12,013 18,522 9,086 11.952 16,511 22.775 31.885 36,440 40.995 40.995 Direct oabour 148 103 108 138 182 88 157 217 300 420 480 540 540 uttilties 339 233 448 1.235 1.950 2 1.036 1.432 1.975 2.765 3.160 3.555 3.555 material & freight 209 353 470 440 84 29 341 471 650 910 1.040 1.170 1.170 Sub-tot&L 5.704 7.473 L-,22 .13.824 20.738 10.031 13.486 1831 25..10 35.920 41.120 46..280 46.260 Olract Costa 0Overhaåd famtu O Mantanance labour - - 62 - 156 288 255 288 281 295 310 325 341 and material Suporvlsory. toch- 235 552 725 1.191 1.208 1,202 1,375 1.512 1.003 1.829 2.012 2.213 2.434 ntcal & admtnistr. persoanne I AMut.a U2I 21 282 j,1j, L2& t,2- L47 1-790 Ljl 22 2.134 2-77 Ovt,rhaad Cam la TOBAL OPERATN 1 -DI 22 -III U 1 .0.J 22.162 11-5i. 1LJ1 21.5411 Z~.4 3L.j0 Aa4 48.198 49.02I Net Operating -80 -1.099 +1,297 +007 -822 +501 +2.596 +4.056 +7.356 +10,896 +12.55 +14.202 .13.9805 Surplus Intereat 150 284 293 110 500 n.a. Depreciation 1 12 393 388 372 20 eaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaansssanssamamanaassanasaanaasamassamamaaaaaaaaaaaaaaaaaaaaaa4 一181一了Ob【發16 卞 。，勿：―〕·〕，‘〕―·’. RAJASTHAM-DAIRT Dairv Cgöpäratjvm UnjUns - Ingöjmå State#~ 1975/7 1976171 1977/78 1979/79 1091118 tolaftfill 19111/92 1993192 1963/24 1934/95 .............................................. (Ra 1911110n) ....................................... BålixAn^ 0 soit Procogetna 36.67 42.25 95.69 134.37 161.40 339.82 Cattla food s_.85 6.93 0.61 15.62 21.34 12.00 17.71 43.60 94.68 111.31 121111.71 173.80 % 3i7>.53 gotik Planta 38.73 43.21 89.58 131.47 142.01 282.60 Faed allt& s:94 8.03 8.31 15.02 22.18 11.50 19.12 Untone ServIcou 1.10 4.40 4.19 4.85 6.32 7.09 1.89 8.73 9.74 12.30 Total fimrmtjfiL~ 1.10 4.48 4.18 10.79 51.08 58.60 112.16 162.28 163.29 310.02 Operating $urolom, (deficit) (1.10) (4.48) (4.18) (4.94) (7.28) (3.74) (0.85) (8.55) 10.39 47.51 3.48 3.51 7.16 7.70 7.96 Intareat 0.15 0.75 0.99 0.77 l.ts 0.93 1.92 (1.10) (4.48) (4.18) (5.09) (11.49) (8.20) (8.74) (14.96) 1.72 37M Incomö Tant>gr',504) 0.66 16.92 (1.10) 0.64.- 16.9a Grant* 0.22 2.39 2.30 4.28 1.6 1.94 1.74 2.40 2.20 - (0.88) (2.09) (1.68) (0.81) (9.88) (8.28) (7.00) (12.58) 3.08 19.82 Aftemmulptivm Lömåma 0.88 2.97 4.95 8.68 15.54 21.60 28.60 41.34 38.28 19.48 心 一183. T.bt.18 t 。，，……．………………．…’…·…’…………… !l -184- . ,Tabしe 1タ ・…／-；。―:\-. -:/&!―、； 185 TabLe 20 INDIA RAJASTHAN DAIRY DEVELOPMENT PROJECT &R.521-INI Cost of Fodder Production Year Hectares Production Total Cost uNder Cost cultivit- on c NO (RslhA) (RS 1000) 1975/76 29970 640 1*9000800 1976/77 2,986 695 29075,270 1977/78 39002 750 29251*500 1978/79 3,018 803 20423*254 1979/80 3,036 857 2,600,995 1980/81 30050 912 29781,600 1981/82 3,066 966 2*9610756 1982/83 3,082 1,021 3,1460722 1983/84 3,100 10080 39348*000 Source: 1975/76 and 1983/84 Agricultural Census,, other years mission estimates. Cost calculation based on lucerne yields of 8 tonnes (green) with RsB production cost for IM kg in 1975/76, increas- ing to 9 tonnes yield with Rs12 production cost in 1983/84 -186- Table 21 NOIA RAJASTHAN DAIRY DEVELOPMENT PAJECT (CR.621-IN) Retrn f rCrss-lreding (BaS :0 10-co Hed) Physical Parameters Native Cows Cross-breeds (SAR) (Actual) (SIRt) (Atal) 10 10 10 10 Number calvings and milked 5 4 6.5 6 Number dry 5 6 3.5 4 Calves sold 4 3 5.5 4 Number cows purchased 1 1 1 1 Milk yield/lactation (It) 500 570 2.300 1,800 Feedi (tons/year/cow and itsprogefty) Green fodder - - 3 2 Dry straw 5 5 5 5 Concentrate 0.2 0.2 0.9 0.6 Financial cost Feed cost 2,000 2,700 11,400 8,100 Miscellaneous 100 100 150 200 Total 2O 2.800 11.550 8.300 Income Manure 900 900 1,500 1,500 Milk 1,970 3,420 14,330 22,680 Others - 500 - 1,000 Total 2.870 4.820 15.!30 25180 GROSS MARGIN 10 cows 770 2,020 4,280 16,880 I cow 77 202 428 1,688 1/ Cost of concentrate at prevailing rates of Rsl,350/ton, cost of green fodder at prevailing rates in rural area based on cost of fodder cul- tivation at Asl2O/ton. No cost for straw has been considered as farmers generally do not purchase. 2/ The Milk price is computed on the basis of producers price paid for cow milk during 1982/83. Others include sale of sale calf in case of Desi and sale of female calf in case of :rossbred. RAJASTHAN DAIRY GyFloPMLENT PROJECT (CR.521-1NI t2s*& And Ineae of a Tvpral TArmer Under the Eginting and Imaraved System of Mined Farmina - gaating .weAs le2raved System d. 2.azanmetra Lad a 2 hectaese Land 2 hectares Cow units a 2 native come Cow units 2 crossbred come CROP ROTATION FOLLOWED* CROP ROTATION FOLLOW2Ds Dajrs - Wheat 1.50 hecteres Sajea - Wheat - Soong a 1.00 hectaree maine - Wheat 1 0.50 hectaree Maine * Wheat * Moong a 0.25 hectares FODDER CROPS Sorghum - Cowpes - Lucern : 0.25 hecatreas Maine - CopeS - Chinese 0.25 hectares cabbage - Oats - Sajra Maise - Cowpoa - Oats - a 0.25 hectares Chinese cabbage - sorghum - compo a S. Cre..Araeduia ( I .. . . . . . ) £ . . . .eld .ttintai. . . 3 ( . . . Re . B8 A wCA Cost ot tatal Prdue Cm OtaiB AttaV Cq2 f IRAAA Cultivaton Value Cfttgva Pruduce JAn* .an M Sejre 22 44 1,950 3.820 S6jre 95 30 - 2,800 2.400 Maive 10 12 9000 1.440 Maize 5 10 - 550 e Wheat 80 0 4.900 e.700 Wheat 38 36 - 2.800 5.220 seoe. sasss Moong 92 92 - 2,250 2.520 7.490 13,660 Dats - - 200 1,700 4,000 Sorghum - t60 O ,500 8000 Copos - SO 1.500 3,000 Lucern - - 250 2.200-- 5,000 Chinese - ISO 1,500 3.000 Cabbage assess awesee 16,300 28,940 .ama a060cr 1 8dra 0 Ra120/4t:1 Straw e R$20/qtt.* Maine 0 R9120/qtl. Moong & R8190/qtl. a Wheat 0 N%ISO/qti. Green fodder 0 Rs20lqtl. C. Livetock and Dairy Praductnl teat at EMe Cost of Produce ReaudSon rog"I's n X811M Load-U&oAtaF -A Coat of concentrate for two 50 Cost of concentrate for 2.810 - cow* * 0.2 tone/cow. two crossbred* and (Cost of concentrate Rol.45/kg) thei- calves (Total 3.0 adult units 0 0.6 ton/unit) Cost of dry fodder 0S tono/unit 2.000 - Cost of dry fodder 3.000 - (9 ao00/ton) (5 tons/unit) Cost of green fodder - - Cost of green fodder 1.200 - (3 tone/unit) Insurance 0 2.5% - Insurance 0 2.5% 250 - Cost of medication too - Cost of medication. 200 - vaccines. etc. a- 05 Milh (870 litres) 1.482 Milk (3.600 litres) - 9.360 OD Sale of mate calf every - 400 Sate of male calf. - 40 alternate year tone per year) 1/ 2.690 1,82 7.260 9.400 emesseasseasee===aeases =eassees TOTAL (8 + C) 10.130 15.542 22.560 38.340 nweat - Usa sNWs =aeos j/ Prom second year. there will be an additional income through sate of heifer. g1-4 * ．闢馴購雜劊騙總瀾J戶歸•開總jt網叫矚開呵月學中申口 撇幣總髡辦”綢叫陣，叫肉．、州州際悶磯酈”開I．叩觔動、”啊•觀州觀，&“即‘&”幼”騙陣”略鳥戶，:& ’開神籐開d悶網颼綱戶歸州閑盧 ”寫〝．時州攤細‘•論補，中州神轎q邊 、奮二調個夠州。•坤一劍向弱露U購必”辟卹叫，’• 參I一＿一＿ 嗡I&,“•馴•『織。州娜“·”。囑才嗎才”I,,0。，”才驢才磚彎”•“榆．潤鯽專呵”& F 1.，馴峰而開開亂 馳審門細萬。開劇• 奉口劇闢悶神開•略籐 ”一，••－一付鱸瞭館膠鱸論．戲擊個珍嗎膠珍州購觀．召飾馴嗡調州庫開翰喜· 神購購物鵝神勵藝· ---－一，飾唔驢“綢哺州，才騙個．辭習鵪徐個臼，.&“•向開滷，寫 •，.，一。細馴I．•召彎嗎鈴•胡榆囉鈴•d留召屆嗡開辟權州“綢細規 州國n細叩間·鳥· . ,1奮露掬瞭購蓄劇嘆閱勵唱寥『粈專彎騙才魷曾•個．編胛祕健，騙榆。紛．朧付飾吋9藝網屹鳥馴暘磚論．& •一，‘一。一瞭健糒呢個•論膠勰膠認偶，騙才辭驢．論個．訪t口唱細•碼州呵唱 宅盧•寫可”網•可•‘ 丁．，。二。。．o.l’。。，。。·，。·。，,&&&,t&& 電叮物一。．••一•·，.－•購1騙•．籐•物調吃州妒唱，& I.&t常‘糒t斤t曾，閱t〞，榭籐0I&!&．•．n•‘．寥r露才露蓄e&1中馴 •你，聯‘『•”&.&l•『•〞祕•，．留鵝〞臘習”榆•g•l‘二•．t••．•月”墜‘· 一’刀『驢t『驪自C視榆勰留煙輪『勰個『總會嚇才嚇憐．勵榭•論．•！習俗徐讓彎籐馴。 示可瀾論編 －•－·－，啊蠶〞，閱磚才•〞a州，〞個貿仰留紹嗎羅網． •。一。。一歸認鶴嘆膠，馴坤論，’勰饞協·榆，驟唱鵝唱騰神崗叮 州馴同磯緣 ”一，,‘·曾認榆唱榭蠶輪鸞閱遛驢鸞弱t付0『露祝轉飾黝 ____-------－一一細”&．簪露， ·，,，··粤．•馴•糒•“•弱．•留口開‘．併．0館’•劇t取馴坤‘_ j物中神細哈露 ,,，二。擁．館『鈴補•露奮”彎認榭矓習鑰付鶴彎辭翻開計騙鳥 ·…‘.&&”•，留”留，留””州•們硎”師綢． .,..&:.,,..&..&.&&&,..,，…”&,:.&&..,&:.,&&,．妒門觀馴•騙”&&&&&&&,,.&,..”•’&,.&．◆，&.&,,,,,，…，,,,’爭”&&&.,,.,，、 《勾騙勰祕間潺騙超痲面唱寡初鵝奮面瀉寥寫圈添啊趣辭初購震卹細辭珍編唱楓閱婉紅m囉n為議叨籐祖• 膚仰網）司不開n爾下•“痲藝 個悶粤『屆待n口觀雜n而神向願勵 祠祠 190 TabLe 24 INDIA -OP T P.ROJECT (CL121 RAJ01HAN DAIRY DEVEL MEL Economic Colts and lWit LtregMs Year roject costs Y fodd r Total Incremental Balance m*,,r Investment Recurre t P uc an Wits Benef its costs Costs cost 75/76 27.16 4.54 - il.70 - 31.70 76/77 25.44 13.54 0.15 39.13 1.43 37.70 77/78 42.23 16.86 0.44 59-53 4.22 55.31 78/79 56.94 31.20 1.51 89.65 14.70 74.95 79/80 32.15 39.84 3.76 75.75 36.34 39.41 80/81 18.46 66.67 6.44 91.57 62.23 29-34 81/82 24.91 43.10 10.71 78.72 103.45 24.73 82/83 33.80 60.30 14.74 108.84 142.29 133.451 83/84 24.30 56.31 20.39 .101.00 196.83 95.83 84/85 68.05 26.33 94.38 254.22 159.84 85/86 81.09 34.39 115.48 331." 216.51 86/87 103.46 46.94 15D.40 453.20 302.80 87/88 129.38 61.03 190.41 589.26 398.85 88/89 148.38 76.25 224.63 736.21 511.58 89/90 159.96 94.19 254.15 19477.15 10223.00 ERR - 29.6% I/ See Table 23. Two kV for a litre of milk at RSO.18 per kq adjusted by SCF of 0.80. See Table 8 for incremental milk production. The econmic price for milk is a weighted averagm price (1984/85) assuming that 60% of incremental milk production Is supplied to OCS for processing and 40% sold to vendors, the fonar priced at W.40 per litre and the Utter at Rs2.20. These prices have been a 0 sted by SCF of 0.8 In deriving the weighted average price of ft2.80 per litre. Including residual project herd value of crossbreds RsS67.72 million (141,930 heads at fts4l,000/head). - 191 - PROJECT COMPLETION REPORT MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CR. 522-IN) INDIA March 6, 1987 Ceneral Agriculture II Division South Asia Projects Department THIS PAGE IS BLANK - 193 - PROJECT COMPLETION REPORT INDIA MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CR. 522-IN) Highlights i. The Madhya Pradesh Dairy Development Project was the last in a series of 3 projects designed to make a significant contribution to the development of India's dairy industry. The purpose of the project was to finance an integrated system to increase the production of milk in rural areas through a cooperative development program which included better animal feeding and management, quality crossbreeding, animal health improvement, and the estab- lishment of facilities for milk collection, processing and marketing. The project was appraised in March/April 1974 and became effective in July 1975. Project cost was estimated at US$31.2 million, 53 percent of which was to be financed by the US$16.4 IDA credit. Total expenditure on the project was US$27.1 million. The main reason for the lower actual cost was the non-utilization of the calf rearing grant. ii. While appraisal targets were not fully met, the project did establish: (a) 849 dairy cooperative societies, 3 milk producers' unions and the Madhya Pradesh Dairy Development Corporation against the appraisal targets of 1,200 societies and 3 unions; (b) an extension program which included provision of artificial insemina- tion and veterinary health services; and (c) the necessary facilities for milk collection, processing and market- ing. iii. The much slower than anticipated production of crossbred animals through the artificial insemination of local cows with semen from exotic dairy bulls severely reduced the expected incremental milk production and resulted in operating deficits at the union and corporation/federation levels and in a negative economic rate of return. iv. The dairy cooperatives established under the project formed centers for village cohesiveness and gave their members a sense of control over their economic situation. Through their participation in the operation of the cooperatives, the villagers' knowledge and management capabilities were enhanced and they gained confidence in their ability to manage their own affairs. The cooperatives were of particular importance to the weakest seg- ments ot the rural population, the small/marginal farmers and the landless agricultural laborers (about 64 percent of the membership) who, on their own, could never avail themselves of the advantages offered by the cooperatives. Furthermore, the village societies helped to break down social barriers since - 194 - all members are treated as equals, irrespective of sex, caste, creed or religion. v. The following points may be of particular interest: (a) The basic concept of the project was sound as was the project design, which was based on the successful AMUL model. However, it should be appreciated that whereas the project was organized from the top down, the AMUL model developed from the bottom up. The rate at which cooperative development can be implemented and the viability of the institutions created need to be more realistically taken account of in future programs for the cooperative dairy sector. (b) The appraisal report placed too much emphasis on the crossbred cow as the agent of change and was over-optimistic regarding the accept- ance by project participants of crossbreeding using artificial insemi- nation as the chief means of increasing milk production. Insufficient attention was given to the constraints of accepting crossbreeding technology by small producers. (c) The report was also over-optimistic with respect to the willingness or ability of the small farmer to use a portion of his land for the production of fodder and the use of balanced cattle feed for milk production. (d) The appraisal failed to recognize the importance of the buffalo as a milk producing animal. (e) Project risks, particularly the possibility of excessive Government involvement in project implementation and the operation of cooperative entities, farmers' acceptance of artificial insemination and crossbreeding, and the likelihood that project participants could attain the assumed production parameters, were given insufficient attention at appraisal. (f) The project should have given greater attention to the rearing of crossbred male offspring both for draft purposes and as breeding- animals. (g) The proposals for milk plants and feed mills were unrealistic with respect to capacities to be created and construction schedules. Greater emphasis should have been given to ongoing reassessments of the program during implementation. (h) It was unrealistic to expect that a newly created institution -- the Madhya Pradesh Dairy Development Corporation -- could implement such complex civil and engineering works spread over different sites within a 2-year period. - 195 - (i) Benchmark surveys should have been conducted, and monitoring activities were needed to assess the impact of the project on milk and crop production and productivity, and on the socio-economic condi- tions of project participants, should have been undertaken on a routine basis. (j) The success of such a project requires continuous strong support (without excessive involvement or interference) of state government officials. (k) The services of a centralized technical organization such as the National Dairy Development Board, which contributed substantially to the successful implementation of the project, are needed to accelerate development. THIS PAGE IS BLANK - 197 - PROJECT COMPLETION REPORT INDIA MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CR. 522-IN) I. BACKGROUND A. Introduction 1.01 The Madhya Pradesh Dairy Development Project was to be implemented over 6 years. This was the third IDA-assisted livestock project in India and, like the first two projects in Karnataka and Rajasthan, it was intended to further assist Government of India (OI) in the implementation of its plans to diversify agriculture and provide increased emphasis on an important food sub-sector which had received little attention. B. Agriculture in India 1.02 India is a large and diverse country with a population of about 780 mitlion (in mid-1986) which is growing at bout 2% per annum. Average per capita income is about US$260. Agriculture is the dominant sector of the Indian economy had contributed about 37% of GNP and engages about two-thirds of the labor force. Agricultural production accounts for about 24% of the country's merchandise exports. India has a total of about 90 million opera- tional land holdings and the average size holding is about 2 ha. Marginal farmers (with less than 1 ha of land) occupy approximately 57% of the holdings and account for 12% of the land, while large farmers (with 10 ha or more land) occupy less than 3% of the holdings but contrQ! some 23% of the land. About 30% of the rural population are landless agricultural laborers. C. Agriculture in Madhya Pradesh Demographic Veatures 1.03 Madhya Pradesh, the largest state in India, covers an area of some 44 million ha (10% of India's total). Total population is around 52 million, nearly 80% of which reside in the rural areas in about 71,000 villages with an average population of 580 persons for village. Fourteen percent of the total population is Schedule Caste and 23% are Scheduled Tribes. In seven of the state's 45 administrative districts, these scheduled groups comprise a majority of the population. Seventy six percent of the workforce is in agriculture, and some 4.8 million people, about 12% of the rural population, are landless agricultural laborers. - 198 - Agroclimatic Conditions 1.04 The state lies under the Tropic of Cancer and its elevation ranges from *ess than 200 m to about 700 m. About 90% of the rainfall comes in the monsoon (kharif) from June to October, but annual averages vary considerably within and between regions: northwestern (500-635 m); western (635-1,020 mm); central (760-1,300 mm); and southeastern (1,270-1,525 mm). The state can be divided into 6 physical regions of which the Maleva Plateau (project area) is the most important agriculturally. Land Use Classification and Utilization 1.05 About 20.7 million ha, 47% of the state's total area, is under cul- tivation (net cropped area 18.7 million ha and fallow 2 million ha), of which about 2.3 million ha are under irrigation. The total cropped area is 21.4 million ha ginning a cropping intensity of 114. Approximately 2.8 million ha (11% of the total area) are classified as permanent pastures and other grazing land and 14 million ha (32% of the total) are forests. Foodgrains occupy most of the cropped area (Table 1.1). Table 1.1: DISTRIBUTION OF MAJOR CROPS IN MADHYA PRADESN (1980/81) Crop Area ('000 ha) Distribution (%) Paddy 4,829 22.6 Wheat 3,358 15.7 Sorghum 2,340 10.9 Pulses 4,571 21.4 Vegetables 117 0.5 Oilseeds 1,802 8.4 Other Crops 4,385 20.5 Gross Cropped Area 21,402 100.0 Farm Size 1.06 There are about 6 million holdings in the state and the average hold- ing is around 3.6 ha (Table 1.2). Landholding distribution is markedly skewed with more than half being less than 2 ha but accounting for only 12 of the cultivated area, while 7% of all holdings cover 34 of the area. - 199 - Table 1.2: DISTRIBUTION OF LANDHOLDINGS IN MADHYA PRADESH Number of Percentage Share Category Holdings Area of Total Average Size (ha) ('000) ('000) Number Area Holding (ha) Less than 1 2,000 868 33 4 0.42 1 - 2 1,152 1,735 19 8 1.51 2 - 4 1,273 3,904 21 18 3.07 4 - 10 1,212 7,809 20 36 6.44 Above 10 424 7,375 7 34 17.39 Total 6,061 21,691 100 100 3.68 The Dairy Subsector 1.07 Madhya Pradesh has about 27 million cattle and 6.4 million buffaloes. Some 8.3 million cows and 2.8 million buffaloes are classified as breedable and about 44% and 50% respectively are in milk at any one time. Production varies considerably with breed, feeding and management practices and averages about 500 liters per lactation for cows and 800 liters per lactation for buffaloes. Total milk production is estimated at about 8 million lpd, equiv- alent to about 150 gm per capita. D. The AMUL Model 1.08 In 1946, the Kaira District Cooperative Kilk Producers' Union Ltd., Anard, Gujarat state, was formed with 2 village producers' societies. The union subsequently become known as the Anard Milk Union Ltd., or AXUL, and the organizational structure as the AMUL model or pattern. By the mid-1960s, a number of milk producer cooperatives based on the AMUL model had been formed and the National Dairy Development Board (NDDB) established to assist in initiating new cooperatives in the major milksheds of the country. In 1970, a specialized institution, the Indian Dairy Corporation (IDC), was established to promote and finance cooperative dairy development. To date, some 40,000 AMUL type dairy cooperatives have been formed mostly under a program known as Operation Flood. 1/ 1.09 The essential elements of the AMUL model involve the formation of a cooperative society of milk producers at the village level, the selection of a board of management which sets the policies of the cooperative within the framework of a general set of bylaws, and the appointment of a local 1/ OF-I (July 1970 to March 1981); OF-II (April 1981 to march 1985); OF-III (April 1985 to March 1990). - 200 - individual as the paid cooperative secretary. Each morning and evening the cooperative purchases milk from all producers in the village who wish to sell it and makes payment to each producer based on the quantity and quality of the milk delivered. The cooperative also sells balanced cattle feed to its members and provides artificial insemination (AI) and veterinary first aid services to cattle and buffaloes. All producers of milk in the village are elegible to become members of the society. Cooperative societies within a 50-75 km radius are members of a collectively owned milk union. The union operates facilities for milk collecting and processing, as well as feed processing, and provides its members with the technical inputs needed to sustain and increase milk production. Each union is governed by a board of directors elected by the producer members which employs a professional manager as the union's chief executive. II. PROJECT FORMULATION A. Preparation and Appraisal 2.01 The project was prepared by the staff of the Animal Husbandry and Veterinary Services Department in Madhya Pradesh along guidelines provided by the GOI Animal Husbandry Division of the Ministry of Agriculture. Two Bank Group missions assisted with preparation in February/March and April/Ma 1973. 2.02 As stated in the preparation report, the primary objectives of the project were: (a) to increase milk production; (b) to increase the incomes of rural poor, particularly the landless and marginal land holders; and (c) to bring milk production, processing and marketing "completely into the organised sector of cooperatives and public marketing systems". To accomplish these objectives, the project was to concentrate on: (a) the establishment of an institutional structure for project implemen- tation; (b) the construction of dairy plants, chilling centers and cattle feed mills; (c) crossbreeding of native village cattle with high producing exotic dairy breeds; and (d) the provision of training and extension programs. Total project cost was estimated at Rs 467.8 million with a foreign exchange component of only Rs 7.4 million. 2.03 The project was appraised in March/April 1974, together with the Rajasthan Dairy Development Project. - 201 - B. Project Area 2.04 The project was located in western Madhya Pradesh and covered 3 milksheds: Bhopal (Bhopal, Hushangabad, Shajapur, Rajgarh, Raisen and Sehoe districts), Indore (Indore, Dewas and Dhar districts), and Ujjain (Ujjain and Ratlam districts). Rainfall in the project area ranges from about 700 mm to 1,600 mm and comes mainly from the June-September monsoon. Temperature varia- tions are marked; the minimum temperature is about 50C and the maximum over 400C. Total rural population in the project area is about 9 million, dis- tributed among some 10,300 villages, each of about 80 households. The project area covers approximately 7 million ha (16% of the state); 4 million ha are under cultivation, of which some 0.4 million ha are irrigated. The average size holding is about 3 ha, with 60% of less than 5 ha (Table 2.1). At appraisal the breedable stock was about 1 million cows and 0.5 million female buffaloes, and the average household owned about 1.6 cows and 0.8 buffaloes; about 3,000 crossbred cows were located in the project area. Table 2.1: LAND USE AND DISTRIBUTION OF LANDHOLDINGS IN PROJECT AREA Area ('000 ha) Landholdings ('000 units) Less Over Milkshed Total Cultivated Irrigated than 1 ha 1-5 ha 5-10 ha 10 ha Bhopal 3,995 2,150 154 123 (21)/a 241 (40) 132 (22) 102 (17) Indore 1,905 1,116 140 35 (18) 78 (40) 45 (23) 37 (19) Ujjain 1,098 758 74 30 (19) 65 (43) 33 (22) 24 (16) Total 6,998 4,024 368 188 (20) 384 (41) 210 (22) 163 (17) /a Figures in parentheses are percentages. C. Project Description 2.05 The project as appraised comprised the following components: (a) establishment of about 1,200 dairy cooperative societies (DCS), 3 milk producers' unions (MPU), and the Madhya Pradesh Dairy Development Corporation (MPDDC); (b) importation and multiplication of purebred exotic breeding stock and an associated AI program of crossbreeding native cattle with high producing exotic breeds, and the provision of extension programs to encourage fodder production, mixed farming, and improved animal hus- bandry; (c) construction of 3 union dairy plants and cattle feed mills, and the establishment of milk collection routes and chilling centers; - 202 - (d) provision of a training center for each union, an extensive training program for developing instructors for training technical and field staff, and fellowships for key personnel; and (e) provision of consultant services. 2.06 MPDDC was to be the main body for implementation and coordination of project activities and would play an essential role in the initial estab- lishment of DCS and MPU. It was also to be responsible for building the dairy plants and other facilities under the project for the unions which would operate them once they become adequately capitalized and staffed and a suffi- cient number of DCS organized. 2.07 Total project cost was estimated at US$31.2 million, with a foreign exchange component of US$7.4 million. The IDA credit of US$16.4 million was to finance about 53% of project costs. GOI and GOMP contribution was to finance about 351 of project costs, and they were to cover the equity financ- ing for investments of the MPDDC and MPU. Eventually the MPU were to acquire at least 751 of government's shares in MPDDC, and the DCS at least 75% of government's shares in the unions. D. Project Objectives and Expected Outcomes 2.08 The objectives of the project as appraised were essentially as stated in the Preparation Report, viz, to increase milk production, raise the level of income of the rural poor, and establish a cooperative organizational struc- ture for dairy development. 2.09 As stated in the appraisal report, the direct economic benefit of the project was to be the increased production of milk, estimated at 285,000 tons annually by year 10. Furthermore, the project was expected to directly benefits, through increased incomes, about 160,000 agricultural households (approximately 0.9 million people), or about 20% of the rural population in the project area. The establishment of 1,200 village cooperatives and 3 milk unions with their own processing plants was to provide direct employment for about 6,200 people. 2.10 The project was to enable the typical smallholder in the project area to increase his net cash income from milk from about Rs 100 to Rs 400 per year. In addition, he was to be afforded the opportunity to adopt a mixed farming system through the integration of a profitable livestock enterprise (dairying) into his traditional farming system. Since such a change was to involve the introductiOn of a pasture/fodder crop rotation, it was expected to result in long term improvement in soil structure and fertility which would largely compensate for some diversion of land to fodder. 2.11 Social benefits were to be derived after the village DCS became firmly established and had a regular surplus of funds (estimated at Rs 8,000 annually by ybar 8). These funds were expected to be used to augment or initiate village development schemes such as education, health, family planning, minor public works and infrastructure (AMUL model). A further benefit was to accrue from improved nutrition due to increased intake of milk, particularly by children and infants. Also, benefits to consumers were to come from an - 203 - improvement in nutrition due to increased availability of unadulterated pas- teurized milk in the urban areas. The economic rate of return was estimated at 34%. E. Negotiations and Effectiveness 2.12 Negotiations were held in Washington October 21-25, 1974, and were attended by the Secretary, Ministry of Agriculture, GO; the Director, Depart- ment of Economic Affairs, GO; the Chief Secretary, GOMP; the Joint Director, Department of Agriculture, GOMP; and the Managing Director, Agricultural Refinance Corporation. 2.13 At negotiations, the following events were specified as conditions of effectiveness: (a) MPDDC established under the laws of the Borrower and under a Memoran- dum and Articles of Association satisfactory to IDA, and a Managing Director of MPDDC appointed; (b) the borrower had subscribed to equity shares of MPDDC in an amount of not less than Rs 275,000 and purchased for cash shares in an amount of not less than Rs 220,000; (c) COMP had (i) subscribed to equity shares of MPDDC in an amount of not less than Rs 275,000 and purchased for cash such shares in an amount of not less than Rs 200,000; and (ii) subscribed to redeemable shares of MPDDC in an amount of not less than Rs 930,000 and purchased for cash such shares in an amount of not less than Rs 460,000; (d) MPDDC had made arrangements satisfactory to IDA to (i) train executive staff of MPDDC and the unions, and union spearhead teams for DCS implementation, (ii) provide first year field supervision, (iii) furnish consulting services to effect a dairy marketing study, and (iv) assist in the preparation of specifications for, and evaluation and award of, tenders for construction of the project dairy plants and feed mills; (e) MPDDC had recruited the MPDDC divisional managers for institutional development, livestock development, and engineering, and recruited consultants for dairy plant engineering, mass-media communications and forage/dairy production; (f) a Subsidiary Loan Agreement had been executed and delivered on behalf of the borrower and ARC; and (g) loan agreements, satisfactory to IDA, had been concluded between ARC and participating banks. 2.14 No special difficulties arose at negotiations and most conditions of effectiveness were met on schedule. However, delays were experienced in: (a) obtainment of key project staff; - 204 - (b) recruitment of project consultants; and (c) conclusion of loan agreements between ARC and the participating banks. As a consequence, the project wad declared effective on July 23, 1975, 3 months later than expected. III. IMPLEMENTATION A. Project Start-Up 3.01 Two supervision missions prior to credit effectiveness, assisted Government and MPDDC in complying with conditions of effectiveness. In addi- tion, these missions assisted MPDDC in the initiation of project activities. Due to very capable management and strong government support, the project had a good start. The concept of village dairy cooperatives was well received by farmers. B. Change in Project Design 3.02 At an early stage, Shajapur and Rajharh districts were included in the project area and Raisen district was excluded mainly to streamline logis- tical operations. This change in the project area, however, did not affect the location of the dairy plants and feed mills. 3.03 As a result of the milk marketing study carried out under the project, the capacity of the dairy plants was adjusted to the anticipated production potential in the 3 milksheds. Instead of a uniform 100,00 lpd capacity, the Ujjain plant was reduced to 60,000 lpd, while the Indore plant was increased to 200,000 lpd. Only the capacity of the Bhopal plant remain unchanged. These alterations resulted in an overall increase in processing capacity from 300,000 1pd to 360,000 lpd (first stage of construction) which remained unchanged throughout the project period. In addition, only the Indore dairy was equipped with a powder plant of 10 tons capacity instead of providing each dairy with a 15-ton plant as recommended at appraisal. 3.04 The number of feed mills was reduced from 3 (total capacity of 300 tons per day) to 2 (in Bhopal and Indore), each of 100 tons per day capacity. 3.05 A calf rearing scheme (US$3.8 million) was to be administered by the project. However, following GOMP's decision in 1975/76 to implement a similar scheme through its veterinary department, the component was deleted from the project to avoid duplication. 3.06 Credit funds for MPDDC and MPU investments were to be made available by OI to ARC, which in turn would on-Lend the funds to participating banks. This procedure proved to be exceedingly cumbersome, resulting in delays in implementation. Project lending arrangements were subsequently changed by channelling funds directly to MPDDC/MPU through the Indian Dairy Corporation (IDC). - 205 - C. General Implementation Experience 3.07 Despite a timely start, physical implementation of the project was considerably slower than anticipated. Contrary to expectations, new milk processing facilities to be constructed under the project were not operational by the end of year 2; thus, formation of new DCS had to be curtailed and, as a consequence, implementation of other project components fell behind schedule. 3.08 Project management was generally satisfactory and COI/COMP support to the project was good throughout. D. Implementation of Main Components Institutions and Organizational Structure 3.09 As envisaged, the entities established under the project were the MPDDC, the MPU, and the DCS. 3.10 The MPDDC was registered under the Indian Companies Act of 1956 on March 22, 1975. The first managing director was appointed on May 22, 1975, and shortly thereafter key staff of good calibre were also appointed. Approximately 1 year after its formation the MPDDC was fully staffed. Ini- tially, the board of the Corporation consisted of only 9 members, with no union representation. In May 1980, the Corporation was reconstituted as the Madhya Pradesh Federation of Dairy Cooperative (MPFDC), which become the apex coordinating and implementing authority for all dairy development activities in the state. After formation of the MPFDC, the board was increased to 15, including 6 union representatives (2 from each MPU). 3.11 The MPDDC engaged the services of NDDB for training the spearhead teams who were responsible for organizing DCS and training the nucleus staff of the Corporation and the MPU. NDDB also assisted MPDDC carry out a market- ing study, prepare engineering specifications for the procurement of equip- ment, and evaluate tenders. In addition, NDDB carried out the construction of project dairy plants and feed mills on a turnkey basis. 3.12 Three MPU were established, 1 in each of the milksheds of Bhophal, Indore, and Ujjain. As per Section 2.12 of the Madhya Pradesh Agreement, the unions were to be established by April 1, 1976: however, since the training of union staff was delayed because of constrains faced by NDDB, they were not fully established and registered until the latter part of 1977. 3.13 As envisaged, the principal functions and responsibilities of the MPU were to: (a) organize and assist in the management of the DCS; (b) establish and supervise milk and cattle feed transportation; (c) process and market the milk collected from its members; (d) operate cattle feed mills; - 206 - (e) provide animal health and Al services; and (f) organize training and extension programs. Each union was governed by a 7 member board of directors, of which 1 or 2 were elected from among the chairmen of the member DCS. Day-to-day management of the MPU was the responsibility of a managing director who was appointed by the board and assisted by 5 divisional managers. 3.14 It was anticipated that about 1,200 DCS would be established during the first 5 years of the project to: (a) act as centers for milk collection and marketing; (b) effect regular payments to milk producers; (c) sell balanced cattle feed; (d) provide Al and animal first aid services; and (e) communicate cooperation and technical information to their members. 3.15 At appraisal it was estimated that the average village in the project area had a population of about 430, constituting about 80 households. It was further estimated that in order to obtain the volume of milk necessary for a viable operation, 3 average villages would need to be included in each DCS. The project was thus aimed at about 3,700 villages, or approximately 60% of those accessible by all weather roads, and 35% of the total villages in the project area. The average DCS was projected to reach its maximum membership in the third year of operation, at which time about 70% of the village households (130 per DCS) would be covered. Thus, at maturity, the projected 1,200 DCS would involve an estimated 156,000 rural households, or approximately 860,000 individuals. 3.16 By October 1975, 2 months after effectiveness, 78 spearhead team members had been recruited and the first batch of 27 sent to NDDB for train- ing. By the end of December 1975, the trainees had returned to Madhya Pradesh and completed the preliminary survey of 354 villages in the Bhopal milkshed. The first DCS were established in Bhopal in February 1976; cooperative forma- tion was initiated in the Indore and Ujjain milksheds in August 1976. 3.17 During the first year of actual operation the project organized 184 societies with a total membership of 7,585. In terms of first year appraisal projections, this represented about 90% of the DCS and 65% of the membership. By year 5, only 471 DCS (with 24,370 member households) had been organized, and by the end of the project the number of DCS totalled only 849 (39,315 member households). The slower than expected rate of DCS formation was due mainly to the delay in construction of the required milk processing facilities. DCS formation significantly increased following commissioning of all the project processing facilities and at present the total number is over 1,200. - 207 - 3.18 Since the actual population of the average village was found to be about 4 times that estimated at appraisal (1,740, constituting approximately 265 households), only 1 village was eventually covered by each DCS. Thus, the project covered only about 25% of the villages and households estimated at appraisal. Some 43% of the DCS members were landless agricultural laborers (21.6%) and marginal farmers (21.61), 21% were small farmers, and 36% were classified as large farmers. As envisaged, most DCS had duly elected manage- ment committees which directed the operations of the societies. 3.19 As envisaged at appraisal, each DCS is managed by a committee of 9 members, elected for a 3-year term, with provisions that one-third of the members retire each year. The committee elects a chairman from among its members and it appoints a paid secretary who is responsible for day-to-day operations of the society. The secretary is assisted by 1 to 2 persons depending upon the size and volume of business of the DCS. The DCS staff is trained in milk testing, basic record keeping, veterinary first aid and AI at the MPU training centres. During the training period, they are paid by the MPU and thereafter are paid out of the revenues of the society. Each DCS is capitalized by share subscriptions and membership fees. Livestock Improvement and Milk Production 3.20 It was expected that initially milk production under the project would be increased from existing native cattle and buffaloes through the adoption of better feeding and management practices; but the greatest increase would come from an intensive program of upgrading, low producing native cows through an AI program of crossbreeding with high producing exotic dairy breeds, mainly Jersey, and by improved feeding. 3.21 To support the crossbreeding program, MPDDC established a Jersey Bull Mother Farm to supply bulls to the MPU. Whereas it was envisaged that a foundation herd of about 75 in-calf heifers would be imported for the farm, and 25 bulls for the 3 MPU, the actual numbers imported were 119 and 21, respectively. Frozen semen from progeny tested Jersey bulls was imported to inseminate the cows. As of March 31, 1983, the farm herd consisted of about 60 mature cows. Bulls surplus to the needs of the project were sold to dairy Federations/MPU in other states, while a limited number of females culled from the herd were sold to project farmers. 3.22 At appraisal, it was expected the first crossbred animals would come into production in year 4 and would increase significantly in number there- after. In a typical DCS, crossbred cows in milk would increase from 9 in year 4 to 55 by year 6 and 184 by year 12. Simultaneously, local cows in milk would increase from 44 (year 1) to 117 (year 4), and thereafter gradually decrease with a complete phasing out by year 10. At the same time, the num- bers of milking buffaloes would increase from 22 (year 1) to 85 (year 5), and thereafter stabilize. 3.23 Against these forecasts, a typical DCS under the project developed as shown in Table 3.1 - 208 - Table 3.1: ANIMALS IN MILK IN TYPICAL DCS In Milk Year 1 Year 4 Year 6 Year 10 /a Local cows 120 171 139 152 Crossbred cows - - 1 11 Buffaloes 82 83 63 52 /a Estimates. Several important differences between what was predicted and the actual situa- tion should be noted: (a) the actual number of local cows and buffaloes in milk in year 1 was considerably higher than estimated; (b) local cows were not replaced by crossbred animals; (c) the number of crossbred cows increased at a significantly slower rate than expected; and (d) buffalo numbers decreased steadily over the project period. The SAR assumed that crossbred cows would increase from 5% of the total herd in year 4 to 65% in year 10, and that native cows would decrease from 62% to zero. In fact, the number of crossbreds reached only 5% in year 10 and native cows actually increased from 59% in year 1 to 69% in year 10, while the proportion of buffaloes decreased from 40% to 27%. 3.24 At appraisal, details of the AI program were not worked out, it was anticipated that MPDDC would own and operate an exotic bull breeding farm which would supply bulls to the MPU. Instead, mainly to reduce costs, the MPDDC supplied the MPU with semen. Further, it was assumed that chilled liquid semen from the MPU would be delivered daily to all DCS by the milk collection trucks. This distribution system worked fairly well during the initial years of the project when DCS were established in the more accessible villages. However, as DCS formation moved into more remote villages, the percentage of societies provided with AI services decreased. Conception rates were very low because of poor semen quality resulting from inadequate tran- sport and storage facilities coupled with the problem of getting animals inseminated at the proper time. Furthermore, because of the small number of animals inseminated monthly, the technicians' skills were not maintained. In early 1983, frozen semen was introduced and chilled semen was phased out. This change resulted in an increase in conception rates and enabled the AI program to move into more remote areas. At the end of the project, about 70% of the DCS had access to regular AI services. 3.25 Approximately 10,600 inseminations (cattle) were carried out during the last year of the project and about 46,000 inseminations were performed - 209 - over the project period. Project staff recorded the birth of some 7,200 crossbred female calves which is lower than the number actually born since an undetermined number of births are never recorded. Nevertheless, the number of crosabreds produced was considerably below the 120,000 (by year 10) envisaged at appraisal. Not only did crossbred animal numbers increase at a very slow rate, there was no replacement of local cows with crossbreds as predicted. A partial explanation for this is that farmers continued to keep their native cows to produce bullocks for draft purposes since they were not convinced that the crossbred bullock was an acceptable draft animal or they could not afford the extra expense of rearing the crossbred male (GOMP's calf rearing scheme and available for female calves only). Since the crossbred cow population did not increase as predicted, incremental milk production fell far short of appraisal targets (para 5.01). 3.26 Part of the slow growth in the number of crossbred cattle can be attributed to the non-acceptance of AI by producers. This was a completely new technology to many farmers and they were reluctant to accept the technique until they had seen evidence and were convinced that it could offer them distinct advantages. It also seems safe to conclude that the low level of adoption reflects imperfections in the provisions of AI services, including low conception rates (para 3.24), and the probability that the majority of farmers, taking account of the risks and returns, are not yet convinced of the superiority of crossbred technology. The relationship between the ownership of crossbred animals and time of exposure to the project was positive and suggests that the adoption of crossbred technology is a very slow process as the vast majority, of a small population of adopters, were exposed to the project for 7-8 years. Fodder Production and Feed Mills 3.27 The appraisal report recognized that the low quality crop residues which traditionally comprised the main component of the indigenous animals' diet would be inadequate to maintain crossbred cattle and would need to be supplemented with high quality green fodder and balanced cattle feed. Fur- thermore, if the expected increased milk yields of native cows and buffaloes were to be realized, additional quantities of green forage would have to be provided. Accordingly, the annual total additional green fodder needed by year 10 was estimated at 620,000 tons, which would require about 15,000 ha of irrigated land. It was anticipated that some 10,000 ha of the existing irrigated land in the project area would be devoted to fodder production. 3.28 Project activities in promoting pasture and fodder production were notable. MPDDC established and operated an applied fodder research-cum-demonstration farm, and fodder demonstration plots were developed at milk processing plants and feed mills in all the unions. Under the guidance and supervision of MPDDC's Fodder Crop Agronomist, project staff distributed some 230 tons of seed (mainly sorghum, maize, berseem, lucerne and oats) and 420,000 napiergrass root slips which resulted in the estab- lishment of about 8,000 ha of forage crops. They also assisted DCS members in establishing 390 ha of pastures (including Stylosanthes spp.) and 370 ha of fodder shrubs (mainly Leucaena). In spite of the extension effort and the generally recognized need for additional green fodder to increase milk produc- tion, farmers were reluctant to substitute fodder crops for food or cash crops, especially since relatively few had crossbred animals. Nevertheless, - 210 - the area under fodder in the project area increased by about 9,000 ha over the project period. No reliable estimate of the incremental fodder produced is available. 3.29 At appraisal the demand for balanced cattle feed was computed on the basis of a feeding rate of 1 kg concentrate for each 3 liters of milk produced, and the additional requirement for concentrate feed by year 10 was estimated at 155,000 tons, over 75% of which would be consumed by crossbreds. Accordingly, it was recommended that each union operate a feed mill of about 75 tons per day capacity for producing this feed. "Construction of these mills would be matched to the growth of demand for feed as projected to year 8 when their capacity would be saturated" (SAR). The first plant was to be built in years 1 and 2, the second is years 3 and 4, and the third in years 4 and 5. Following the completion of a feasibility study carried out by NDDB, it was decided to construct mills only in the Bhopal and Indore unions, each of 100 tons per day capacity. Construction of the Bhopal mill started in October 1978 and the plant was commissioned in June 1980 (year 5); construc- tion of the Indore plant began in June 1979 and commissioning took place in February 1982 (year 6). Both mills were built by NDDB on a turnkey basis. 3.30 While the sale of concentrate feed increased substantially in the project area with the completion of the mills, neither plant ever operated near capacity. In 1976/77, about 330 tons of feed (from existing GOMP mill) were sold. This increased to about 5,500 tons in 1982/83. Per DCS, the increase was from about 1,800 kg to 6,500 kg, and per DCS member from about 40 kg in 1976/77 to 140 kg in 1982/83. On a per animal basis, this represented about 25 kg per head compared with appraisal estimates of 250 kg per native cow, 365 kg per buffalo, and 1,000 kg per crossbred cow. The reasons for the very low consumption of balanced cattle feed is not known. Furthermore, the extent of the purchase of feed (i.e., cottonseed cake, rice bran, etc.) on the open market is also unknown; however, it may have been significant despite the generally higher open market price. Milk Processing Plants 3.31 The project provided for the construction of 3 milk processing plants, each with an initial capacity of 100,000 lpd, which was to be expanded in 2 stages (in years 4 and 5) to 200,000 lpd. All plants were to be built in years 1 and 2 and commence operation in year 3. 3.32 Prior to the start of construction, NDDB, in collaboration with MPDDC, carried out market surveys in each milkshed to determine the appropriate product mix for each plant to avoid installing excess capacity and to minimize freight of fluid milk. Based on the surveys, it was recommended to increase the capacity of the milk plants in Indore to 200,000 lpd and decrease the capacity of the Ujjain plant to 60,000 lpd. The capacity of the Bhopal plant was considered sufficient, thus total capacity in the project area was increased from 300,000 to 360,000 lpd (stage 1), but was not further increased during the project period as anticipated. In addition, the project recom- mended the construction of 6 chilling centers with a total capacity of 90,000 1pd. During the project period, five chilling centers with a total capacity of 10,000 1pd were built. - 211 - 3.33 Construction of the new processing facilities was carried out by NDDB on a turnkey basis. As shown in Table 3.2, there was considerable delay in the construction and commissioning of all the plants. These delays initially were due mainly to the unsatisfactory arrangements made for the channelling of credit funds under the project. Difficulties in acquiring land and peri- odic shortages of cement, steel, water and power also contributed to the delays. Thus, construction of the first project plant (Ujjain) was completed in year 5, 3 years later than anticipated. Table 3.2: CONSTRUCTION OF DAIRY PLANTS Activity Plants Bhopal Indore Ujjain 'Date of land acquisition 12/78 8/78 4/78 Starting date of construction 4/79 4/79 4/78 Date of completion 10/81 9/82 4/80 3.34 At appraisal, it was envisaged that each plant would have a milk powder unit of 15 tons per day capacity. Actually, only 1 plant (Indore) was equipped with milk drying facilities (10 tons per day capacity). The SAR made provision for a total of 0.9 million liters liquid milk storage. Actual liquid storage capacity installed was 150,000 liters for raw milk and 225,000 liters for processed milk. In addition, a combined cold/deep frozen storage capacity of 325 tons was provided. Milk Collection, Processing and Marketing 3.35 Traditionally, farmers converted most of their milk into ghee, wasting most of the skimmed milk, or disposed of it through private traders who operated mainly in villages comparatively close to the urban areas. It was a major aim of the project to provide a secure market outlet for surplus milk in the rural areas, thus stimulating production and increasing farmers' cash income. 3.36 Under the project, milk was to be collected from the DCS along defined and economically viable routes, involving from 13 to 15 DCS per route. Fifty one collection routes were actually established -- 16 in Bhopal, 18 in Indore, 17 in Ujjain -- each servicing on average 15 DCS. Milk was transported fro the DCS to the chilling centres or ailk plants in cans employing hired trucks; project-owned road tankers were used for freighting milk from the chilling centres to the plants. 3.37 It was projected that milk procurement would total about 7 million liters (19,000 1pd) in year 1, rising to 127 million liters (348,000 lpd) by year 5, when all 1,200 of the DCS had been formed and all the dairy plants were in operation, and to 295 million liters (809,000 lpd) by year 8. Actual milk procurement ranged from 22,000 liters (60 lpd) in year 1 to 16 million liters (43,000 1pd) in year 5, when only 28% of the expected number of DCS had been organized, to 45 million liters (124,000 lpd) in year 8, when about 70Z of the estimated number of DCS were formed (Table 3.3). - 212 - Table 3.3: MILK PROCUREMENT (million liters) Year 1 Year 5 Year 8 Appraisal estimate 7.2 127.0 295.0 Actual 0.02 15.7 45.0 Percent of estimate 0.003 12.4 15.0 3.38 Milk collection was constrained by the slower than expected rate of formation of DCS, which resulted from the delays in construction of the milk processing facilities. Therefore, the average collection rate for the first 5 years of the project was only about 5% of appraisal estimate. Despite completion of the 3 project milk plants and increased formation of DCS, milk collection during years 6 through 9 was only about 10% of the appraisal estimate. The reduced intake of raw milk resulted in a low annual average capacity utilization which amounted to only 30% in 1983. However, during peak months of the flush season (November/December) processing capacity was fully utilized. 3.39 The SAR assumed that 25% of project milk would be sold as pasteurized milk and 75% as milk products. Until the completion of the Indore dairy in September 1982, practically all of the project output was distributed as pasteurized milk. In February 1983, MPDDC began marketing skim milk powder, butter and ghee under the trade name SNEHA. Within MP, marketing of these products was done through distributors while out of state sales were handled by a commercial selling agent. On average, about 20% of the fat and 60% of the SNF procured was used for liquid milk sales while the remainder went into milk products. In accordance with agreements reached at negotiations, con- sumer prices of milk and milk products, as well as the producer price of milk, were determined by MPDDC in consultation with the MPU. Training, Extension and Animal Health 3.40 Training and Extension. The SAR correctly identified the availability of trained and motivated manpower as an essential factor for the success of the project. Accordingly, training at the DCS, MPU and MPDDC levels was proposed. At the DCS level, training involved short visits to Anand, Cujarat, of prospective society members to observe AMUL societies and to learn firsthand the operations and benefits of dairy cooperatives. On return to their villages, the farmers participated in village base camps held during the period of pre DCS activity to communicate cooperative principles and experien- ces to other farmers, and also to identify potential leaders and build member- ship in preparation for DCS formation and operation. On the basis of 1,200 new societies, the project envisaged that 12,000 farmers (10 per DCS) would visit Anand and about 600 village base camps would be held. A total of about 2,300 farmers actually were sent to Anand, or slightly less than 3 per DCS. The number of base camps held is not known. - 213 - 3.41 A training center for each MPU was established as proposed to provide training for DCS staff in AI, animal first aid, milk testing and basic record keeping. The centers were also responsible for training members of the DCS management committees. Under the project 946 DCS secretaries, 954 lay insemi- nators, and 1,285 management committee members were trained at these facilities. Thus, on average, 2.5 staff members and 1.7 committee members per functional DCS were trained compared to 3 staff members and 9 committee members anticipated at appraisal. 3.42 At the corporation/federation level, training of the MPU staff and the project implementation teams (spe*rhead teams) was carried out at NDDB and the National Dairy Research InstiLute. The consultants employed under the project also actively engaged in training. Overseas fellowships for 3 key staff of each union were provided for under the project in the areas of dairy plant management, dairy production and crossbreeding, and cooperative communications. MPDDC sponsored 18 project staff for advanced training abroad. In addition to the fields.mentioned, staff also received training in dairy engineering, marketing, fodder production, project planning and monitor- ing. 3.43 The training activities carried out under the project were in general commensurate with the growth in DCS numbers. They therefore fell short of appraisal estimates which in some instances appeared excessive (e.g., 10 couples per DCS to visit Gujarat, 3 staff from each new DCS to attend basic courses, 9 management committee members plus 3 staff members from each DCS to attend management committee course). Since training was heavily oriented towards animal health, other activities such as animal feeding and management, fodder production, calfrearing, and milking hygiene did not receive the atten- tion they deserved from extension workers. 3.44 Animal Health. As envisaged, each MPU provided routine (weekly) and emergency veterinary services to its member DCS through the operation of 16 mobile veterinary units. While the weekly services where provided free of charge, society members paid Rs 25 per visit (non-members Rs 40) for emergency services. In addition to emergency and routine services by graduate veterinarians, producers' animals were provided first aid care by trained DCS staff. Over the project period, 229,845 animals received veterinary first aid, 492,977 routine veterinary treatments and 29,413 emergency veterinary treatments. The demand for veterinary services is growing and the unions are prepared to expand their animal health activities. However, increasing costs will require an upward adjustment of the fee structure and/or more efficient use of existing Government services. Technical Assistance, Contractors and Suppliers 3.45 To assist MPDDC in implementing the project, provision was made for 12 manyears of consultancy services in the areas of dairy plant engineering (3 MY), dairy processing (2 MY), dairy marketing (2 MY), mass media communica- tions (2 MY), and forage/livestock production (3 MY). Assurances were given by COMP and GOI that consultants acceptable to the Association would be recruited; however, only 2 consultants (1 each in dairy processing and forage production) were hired on a permanent basis. The services of 2 others, both in livestock production, were obtained as and when needed. All consultants - 214 - were recruited locally. In addition to using the technical expertise of NDDB in designing, erecting, installing, commissioning, and operating milk process- ing facilities and feed mills, MPDDC also utilized NDDB in organizing and supervising DCS, carrying out marketing and feasibility studies, and in the procurement of machinery and equipment. In general, the performance of the consultants was judged to be satisfactory. 3.46 No major difficulties were encountered with the civil contractors engaged by NDDB except in the case of the Indore dairy plant. Here, legal and technical complications with the contractor led to delays in the comple- tion and commissioning of the plant and to an increase in cost. The overall performance of the suppliers of equipment, spare parts and utilities was satisfactory. E. Procurement 3.47 At appraisal, it was expected that MPDDC would be the sole procurement agent for all MPDDC and MPU investment items financed by IDA. However, since the services of NDDB were utilized for the construction, installation and commissioning of all processing facilities on a turnkey basis, NDDB was given the responsibility for procuring, under ICB arrangements, all major items needed for these facilities. Not only did this relieve MPDDC of a con- siderable work load, it also resulted in significant cost savings since NDDB was able to procure in bulk on a global tender basis. Minor items'of equip- ment and supplies were procured by MPDDC following ICB procedures. Procure- ment was satisfactorily carried out and the borrower had no difficulties in following the Bank's guidelines. Neither did he request any procurement changes. F. Project Costs and Financing 3.48 The total expenditure on the project was Rs 205.3 million (US$24.1 million) compared with the appraisal estimate of Rs 249.7 million (US$31.2 million). The actual cost in local currency was 18% less than the original estimate, which is mostly due to the deletion of the calf rearing scheme (Rs 30 million) from the project. Although the capacity of milk processing facilities was reduced by almost 50%, the delay in constructing these facilities resulted in a 45% increase in their cost. 3.49 Project financing is summarized in Table 3.4. - 215 - Table 3.4: PROJECT FINANCING (Rs '000) SAR Estimates Actual Source Amount Percent Amount Percent GOI 37,120 14.9 14,283 7.0 COMP 50,400 20.2 32,945 16.0 ARC/Banks 29,840 11.9 25,793 12.6 DCS Members 1,200 0.5 1,039 0.5 IDA 131,200 52.5 131,200 63.9 Total 249,760 100.0 205,260 100.0 G. Disbursements 3.50 Disbursements were projected to extend over 7 years, beginning in the first quarter of IDA FY76. Because of delays in the construction of process- ing facilities, resulting mainly from the cumbersome arrangements set up under the project for the channelling of credit funds, actual disbursements extended over 9 years (Annex Table 2). The credit of US$16.4 million was fully dis- bursed. H. Adjustments in Legal Agreements 3.51 Under the project, all IDA funds (US$13.6 million), except those for the purchase of imported cattle, DCS equipment, and training and extension services (US$2.8 million), were to be channelled to MPDDC and the MPU through GOI, ARC, and the participating banks. This multitiered financial arrangement proved to be cumbersome and, in the case of dairy and feed plant construction, resulted in frustration, multiple appraisal of subproject loan requests and lengthy delays. Subcontractors of NDDB frequently operated on advance pay- ments and provided NDDB with a series of running bills as each subcontract progressed. The accounts were only finalized at job completion. As turnkey contractor, NDDB retained title to all machinery and equipment until final plant acceptance by project authorities. The multitude of small contracts, the use of local languages in billing procedures, the lack of photocopy equip- ment, and the impracticality of the task of forwarding to MPDDC periodic documentation on partly paid jobs, made it virtually impossible for MPDDC to provide proper documentation to participating banks until each plant was completed. Without this documentation, the banks could not obtain refinancing from ARC, who in turn could not claim from GOI. As a result, IDA disburse- ments were severely delayed. 3.52 After discussing the matter with GOI/GOMP, NDDB, ARC, and MPDDC, Bank staff advised that the problem could be overcome by making provision in the DCA for financing turnkey contracts, including advances under such contracts. Accordingly, on April 27, 1978, Schedule 1 of the DCA was amended through the - 216 - addition of another category which provided for US$9 million to be disbursed for "construction of dairy and feed plants under turnkey contracts", with 80% of total expenditures eligible for refinancing. This enabled mobilization funds to be passed to the contractors which greatly enhanced the speed of project works and improved project disbursements. Payment under this new category was based on NDDB statements of expenditure, with supervision mis- sions checking on physical progress in relation to expenditures. NDDB sub- mitted quarterly progress statements of expenditure together with final detailed billings for each construction as and when completed. These state- ments indicated the progress of expenditure against advances, and claims for further financing by NDDB from MPDDC were met only when expenditures approximated advances. On June 12, 1980, Schedule 1 was further amended by increasing the new category from US$9 million to US$11.7 million and decreas- ing the unallocated category accordingly (Annex Table 3). 3.53 On may 19, 1978, GOI proposed that the project financing arrangements be streamlined by allowing the project to borrow under terms and conditions similar to those proposed for the National Dairy Project (Cr. 824-IN), by drawing funds directly from ARC or from IDC, rather than through intermediary banks. IDA accepted the proposal and an Amending Agreement between IDA, GOI, GOMP and IDC was signed in June 1980. A Subsidiary Loan Agreement between GOI and IDC was signed on November 10, 1980. The Subsidiary Loan Agreement between GOI and ARC was also amended to reflect IDC's participation in the project. This change further enhanced project progress and disbursements. IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT A. Implementing Agencies 4.01 MPDDC/MPFDC. MPDDC was set up in a timely manner, headed by a very capable managing director, and was staffed appropriately. It served effec- tively in its role as the center for coordination and implementation of project activities during the initial years of the project. When the MPFDC was established in 1980, MPDDC went into liquidation and all i:;s functions and responsibilities were transferred to the federation. While the SAR envisaged that the MPDDC would ultimately be responsible to a 15-member board, the major of whom would be MPU representatives, it was not until the MPFDC came into existence that union members were elected to the board of the apex body. While, in general, the performance of the MPDDC and the MPFDC was satisfactory, they should have played a stronger role in monitoring and evaluation and marketing. 4.02 MPU. The MPU were organized and registered on schedule by MPDDC. Also the staffing pattern suggested at appraisal was generally adhered to. Although the services provided to the DCS by the MPU have been constrained by escalating costs and other factors, the unions' milk collection and transport system was quite efficient, and they have performed their training functions satisfactorily. - 217 - 4.03 DCS. The village societies carried out well the functions they were established to perform. Farmer participation was generally good and manage- ment of the societies was of a high standard overall as indicated by the fact that most of the PCS showed annual profits. B. Auditing and Reporting 4.04 Auditing of accounts and submission of financial statements and audit reports were far from satisfactory. Even today the audit of MPDDC/NPFDC accounts is 3 years behind schedule although accounts have been prepared up to 1982/83. The accounts of cooperative institutions in Madhya Pradesh are audited by the Audit Cell of the Office of the Registrar of Cooperatives. A major reason for the unsatisfactory audit situation was the failure of the Registrar of Cooperatives to strengthen its staff (as envisaged at appraisal) to carry out the additional functions imposed by the project. 4.05 Reporting by MPDDC was good. Quarterly progress reports generally covering all project activities were submitted in a timely manner. V. PROJECT IMPACT A. Incremental Production 5.01 The annual incremental milk production from the project at full development (year 10) was projected at about 1 million tons. This was based on the assumption that all native cows in the DCS would be replaced with crossbreds, that the crossbreds produced under the project would account for 802 of the total milk produced, and that buffalo members would remain constant and would contribute the remaining 20%. Estimated actual incremental milk production in year 10 was only 21,000 tons, or approximately 2% of the appraisal estimate. Only 292 of this amount was contributed by project crossbreds; 25% was from buffaloes; and 46% was produced by local or native coWs. B. Technological Change 5.02 The project contributed substantially to improved animal health serv- ices. It also introduced a number of new and improved technologies (crossbreeding, AI, frozen semen, high yielding fodder crops, balanced cattle feed); however, the uptake of these to date has not been widespread. The provision by the project of a secure market outlet for farmers' surplus milk, together with the establishment of the necessary milk processing and marketing infrastructure has been the most important single factor in dairy development in Kadhya Pradesh. 5.03 While farmer acceptance of new technology introduced by the project was not as rapid as expected, there are indications that the limits of milk production under existing traditional technology may have been reached and that new production practices will be taken up by an increasing number of livestock producers in the future. Thus, it is expected that producers will - 218 - increasingly adopt better feeding and management practices, as well as improved breeding practices, and that production and productivity will increase substantially as a consequence. C. Social Iapact 5.04 As a result of the project's activities in providing routine and emergency veterinary services, in improving animal feeding through the increased use of green fodder and balanced cattle feed, and in upgrading the quality of milk animals through the use of AI, the producer (husband and/or wife) has become more aware of and interested in family health and nutrition, as well as in family planning. 5.05 The village society influences the lives of its members in more wayL than assisting in their milk business. The DC8 forms a center for village cohesiveness and gives the villagers a sense of control over their own des- tinies. The fact that the cooperative members have a predictable cash flow from their milk sales enables them to more adequate take care of family needs as they arise. Thus, there is less reliance on the village money leader or the merchant who extends credit at high rates of interest. Through their participation in the operation of the DCS, the villagers' knowledge and management capabilities have been enhanced, and they have gained confidence in their ability to manage their own affairs. 5.06 The cooperatives have been of particular importance to the weakest segments of the rural population, the small/marginal farmers and the landless agricultural laborers (para 3.18) who, on their own, could almost never avail themselves of the advantages offered by the DCS. The cooperatives have also helped to break down social barriers since all members and suppliers of millk to the societies are treated as equals, irrespective of sex, caste, creed or religion. Lastly, since women are involved to a significant extent in dairy operations at the village level, the project has increased women's importance and involvement in the life of the community and enhanced the awareness of their role in dairying. VI. FINANCIAL AND ECONOMIC RE-EVALUATION A. Financial Performance Farm Level 6.01 The SAR anticipated that by year 10 all native cows in a DCS would be replaced by crossbreds resulting in an incremental farm income of at least Rs 340 per year. Furthermore, it was expected that some 160,000 farm families with 120,000 crossbred cows would be involved in the project. In fact, only about one fourth of the expected members participated in the projact and less than 2,000 crossbred cows were in milk by project end. Thus, the overall benefits to the farming community in Madhya Pradesh of introducing crossbred cows were considerably smaller than anticipated. However, the project did provide much better access to production inputs and, above all, provided - 219 - greatly improved milk marketing opportunities to producers through the 849 village cooperatives established. DCS 6.02 As expected, most DCS established under the project were financially viable by year 2. The net income of a typical society increased from Ra 3,727 in 1977/78 to Rs 5,759 in 1982/83 (Annex Table 8). MPU 6.03 By year 8, the dairy plants and feed mills were expected to generate operating surpluses of Rs 60.3 million and Rs 3.5 million respectively, and the costs of services and administration were estimated to total no more than Rs 3 million annually. However, because of the low incremental milk produc- tion, the dairy plants achieved only minimal operating surpluses and the feed mills incurred persistent losses (Annex Tables 9 and 10). Over the project period, the cost of services increased from Rs 0.79 million to Rs 7.22 million and operational deficits from Rs 0.83 million to Rs 7.97 million. The major reasons for this unsatisfactory performance were the high costs of technical services, due mainly to the step rise in veterinary costs, and the low capacity utilization of the dairy plants and feed mills. MPDDC/MPFDC 6.04 MPDDC/MPFDC's revenues were to come mainly from the sale of bulls from the central bull farm and a levy on the MPU to cover MPDDC/MPFDC's administra- tive expenses for services provided to them. The levy was never imposed and the number of bulls sold over the project period was lower than anticipated. Thus, the service operations of MPDDC/MPFDC incurred accumulated losses of Rs 0.21 million. The combined activities of MPDDC/MPDFC and the MPU resulted in net deficits ranging from Rs 1.12 million in 1976/77 to Rs 11.66 million in 1982/83; total accumulated losses amounted to Ri 25.24 million (Annex Table 12). B. Economic Performance 6.05 Re-calculation of the project's economic rate of return followed the method adopted at appraisal, and was based on the following assumptions: (a) actual and estimated cost and production data for years 1-9 were used; (b) all values were expressed in 1984/85 terms; (c) the economic price for milk of Re 2.80 per liter was calculated as a composite price for ex-plant milk and milk products and the prepara- tion of incremental production that did not reach the plant (estimated at 40%). The former was priced at Rs 4.40 per liter and the latter at Rs 2.20 per liter. The weighted average price was adjusted by a SCF of 0.8; - 220 - (d) Additional fodder production costs were estimated at an economic price of Rs 0.14 per kg, assuming a kg of green fodder for each incremental liter of milk produced; and (e) domestic prices and price components were translated into border rupees by applying a SCF of 0.8, and all costs and benefits were expressed in 1985 constant prices by applying a deflator using the wholesale price index. 1/ On the basis of the above assumptions, and given the extremely small increase in milk production, the re-calculated economic rate of return was negative. VII. IDA PERFORMANCE A. Project Design and Appraisal 7.01 The basic concept of the project, i.e., to improve the living stand- ards of small landholders and landless agricultural laborers through the development of an integrated program for the production, collection, process- ing, and marketing of milk, was sound, as was the project design which was based on the highly successful AMUL model developed in Gujarat state. 7.02 The project as implemented was similar to that appraised, however, the results obtained differed markedly in several respects from those predicted. While the project succeeded in establishing the basic infrastruc- ture, facilities, and services for a modern dairy industry, the accomplish- ments in terms of crossbred animals produced, incremental milk production, and the establishment of a truly farmer owned and managed cooperative (AMUL model) organization fell short of appraisal expectations. 7.03 The appraisal report placed too much emphasis on the crossbred cow as the agent of change, and was overoptimistic regarding the acceptance by project participants of crossbreeding using AI as the chief means of increas- ing milk production. The report was also over optimistic with respect to the willingness or ability of the small/marginal farmer to use a portion of his land for the production of green fodder, the use of balanced cattle feed by producers, the time required to construct processing facilities, and the formation of DCS. Furthermore, at appraisal, insufficient attention was given to the buffalo as a milk producing animal, the production of crossbred males for both breeding and draft purposes, project lending arrangements, and milk pricing and marketing. Project risks, particularly the possibility of exces- sive Government involvement in project implementation and operation, farmers' acceptance of AI and crossbreeding, and the likelihood that project par- ticipants could attain the assumed production parameters, were given inade- quate consideration at appraisal. 1/ The following factors were derived from the wholesale price index: 2.00, 1.96, 1.86, 1.86, 1.59, 1.34, 1.23, 1.20, 1.10, 1.02 for the period 1975/76 - 1985/86. - 221 - 7.04 In retrospect, the targets set at appraisal and the timetable proposed for their accomplishment were unrealistic. Given the fact that cooperative dairying in Madhya Pradesh was largely unknown and milk marketing through middlemen or private traders was well entrenched, it was too much to expect that the AMUL model in its entirety could be implemented within a period of 6 years. B. Supervision 7.05 Twelve supervision missions visited the project over the period March 1975 to March 1983 at intervals varying from 2 to 18 months (average 8 months). The size of the missions ranged from 1 to 3 individuals and averaged approximately 2. Two different individuals (8 Bank staff members and 2 con- sultants) participating in the reviews. Only 1 Bank staff member covered the project for 5 consecutive years. Following each mission, letters summarizing the main findings and indicating corrective actions required were sent to GOND, GOI and project staff. The rapport with project staff and senior government officials was good and, while often critical, the missions were seen by government and project authorities to have a positive role. 7.06 From 1978-81, the project was supervised mainly by staff from the resident mission office in New Delhi. This proved beneficial in that it provided greater continuity and local contact than would otherwise have been the case. Overall, the Bank's supervisory effort was satisfactory; however, in retrospect, more attention and emphasis should have been given to the following: monitoring activities needed to assess the impact of the project on milk and crop production and productivity, and on the socio-economic condi- tions of project participants; training and extension activities; milk pricing and milk marketing; and the organizational management and financial operations of the various project entities. VIII. SUMMARY 8.01 The project, which aimed at the establishment of an integrated program for the production, collection, processing and distribution of milk, was the third of a series of 3 projects designed to make a significant contribution to the development of India's dairy industry. It consisted essentially of 3 main components, viz., the development of an integrated cooperative institutional structure; provision of the necessary prerequisites for sustaining and increasing milk production; and the establishment of milk collecting, process- ing, and marketing facilities. 8.02 While the initial rate of establishing village cooperatives was very close to that predicted at appraisal, after the second year DCS formation and milk collection had to be severely curtailed because of insufficient process- ing capacity. By the end of the project, a total of 849 DCS had been organized with a membership of 39,315 compared with 1,200 DCS and 160,000 members envisaged at appraisal. Three milk producers' unions were formed as projected. - 222 - 8.03 Provision was made for the construction of 3 feed mixing plants (total capacity of 225 tons per day) and the creation of an additional 600,000 lpd of milk processing capacity. The project constructed 2 feed mills, each with a capacity of 100 tons per day, and established an additional 360,000 lpd milk processing capacity. Extended delays were experienced in the construction of most of the plants. 8.04 The breeding of crossbred cows proceeded much slower than anticipated (only 5% of SAR target by year 10), and the production of green fodder and the use of balanced cattle feed were considerably below appraisal estimates. As a consequence, incremental milk production was only a fraction of the appraisal target. Annual incremental production at full development (year 10) was projected at about 1 million tons. This was based on the replacement of all native cows with crossbreds which were to contribute 80% of total production. Estimated actual incremental production reached only 21,000 tons, or about 2% of target. The very low incremental milk production resulted in a negative economic rate of return for the project. Also, contrary to expectations, the MPU and MPDDC/MPFDC did not generate perating surpluses, and their total accumulated losses on the project period amounted to Rs 25.2 million. 8.05 Although the project failed to fully reach the physical targets set at appraisal, all majo- project components were initiated and are considered a sound basis for successful continuation. A major achievement of the project was the provision of a secure market outlet for surplus milk thus providing farmers a steady cash income and an alternative to converting milk to ghee or setting it to private traders. As a result of the project, the traditional milk vendors now offer better prices for milk than before resulting in an improvement in the economy of those producers who do not supply milk to the cooperatives. To this assessment must be added a number of important social achievements. Through their participation in the operation of the DCS, the villagers' knowledge and management capabilities, were enhanced and they gained confidence in their ability to manage .their own affairs. The coopera- tives were of particular importance to the weakest segments of the local population, the small/marginal farmers and the landless who, on their own, could never avail themselves of the advantages offered by the DCS. Further- more, the cooperatives helped to break down social barriers since all members and suppliers of milk to the societies are treated as equal, irrespective of sex, caste, creed or religion. Lastly, the project increased women's impor- tance and involvement in the community and enhanced the awareness of their role in dairying. Table 1 - 223 - PROJECT COMPLETION REPORT INDIA - MADHYA PRADESH DAIRY DEVELOPMENT*PROJECT CCREDIT NO. 522-IN) Comparison Between Appraisal Cost Estimates and Actual Expenditure (Rs '000) Category Appraisal Actual Change Estimate ( DCS Investments 2,400 3,734 + 55.58 Union Investments 116,180 148,557 + 27.86 - Processing plants 87,120 126,541 + 45.24 - Feed mills 16,410 14,259 (-) 13.10 - Technical services 12,650 7,757 (-) 38.67 MPODC Investments 2,380 5,671 + 138.27 - Bull feeding farm 2,080 4,338 + 108.55 - Management facilities 300 1,333 + 344.33 Training and Extension 18,830 18,983 + 0.81 - Consultant services and 6,690 2,016 (-) 69.86 fellowships - Union training centres and 10,940 16,967 + 55.09 extension programme - Farmer camps 1,200 57 (-) 99.90 Calf Rearing 30,000 Nil - TOTAL INVESTMENT 169,790 177,002 + 4.24 Establishment Costs 13,730 15,014 + 9.35 Working Capital 2,340 13,244 + 465.98 Contingencies 63,870 Nil - TOTAL PROJECT COST 249,730 205,260 (-) 17.80 - 224 - Table 2 PROJECT COMPLETION REPORT INDIA - MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CREDIT NO. 522-IN) Disbursement of Credit by Years (US$ Million) IDA Fiscal SAR Estimates Actual Year Annual Cumulative Annual Cumulative 1975 -- - - 1976 1.4 1.4 - - 1977 6.0 7.4 0.7 0.7 1978 2.3 9.7 1.8 2.5 1979 2.0 11.7 3.8 6.3 1980 3.7 15.4 3.9 10.2 1981 1.0 16.4 1.4 11.6 1982 - - 3.3 14.9 1983 - 0.8 15.7 1984 - - 0.7 16.4 Date of Effectiveness 2 7/23/75 Estimated Closing Date : 6/30/82 Actual Closing Date : 3/31/83 Final Disbursement : 10/24/83 - 225 - Table 3 PROJECT COMPLETION REPORT INDIA - MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CREDIT NO. 522-IN) Credit Allocatiot. and Disbursements (US$ '000) Credit Allocation Disbursement Revised Revised Actual Category Original 4/27/78 6/12/80 Disbursements 1. Civil Works 2,700 /a 700 /b 700 /b 277 2. Equipment and Materials (ICB) 4,650 650 650 358 3. Equipment and Materials 3,850 850 850 1,154 (other than ICB) 4. Imported Cattle, Semen 100 100 100 119 and Equipment 5. Training and Extension 1,150 1,150 1,150 1,398 6. Consultants' Services and Fellowships 700 700 700 265 7. Construction of Dairy and Feed Plants - 9,000 11,700 12,829 8. Unallocated 3,250 3,250 550 - Total 16,400 16,400 16,400 16,400 la For dairy plants, feed mills, and cattle breeding farms and AI centers. b For cattle breeding farms and Al centers only. - 226- Table 4 Page 1 PROJECT COMPLETION REPORT INDIA - MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CREDIT N. 52Z-IN) Existing Staff Structure in IDA Project Name of Post 8hopal Indore Ujjain Total Manager (PO) 1 1 1 3 DY. Manager (PO) 1 1 1 3 0Y. Manager (E) 1 1 1 3 Assistant Manager (E) 1 4 2 7 Assistant Manager (P) 4 4 4 12 Process Superintendent 13 20 5 38 Maint. Superintendent 4 3 2 9 Senior Technician 5 5 4 14 Technicians 36 44 17 97 Plumber/Carpenter/Mechanic 1 4 5 10 Boiler Oerator 5 5 4 14 Dairy Attendant 61 30 70 161 Total 133 122 116 371 DY. Manager (Q.C.) - - 1 Assistant Manager (Q.C.) 1 1 1 3 Q.C. Superintendent 3 4 1 8 Senior Technician (Q.C.) 5 3 7 15 Junior Assistant (Q.C.) 9 18 6 33 Dairy Dock Assistant - 2 2 4 Total 18 29 17 64 Inventory Management:, Assistant Manager (IM) - 1 1 2 Superintendent Stores (IM) - - 1 1 Senior Assistant (IM) 3 4 5 12 Junior Assistant (IM) 5 4 5 14 Store Clerk 1 3 1 5 Total 9 12 13 34 1/ Provided by MPFDC. - 227 - TabLe 4 Page 2 Name of Post Bhopal Indore Ujjain Total Administration: DY. Manager (A&P) - - Assistant Manager (A&P) 1 1 1 3 Superintendent (A&P) 1 1 1 3 Office Assistant (Senior) 1 3 2 6 Office Assistant (Junior) 6 4 4 14 UoC 4 4 14 22 Typist/LDC 3 9 6 18 Telephone Operator 2 2 2 6 Messenger 2 13 2 17 Total 20 37 32 89 Finance: Manager (Fin.) - - - - Assistant Manager 1 1 1 3 Finance Superintendent 1 2 1 4 Accountants 6 4 5 15 Typist/UDC 2 5 2 9 Typist/LOC 1 9 2 12 Total 11 21 11 43 Marketing Division: Manager (Mkt.) - - - - DY. Manager (Mkt.) *1 - - 1 Assistant Manager (M) 1 1 1 3 Sales Supervisor 2 1 1 4 SPA/DA 14 11 3 28 Dispatch Clerk 16 6 5 27 Sales Accountant - - - Typist/LDC 2 - 2 4 Attendants 1 - 2 3 Total 37 19 14 70 Chilling Centre: DY. Manager - 1 - 1 Assistant Manager 4 4 2 10 Process Superintendent 8 8 4 20 Senior Technician - 12 4 16 Technicians 16 18 6 40 Attendants 44 18 35 97 Boilerman 8' Grade 4 3 4 11 Total 76 64 55 195 GRAND TOTAL 304 304 258 866 saftenownum n man =am no= - 228 - TabLe 5 OCS Membership Year OCS Formation Total Membership 1976/77 184 7,585 1977/78 233 11,904 1978/79 267 15,471 1979/80 336 19,155 1980/81 471 24,370 1981/82 624 29,363 1982/83 849 39,915 !！才‘!!．州， ！。，、．、。，，、會 I露蠶言，；。；,；復 細 計 蓄＿ {‘權“&‘憤！區。 華，屆糟侮，黍“,，爆厝爆 ;‘曄“!,&，藝‘·”,}｝。 i‘醒‘,‘·‘&,&!&}l& i石纖震籐侮·編言籐留匱審蜓 爭．一廷陸 才妒霹＇戶妒＇&，邊濾’- 萬織座當藝瞬為奮蓬睡熔 弋 饉健讜權．鑼德 煙靨露籐霍饜籐露言憂 權壓侮屆煙蠶籐認震曆 憤雲儡煙震健權煙露·德 侮煙靂屆言權震屆權健 侮膩馳鬱啟認屆露·肆 9 .lq社一6可Z- - 230 - Table 7 PROJECT COMPLETION REPORT INDIA MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CR, 522-IN) Milk Procurement and Producer Pricesq rage k Receipts Annual Average Price Amount Total Pricing per Financial Paid To Average Annual per Kg* Year Producers Procurement Procurement Liter Pat (Rs '000) (liters/day) ('000 liters) (Re/liter) (Re/& Pat) 1975-76 370000 0 22 1.71 26.00 1976-77 120664 17v660 60976 2.00 31.30 1977-78 20,939 32vOOO llt68O 1.89 29.50 1979-80 30#871 43vOOO 150695 1.97 30.70 1980-81 420,469 680000 24v820 2.05 32.10 1981-82 439665 79tOOO 28t835 2.13 33.30 1982-83 989154 1419000 510465 2.46 38.43 Note: Ratio of cow: buffalo milk procurement to 13:879 approximately. Average price paid per kg fat has been calculated on weighted average basis. PROJECT CONPLETION REPORT INRIA - MDYA PMS1 DAIRY DEVELOPENT PROJECT - (CEDIT .is, 522-112 Typical Dairy Cooperative Society - Itscome and Ooecdtino Costs OCS : Nipania Milkshed S Shopal Particulars 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 19262-3 Members milk sales to OCS (L) 2.145.70 16,717.80 12.695.18 18.110.30 16.907.10 11.803.90 16,188.50 Ron-members milk sales to OCS (L) 351.60 3,595.20 2.730.13 4,229.20 5.467.00 2.091.60 4,211.80 Total Annual DCS Milk Sales (L) 2497.30 20.313.00 15425.30 22.339.50 22,074.10 13.895.50 20.410.30 (in* kg fatlyear) IS8.70 1.305.25 964.46 1.516.53 1,380.18 862.79 1.202.28 (4ttle feed sales (kg/year) 2L0.00 1.980.50 1,282.70 I.559.00 700.00 1.610.00 - Revenues Commission on milk sales 728.85 7.427.71 5.640.46 4.338.33 4.664.54 4.718.32 9,576.49 Commission on cattle feed sales 4.07 103.00 66.71 - 17.15 94.87 - Commission on fodder seed sales - - 3.60 1.00 51.65 - Commission on ghee 20.40 - - - - Interest from Bank - 21.18 96.54 70.20 - 305.32 083.t1 Miscellaneous and others 15.25 128.25 85.00 69.00 30.00 92.60 30.00 total Ravenue 7A8.57 1,680.14 5.892.51 4.478.53 4-763-34- 5 1..t1 10489-60 Doeratina Costs Wages 282.30 2.070.00 2.400.00 2.380.00 2.400.00 2.240.00 2.565.00 Rent 20.00 110.00 137.50 144.00 171.00 180.00 180.00 Milk testing & first alt supplies 8.70 110.15 147.63 126.55 124.25 290.30 473.70 Sreakages - 524.74 251.50 297.63 240.11 209.17 137.94 Low fat deduction - 32.63 - - 165.48 160.38 Miscellaneous 615.70 1.105.58 1.412.21 -3.449.58 1,J10.11 1,321.46 1.214.84 Total Operating Costs 26f.70 3,953.a. 4,348.83 4.-397.78 4.Z45 41 4 i406.41 4,731.86 Operating surplus (deficit) (158.13) 3,727.14 1.543.47 80.77 523.87 804.70 5,759.86 Sonus from Union - - - - - - Net operating aurplub (00fici) (158.13) 3.727.14 1.543.47 80.77 523.67 804.70 5.759.86 EROJECT COfPLETIQI REPORT INDIA - fADiA PRAMSH DAZR DEVELOPMENT PROJECT ita Processin Plants toonal. 0itaut6 and Induce) (its mi II Ses) Waimea * Dgagla 1981/82 1982/83 total malk processed (Miltion Istres) 11.594 16.594 53.790 Pasteurised Milk to bulk ftankers) Pasteurised mtl In bulk (cans) PeteeutsOd Milk in bottles 30.996 47.906 121.8 oil. by-products (butter and 10e) 2.457 e*16 pomer - - 14.284 Other products 0.635 0.371 0.463 total Sale& 34,08& Al,972 167-635 ua#frat In. Costa Direct Costs Cum Milk purchase Buftato milk purchase 20.504 25.891 120.140 Drect 1abour 0.528 0.679 1.438 S Uttlities 1.735 2.660 6.679 Materials and retailing expenses 3.144 6.756 13.580 Preignt 3.577 4.207 9.202 Sales tax 0.175 0.114 0.252 Cnailing expenses 1.016 1.757 2.716 Sub-total Direct Costs 3.SZI 2Sg5985 Overead Costs Control expenses 0.174 0.11h 0.473 Maintenance labour - 0.185 Maintenance materials - 0.242 Supervisory. Technical. Administrative Personnel ) 1.639 1.594 2.326 and Plant Manager and Assistant ) Administrative Expenses 0.961 1.61 5.020 Sub-total Overhead Costs 2.17 2-72S 8,24o IOlAL OPERATING COSTS 34 44791 164.230 0 et1l OPERATING SURPLUS 3.5.A. ...1 3-405 INDIA *MADIhA PRADES DAIRY DgygLOPNENT PRJEC[ Fwed uns I t(bIopatitudore) -UMltm # a D erA""to Co-Li lif"0lul 19081/b21923 I"tal Production (M.T.) 4.719 8.492 11.616 (Rs million) Assaas Total sales 5.047 10.102 13.740 Other income 0.180 - Doorat Ina Cot I Direct Costs "N*w materials 5.925 8.019 11.702 W Otrect tabour 0.219 0.362 0.460 ut lities 0.239 0.451 0.270 Materials, freight 0.472 0.702 3.003 Sub-total Olrect Costs a,8S 9,S34 Overhead Cost& Mintenance labour - 0.012 - Maintenance materials 0.018 0.112 0.032 Supervisory. Technical. Administrative 0.065 0.373 0.697 Personnel Administrative expenses 0.191 0.78 1.292 Plant Manager and Assistant - - 0.041 %41e tax 0.19 0.162 0.160 Sub-total Overhead Costs 4&ZZ 13AA 2,21A TOTAL OPERATING COSTS Z,327 109J 1,0AA Lar OPERATING SURPLUS/DtfCIT (2.280) (0.690) (3.910) -4 C iæi:JD1~fbRLMULak-IYl=m Lf5å (R C 0000) "L.::.ZZ Pl:-. - 78-79 79-80 80-81 81-82 83-83 S:aes:fgnaifals - 57 214 302 182 221 Insane -l288 364 380 301 340 266 Insurance cia us 86 30 39 63 64 66 Mltscelaneous Inc3m - 70 1 47 38 24 IutaI Revenues - ~ 124 &2.J £ LLL L onaratia Costs P46ture maintenance 19 2 - - Concentrate teed 29 302 249 147 190 1 342 F'&I and power - 15 7 28 34 32 32 Veterinary suppIIes and ze~n 5 53 38 18 22 23 12 Maintenance and replacement of equipmaent - - - - - 2 24 Saaries and mags 2 38 73 12 72 75 87 i see II aneous - 54 135 101 325 97 l Sub-total 219 Administrative Exaensis ýtdff saIaries 21 62 130 70 109 123 Transportation - 10 - - 7 OfflCe space and supplies - 6 I8 38 33 65 49 Siscelaeneous - 2 14 21 18 21 20 Insurance charges I 30 26 32 34 41 37 xwzl Lu imA 2A21 Total Oneratino Costa 4Ug Opdrating Surplua/(eficit) (38) (93) 5 7I 139 (76) (245) Depreciation - 27 30 29 122 122 122 B Met Surplus (Oeficit) (38) (120) 21 42 17 (46) (367) ..P d DEVELOP NT PROJECI balre cocoerat1twe UnIon/~& s'ration - Euamary £ncome Statement (aM mlii tin) - Val- 7/77/878/79 79/80 s0/8t at/82 82/83 Ravenufts 0t$ processin9 - -- - 34.09 52.97 167.64 Cattte foed o - - 5.05 10.28 13.74 Support services - 0.37 0.62 0.63 0.71 0.62 0.57 Total Revfnuaf OA37 062 0...63 39.85 63.87 181.95 Oueratina Cuzta m%$& plnts - -- - 33.45 44.79 164.23 1,*du Mil la - - - - 7.33 10.97 17.65 Union services 0.79 0.91 1.22 2.06 3.37 3.87 7.22 5upport services (MPOOC) .1/ 0.04 0.47 0.57 0.56 0.57 0.70 0.82 lttal0Oeratin" Costa 0.83 1.38 1.79 2.62 44.72 80.33 189.92 Operating Surptus (Deficit) (80.83) (1.01) (1.17) (1.99) (4.87) 3.54 (7.97) Depreciation 0.29 0.61 0.86 1.09 1.94 2.44 3.01 inlterest - - - - - 0.88 Ndt Surplus/(Deficit) (1.12) (1.62) (2.03) (3.08) <6.83) 1.10 (11.66) 1/ Bult farm and samen station. r PRJC CSOIMLETVN REP2RT (CREu~5DT &. 22-Bif 2 Madiva Pradesh Cor>prat ion Buk Ier02$nu Far -o *tard Cnanacu inventoR.rx 17 77 1977-78 1978-79 1979-80 1980-81 1981-82 19U2-S3 1983-84 1984-85 1985-86 1286-87 On hand 11t 119 110 73 71 68 68 62 63 44 44 tat c4tf hetters - - - 13 13 16 5 16 9 6 6 fotal mateo 112 74 82 69 62 57 40 47 40 40 40 &stt deaths - 9 - 7 7 8 3 9 10 10 3 2 Less sales - - 30 8 8 13 2 5 18 3 4 On hand at end 119 110 73 71 68 68 62 63 44 44 44 "utfara (over 6 muntjib) On hand (old * new) - - 53 39 41 59 59 54 35 28 34 Les deatha - - 4 - 4 5 1 2 - 1 2 Less sales - - 45 13 - 13 26 13 16 15 20 Purchaled - - - - By transfer - - - 13 13 16 6 16 8 6 6 On hand at end - - 4 13 24 24 26 23 10 6 6 Calvsa (1 year) Sorn during year Males - 36 37 50 32 20 29 26 23 20 20 Les deaths - 4 3 4 1 3 1 3 2 1 1 On hand at end - 32 34 48 31 25 28 23 21 19 19 Females - 59 37 32 37 34 28 14 24 20 20 kess deaths - 6 2 4 2 3 1 2 - 1 1 On hand at end - 53 35 28 35 31 27 12 24 19 19 Mala ap (old * new) On hand - - 32 47 59 41 49 53 44 55 20 Less deaths - - - 2 2 - 2 14 2 2 2 -4 Less sales - - 19 34 47 17 22 18 7 33 17 By transfer - - - - - - - - - - 19 On hand at end - - 13 11 10 24 25 21 34 20 20 - 237 - Table 1 4 18JA".Bb81026888JAALIE n9t 82LSI Madhya Pradesh Dairy Develowent Corporation Cost of Fodder Production NabI Irigatedl Year Acres under Production Total Cost cultivation Cost (Rs) (Rs7acre) 1976-77 195 1,905 u 371,085 1977-78 756 2,045 a 1,546.020 1978-79 1,224 2,067 - 2,530,008 1979-80 1,366 2,255 = 3,080,330 1980-81 2,159 2,380 * 5,138,420 1981-82 2,933 2,482 a 7,279,706 1982-83 4,067 2,624 = 10,671,808 1983-84 5,219 2,781 a 14,514,039 Cost of Fodder Production (Summer Irrigated) 1976-77 210 995 208,950 1977-78 268 1,025 274,700 1978-79 404 1,045 = 422,180 1979-80 375 1,125 421,875 1980-81 493 1,165 574,345 1981-82 736 1,225 - 901,600 1982-83 1,452 1,330 = 1,931,160 1983-84 1,653 1,384 = 2,287,752 Cost of Fodder Production (Kharif Non-irrigated) 1976-77 46 845 = 34,645 1977-78 142 850 U 120,700 1978-79 81 870 = 70,470 1979-0 339 925 = 313,575 1980-81 812 940 = 763,280 1981-82 874 1,000 a 874,000 1982-83 2,157 1,105 = 2,383,485 1983-84 2,156 1,134 * 2,444,904 - 238 - Table 15 INDIA MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CR.522-IN) Returng From Crossbreedinq Basis: 10 Cow Herd Native Cow Crossbred Cow Physical Parameters Cows 10 10 No. calving and milked 5 6.5 No. dry 5 3.5 Calves sold 4 5.5 No. of cows purchased 1/ 1 1 Litres per lactation 17 375 1,800 Feeding: tons/year/cow including progeny Green fodder - 3 Straw (by-product free of cost) 5 5 Concentrates 0.2 0.9 Financial Operations Css Feed costs 2,600 14,700 Miscellaneous 150 225 Medical Expenses 500 Total Costs 2.750 15.42 Income 4anure S Rs3O/t 900 1,500 Milk 9 2.00 ?/ 3,750 23,400 Total Income 4j6S5 24.900 Gross Marin Per 10 cows 1,900 9,375. Per cow 190 950 1/ Milk yield per cow excluding calf consumption. / Average component price of milk sold to OCS, private vendor and home consumption. · - 239 - TabLe 16 . I al I . . I2 * • 5:2 : a jj : 5u:: 55:: 11j g i .555 5 552 22 !5 % .25 qsu s5 qq2 25:q i j8 PåS Si~SE m : i .255 2 5-1 5 25 25 i . 1 i slng 55. 5 ! 22I. i sesa1 5-15 is 225 5 5555m 5- 111111 2 PROJECT CORPLETION REPORT INDIA - MADHYA PRADESH DAIRY DEVELOPMENT PROJECT (CREDIT NO. 522-IN) Economic Costs and Benefit Streams (Rs Mittion) 1/ 2/ PsoCA t Cuhts tV 12aguA Toal 11cr*mental BaLac po.2us,-.1ti CoAtA benefits Investment Recurrelst CstA casts Coait 1976/76 1.35 - 0.04 1.39 0.42 (0.97) 1976/7? 12.84 1.41 0.75 15.00 7.25 (7.75) 107/7 24.74 3.08 T).98 28.80 9.46 (19.34) 1978/79 46.15 3.95 1.09 51.19 10.40 440.71) 1079/80 33.02 4.69 1.40 39.11 13.52 (25.59) 1680/8 16.48 25.29 2.10 43.87 20.32 (23.55) 1981/82 25.79 50.90 2.98 79.67 28.81 (50.66) 1982/83 16.02 63.79 4.29 84.10 41.45 (42.6S) 1983/84 4.84 73.35 5.17 83.36 49.92 (33.44) 1904/85 - 72.19 6.05 70.24 58.45 (19.79) 1965/86 - 57.94 6.79 64.73 65.54 0.81 1966/87 - 76.70 7.73 84.43 74.64 ( .79) 0 1987/88 - 100.09 8.96 109.05 86.52 (22.53) 1988/89 - 106.17 10.06 116.23 97.1s (t9.08) 1989/90 - 112.59 11.14 123.73 148.02 24.29 Two kg for a litre of milk at Rs0.18 per kg adjusted by SCF of 0.80. See Table 6 for incomental milk production. The economic price tor milk is a weighted average (1984/85) assuming that 6S of incremental milk production is supplied to OCS for processing and 40% sold to vendors, the former priced at 0&4.40 per litre and the latter at R*2.20. These prices have been adjusted by SCF of 0.80 in deriving the weighted average price of As2.80 per litre. Including ressdual project herd value of crossbreds - Rs40.44 million (10.109 head at Rs4.000/head). - 241 - PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT (Cr. 824-IN) March 23, 1987 General Agriculture II Division South Asia Projects Department 247- s I - 243 - PROJECT COMPLETON REPORT INDIA NATIONAL DAIRY PROJECT - (Cr. 824-IN) Highlights i. The National Dairy Project was the fourth dairy development project supported by the Bank in India, and the first which was on a national basis, providing assistance throgh the Operation Flood II program. Operation Flood I, financed by the World Food Program, had been set u; on the basis of "Anand Pattern Cooperatives", aimed at organizing milk marketing systems in four metropolitan cities in Bombay, Calcutta, Delhi and Madres and linked wth natural milksheds of their respective hinterlands. ii. It was estimated that the expanded program would cost $364 m, financed by IDA (41%), from funds generated from BBC commodity assistance (491), and by 0I/IDC (101). The project was appraised in December 1977, and became effec- tive one year later in December 1978. Actual project cost amounted to $304 a, with IDA's total disbursements amounting to US$ 150 m, about 49% of the tota project cost. iii. Project implementation was somewhat delayed in the beginning as state support was mixed, and full implemetation only got going in 1981, with the credit closing in December 185. Under the project, milk procurement increased from an average of 2.4 mlpd in 1979/80 to 7.9 mlpd in 1985/86. The peak season rise reflects increased fodder availability after the monsoon season and coincides with the milking cycle, particularly for buffaloes. The project established 16 state level federations, 125 milkshed unions and over 32,000 DCSs, which assumed the role of the basic village organizational unit. A total of 4.5 million farmers with an estimated 7 million milk animals became members, of which 211 were landless and 29% marginal farmers. At the level of the unions, incremental processing capacity established was 4.1 mlpd with a further 2.8 alpd under erection at the end of the project. Additional storage capacity for SNP and butter oil, and transportation facilities were also established. Technical assistance was provided under an FA0 arrangement for dairy plant management, engineering and processing, marketing and train- ing. iv. The financial rate of return (FR) for landless farmers with crossbred cows was 37%, and this was estimated to be higher for small farmers who could provide their own fodder. For DCs, FRR as estimated at 28% (SAR 25%); for milk unions, 17% (SAR 29%), the decrease attributed to lower than estimated utilization. While no economic rates of return were calculated, it is espected that it would not vary significantly from the FRR. Apart from the project beneficiaries, Operation Flood has helped to provide a renumerative - 244 - price to milk producers in general, which in turn has now contributed to the increase in overall milk production. To the extent that DCSs and the unions become ready buyers of milk at a far and renumerative price, both in the flush and lean seasons, the dairy industry has become more competitive and the vast majority of milk producers supplying private traders have also benefited. Also, the project has created over 50,000 regular jobs in the metro dairies and unions, with over 120,000 part time positions at the level of the DCSs. v. The following points and/or lessons are of particular interest: (a) The basic concept of Operation Flood is sound, and the program has suc- ceeded in laying the foundation for the development of dairy cooperatives in a competitive environment where traditional entrepreneurs continue to play a important role. However, the project was somewhat optimistic in its level of expectation for ready aceptance by the states of the "Anand Pattern Cooperatives" as many State Governments still have the consumer as their primary interest. The latter has become progressively more costly to the States, and as a result, States are becoming more receptive to the development of dairy cooperatives along the line of the "Anand Pattern$. (b) For the continuing development of the producer's interest and increased milk production, it has become necessary to expand and modernize facilities in keeping with supply and demand conditions; experience indicates that greater emphasis needs to be placed on marketing. (c) The project concentrated on the establishment of increased processing facilities and inputs, but with insufficient attention to the financial and management aspects of establishing and managing the participating institutions. As a result, many institutions are operating on a marginal basis, requiring much institutional strengthening. A union incurring loss is unable to pay its farmers on time, attract competent management and tends to deteriorate rapidly as te farmers divert their milk else- where. IDC needs to strengthen its monitoring of borrowers, including the obtaining of timely audited financial reprting, now considered to be poor in many instances. Also, NDDB/IDC needed to strengthen their own capabilities for developing sound investment programs and for providing institutional advice and technical assistance where required. This would also include marketing expertise as the milk market has become more competitive, with many more choices available to the consumer. Overall, future expansion should be linked to institution building, and a proposed period of consolidation is necessary to strengthen existing institutions. (d) Under theproject, IDC provided grants to participating unions/federations of 30% of their capital investment. This grant became the largest part of the producers equity in the institutions, as the investments were accounted at their full cost. Also, IDC provided development funds to meet 100% of certain inputs. In promoting a spirit of self-sufficiency - 245 - and viability at the level of the unions, IDC is now proposing to limit its support for capital infrastructure only, requiring the unions to progressively increase recoveries for input costs from the producer. The above grants and development support are financed from a special Opera- tion Flood Fund built up from he proceeds of the EEC commodity assis- tance. While there is still a substantial balance in this fund ($160 million), it will be exhausted within another four to five years unless it receives further assistance. In looking into any future project, it is important to progressively reduce the level of grants and assistance provided, it NBBD/IDC is to be self-sufficient. NDDB/IDC is already examining proposals for reducing the above levels of assistance, by getting existing Government agencies to provide extension services to dairy producers. (e) While substantial progress has been made in the development of te dairy cooperatives, continued emphasis is needed to increase milk productivity to improve the efficiency of the processing units. T HIS PAGE IS BLANK - 247 - PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT (CR. 824-IN) I. BACKGROUND A. Introduction 1.01 The National Dairy Project (NDP), Cr. 824-IN, involving a loan of US$150 million was approved in June 1978. This was the fourth dairy develop- ment project supported by World Bank credit in India and the first sector credit to assist dairy development on a national scale. NDP formed a part of the country's dairy development program known as Operation Flood, a program conceived and managed by the Indian Dairy Corporation (IDC) and the National Dairy Development Board (NDDB) aimed at setting up a modern dairy industry under cooperatives to meet the country's increasing need for milk and milk products and provide remunerative prices to the milk producers in rural areas. While this project aimed at providing access to the urban market for rural milk producers, it helped in generating employment both in the rural and urban areas. 1.02 The first phase of the dairy development program known as Operation Flood I designed on the basis of "Anand Pattern Cooperatives" was aimed at setting up organized milk marketing systems in four metropolitan cities -- Bombay, Calcutta, Delhi and Madras to be linked with the natural milksheds of their respective hinterland. On completion of Operation Flood I in March 1981, about 10,400 dairy cooperative societies were established in 27 milksheds covering 1.46 million families. During this period, milk marketing in four metropolitan cities rose from one million to 2.2 million litres per day (mlpd). Operation Flood I particularly aimed at capturing a major share of the liquid milk in these four metropolitan cities. In 1981, a much larger dairy develop- ment project, known as Operation Flood II, was launched. On its completion by March 1985 Operation Flood II had covered 136 milksheds encompassing 34,523 Anand Pattern village milk producers' cooperatives. As on March 1986, the cooperative dairies procured on an average 7.9 million litres from 4.5 million rural milk producers. About 10.9 mlpd processing capacities were available with the rural dairies and another 3.6 mlpd processing capacity with the four metropolitan dairies. B. Agriculture and Livestock in National Economy 1.03 Agriculture including forestry and fisheries is the dominant sector of the Indian economy, providing 69% of direct labor employment, 38% of net domestic product and 36% of export earnings. The country had a record foodgrains production of 151.5 million tons during 1983-84. Owing to expansion in the provision of institutional credit, use of high yielding varieties, supply of input services to the farmers, and a suitable price support program, foodgrain production has continued to rise and it is expected to grow by 3.7% annually during the Seventh Plan period. Out of the total public sector outlay - 248 - of Rs 1,800 billion (1983-84 prices) during the Seventh Plan, 10.9% is allo- cated to various agricultural and rural development schemes. The notable feature of the improvement in agricultural production is that it is not con- fined to the progressive areas of Punjab, Haryana and Uttar Pradesh alone but has spread into areas such as West Bengal, Bihar, Orissa, Madhya Pradesh, Tamil Nadu and Andhra Pradesh where growth rates had traditionally been relatively slow. 1.04 India has about 163 million hectares of cultivated land divided into a total of 89 million operational land holdings. The average land holding size is about 2 hectares. Marginal farmers (having less than 1 hectare) comprise about 57% of the total number of holdings (Table 1). Table 1: THE NUMBER OF HOLDINGS, OPERATIONAL AREA AND AVERAGE LAND HOLDING SIZE -- ALL INDIA (1981-82) Number of Percent to Area Average Operational Holdings Total Number (Million Size Size Groups (Million) Of Holdings Hectares) (Ha) Marginal (below 1 ha) 50.52 56.5 19.80 0.39 Small (1 to 2 ha) 16.08 18.0 22.96 1.43 Semi-medium (2 to 4 ha) 12.51 14.0 34.56 2.76 Medium (4 to 10 ha) 8.09 9.1 48.34 5.97 Large (10 ha and above) 2.15 2.4 37.13 17.24 Total 89.35 100 162.79 1.82 It is estimated that about 19% of the working population in rural areas have non-agricultural occupations and another 30% are landless agricultural laborers. 1.05 India has a livestock resource of considerable genetic diversity and with adaptability to withstand environmental stress. The livestock sector accounts for 18% of the total agricultural output. The pattern of livestock keeping in India is dominated by need for draft power. There are some 83 million draft males in use. Additionally, most villages keep milch animals - buffalo or cow. There are about 55 million cows and 31 million buffaloes of breedable age with average lactation yields of about 500 litres and 800 litres respectively. Livestock statistics do not show any significant rise in the mitch animal population between 1978-86, though milk production rose from 29.1 million tons to an estimated 42.3 million tons during this period thereby improving the per capita availability of milk. The share of buffalo milk in the country's milk production is almost 55%. 1.06 The rapid population increase and its dependence on a limited cultiv- able land requires the development of intensive systems of agricultural produc- tion aimed at improving productivity and rural incomes. These objectives can - 249 - be served by developing livestock and dairy production as a subsidiary occupa- tion for the small holder and landless laborer. Livestock do not necessarily compete with humans for land use in India as milch animal rearing is complemen- tary to the existing cropping system, using largely crop residues and agricul- tural by-products as feed. This enables small and marginal farmers to take up dairy production as an economic activity. In the Seventh Plan, the emphasis is on low cost livestock production that forms a part of low technology mixed farming for sustaining and improving the income of small/marginal farmers and encouragement of crossbreeding to increase milk production with due emphasis given to the local breed. C. The Anand Pattern 1.07 The basic organizational unit of NDP was the village dairy cooperative based on the Amul model. A key aspect of the Anand Pattern is the formation of a DCS of milk producers at the village level which is responsible for the daily procurement of milk, regular payment to the milk producers based on quality testing of their milk, sale of cattlefeed and provision of technical inputs. The Anand Pattern DCS is managed by an elected Management Committee which sets the policies of the DCS within the framework of an established set of bye-laws applicable to all Amul type dairy cooperatives. The day-to-day running of the DCS is done by a paid cooperative secretary who is a local person. Milk is collected from the producer members each morning and evening and payment is made based on quality testing of their milk. All milk producers in the village are eligible to become members of the society and the cooperative societies within a milkshed in a radius of 15 to 75 kms become members of a collectively owned milk union. 1.08 The milk union generally owns a dairy processing plant to receive all the milk that can be collected from its member DCS. It often owns a cattle feed plant that manufactures and supplies cattle feed on no-profit no-loss basis and usually provides its members with technical inputs necessary to sustain and increase milk production. The union is responsible for marketing of liquid milk in its area and has in many cases facilities for conversion of surplus milk into products. Each union is governed by an elected board of directors and employs a professional manager as the union's Chief Executive. All member milk unions join to form a state level federation registered under the Cooperative Act with the primary objective of coordinating the marketing activities of member unions outside the state. Thus the Anand Model has a "three-tier" structure of village dairy cooperatives, district unions of vil- lage dairy cooperatives and apex federation of milk unions at the state level. D. Bank's Previous Involvement in Dairy Development in India 1.09 IDA has assisted the dairy projects in the states of Karnataka, Rajas- than and Madhya Pradesh essentially aimed at dairy development in cooperative sector on the Anand Pattern Model. The Karnataka Dairy Development Project, the first of the three projects, covering four milksheds was implemented by IDA Credit 482-IN with an investment of US$ 30 million. The second project under- taken was the Rajasthan Dairy Development project which covered five milksheds - 250 - and which was implemented by IDA Credit 521-IN with an investment of US$ 27.7 mil- lion. The third, the Madhya Pradesh Dairy Development Project covered three milksheds and was implemented by IDA Credit 522-IN with an investment of US$ 16.4 million. II. PROJECT FORMULATION A. Preparation and Appraisal 2.01 The project was prepared on the basis of the Operation Flood II proposal prepared by NDDB in 1978 along the guidelines of the Government of India (GOI), Animal Husbandry Division of the Ministry of Agriculture, and on the findings of an IDA mission comprising Messrs. P. Brumby, P. Dax, Mrs. K. J. Hong, Messrs. G. Slade, S. Thillairajah, T. Turtiainen and C. Wolf- felt, which visited India in November-December 1977. 2.02 NDP was to consist of a number of subprojects in respect of individual states covered. The state plans were to be prepared by respective state dairy federations in consultation with the NDDB and appraised and financed by IDC in accordance with the criteria agreed with IDA. Progress on completion of state plans is given in Annex 1. 2.03 The NDP to be implemented as the first phase of Operation Flood II, was appraised in May 1978. B. Project Description 2.04 According to the Staff Appraisal Report, the project would comprise a number of activities that would be initiated in the first three years, with disbursement to be completed in seven years. These activities would include: (a) establishment of about 20,000 DCS grouped into approximately 50 dairy unions and 25 federations; (b) provision of animal health, AI and other extension services to cover all DCS; (c) construction of dairy processing facilities with a total incremental capacity of about 5 mlpd; (d) provision of packaging, distribution and transport facilities to handle the marketing of approximately 4.5 mlpd of liquid milk; (e) provision for storage and long distance transport facilities to support the establishment of a buffer stock of dairy products and the develop- ment of a national"milk grid"; and () provision of training, research and technical assistance. - 251 - 2.05 An additional benefit from the project would be a major increase in the income and living standards of 3 to 4 million village households. The overall impact of the project would result in an incremental milk production of 5 mlpd and a rise in total milk sales of 8 mlpd. The majority of project beneficiaries would be subsistence and small farmers. C. Negotiations and EffectivenAss 2.06 At negotiations held in Washington in May 1978, the conditions of Credit effectiveness were decided at the signing of a subsidiary loan agree- ment, satisfactory to IDA, between OI and IDC. 2.07 No special difficulties arose at negotiations and most conditions of effectiveness were met on schedule. Barring minimal delay, the Credit was declared effective on December 27, 1978. III. IMPLEMENTATION A. Project Start-up 3.01 Project start-up had initially been targeted for December 1978 presum- ing preliminary steps would be completed during 1977-78. State federations had to be formed, and individual state projects had to be prepared by NDDB in consultation with the state federations and the state governments concerned. The state governments and state federations had to execute agreement; the state governments were required to guarantee repayment. The project as prepared by NDDB in consultation with the state governments concerned had finally to be appraised by IDC. Annex 1 indicates the actual date for completing the key steps required for project start-up. The preliminary steps took substantially longer than anticipated. As a result, while implementation began in early 1979 in a number of states, it was substantially delayed in certain states like Maharashtra, Uttar Pradesh, Karnataka, Rajasthan, Bihar and Haryana. Only a limited expenditure of Rs 442.66 million was therefore incurred up to March 31, 1981. B. Changes in Project Design 3.02 The SAR envisaged the establishment of 25 federations covering about 50 incremental milkshed districts throughout India. Under Operation Flood and the IDA project, 39 milk unions had already been established (Annex 2). On the basis of a decision of the Steering Committee at its meeting on July 9, 1979, it was decided to extend the program to all states and union territories. 3.03 The SAR had essentially provided for the establishment of 25 cluster federations, each consisting of two to six unions. In fact as the project proceeded, it was realized that rather than having more than one cluster of federations in a state, it would be desirable to have only one federation in each state enabling it to work closely with the state government and to develop statewise brand identity and brand marketing. The federation would therefore - 252 - become the apex dairy cooperative institution of the state. In small states like Sikkim, Assam and the various union territories, it was realized that, one union would be adequate and no federation was necessary. As a result, only 16 state level federations were established. Annex 3 lists and gives the juris- diction of federations and unions. NDP on March 31, 1986 covered 164 milksheds, 16 federations and 9 apex unions created in 25 states/union ter- ritories to implement the program. C. General Implementation Experience 3.04 Physical implementation of the project was considerably slower than anticipated owing to the delayed start in some of the states. Project manage- ment was generally very satisfactory and GOI's support to the project was good throughout. Support of state governments was mixed. In certain states like Tamil Nadu, Madhya Pradesh and Gujarat the completion of preliminary steps of project start-up was on time, and project implementation generally started according to schedule. In a number of cases, however, progress was extremely slow owing to delays in completing preliminary steps including execution of agreements and finalization of perspective plans. Substantial delay occurred in the case of Bihar, Haryana, Maharashtra and Uttar Pradesh where appraisal reports were completed only in 1984-85. In the case of Rajasthan the appraisal report is yet to be finalized. The Credit closed on December 31, 1985 as scheduled. Expenditures were, however, permitted up to June 30, 1986. D. Implementation of Main Components Institutions and Organizational Structure 3.05 The project aimed at organizing groups of farmers into DCSs responsible for development of dairying in the village, including collection of milk from its member farmers, testing of milk and payments to member farmers. DCSs within the jurisdiction of a milkshed union were to be affiliated to a milkshed union. 3.06 The Board of Directors of the milkshed union consisted of elected chairmen of the DCSs affiliated to each union. All unions in the state were affiliated into a state federation which has been made responsible for implementing NDP in the state. The state federations were to handle all mat- ters connected with sale of milk and dairy products outside the jurisdiction of the union and to coordinate all other actions related to cooperative dairy program in the state. 3.07 In fact, as against the targetted 25 state level federations, only 16 were established. This was because the state level federation was necessary only in cases where there are more than two district unions within a state. Only 16 states had more than two unions and therefore required state level federations. 3.08 Formation of milkshed unions has far exceeded SAR targets, 125 of these being established against only 50 anticipated as per SAR (Annex 4). The major reason for the larger number of unions established is that the project was subsequently increased in scope (see Annexes 2 and 3). - 253 - 3.09 As against 20,000 DCSs targetted in the SAR, a total of 32,593 DCSs were actually established (Annex 5). DCSs as established became the basic organizational unit at the village level. While there were some variations in functioning from state to state, all DCSs accepted their major respon- sibilities including: (a) serving as centres for milk collection; (b) effecting regular payment to producers; (c) providing veterinary first-aid services to members' milch animals; (d) communicating cooperative and technical information to the members; and (e) representing the members on the Union General Body. 3.10 In addition, depending on needs and development, DCSs have in many cases provided AI facilities and balanced cattle feed for sale and participated in the all-round development of the village. 3.11 The SAR anticipated a total of about 3.5 million farmers having 5.6 million milch cows becoming members of DCSs. As against these figures, in fact, a total of 4.5 million farmer members with an estimated 7.0 million milch animals actually became members by the end of the project period. Based on surveys, it has been found that about 21% of members were landless, 29% were marginal farmers and 38% were small and medium farmers. The targets as per SAR and the estimated number of beneficiaries based on Society Village Enumeration is given below: (millions) Society Village Ennumeration Targets Estimates Landless 0.5 0.90 Marginal farmers (less than 2.5 acres) 2.0 1.40 Small farmers and medium farmers (2.5 to 10 acres) 0.7 1.70 Commercial farmers (more than 10 acres) 0.3 0.50 Total 3.5 4.50 Union Services 3.12 The principal functions and responsibilities of a union were to (a) organize and effect the establishment of DCS, including the training of DCS staff and the audit of accounts; (b) provide animal health and AI services for the DCS; - 254 - (c) organize and manage the transport of milk from DCS to dairies; (d) organize the supply of cattle feed and fodder production techniques; (e) channel to the DCS existing calf-rearing and fodder seed subsidies; and (f) process and market the milk procured by the DCS. NDDB and established federations would train the nucleus staff of the unions and federations who would direct the organization of DCS. 3.13 On this basis, as indicated at para 3.08, 125 milkshed unions have actually been established. These unions are largely carrying out the principal functions for which they were established. The milkshed unions are organizing DCSs and they accept the responsibility of training DCS staff. 3.14 In most states, unions are organizing transport of milk from the DCSs to the dairies and are arranging payments to the DCSs based on tests of milk supplied. Federations and unions are arranging to process and market the milk procured by the DCSs throughout the project area. In a number of state, processing plants are still with the federations and have not been transferred to the unions. In a few states, including Maharashtra, existing and new plants within the jurisdiction of the union are still owned by the state government. 3.15 Unions are being used as the basic channel for the provision of all inputs and financial support and assistance under Operation Flood II to the DCSs, They are taking necessary action for the formation of the society and organizing milk collection. Unions are playing a variety of roles in the provision of technical inputs to farmers depending on their financial viability and needs. 3.16 The SAR had no specific targets with reference to animal health, AI services and other extension services apart from indicating that all DCSs would be covered. It had however, visualized operating 8 to 10 routine veterinary routes per union and emergency veterinary services for providing animal health cover. 3.17 A detailed statement showing progress of technical inputs (AI and AH) is given at Annexes 6, 7 and 7.1. By March 31, 1986 a total of 8,748 DCS were provided AI facilities by the unions. In many of the remaining DCSs, AI facilities were available from other sources, including state governments and others like the Indo-Swiss project in Kerala. Through the project, artificial inseminations amounting to over 3 million in case of cows and over 4 million in case of buffaloes were performed. As a result, 339,300 female calves (cattle) and 551,530 calves (buffaloes) were born (Annex 8). 3.18 Some 715 regular and emergency routes were provided under the project covering about 27,334 DdS under the animal health program as of March 1986 (Annex 8). Regular routes provided for routine visits of veterinarians at fixed periods to each DCS on the route. These regular visits enable the provi- sion of free veterinary treatment to the milch animals owned by members every one to two weeks. Emergency routes have essentially been established to - 255 - provide treatment in case of emergency. Emergency visits are normally being charged at rates varying between Rs 10 and Rs 30 per visit. Processing Facilities 3.19 The project aimed at establishing about 5 mlpd of incremental process- ing capacity which along with the surplus capacity existing at the time of appraisal would be sufficient to cope with the incremental procurement of 8 mlpd. Included in the capacity were about one million litres per day of product manufactured. Investments were based on a model that assumed a certain mix of plant expansion and new construction, and the disposal of milk in liquid form and milk products in ratio of 4:1. 3.20 As against SAR targets of 5 mlpd incremental capacity, actual incremen- tal capacity established under NDP was 4.11 mlpd and a further 2.77 mlpd was under erection. The capacities financed under the project are given at Table 2 (Annex 9). Table 2: DAIRY PROCESSING FACILITIES FINANCED UNDER NATIONAL DAIRY PROJECT Incremental Capacities Created Up to 3/31/86 (mlpd) Under (Capacities Completed) Construction Dairy processing capacity in milksheds 3.01 2.64 Metro dairies 0.70 0.15 Aseptic packing station 0.40 - Total 4.11 2.77 3.21 As against a processing capacity of 1 mlpd, equivalent to 100 tons per day (tpd) drying capacity for product manufactured, the actual capacity estab- lished was 1.19 mlpd (equivalent to 119 tpd drying). 3.22 The specific investment plan for each union was based on a detailed study of existing processing facilities and milk procurement potential in each union. Wherever state government/dairy corporation plants were available an effort was made to get these transferred to the concerned federation/union and to expand these in order to minimize additional investments. The total opera- tional capacity available to the project by March 1986 was 10.9 mlpd. 3.23 As against the operational capacity of 10.9 mlpd as on March 1986 actual capacity utilization was 93% (Annex 10). Capacity utilization of powder plants during the peak month of February 1986 was 53%. - 256 - Distribution and Marketing 3.24 The BAR anticipated development of distribution, packaging and tran- sport facilities to handle marketing of approximately 4.5 mlpd. Major invest- ments involved provision of milk packaging and paper laminating equipment and bulk vending systems. 3.25 A range of facilities had been developed under the project to facilitate marketing of milk and milk products in towns with population over 100,000 and in other smaller towns. Three major modes of distribution were to be developed, namely, bulk vending, sachet and tetrapak. In addition, smaller towns were to be catered to by using 40-litre cans. Over the project period, liquid milk marketing has been extended from some 120 cities/towns at the beginning of the project to over 400 by the end of the project. In most cases processed liquid milk is being packaged in sachet and distributed. In smaller towns liquid milk is distributed using 40-litre cans. Liquid milk sale has risen during this period by an incremental 3.70 mlpd. 3.26 A paper laminating plant was established on the technical patent by M/s. Tetra Pak International, Sweden. The paper laminating plant went into operation in July 1983. Based on this plant, four packaging stations with an aggregate capacity of 0.4 million litres were established at Jaipur, Surat, Indore and Guntur. 3.27 Bulk vending systems earlier established only in Delhi have since been established in Calcutta, Madras and Bangalore. Sachet packing machines have been provided to most of the plants distributing milk in smaller towns in India. As a result today about 65% of the total liquid milk is sold either based on bulk vending system or sachet packed. Storage Facilities and Transport (Milk Grid) 3.28 Some of the facilities that have been provided under the project were as follows: (a) As against the estimated 2,500 tons of additional storage capacity to be constructed by IDC 'under the project a total additional storage capacity of 6,060 tons have been established (5,060 tons for SMP and 1,000 tons for butter oil). (b) The SAR anticipated the provision of an additional 75 rail tankers to handle long distance transportation of milk. As against this, addi- tional rail tankers actually procured numbered 65 bringing, the total number of rail milk tankers available for long distance movement to 95. In addition, another 18 rail tankers have been ordered and are pending delivery. Training, Research and Technical Assistance 3.29 The SAR specifically visualiseA steps to be taken to strengthen train- ing and R&D. This would include strengthening of facilities at Anand and establishment of Regional Training Centre and the expanding of the Applied Research and Development program currently being executed by NDDB. - 257 - 3.30 During the project period, training facilities at NDDB have been strengthened and new training centres have been established at Erode, Siliguri and Jullundhar in the Southern, Eastern, and Northern Regions respectively. Training centres have been established with federations and unions all over India to handle work connected with training of society secretaries, AI workers and supervisors. Various categories of technical persons trained at NDDB during the project period are given in Table 3. This is apart from the persons trained at union training centres. Table 3: YEARWISE NUMBER OF TECHNICAL PERSONS TRAINED BY NDDB 78-79 79-80 80-81 81-82 82-83 83-84 84-85 85-86 Sr. Dairy Plant Managers 5 - - - 4 6 4 19 Sr. Feed Plant Managers 3 - - - - - 2 12 Jr. Dairy Plant Officera 22 - - - 29 - 36 98 Jr. Feed Plant Officers 5 - - 3 - - 11 10 Milk Proc. & Tech. Inputs 190 183 102 453 579 612 766 750 Frozen Semen Technology 40 37 37 26 118 16 2 12 Dairy Plant Technicians 12 26 - 23 31 26 41 106 3.31 A total of 24 training centres have been established under the project. The recurring expenses of these training centres have substantially been met from fees paid on behalf of individual functionary under training and ultimately funded as grant-in-aid under the project (Annex 11). 3.32 The R&D division at NDDB has carried out and completed a large number of applied research and development projects. A detailed list of projects completed yearwise is in Annex 12. Among the projects that need to be par- ticularly mentioned have been successful development of continuous production process of indigenous sweets, (Shrikhand, Rasgulla, Gulabjamun and Mistidoi). A process was developed to manufacture urea molasses lick which will increase efficiency in the utilization of crop residue and bypass dietary protein. This process is now being commercialized and is being extended to many parts of the country. A milko-tester enabling electronic testing of fat under village conditions was developed in the year 1980-81 and is now being widely adopted at the village level. 3.33 The SAR had envisaged that research divisions would be set up within NDDB for some major areas viz. farm systems, design engineering, dairy technol- ogy and product formulation and support services. These research divisions have been established during the project period within NDDB and have taken up a wide variety of research projects (Annex 12). - 258 - Technical Assistance Under National Dairy Project 3.34 Under the Credit Agreement, IDA had agreed for technical assistance under the project. Accordingly, specialists in dairy plant management, systems management, aseptic milk packaging, dairy plant energy systems and milk drying technology were provided to NDDB under the FAO Funds-In-Trust arrangement. The main objectives of the technical assistance program were: (a) to avail the services of internationally recruited experts in Dairy Plant Management who would assist and guide the emerging rural producers' organizations in installing effective systems of dairy plant management for the development of viable dairy plants; (b) to provide short term experts in areas like dairy engineering, milk processing, management of cooperative milk marketing organizations; and (c) to provide facilities for training of national project personnel in various areas with a view to achieving professionalization in the dairy industry and supply of some specialized equipment. 3.35 As on March 31, 1986, a total of some 410 man months of personnel services have been provided under the technical assistance program. The experts provided under the project hilped to improve the operation and manage- ment of a number of dairy plants owned by the rural milk producers. In par- ticular they have assisted in* (a) plant operations; (b) plant economics and organization; (c) development of personnel; (d) design and conduct of large in-plant training programs for dairy plant operators and maintenance personnel. They have also assisted the project authorities in commissioning aseptic pack- aging stations and in developing appropriate methods to ensure supply of quality milk for packaging at these stations. The system development advisor has provided assistance in the areas of project planning and monitoring and has trained professional staff in the uses of computer aided systems. Assistance was also received in the pilot plant trials for indigenous dairy products development and processing equipment development. E. Project Costs and Financing 3.36 Project costs were indicated at Rs 3,128.10 million in the SAR. As against this figure, actual project costs of NDP have amounted to Rs 3003.91 million. The actual against anticipated investments for various project components are given in Table 4. Further details are given in Annex 13. - 259 - Table 4: PROJECT COST (Rs Million) SAR Estimates Actuals DCS equipment and union services 251.00 237.95 DCS and union establishment 684.00 448.13 Processing and distribution 1994.00 2085.27 IDC direct investments 105.00 144.66 NDDB research and training 60.00 63.12 Technical assistance 34.00 24.78 Total 3128.10 3003.91 3.37 The IDA Credit of US$150 million (equivalent to Rs 1,290 million) was to meet about 46% of total costs, net of import duties and taxes. Remaining local costs of 1.838 million was to be met by IDC. Of this Ra 200 million was to be from IDC's own resources and GOI contribution of Rs 1,530 million to IDC. 3.38 As against these resources, the amounts received were essentially from other sources as given in Table 5. The IDA Credit to GOI was to be on standard terms. 001 would in turn lend IDA funds to IDC at an interest rate of 7.5% per annum. As against this, interest on sub-loans to the states has been provided at an interest rate of 8.5% per annum. - 260 - Table 5: RESOURCES OF'FINANCING FOR NATIONAL DAIRY PROJECT (Million) Actual as on March 1986 SAR Estimates (Rs Million) /a Ra US$ 7b Rs US$ /c IDC's own resource 200.00 26.23 200.00 20.24 Fund generation from EEC commodity assistance 1,530.00 177.91 1,279.66 120.52 IDA Credit 1,290.00 150.00 1,524.25 154.28 Other/GOI 108.00 /d 12.56 - - Total 3,128.00 363.76 3,003.91 304.04 /a Against the targetted generation as per the SAR, actual funds generated for the Operation Flood Project is shown. /b US$1 = Rs 8.60 as assumed in SAR. 7c US$1 - Rs 9.88 average on the basis of exchange rate prevailing during 1978 - December 1985. /d Includes Rs 60 million as GOI's contribution to NDDB for training assistance and Rs 48 million as equity for DCS. F. Procurement of Machinery 3.39 The SAR anticipated that major items of machinery and packing material would be bulk procured by International Competitive Bidding (ICB) in accordance with IDA guidelines. Minor equipment would be procured on the basis of local competitive bidding. Contract for civil works would largely be determined on the basis of local competitive bids. Existing procedure of NDDB for procure- ment of dairy plant equipment and civil works, charging unions/federation a service charge of 5% of total costs for undertaking works on a turnkey basis, would be incorporated. P.acurement of equipment, erection of plant and machinery and execution of civil works have been carried out on the basis of provisions approved in the SAR. Major items have been bulk procured by ICB. Smaller items and civil construction have largely been contracted through local competitive bidding. NDDB has at the request of states concerned carried out substantial work on a turnkey basis. Progressively however, efforts have also been made to develop engineering aod erection skills with federation providing only consultancy services from NDDB. 3.40 Considerable efforts have been made in buying indigenous supplies that has encouraged many local manufacturer in dairy sector. From a total of only 53 indigenous suppliers of equipment in 1978, by the end of the project period there were some 140 suppliers, ensuring far greater effectiveness in supplies. IDC has also developed its own manufacturing unit. - 261 - G. Disbursements 3.41 The amount of development Credit US$150 million has be- disbursed generally in line with the proposed categories as per the SAR (Table 6). Table 6: FUNDS ALLOCATION AND DISBURSEMENT (in US$ equivalent) Original Revised Amount Category Allocation Allocation Disbursed 1. Equipment, materials & vehicles: 60,000,000 80,000,000 80,046,586.40 (a) Directly imported (b) Procured locally through ICB (c) Procured through producers other than ICB 2. Establishment costs including civil works of dairy cooperative societies, unions and federations other than Category (1) 81,000,000 66,000,000 65,999,590.61 3. Consultant and technical assistance services 4,000,000 4,000,000 3,953,823.05 4. Unallocated 5,000,000 NIL NIL Total 150,000,000 150,000,000 150,000,000.00 IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT A. Implementing Agencines National Dairy Development Board 4.01 NDDB was expected to play a key role in the preparation of state plans, training of union personnel, fielding of CST, and design and erection of processing plants. 4.02 NDDB has played a major role in sub-project formulation. At the request of states, NDDB assisted the state implementing agencies in selection of the project areas and in preparation of each state's perspective plan giving the broad program dimensions and investment involved, along with - 262 - techno-economics and milkshedwise schedule of various components of the projects. In some cases where conditions have in fact varied substantially from original assumptions, NDDB has also prepared mid-course corrections. In order to deal with the increased workload involved and the changed nature of work, the Planning Division was substantially strengthened. This included establishing Planning Cell in four regional offices at Delhi, Bombay, Calcutta and Bangalore and increasing the number of Planning personnel. On the basis of perspective plans prepared NDDB also assisted state federation/unions in developing specific project details with the assistance of a multi-disciplinary group of engineers, veterinarians, dairy technologists and plannera so as to enable field implementation to proceed on a systematic basis. 4.03 During the project period, NDDB has assisted the unions and federations concerned to recruit suitable professionals. Thereafter, the personnel recruited for the composite spearhead teams have been trained by NDDB and then utilized by the unions/federations concerned for their operations. In addi- tion, in most of the unions one or two NDDB employees have worked as team leaders/members of the composite spearhead team so as to provide continuous guidance and support to the newly trained team. The salaries of the composite spearhead team have for the first two years been reimbursed by the project. Thereafter, these salaries have been met by the unions/federations concerned. The composite spearhead team has been largely responsible at the union level for organizing systems of milk collection an4 inputs supply. 4.04 NDDB has assisted federations and unions in the design and erection of processing plants either on a turn key or on a consultancy basis. Wherever federations/unions have had the capacity to supervise erection, NDDB services have been restricted to consultancy. Even in these cases, NDDB engineers have provided basic design and equipment specifications and monitored the progress on behalf of IDC. As contemplated, NDDB has also been involved in bulking the demands for major pieces of equipment and fixing agencies for supply based on ICB procedure on local bidding depending on the size of the order. In order to do this, NDDB has substantially strengthened its engineering capacities. The total number of engineers and dairy technologists with NDDB has risen from about 189 at the end of march 1978 to about 460 at the end of March 1986. Indian Dairy Corporation 4.05 IDC was to be the Project authority and had the major responsibility for implementing the project, the components of which would be planned mainly by NDDB. IDC was also to channel on-lending funds to unions and federations. As contemplated, IDC was to largely depend on NDDB for formulation of individual sub-projects, manpower training, developing of spearhead teams, turn-key projects, purchase of equipment, R&D, etc. In order to do this, IDC was to be suitably strengthened. 4.06 As contemplated, IDC has functioned as the Project authority and chan- nel for on-lending funds to unions and federations. It has depended largely on NDDB for planning individual components of the program. 4.07 To cope with increasing responsibilities resulting from the implementa- tion of NDP, IDC was suitably strengthened. A Monitoring Division supported by an EDP Cell with its own computer was established. This Monitoring Division - 263 - has the responsibility of monitoring the progress of individual sub-projects and their specific components in each milkshed, preparing monthly and quarterly progress report both for internal control and for various agencies viz. the World Bank and 001. Both the Project and Finance Divisions were strengthened to deal with the increased work load of project appraisal, financing and centralized purchase of dairy equipments. 4.08 Projects accounts were generally satisfactorily maintained. Project accounts for NDP have not, however, been maintained in a manner that enables the classifications of component items as described in the SAR. This has occurred as IDC has maintained the project accounts for the Operation Flood in a manner that meets the requirement of GOI. An effort has therefore been made to the extent practicable to suitably regroup components/items and expenses with components identified in the SAR so as to enable meaningful comparison. B. Audit 4.09 IDC/NDDB audits have been carried out on time and reported to the World Bank as per Development Credit Agreement. Audits of both IDC and NDDB have been carried out by well established firms of Chartered Accountants. The audit of IDC, a public sector company owned by 001 has subsequently been test checked by the Comptroller and Auditor General of India whose report has been tabled before the two houses of Parliament along with the Annual Reports of IDC. 4.10 The situation with regara to audit of federations/unions and DCSs was not initially very satisfactory but has been progressively improving. Statutorily, auditing the accounts of federations and unions and DCS is the responsibility of the respective Cooperative Society Registrars of the state governments concerned. Owing to inadequate staff to cope with the rapid growth of cooperatives, there has been some delay in completing audits on time. In certain states, staff have been substantially strengthened in order to ensure timely completion of audit. 4.11 IDC had specifically offered to meet the part of the cost of estab- lishing Audit Boards in each state on a reducing basis so as to develop a system in which an audit board will have the twin responsibilities for carrying out audit and taking corrective action to deal with defaulters. While most state governments were ready to accept the financial support for strengthening audit staff within their departments, none of the state governments were ready to establish an audit board giving them powers under cooperative Societies Act for taking actions against defaulters. It became clear that the registrars of Cooperative Departments preferred to strengthen their own staff and retain their powers for both conducting audit and taking corrective actions in the case of defaulters. It was therefore re&lized that rather than financially supporting the establishment of audit boards, it would be best to continuously attempt to persuade governments to strengthen their own Audit Cells and take expeditious actions to deal with defaulters. As a part of this effort the Monitoring Division of IDC recently began regularly monitoring the progress of the program. - 264 - C. Reporting 4.12 Based on the agreement on reporting format between IDA and IDC, peri- odic reports were prepared and submitted to IDA. The quarterly progress report and the IDC and NDDB annual reports with audited accounts were submitted to IDA on a regular basis. These reports contained significant developments in each milkshed union and the state and also included problems and constraints faced in the process of implementation. V. PROJECT IMPACT 5.01 Operation Flood II was expected to establish a three tier scructure procuring nilk from the farmer through the DCS and ultimately arranging for the marketing of liquid milk and milk products at local and national levels. A three tier Anand Pattern structure was expected to be owned and controlled by the farmer, as a result of which the total infrastructure so developed would aim at improving the income of milk producer member of the DCS. To assess project impact, it will be necessary to examine achievements in the following directions: (a) the extent to which targets for procurement, marketing and milk produc- tion have been achieved; (b) the extent to which Anand Pattern structure owned and controlled by the farmer has been established; and (c) the extent to which the milk producer particularly small and marginal farmers has benefitted; and (d) the technological/organizational change in the dairy industry. A. Incremental Milk Production 5.02 As per SAR, incremental milk procurement during the Seventh year was targetted at 8.0 mlpd. Milk procurement from the project has risen from an average 2.36 mlpd during 1979-80 to 7.9 mlpd in 1985-86. However, the peak procurement which was only 3.31 in 1979-80 has gone up to 10.0 mlpd during 1985-86. In fact, during 1985-86 in a large number of milksheds, milk offered was not accepted for want of capacities to process and conserve. It was real- ized that the milk processing capacities must be adequate in every milkshed or group of milksheds to handle peak procurement. 5.03 The SAR had targetted an average milk procurement of 510 1pd per DCS during the seventh year of the project. As against this a typical DCS formed under NDP procured about 238 lpd milk. The estimated incremental milk produc- tion from the project was 4.23 mlpd as agains* SAR target of 5.16 mlpd (or 77%) Table 7. - 265 - Table 7: BUILD-UP OF DCS MILK PRODUCTION AND PROCUREMENT Incremental Total Milk Pro- Pre- Milk Pro- Project duction Project New DCS Total No. duction from Milk Pro- from Year Formed of DCS the Project /a duction /a Project (mlpd) (mlpd) (mlpd) - 10,009 - 2.01 1 1,337 11,436 0.106 2.519 2.36 2 1,834 13,270 0.424 3.224 2.56 3 5,152 18,422 0.833 4.721 2.78 4 5,074 23,496 1.350 6.310 4.42 5 5,118 28,614 2.065 8.101 5.21 6 5,909 34,523 2.966 10.246 5.78 7 8,347 42,870 4.235 13.275 7.47 8 1,954 44,824 5.774 15.226 8.65 9 2,022 46,846 7.527 17.408 9.84 10 2,078 48,924 9.522 19.833 11.03 11 1,361 50,285 12.283 22.383 12.22 /a Estimates are based on typical DCS model. /b Actual procurement figures have been taken up to Year 7, and for the remaining years these have been projected. It has been envisaged that DCS herds would comprise about 69 cows and 91 buffaloes in the beginning of the project period. However, herd composition in Year 11 was assumed to be 81 local cows, 57 crossbred cows and 182 buffaloes. Milk production and procurement shown are for all the DCS, including newly formed DCS, DCS that existed before the project, and DCS covered under the IDA credits in Rajasthan, Karnataka and Madhya Pradesh since the funds under the NDP have been utilized for providing assistance to all these DCS either on formation and/or for strengthening. 5.04 Milk marketed by various unions/federations under Operation Flood has risen from 2.35 mlpd to 6.00 mlpd, showing an increase of 155% during the seven year period. In addition, there has been a major increase in the production and marketing of dairy products namely ghee, butter, milk powder, baby food, etc. Total tonnage produced and therefore marketed by the cooperative struc- ture has risen from 46,800 mt in the year 1980-81 to 89,400 mt in the year 1985-86 or by 91% (Table 8). - 266 - Table 8: YEARWISE PRODUCTION OF MAJOR PRODUCTS MANUFACTURED BY DAIRIES UNDER OPERATION FLOOD (MT) Year SMP WMP IMF BUTTER GHEE 1980-81 10,938 7,840 28,027 13,390 10,761 1981-82 11,539 8,069 19,693 15,484 11,134 1982-83 21,670 6,654 24,600 24,208 15,340 1983-84 21,839 6,869 29,318 24,376 19,816 1984-85 28,554 12,139 29,580 32,000 22,000 1985-86 40,662 21,865 26,907 41,092 40,510 Sources IDC monthly reports. B. Establishment of the Anand Pattern Structure 5.05 A three tier Anand Pattern structure has generally been established throughout India. As established, however this structure needs to be further rationalized in a number of directions if the objectives of establishing an Anand pattern structure owned and controlled by the farmers are to be achieved. In Gujarat the federation was essentially established as a result of the felt need of the individual union to establish a common brand name and a common marketing platform for unions, and to enable unions to coordinate various activities. In most other states, however, the federation was established as an instrument for implementing Operation Flood II, to establish unions and DCS in an effort to create a farmer owned and controlled organization. In many states, particularly the earlier IDA aided projects in the states of Rajasthan, Karnataka and Madhya Pradesh, existing government dairy development corpora- tions were converted into federations. 5.06 Whereas the unions in Gujarat were essentially strong viable and owned and controlled by farmers through elected boards the federations and unions formed in many parts of India were established with government nominated boards, and controlled by government. In many cases competent professionals employed by the federations ensured that they were building a system which would ultimately lead to the emergence of an Anand Pattern structure. In certain cases however, the systems developed were essentially aimed at provid- ing benefits to the consumer, sacrificing the milk producer. In many cases, the feeder balancing dairies at the union level have remained the property of the federation and not of the union resulting in a strong federation and a weak union with the farmer losing control of the system. Nowhere except in Gujarat, Kerala and Pondicherry is the federation actually controlled by an elected board. 5.07 During the initial years as Operation Flood was being introduced it was necessary to establish an organization (i.e. federation) responsible for - 267 - implementing the program in the states. As milk collection and sale have expanded and DCS And unions have been established, it is now necessary to effectively transfer ownership control and effective power to the elected boards at the union level. In an effort to strengthen unions, Operation Flood III now aims at transferring feeder dairies and balancing plants to the concerned unions and ensuring the establishment of elected boards at the union and federation level. Initial difficulties are expected as bureaucratic struc- tures already established at the federation leve.may impede the transfer of power to the unions and their elected leadership. C. Technological/Organization Change in the Dairy Industry 5.08 Operation Flood has resulted in considerable changes in the working of the dairy industry organizationally and technologically. Significant chan- ges have occurred, such as linking of the metro dairy system to a national milk grid and moving surplus milk to deficit areas. Metro dairies have expanded milk sale from about 1.80 mlpd in March 1978-79 to about 3.05 mlpd in March 1986, supported by the national milk grid in the form of both milk and com- modities. The availability of indigenous milk powder for reconstitution has risen substantiatly, reducing dependence on imported commodities. Over the years, the percentage of imported commodities in the total throughput of the dairy industry has dropped considerably -- from 22% in 1970 to less than 6% by 1985-86 (Annex 14). 5.09 Behind this change has been the developmept of a new dynamism in the national dairy program. As Table 9 below indicates, milk collection by cooperative dairies has risen at a compound rate of 22% per annum during Opera- tion Flood II. Production of milk powder has risen at a compound rate of 9.5 Z per annum over this period. The significant rise in milk collection and powder production and the development of an infrastructure that has been able to handle the increase in milk so collected and provide it to the metro cities have only been possible because of the NDP. Table 9: MILK PROCUREMENT AND INDIGENOUS POWDER PRODUCTION 78/79 79/80 80/81 81/82 82/83 83/84 84/85 85/86 Milk procurement by cooperatives (mlpd) 2.01 2.36 2.56 2.78 4.42 5.21 5.78 7.90 Indigenous powder production ('000 mt) 59.60 69.60 76.50 84.50 88.00 92.80 102.00 130.00/a /a Anticipated. - 268 - 5.10 Improved availability of liquid milk and dairy products, supported by the development of a modern dairy infrastructure, has brought a new edge to competition on the national dairy market. No longer is one brand commanding the market for ghee, butter or powder. Instead consumers in every major city have an increased choice of brands, flavors, packing and products. In liquid milk, these changes are even more as a consumer has now the choice of packaged pasteurized milk, packaged long life milk or bulk vended milk. He has a choice of high fat or Low fat milk. This choice enables different sections of the community based on their needs and income to decide on the type of product they wish to buy. Over the last five years, the market for milk and dairy products have changed from a seller's market to a buyer's market. D. Social Impact 5.11 Progressively, there has been an increased realization of the role of Operation Flood in fighting poverty and the need to replace a government regu- lated pricing structure favoring the consumer by a market force providing a fair remunerative price to the producers. As a result prices of toned milk in Delhi have risen from Rs 1.80 per litre in March 1981 to Rs 3.30 per litre in March 1986 and in Calcutta from Rs 1.80 per litre To Rs 3.40 per litre respectively. The wholesale price index of milk and milk products has risen 13% annually whereas the wholesale price index of all food articles has risen 10.74% annually. Milk pricing is now decided by the Mother Dairy Managing Committee and no longer requires a government decision. The trend has progres- sively been adopted in many parts of India accepting that the dairy business run by the cooperative is a commercial venture like any other, apart from having a significant impact on farm incomes and rural development. Any efforts at controlling milk prices to the urban consumer will be counter productive and would result in shortages. 5.12 As per SAR the project essentially aimed at covering an incremental 3 million farmers at the end of the seventh year. By March 1986, 4.48 million farmers, or an incremental 3.2: million farmers, were covered. The actual number of farmers covered has been 94% of the target. 5.13 Though the SAR target has not been met, the impact of the program is on a much larger number of milk producers than actually indicated by the above figures. Large numbers of milk producers in certain states, who are in fact supplying milk as non-members of societies, are benefitting from the pricing structure. Problems of various kinds including efforts of individuals aimed at retaining control of the DCS, failures to develop democratic systems in some DCS, absence of DCS in certain villages and therefore supplies to the adjoining DCS by individual milk producers have all resulted in many beneficiaries not being formally covered. Apart from this, to the extent the DCS and the unions have become ready buyers of milk at declared prices, they have been responsible for a general rise in the farm price of milk paid not only by the DCS but also by the trader. Trade exploitation has to a major extent been restricted in Operation Flood areas and the vast majority of milk producers supplying milk to traders have in fact benefitted. When it is realized that only 26% of the incremental milk is being received by the cooperative structure in Operation Flood areas and part of the balance is directly sold by the farmers to the traders, it can be realized that a much larger impact has actually been made in - 269 - terms of improving price of the milk producers than figures of DCS membership indicate. 5.14 Apart from the direct impact on the income of the milk producer, development of the cooperative structure and the processing and marketing infrastructure have had a major impact in organizing the rural milk producer and developing systems for organizing agricultural producers in an effort to obtain a fair share of the urban market price. The Anand Pattern so estab- lished in many parts of India has given members a new confidence that they can deal with market forces and they can compete with private and multinational industry as has been done not only by "Amul" but by a large number of repli- cated "Amuls" all over India. In fact, this strength has resulted in a sig- nificant re-orientation of relative power between agricultural producers and urban consumers. 5.15 What is not so obvious but yet apparent are the variety of other impacts of Operation Flood. It has financed visits of farmers and rural leadership from all over India to atudy "Amul" and thus helped transfer not merely technology but also the concept of cooperative organization and the system for developing farm leadership. As has already taken place in Anand, DCS all over India are progressively participating in village improvement. Improved incomes for the individual milk producers tend to result in rising expectations from the village community, leading to a variety of village improvements whether in terms of improved roads or lighting or a TV set or a meeting hall or even drainage and improved hygiene. The DCS and union leader- ships tend to become leaders in the community, giving milk producers greater effective power as a result of organization. 5.16 A significant share of the benefits from Operation Flood has continued to flow to the small farmers and landless laborers. Milk production largely continues to remain the domain of the small farmers, leaving the larger farmers to areas of less intensive agriculture like production of cereals, sugar cane and cash crops. An enumeration of 22,480 DCS carried out in April 1984 clearly showed that, of all the rural households owning milch animals, some 21% were landless and a further 51% operated less than 5 acres of land. These households accounted for some 60% of milch animals reared by rural households and provided 72% of the DCS membership (Annex 15). 5.17 It is quite reassuring to note that 68% of the crossbred milch animals are owned by these groups of households with low economic profile. Therefore, the participation of the economically weaker section of the society in the milk cooperative is quite impressive. 5.18 Finally, establishment of the cooperative structure has created over 51,000 regular jobs with metro dairies, federations and unions, apart from the tremendous increase in employment at the farm level and in ancillary services. In addition 40,000 DCS have employed not less than 120,000 part-time staff for collection, testing and accounting of milk. Of their total employment, over 5,000 employees are technically trained personnel (Annex 16). This growth in trained personnel all over India provides the basis for further expansion. - 270 - VI. FINANCIAL AND ECONOMIC RE-EVALUATION A. Financial Performance Financial Re-evaluation 6.01 The financial returns of farmers, DCS and milk unions have been re-assessed based on the actual data available on the operation at these levels. Fresh models have been prepared of typical farmer, DCS and milk union based on data relating to a large number of demonstration farms, working DCS and working milk unions compiled by us. These models reflect the operating field situation as realistically as possible. Returns to Farmer 6.02 Based on financial analysis of the crossbred cow a re-assessment has been attempted on the financial return to the typical farmer. The direct cash production costs of milk for the landless farmer have been found to be about 55% of sales value as against 50% estimated in the SAR. The financial rate of return to the landless laborer purchasing and maintaining a crossbred cow has been found to be about 37% as against 31% originally estimated in the SAR. 6.03 For the small farmer,with some fodder and crop residues available, the actual cash expenses on production fall significantly depending on the extent to which he is required to purchase feed. For the average small farmer, cash costs currently continue to approximate 251 of milk sales or similar to be assumed in the SAR (Annex 17.1). The cash flow, therefore, for the average member of the DCS works out as follows Table 10: CASUFLOW OF AN AVERAGE DCS MEMBER (Rs Per Year) Years 1 2 3 4 5 6 7 8 9 10 12 13 458 581 799 992 1,172 1,353 1,456 1,539 1,599 1,614 1,666 1,696 Financial Return to DCS 6.04 The financial situation of a typical DCS, based on the actual operating cost and income data collected from various milksheds in India under Operation Flood program has been projected up to Year 12. The sources and uses of funds are given in Annex 17.2. The DCS has shown an operating loss of Rs 1,780/- and of Rs 1,130/- in the first two years of its operation. It has shown an operat- ing surplus of Rs 4,100- in Year 7 and is expected to increase to Rs 7,790/- by the 12th year of the project period. The main cause for a lower operating - 271 - surplus than anticipated in the SAR is the lower procurement of milk by the DCS as compared to the SAR projections. The financial rate of return of a typical DCS, based on total assets employed and cash flow generated during Operation Flood program works out to 27.9% as compared to 23% expected in the SAR (Annex 17A). Financial Return to Milk Union 6.05 A typical milk union model has been prepared to reflect an average situation in a union formed under Operation Flood. The milk union is assumed to have a dairy plant of 60,000 1pd capacity from Year 1 provided by a dairy development corporation or state government depending on the position in that union. This dairy plant capacity is expected to be expanded to 100,000 lpd in year 4 (Annex 18.1 page 1). Based on the assumptions shown in the calculation, the union is expected to lose financially during the first three years and thereafter generally make a profit. At the end Year 12, it is expected to have an operational surplus of Rs 24.35 million. The financial rate of return determined is 17.40% (Annexes 18.2 and 18A) as against SAR anticipation of 29%. The somewhat lower financial return is a result of the lower levels of procure- ment than anticipated in the SAR. Financial Return to Federation 6.06 The SAR did not develop a model of a typical federation or arrive at its financial rate or return. Based on the actual working of federations under Operation Flood, we have developed a typical federation model which should reflect the average position. This typical federation comprises of six to seven milk unions by the end of seventh year collecting about 0.3 mlpd. The financial rate of return of the typical federation works out to 18.8% (Annexes 19.1 to 19.5 and 19A). 6.07 The return to the milk producers is extremely difficult to quantify for the following reasons: (a) It is difficult to specifically determine the extent to which the creation of cooperatives has improved the price to the milk producers as against what the milk producers would have otherwise obtained, had this infrastructure not existed. (b) To the extent the milk producer increases his sale he gets a return. It is difficult to determine the extent of this return owing to the fact that only a small part of his cost is towards purchase of feed. The bulk of cost comprises of items like household labor, crop residues, better utilisation of agricultural wastes, etc. B. Economic Performance 6.08 The basic objective of this program has been to improve the income of farmers. Assuming that direct cash production costs for the milk of the land- less/marginal farmers are 55% and smail and other farmers are 25% of the sale price, an investment of Rs 3,377 million, which is the total investment of - 272 - Operation Flood II, is projected to give a net increase of Ra 4,808.4 million in incomes to farmers in 1985-86 (Annex 20). VII. SUMMARY AND LESSONS LEARNT 7.01 The project aimed at replicating the Amul pattern in 50 milksheds and 20,000 DCS of India and improving incomes to farmers by providing them a market for milk and assisting them in expanding production. The project consisted essentially of three main components: (a) the establishment of necessary three tier cooperative institutional structure; (b) production, processing and marketing facilities; and (c) training, extension and input facilities aimed at improving farm level production. As already explained progress was faster than anticipated in developing the necessary cooperative infrastructure and processing and marketing facilities. There has been a limited shortfall in achievement of targets relating to col- lection and marketing of milk for a variety of reasons including capacity limitations and management problems. The program has, however, succeeded in laying the foundation of the Anand Pattern structure and a national milk grid encompassing major states of India and most of the major milk producing dis- tricts in India. The project can be said to have achieved its main objective of laying the foundation of a structure that would replicate the Anand Pattern. It will now be for Operation Flood III to consolidate on the foundation now established. 7.02 As a result of NDP, a large number of lessons have been learnt based on which modifications have been introduced in both strategy and the design for Operation Flood III. Many of these changes have already been implemented and have become operational during 1985-86. Need for Strong Unions and Elected Boards 7.03 Experience during Operation Flood II has established the need for a strong union with an elected board owned and controlled by the milk producer. During the NDP state federations were established and expected to handle not only milk marketing as in Gujarat but also to function as a major instrument for developing milkshed unions. Experience tended to indicate that unless adequate attention was paid to forming strong unions and ensuring early elec- tions to the board of unions and federations, the federation structure tended to gain the character of a large bureaucratic organization, in some ways similar to a dairy development corporation. If an Anand Pattern organization owned and controlled by the farmer is to function efficiently, a strong union with an elected board and own infrastructure for collection and marketing of milk, is essential. Otherwise many of the ills of the earlier government dairy development corporation would tend to reappear. - 273 - Financial Viability 7.04 The second major area of experience has been that greater emphasis has to be placed on developing unions that can attain financial viability by gener- ating incomes based on efficient procurement and marketing. The financially viable union is able to funct-lon without losing its independence of action to government or the federation. To the extent that the prices paid to the farmers are competitive, the union gets increasing quantities of milk, and is able to expand its activities and increase price to the dairy cooperative societies and ultimately to the producer members. A union incurring losses is unable to pay its farmers on time or attract competent management and tends to deteriorate rapidly as the farmer diverts his milk to the trade. Need for Dovetailing with State Animal Husbandry Programs 7.05 While it is desirable that unions and DCS provide veterinary inputs, these have to be limited to the financial ability of these institutions to bear the cost and to the extent to which the farmer himself is ready to pay for these services. In an effort to ensure the maximum benefit to milk producer members at the minimum cost, it seems desirable to dovetail the program of providing veterinary inputs like animal health cover and artificial insemina- tion with the program of the various state departments of Animal Husbandry and Dairy. It is also desirable to dovetail the working of the union with poverty eradication programs of the government, providing support to the marginal and small farmers and landless laborers enabling them to become milk producers. The district union, as the elected representative of producer members, has to decide the extent to which: (a) its members will depend on existing veterinary facilities of the govern- ment, (b) the unions and DCS will supplement the veterinary cover and artificial insemination of the government, and (c) the cost of these facilities will be paid by the milk producer members. Ultimately they will have to decide the trade off between the price paid for the milk and the cost of technical inputs provided, given similar level of efficiencies and marketing conditions. Planning Capacities in Excess of Requirements 7.06 Recent experience, particularly in 1985-86, has further reinforced the need to plan processing, balancing and marketing facilities in excess of anticipated requirement, realizing that ultimately the quantity of milk received by the cooperative structure will depend on a variety of forces including the vagaries of the monsoon, prices of ghee and oils, import policy of oil and a variety of other unpredictable factors. During 1984-85 and 1985-86 milk procurement rose by 24.99%, and 29.29% respectively. Certain states are known to have collected and permitted heavy spoilage of milk. Capacity utilization of liquid milk plant rose from a peak of 86% in flush of 1983-84 to 93% in flush of 1984-85 and 103% in flush of 1985-86. - 274 - Emphasis on Marketin 7.07 During 'the NDP, the emphasis of the program was largely on expanding the procurement and processing of milk. It was generally assumed that the milk so collected, once processed, could be sold at remunerative prices. With the dramatic increase in milk collection during the last two years, a change has occurred and marketing has become a limiting factor in the further development of the program. A new impetus will therefore have to be given to marketing. This will have to include a major effort at training and developing marketing personnel within the cooperative sector. Action has already been taken to recruit marketing personnel and introduce the spearhead team concept already successfully used in developing the DCS system and procurement. Successful research and development work by NDDB and the available experience in marketing and distribution with certain dairies are providing an opportunity to expand the range of products available and improve distribution system aimed at increasing consumer choice and availability leading to increased consumption. Greater priority needs to be paid to establishing market dairies in areas where collection may not in itself justify a dairy but the urban population will provide a market for milk transferred through the national milk grid to meet the deficit in that area. Such dairies are now under construction in a number of major consuming markets including the Steel Cities -- Rourkela, Jamshedpur, Bhilai and other cities in the Industrial Belts of Eastern India. Remunerative Farm Price 7.08 Remunerative price must be paid to the agriculture producer enabling him to cover his out of pocket costs and expand production. Improved farm price have been a major factor in expanding milk availability during the last few years. At the same time, the consumer price must be such that it covers the costs of efficient processing and marketing of milk and remains competitive with the price at which milk is available from cattle maintained within the city and around it. In the final analysis, the costs of cooperative structure must not exceed the costs of the traditional trader based on city cattle. Whereas city cattle have higher costs of feeding and maintenance, they have the advantage of eliminating processing and therefore lower costs of handling. Milk pricing in the urban centre must be such as to compete with the trade and yet provide for a remunerative price to the farmer based on efficient collec- tion and handling of milk by the cooperative structure. To the extent costs are minimized and milk prices made attractive, the trade will find itself unable to compete and the cooperative structure can be expected to expand collection and further reduce the costs, ultimately paying a better price to the producer and generally improving availability to the consumer. Need for Consolidation 7.09 Owing to decisions taken in 1978, Operation Flood II was e).tended beyond its original project area in order to cover larger areas. This in turA has been responsible for reducing the extent of investment in individual milksheds and ultimately resulted lower average levels of collection of milk from DCS and unions. Ultimately, this has reduced the financial viability of the DCS and the unions and increased the need for initial government support. Areas covered have often been handled by creating unions with more than one district resulting in longer distance for milk movement and therefore higher - 275 - cost of milk movement. With increasing milk availability, the costs of opera- tion have become critical as the National Milk Grid has enabled cheaper milk to move across state barriers and compete with local milk thus establishing an inter-relation between prices in one state vith every other state. All these factors have clearly revealed the need to concentrate the program aimed at minimizing cost of production and facilitating competition by financially viable unions. Owing to the heavy expansion of infrastructure during the NDP the emphasis on Operation Flood III must be on consolidation rather than expan- sion of project area. しスヲムー nHパで・バ）.l仏4 - 277 - Annex I PROJECT CD14PLITION REPORT INDIA FIRST NATIONAL DAIRY PROJECT Status of Pre-implemeniation Actions off-Natronal Dairy Project (as of December 31# 1985) Date of SigniniL/Execution of State/ OF-II Loan Govern- Date of Completion Approval of Union Territory Agree- cum-grant ment formation of Perspec- Appraisal ment agreement guarantee of fedn. tive Plan Report Andaman & Nicobar 29/01/80 28/12/83. Agreed 1/82 Nov. 79 Dec. 80 Andhra Pradesh 08/01/81 01/06/82 Agreed 12/80 Mare 80 Mar. 82 Assam 17/09/79 30/09/81 21/09/81 8/76 Feb. 80 Jan. 82 Bihar 25/03/80 17/11/83 14/12/83 4/83 Jan. 83 Mar. 84 Go& 29/07/79 28/07/83 21/09/83 5/72 Nov. 79 June 80 Cujarat 30/11/78 11/08/82 09108184 11/73 Jun. 79 Dec. 79 Haryana 09/08/79 30/09/82 08/01/85 4/77 Apr. 83 Nov. 85 Himachal Pradesh 26/10/79 19/01/83 19/04/83 1/80 Jan. 81 Aug. 81 Jammu 4 Kashmir 05/03/80 09/02/83 09/02/83 4/82 Nov* 80 Jan. 82 Karnataka 05/06/82 Agreed Agreed 1/83 Dec* 83 Oct. 84 Kerala 07/06/79 08/05/81 12/01/81 2/80 Jul. 79 Dec. 79 Madhya Pradesh 06/02/79 22/06/81 06/09/80 5/80 Feb. 80 Sep. 81 Maharashtra 14/05/81 30/05/85 Agreed 6/67 Sep. 82 Jan. 84 Manipur 04/02/83 - - - Apr. 85 Meghalaya - - - Nitoram 05/06/80 21/03/84 Agreed 2/83 Jan. 81 Sep. 81 Nagaland 09/11/81 - - 5/84 Apr. 82 Feb. 85 Orissa 30/05/79 02/02/81 05/09/81 11/79 Sep. 79 Aug. 80 Pondicherry 26103/80 19/04/83 06/08/83 7/83 Oct. 79 Jun. 80 Punjab 31/12/79 16/10/80 05/07/86 12/73 May 80 Aug. 80 Rajasthan 18/06/80 Agreed Agreed 10/77 Mar. 84 Sikkim 06/12/79 15/12/81 19/09/81 5/80 May 80 Jun. 81 Tamil Nadu 20/11/80 29/04/81 09tl2/81 12/80 Jan. 79 Nov. 79 Tipurs 23/01/80 12/09/83 25/07/85 3/81 Aug. 80 Sep. 85 Uttar Pradesh 22/08/79 Agreed Agreed 4/62 Oct* 83 Jul. 85 West Bengal 10/08/78 28/03/84 24/08/84 6/83 Nov. 79 June 80 Agreed to but not executed. - 278 - Annex 2 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT Operation Flood and World Bank Assisted Milksheds (as on March 81) Cooperative Dairy Plant Producers' Cooperatives union Commi- Anand registered: ssioned: With Pattern Other MilksheO Districts Year Year union 9peration Flood I (a) Original Districts Cuntur 77 77 (No) 298 314 Patna 77 78 (Yes) 118 - Banaskantha 69 73 (No) 1040 - Kaira 46 Expanded 78 (No) 895 - Mehsana 60 Expanded 75 (No) 887 - Sabarkantha 64 74@ (No) 1089 - Rohtak 72 770 (Yes) 191 100 Jalgaon 71 76@ (No) 452 227 Kothapur 63 - - 266 310 Bhatinda 78 74 (Yes) 309 - Ludhiana 72 74 (Yes) 77 - Bikaner 72 77@ (Yes) 280 - Erode 75 81 (No) 198 - Madurai 79 Expanded 76 (Yes) 849 320 Meerut 80 78 (Yes) 185 144 Varanasi - 79 (Yes) 63 86 Murshidabad 74 Due in 81 (Yes) 213 - Katigara 73 76 (No) 280 - Sub total 7676 1501 (b) Additional Districts Baroda 57 Expanded 72 (No) 718 - Aheedabad 77 - - 169 75 Curgeon 72 - - 314 53 Madras 79 Expanded 74 - 214 107 Salem 78 Due in 82 - 325 - Dotaceamund 78 - - 90 19 Vellore - - - 708 46 Midnapore 77 - - 91 - Ropar 78 - - 104 - Sub total 2733 300 -279- Annex 2 Page 2 Cooperative Dairy Plant Producers' Cooperatives union Commi- Anand registered: asioneds With Pattern Other Milkshed Districts Year Year union Workd Bank Projects (a) Karnataka: Bangalore 76 Expanded 79 - 390 - Mysore 76 80 - 419 - Tumkur 77 Due in 81 - 255 - Hassan 77 Due in 82 - 203 - (b) Madhya Pradesh: Bhopal 77 Due in 82 - 141 - Indore 77 Due in 82 - 133 - Ujjain 77 80 (No) 167 - (c) Rajasthan: Awar 72 80@ (Yes) 320 - Ajmer 72 750 (Yes) 279 - Jaipur 75 Due in 81 - 319 - Shituara 72 Due in 82 - 161 - Swai Madhopur-Tonk 78 - - 74 19 Sub total 2861 19 CRAND TOTAL 13270 1820 suWnW ==3R @* Expansion in progress at year end. - 280 - Annex 3 Page 1 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT (CR. 824-IN) Operation Flood II Milkshed and Districts Covered as on March 1986 Districts Covered State/Union Territory Milkshed Union by Milkshed Union Andhra Pradesh Vishakhapatnam Srikakulam Vizianagaram Vishakhapatnam Godavali East Godavali West Godavali Krishna Krishna Guntur Guntur Prakasam Prakasam Rangareddy Rangareddy Nalgonda Nizamabad Nizamabad Medak Kurnool Kurnool Cuddappad Cuddappad Chittoor Chittoor Assam* Gauhati Golpara Kamrup Nowgong Bihar Patna Patna Nalanda Muzaffarpur Muzaffarpur Vaishali Begusarai Madhubani Begusarai Samastipur Samastipur Darbhanga - 281 - Annex 3 Page 2 Districts Covered State/Union Territory Milkshed Union by Milkshed Union Cujarat Valsad Valsad Surat Surat Bharuch Bharuch Vadodara Vadodara Panchmahals Panchmahals Kheda Kheda Ahmedabad Ahmedabad Candhinagar Gandhinagar Mehsana Mehsana Banaskantha Banaskantha Sabarkantha Sabarkantha Kutch Kutch Rajkot Rajkot Junagadh Junagadh Bhavnagar Bhavnagar Surendranagar Surendranagar Haryana Ambala Ambala Kurukshetra Kurukshetra Karnal Karnal Panipat Hissar Hissar Sirsa Sirsa Bhiwani Bhiwani Rohtak Robtak Jind Jind Mahenragarh Mahenragarh Curgaon Gurgeon Faridabad Himachat Pradesh Mandi Mandi Hamirpur Bilaspur Solan Simla Solan Sirmur :A4m4 & Kshmir* Srinagar Baramula Srinagar Anantnag - 282 - Annex 3 Page 3 Districts Covered State/Union Territory Milkshed Union by Milkshed Union Karnataka Mysore Mysore Mandya Hassan Hassan Coorg Chigmagalur Bangalore Bangalore Kolar Tumkur Tuukur Shimoga Shimoga Chitradurga South Canara South Canara Belgaun Belgaum Bijapur Bijapur Gulbarga Gulbarga Bidar Raichur Raichur Bellary Dharvar Dharwar North Canara Kerala Trivandram Trivandrum Quilon Alleppey Pathanamthitta Ernakulam Kottayam Ernakulam Idukki Trichur - 283 - Anez 3 Page 4 Districts Covered State/Union Territory Milkshed Union by Milkshed Union Madhya Pradesh Ujjain Mandsur Ratlam Ujjain Shajapur Indore Khandwa Devas Indore Dhar Khargone Bhopal Vidisha Betul Hoshangabad Sehore Bhopal Rajgarh Sagar Sagar Chhatarpur Tikamgarh Gvalior Shivpuri Morena Gvalior Bhind Datia Jabalpur Satna Reva Jabalpur Raipur Bilaspur Durg Raipur - 284 - Annex 3 Page 5 Districts Covered State/Union Territory Milkshed Union by Milkshed Union Maharashtra Kolhapur Kothapur Sangli Sangli Sholapur Sholapur Osmanabad Osmanabad Ratnagiri Ratnagiri Raigarh Pune Pune Satara Satara Bhir Bhir Aurangabad Aurangabad Buldhana Buldhana Jalgaon Jalgaon Dhulia Dhulia Nasik Nasik Yeotmal Yeotmal Wardha Wardha Chandrapur Chandrapur Ahmednagar Ahmednagar Bhandara Bhandara Orissa Keonjhar Keonjhar Cuttack Cuttack Puri Puri Dhenkanal Dhenkanal Punjab Gurdaspur Gurdaspur Amritsar Amritsar Jullundur Jullundur. Kapurthala Hoshiarpur Hoshiarpur Ferozepur Ferozepur Ludhiana Ludhiana Ropar Ropar Faridkot Paridkot Bhatinda Bhatinda Sangrur Sangrur Patiala Patiala -285 - Annex 3 Page 6 Districts Covered State/Union Territory Milkshed Union by Milkshed Union Rajasthan Ganganagar Canganagar Bikaner Bikaner Nagaur Jodhpur Jodhpur Jaisalmer Barmer Jalore Jalore Pali Pali Churu Churu Sikar Sikar Jhunjhunu Alwar Alwar Jaipur Jaipur Ajmer Ajmer Bhilwara Bhilwara Chittorgarh Banswara Banswara Dungarpur Udaipur Udaipur Kota Kota Bundi Jhalawar Tonk Tonk Sawaimadhopur Bharatpur Bharatpur-Dholpur Si ~as* Sikkim Gyalzing Namachi Gaugtok aMIl Nadu Chingleput Chingleput North Arcot North Arcot Dharmapuri Dharmapuri Periyar Periyar Coimbatore Coimbatore Nilgiris Nilgiris Madurai Madurai Pudukottai Pudukottai Tanjavur Tanjavur Trichy Trichy Salem Salem South Arcot South Arcot 7r Agartala West Tripura South Tripura -286- Annex 3 Page 7 Districts Covered State/Union Territory Milkshed Union by Nilkshed Union Uttar Pradesh Saharanpur Saharanpur Musaffarnagar Musaffarnagar Meerut Meerut Chasiabad Chaziabad Moradabad Moradabad Bulandsahar Bulandsahar Aligarh Aligarh Mathura Nathura Agra Agra Mainpuri Nainpuri Etah Etah Farrukhabad Farrukhabad Hardoi Hardoi Sitapur Sitapur Barabanki Barabanki Lucknow Lucknow Unnao Unnao Kanpur Kanpur Etavah Etawah Fatepur Fatepur Raebareli Raebareli Sultanpur Sultanpur Jaunpur Jaunpur Al1habad Alhabad Mirsapur Mirzapur Varanasi Varanasi Chazipur Chasipur Ballia Ballia Weqt Bengal Darjeeling Darjeeling Jelpaiguri Malda Malda Murshidabad Murshidabad Burdwan Burdwan Hooghli Howrah Midnapore Midnapore Nadia Nadia 24-Parganas -287 - Annex 3 Page 8 Districts Covered State/Union Territory Milkshed Union by Milkshed Union Andaman & Nicobar* South Andaman South Andaman Coa* Goa Goa Pondicherry* Pondicherry Pondicherry * Unions - 288 - Annex 4 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT Progress of National Dairy Project - Number of Milksheds Covered (as ou 31st March) Milkshed/ Cumulative State Name 1978-79 79-80 80-81 81-82 82-83 83-84 84-85 85-86 Operation Flood Projects Andhra Pradesh 1 1 1 2 8 10 10 10 Assam - - - 1 1 1 1 1 Bihar 1 1 1 1 1 1 1 1 Gujarat 6 6 6 14 16 16 16 16 Haryana 2 2 2 2 7 10 11 10 Himachal Pradesh - - - - - 2 2 2 Jamau & Kashmir - - - - - 1 1 1 Karnataka - - - - - 1 2 7 Kerala - 2 2 2 2 2 Madhya Pradesh - - - 4 4 4 4 4 Maharashtra 2 2 2 2 11 15 16 18 Orissa - - - 4 4 4 4 4 Punjab 2 3 3 9 10 11 11 11 Rajasthan 1 1 1 1 1 1 1 10 Sikkim - - - 1 1 1 1 1 Tamil Nadu 5 6 6 7 9 9 9 12 Tripura - - - 1 1 1 1 1 Uttar Pradesh 2 2 2 2 4 6 19 27 West Bengal 3 3 3 4 4 4 6 6 Andaman & Nicobar - - - - - 1 1 1 Goa - - - 1 1 1 1 1 Pondicherry - - - 1 1 1 1 1 Project Total 25 27 27 59 86 103 124 152 IDA Projects Karnataka 4 4 4 4 4 4 4 4 Madhya Pradesh 3 3 3 3 3 3 3 3 Rajasthan 5 5 5 5 5 5 5 5 Project Total 12 12 12 12 12 12 12 Grand Total 37 3 39 71 98 115 136 164 zzWc mama Rag ama WWWW ama * Provisional - 289 - Annex 5 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT (CR. 824-IN) Progress of National Dairy Project - DCS Organised-Ainand Pattern (as on 31st March) Milkshed/ Cumulative State Name 1978-79 79-80 80-81 81-82 82-83 83-84 84-85 85-86 Operation Flood Projects Andhra Pradesh 161 210 298 340 1236 2175 2518 3158 Assam - - - 50 99 113 124 125 Bihar 117 118 118 162 244 380 765 1030 Gujarat 4038 4501 4798 6156 7034 7577 7973 8356 Baryana 344 325 505 622 988 1891 2383 2867 Himachal Pradesh - - - - - 40 78 98 Jammu & Kashmir - - - - - 47 86 100 Karnataka - - - - - 76 486 1433 Kerala - - - 74 242 359 468 535 Madhya Pradesh - - - 130 233 518 836 1434 Maharashtra 420 565 718 956 1072 1244 1950 2617 Oriusa - - - 74 165 228 285 352 Punjab 178 193 490 1755 2357 3437 3818 4094 Rajasthan 267 265 280 239 282 452 677 2426 Sikkim - - - 73 82 98 107 112 Tamil Nadu 1820 2218 2384 3185 4024 3732 4249 4958 Tripura - - - 56 56 51 61 75 Utter Pradesh 105 195 248 598 588 1241 2503 3701 West Bengal 465 519 570 637 723 809 978 1024 Andaman & Nicobar - - - - - 20 20 20 Coa - - * - 31 52 66 76 Pondicherry - - 1 1 35 53 62 Project Total 7915 9109 10409 15107 19457 24575 30484 38653 IDA Projects Karnataka 818 986 1267 1442 1803 1803 1803 1803 Madhya Pradesh 267 367 441 822 849 849 849 849 Rajasthan 799 974 1153 1251 1387 1387 1387 1387 Project Total 1884 2327 2861 3315 4039 4039 4039 4039 Grand Total 9799 11436 13270 18422 23496 28614 34523 42692 Ws" uWWW n =WWWW is. = w= waW asa ===W=u= - 290 - Annex 6 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT (CR. 824-IN) Progress of National Dairy Project - DCS under Artificial Insemination (as on 31st March) Wilkshed/ Cumulative state Name 1978-79 79-80 80-81 81-82 82-83 83-84 84-85 85-86 Operation Flood Projects Andhra Pradesh - 16 63 56 179 180 121 163 Assam - - - 4 - 18 6 9 Bihar 19 3 - - - - 61 91 Gujarat 1169 1202 1248 1983 1367 1466 1686 1819 Haryana 22 15 39 154 93 143 150 257 Karnataka - - - - - 526 798 1037 Kerala - - - - a - 199 143 Madhya Pradesh - - - 53 166 922 823 637 Maharashtra 113 63 38 97 111 142 214 304 Orissa - - - 29 64 111 133 118 Punjab 50 - 21 73 341 477 697 776 Rajasthan 55 55 19 22 47 241 346 547 Sikkim - - - 18 15 29 34 30 Tamil Nadu 999 1440 1617 1305 1187 1308 1319 1742 Tripura - - - - - 5 - 7 Uttar Pradesh - 9 19 27 96 240 500 626 West Bengal 280 180 229 231 331 349 424 403 Andaman & Nicoba - - - - - 6 6 7 Coa - - - - - 9 11 9 Pondicherry - - - - - - 15 20 Project Total 2707 2983 3293 4052 3997 6172 7504 8745 IDA Projects Karnataka - 752 901 991 1108 - - - Madhya Pradesh - 268 309 447 743 - - - Rajasthan - 575 365 306 291 - - - Project Total - 1595 1575 1744 2142 - - - Grand Total 2707 4578 4868 5796 6139 6172 7504 8745 uWWe u==on man as aa Uame mass agag - 291 - Annex 7 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT (CR. 824-IN) Progriss of National Dairy Project Societies Covered under Animal Health Programme Milkshed/ Cumulative State Name 1978-79 79-80 80-81 81-82 82-83 83-84 84-85 85-86 Operation Flood Projects Andhra Pradesh 121 160 286 287 386 420 396 597 Aesam - - - 19 48 11 11 12 Bihar 67 - - - - - - 9 Gujarat 3476 3466 3578 4058 4255 4695 5114 5761 Haryana 314 298 309 158 531 442 503 806 Karnataka * - - - - 305 812 1440 Kerala - - - 50 168 231 284 413 Madhya Pradesh - * - 113 207 365 551 885 Maharashtra 312 452 524 700 749 1029 1137 1558 Orissa - - - 49 112 133 137 148 Punjab 360 175 461 1586 1869 2682 3419 3773 Rajasthan 160 179 123 175 266 179 482 2071 Sikkim - - - 69 76 71 80 65 Tamil Nadu 2806 1742 1951 1992 1866 2243 2768 3189 Tripura - - - 22 29 34 41 65 Uttar Pradesh 364 281 388 458 598 932 2193 3175 West Bengal 298 342 418 385 477 553 579 591 Goa - - - - - 45 66 76 Pondicherry - - - - 17 - 33 33 Project Total 8263 7095 8039 10121 11653 14670 18605 24667 IDA Projects Karnataka - 853 914 978 1017 1017 1017 1017 Nadhya Pradesh - 293 383 530 757 757 757 757 Rajasthan - 790 852 834 958 958 958 958 Project Total - 1936 2149 2342 2732 2732 2732 2732 Grand Total 8263 9031 10188 12463 14385 17402 21337 27339 - 292 - Annex 7.1 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT (CR. 824-IN) Progress on Technical Inputs & Milk Procurement No. .DCS under Milk State/Milkshed of A. H. A. I. Procurement Marketed LCS (TLPD) (TLPD) (as of 3/31/86) Average for March 1986 ANDHRA PRADESH 1. Chitoor 432 - - 147.96 6.00 2. Cudappah 186 - - 53.88 3.83 3. Godavari 373 - 2 48.84 30.79 4. Guntur 524 480 99 147.41 29.07 5. Krishna 307 - 11 113.57 71.16 6. Kurnool 244 - 1 53.34 19.07 7. Nalgonda 249 50 - 38.37 230.68 8. Nizamabad 252 - - 42.56 3.48 9. Prakasam 202 - 92.24 3.73 10. Visak& 389 - 50 71.25 72.22 State Total 3158 530 163 859.42 470.03 ASSAM 1. Cauhati 125 12 9 6.43 2.39 BIHAR 1. Muzaffarpur 142 - - 2.43 17.71 2. Patna 589 - 72 16.02 28.39 3. Begusarai 167 - 10 7.57 0.32 4. Samastipur 132 9 9 2.44 1.24 Milk marketing to other dairies: 5. Jamshedpur - - - - 13.33 6. Bokaro - - - - 5.89 7. Ranchi - - - - 2.95 State Total 1030 9 91 28.96 69.83 CUJARAT 1. Ahmedabad 403 - 29 68.33 285.83 2. Banas 1114 753 64 141.11 13.34 3. Sharuch 453 65 47 16.68 15.90 4. Bhavnagar 188 35 24 29.00 26.17 5. Candhinagar 53 53 11 22.21 16.34 6. Junagadh 213 72 51 47.72 12.19 7. Kaira 882 874 759 741.18 53.62 - 293 - Annex 7.1 Page 2 No. DCS under Milk State/Milkshed of A. H. A. I. Procurement Marketed DCS (TLPD) (TLPD) (as of 3/31/86) Average for March 1986 8. Kutch 190 47 11 17.36 10.95 9. Mehsana 889 904 347 655.36 47.35 10. Panchamal 447 166 89 40.28 19.98 11. Rajkot 423 141 21 79.17 10.68 12. Sabar 1284 1284 94 334.95 25.27 13. Surat 661 442 66 172.60 147.22 14. Surendranagar 275 240 43 37.15 3.78 15. Baroda 881 685 101 133.71 135.18 16. Valsad - - 62 31.16 28.73 State Total 8356 5761 1819 2567.97 841.66 HARYANA 1. Ambala 482 207 58 45.77 15.58 2. Bhivani 208 - - 5.36 0.56 3. Gurgaon 336 - - 8.40 28.95 4. Hissar 270 80 7 26.60 6.39 5. Jind 158 - 34 13.90 0.50 6. Karnal 221 156 37 24.24 0.05 7. Kurukshetra 282 155 26 29.18 - 8. Mahendragarh 315 - - 2.43 - 9. Rohtak 329 - 9 23.03 2.01 10. Sirsa 266 208 86 39.93 0.37 State Total 2867 806 257 218.84 54.40 HIMACHAL PRADESH 1. Mandi 42 - - 3.53 3.66 2. Simla 56 - - 6.85 4.01 State Total 98 - - 10.38 7.67 JAMMU & KASHMIR 1. Srinagar 100 - - 6.80 7.48 KARNATAKA 1. Bangalore 845 712 315 248.87 263.95 2. Belgaum 176 127 51 18.99 10.58 3. Bijapur 98 94 12 9.75 21.90 4. Dharwad 214 155 61 21.26 24.36 5. Culbarga 127 70 11 10.74 19.70 6. Hassan 386 275 146 35.05 36.36 7. Mysore 678 564 250 141.92 52.63 8. Raichur 68 - 3 10.36 - - 294 - Anne 7.1 Page 3 No. DCS under Milk State/Milkshed of A. H. A. I. Procurement Marketed DCS (TLPD) (TLPD) (as of 3/31/86) Average for March 1986 9. South Kanara 65 - 8 12.76 19.32 10. Shimoga 85 52 5 7.72 12.18 11. Tuakur 494 402 175 74.41 42.98 State Total 3236 2457 1037 591.83 503.96 KERALA *1. Eranakulam 262 207 11 50.70 39.10 2. Trivandrum 273 206 132 55.54 50.64 State Total 535 413 143 106.24 89.74 MADHYA PRADESH 1. Bhopal 577 326 162 28.05 69.67 2. Gwalior 127 94 34 17.70 13.28 3. Indore 651 484 194 66.42 34.34 4. Jabalpur 193 132 47 7.75 10.73 5. Raipur 176 95 28 11.49 9.35 6. Sagar 75 54 20 1.66 1.63 7. Ujjain 484 457 152 93.21 9.81 State Total 2283 1642 637 222.28 148.81 MAHARASHTRA 1. Ahmednagar 90 - - 375.00 13.35 2. Aurangabad 99 76 10 43.93 9.27 3. Bhandara - - - 54.93 1.62 4. Beed 107 79 16 63.61 0.28 5. Buldhana 84 - - 45.34 0.38 6. Chandrapur - - - 8.75 11.39 7. Dhule - 113 - 145.46 - 8. Jalgaon 804 685 124 174.25 14.85 9. Kolhapur 775 259 68 143.29 12.51 10. Nasik - - - 56.54 7.87 11. Usmanabad 139 125 32 88.34 2.90 12. Pune 238 113 - 348.88 50.99 13. Ratnagiri - - - 11.38 3.91 14. Sangli 51 - - 149.66 1.23 15. Satara - - - 115.50 6.33 16. Sholapur 146 108 39 38.45 4.81 17. Wardha 3 - - 43.82 1.37 18. Yavatmal 81 - 15 20.65 0.82 State Total 2617 1558 304 1927.78 143.78 - 295 - Annex 7.1 Page 4 No. DCS under Milk State/Milkshed of A. H. A. I. Procurement Marketed DCS (TLPD) (TLPD) (as of 3/31/86) Average for March 1986 ORISSA 1. Cuttack 128 - 30 6.13 - 2. Dhenkanal 83 46 23 2.01 0.17 3. Keonjhar 53 35 24 2.24 1.89 4. Purl 88 40 41 3.43 15.57 State Total 352 121 118 13.81 17.63 PUNJAB 1. Amritsar 459 343 35 73.27 9.65 2. Bhatinda 381 351 128 31.21 7.56 3. Faridkot 335 335 51 33.57 0.69 4. Peromepur 256 256 27 32.45 - 5. Gurdaspur 280 280 47 33.46 1.02 6. Hoshiarpur 425 360 98 41.46 0.26 7. Jalandhar 566 551 104 125.39 9.35 8. Ludhiana 450 450 120 120.19 23.27 9. Patiala 249 215 56 43.80 - 10. Ropar 364 358 62 46.10 47.77 11. Sangrur 329 274 48 37.15 0.06 State Total 4094 3773 776 618.05 99.63 RAJASTHAN 1. Ajmer 271 226 92 100.50 12.65 2. Alwar 466 381 88 57.18 1.99 3. Bansvara 65 - - 0.75 0.49 4. Bharatpur 184 124 19 14.50 - 5. Bhilwara 320 310 56 106.82 5.59 6. Bikaner 574 518 31 137.89 1.22 7. Churu 88 88 5 42.47 0.25 8. Canganagar 189 141 5 23.17 - 9. Jaipur 427 320 150 112.14 37.06 10. Jalore 45 41 - 7.69 - 11. Jodhpur 576 391 24 96.45 9.71 12. Kota 87 54 11 13.67 2.52 13. Pali 130 111 8 38.45 0.01 14. Tonk &S.Hodhpur 156 96 25 17.71 0.19 15. Sikar 70 73 9 3.99 0.39 16. Udaipur 165 155 24 16.02 1.53 State Total 3813 3029 547 789.40 73.60 - 296 - Annex 7.1 Page 5 No. DCS under Milk State/Milkshed of A. H. A. I. Procurement Marketed DCS (TLPD) (TLPD) (as of 3/31/86) Average for March 1986 SIKKIM 1. Sikkim 112 49 30 2.50 4.29 TAMIL NADU 1. Chingleput 594 246 76 36.95 1.73 2. Coimbatore 389 315 119 69.80 50.35 3. Dharmapuri 514 319 230 77.76 18.90 4. Erode 528 463 210 160.81 24.78 5. Madural 734 407 241 98.85 75.23 6. Ooty 121 118 70 21.83 19.55 7. North Arcot 779 396 295 153.33 7.67 8. Pudukkottai 13 - - 2.61 1.28 9. Thanjavur 54 - - 13.73 17.75 10. Trichy 80 - - 39.79 33.08 11. Salem 639 509 282 181.91 29.87 12. South Arcot 453 416 220 58.71 18.86 State Total 4958 3189 1743 916.08 299.05 TRIPURA 1. Agartala 75 65 7 2.61 5.60 UTTAR PRADESH 1. Agra 141 111 13 12.04 2.57 2. Aligarh 69 69 - 32.87 - 3. Allahabad 185 185 31 12.36 11.65 4. Ballia 131 127 38 5.93 1.39 5. Barabanki 267 253 28 14.90 - 6. Bulandsahar 254 226 54 49.62 - 7. Etah 19 - - 1.35 - 8. Etavah 93 93 11 5.75 - 9. Farrukhabad 16 12 - 2.88 - 10. Fatehpur 214 190 37 20.86 - 11. Caziabad 232 190 51 28.04 - 12. Catipur 32 22 - 1.26 - 13. Hardoi 33 33 - 3.49 - 14. Jaunpur 13 13 - 0.40 0.04 15. Kanpur 85 - - 6.93 21.49 16. Lucknow 102 95 10 4.08 32.43 17. Mainpuri 17 - - 1.47 - 18. Mathura 87 69 10 8.86 0.26 19. Meerut 539 440 128 76.32 16.55 20. Mirzapur 98 53 11 1.23 - 21. Moradabad 276 265 98 50.90 3.81 - 297 - Annex 7.1 Page 6 No. DCS under Milk State/Milkshed of A. H. A. I. Procurement Marketed DCS -7 (TLPD) (TLPD) (as of 3131/86) Average for March 1986 22. Muzaffarnagar 156 138 17 20.40 - 23. Raebareli* 151 120 23 5.25 0.83 24. Saharanpur 87 87 - 10.22 - 25. Sitapur 17 17 - 0.46 - 26. Suttanpur 113 90 23 2.22 0.48 27. Unnao 22 - - 0.85 - 28. Varanasi 252 172 43 7.14 15.39 State Total 3701 3070 626 388.21 139.34 WEST BENGAL 1. Darjeeling 311 223 135 19.27 36.12 2. Hugli 31 14 2 0.06 4.68 3. Malda 96 41 35 0.75 0.79 4. Midnapore 104 52 52 1.56 3.89 5. Murshidabad 285 163 129 9.45 1.58 6. Nadia 197 98 52 5.85 - State Total 1024 591 405 36.94 47.05 ANDAMAN & NICOBAR 1. South Andaman 20 - 7 0.55 0.48 COA 1. Ponda-Goa 76 76 9 10.99 21.12 PONDICHERRY 1. Pondicherry 62 33 20 12.60 9.43 CRAND TOTAL 42692 27399 8745 9339.16 3056.98 298- Annex 8 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT Progress on Technical Inputs (As on March) Mobile Al Performed Female Calves Born Veterinary C' 000) (' 000) Clinics Year Cow Buffalo Cow Buffalo (R + E) 78-79 61.15 254.95 18.88 46.90 242 79-80 114.34 280.88 14.63 60.33 247 80-81 374.79 447.83 32.03 44.18 346 81-82 337.71 456.83 35.00 52.63 387 82-83 307.43 458.04 39.13 72.33 431 83-84 393.59 599.94 42.97 78.54 476 84-85 590.45 739.00 60.56 81.95 569 85-86 970.40 938.73 96.10 113.67 715 DTES: 1. Figures given for the year 1985-86 are provisional. 2. R * Regular, £ Emergency. 3. Figures for Al & female calves born have been rounded off to the nearest decimal point. - 299- Annex9 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT Dairy Processing Facilities Fiianced under National Dairy Project Incremental Capacities Works in Advance Stage of State/UT Created Up To March 3, 1986 Completion as on March 3, 1986 (MLPD) (MLPD) Andhra Pradesh 0.65 0.35 Assam - 0.06 Bihar -- Gujarat 1.23 0.23 Haryana 0.06 0.06 Himachal Pradesh - 0.02 Jammu & Kashmir -- Karnataka - Kerala - 0.28 Madhya Pradesh 0.12 0.43 Maharashtra 0.30 0.10 Orissa 0.07 0.03 Punjab 0.22 0.47 Rajasthan 0.05 0.15 Sikkim - Tamil Nadu 0.15 0.35 Tripura - - Uttar Pradesh 0.06 0.09 West Bengal 0.06 - Coa 0.02 - Pondicherry 0.02 - Subtotal 3.01 2.62 Metro Dairies Delhi 0.30 - Calcutta - Bombay 0.40 - Madras - 0.15 Subtotal 0.70 0.15 Aseptic Packing Station Andhra Pradesh (Cuntur) 0.10 - Cujarat (Surat) 0.10 Madhya Pradesh (Indore) 0.10 - Rajastha (Jaipur) 0.10 Subtotal 0.40 - Grand Total 4.11 2.77 300 - Anne. 10 Page 1 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT Capacity Utilization of Liquid Milk and Powder Plants (as on March 1986) (Z) Processing Milk Powder Capacity Utilization Capacity Throughput Manufactured Liquid Milk Drying (TLPD) (TLPD) (MT) Plant Plant A. Andhra Pradesh Chittoor 150 (12) 143.64 183.33 96 49 Cudappah 150 (12) 97.07 252.79 64 68 Codavari 25 66.71 - 267 - auntur 250 (22) 191.66 246.63 77 36 Krishna 200 (20) 204.11 283.38 136 46 Kurnool 175 (17) 108.72 - 72 - "algonda 250 (10) 268.16 20.19 179 7 Wizamabad 12 42.19 - 352 - Prakasam - - - - - Visakha 100 73.64 - 74 - State Total 1,312 (93) 1,194.91 986.28 102 34 B. Assam Cauhati 10 6.72 - 67 - C. Bihar Mutsffirpur 25 19.48 - 78 - Patna 100 (5) 32.48 7.15 32 5 Beausarai 100 (5) 7.34 - 7 - Somastipur - - - State Total 225 (10) 59.62 7.15 26 2 Annex 10 -301 - Page 2 Processing Milk Powder Capacity Utilization Capacity Throughput Manufactured Liquid Milk Drying (TLPD) (TLPD) (MT) Plant Plant D. Gujarat Ahmedabad 200 410.01 - 200 - Banas 350 (15) 139.43 226.69 40 49 Bharuch 60 16.19 - 27 - Bhavnagar 16 29.99 - 187 - Gandhinagar 30 21.96 - 73 - Junagadh 25 46.33 - 185 - Kaira 800 (65) 719.59 1,766.20 90 88 Kutch 10 16.85 - 169 - Mehsana 750 (82) 638.70 1,858.73 85 73 Panchmahal 30 41.00 - 137 - Rajkot 40 (2) 79.53 - 199 - Sabar 400 (38) 327.16 876.81 82 74 Surat 150 (1.5) 175.95 - 117 - Surendranagar 30 36.06 - 120 - Baroda 100 141.17 - 141 - Valsad 30 37.15 - 124 - State Total 3,021 (203.5) 2,877.07 4,728.43 95 75 E. Haryana Ambala 50 69.76 - 140 - Bhivani 15 6.13 - 41 Curgaon 50 35.60 71 - Hissar - - - - - Jind 100 (10) 70.82 203.69 71 66 Karnal - - - - - Kurukshetra - - - Mahendragarh - - - - - Rohtak 100 (5) 64.00 93.85 64 61 Sirsa - - - - - State Total 315 (15) 246.31 297.54 78 64 F. Himachal Pradesh Mandi 10 3.70 - 37 - Simla 10 6.96 - 70 - State Total 20 10.66 - 53 - C. Jammu & Kashmir Srinagar 10 7.48 - 75 - Annex 10 302 - Page 3 (z) Processing Milk Powder Capacity Utilization Capacity Throughput Manufactured Liquid Milk Drying (TLPD) (TLPD) (NT) Plant Plant H. Karnataka Bangalore 350 (5) 263.95 4.99 66 3 Belgaum 10 19.43 - 194 - Bijapur - - - Dharwad - - - Gulbarga 10 19.70 - 197 - Hassan 60 51.62 - 86 - Mysore 160 (10) 137.78 70.80 86 24 Raichur - - - - - South Karnara 10 26.19 - 262 - Shimoga 10 12.18 - 122 - Tumkur 60 72.24 - 120 - State Total 670 (15) 603.09 75.79 90 17 I. Kerala Zrnakulam 56 49.89 - 89 - Trivandrum 106 55.49 - 53 - State Total 160 105.38 - - J. Madhya Pradesh Bhopal 100 70.06 - 70 - Gualior 10 14.44 - 144 - Indore 200 (10) 100.53 131.34 50 42 Jabalpur 40 10.73 - 27 - Raipur 20 14.07 - 70 - Sagar - - - - Ujjain 60 91.09 - 152 - State Total 430 (10) 300.92 131.34 70 42 Annes 10 -303 - Pg Processing milk Powder Capacity Utilisation Capacity Throughput Manufactured Liquid Milk Drying (TLPD) (TLPD) (NT) Plant Plant K. Maharashtra Ahmednagar 100 369.95 - 370 - Aurangabad 50 51.81 - 104 - Shandara 20 53.33 - 267 - seed 120 61.75 - 51 - 8uldhana s0 44.48 - 89 - Chandrapur 20 11.39 - 57 - Dhute 200 203.03 - 102 - Jalegon 200 (15) 171.69 263.76 86 57 Kolhapur 200 (10) 139.11 78.17 70 25 Maeik 70 56.51 - 81 - Oseenabad 170 (10) 85.76 - 50 - Pune 170 (3) 338.71 - 199 - Ratnagiri 40 14.28 - 36 - Sangli 240 (20) 218.64 421.85 91 68 Satara 125 118.59 - 95 - Sholapur 75 38.46 51 - Mardha 50 42.54 - 85 - Yavatmal - * - - - State Total 1,900 (58) 2,020.02 763.78 154 42 L. Orissa Cuttack 10 6.01 - 60 - Dhenkanal - - - - - Koonjhar - - - . Puri 60 15.57 - - - State Total 70 21.58 - 1 Annex 10 -304 - Page 5 (M) Processing Milk Powder Capacity Utilization Capacity Throughput Manufactured Liquid Milk Drying (TLPD) (TLPD) (MT) Plant Plant M. Punjab Amritsar 60 (5) 76.01 130.26 127 84 Bhatinda 100 (7) 76.04 126.85 76 58 Paridkot - - - - - Ferospur - - - - - Curdaspur - (10) - 101.57 - 33 Hoshiarpur 90 (9) 83.17 217.20 91 78 Julandhar 150 (10) 121.73 - 81 54 Ludhiana 100 (6.5) 134.50 232.08 135 115 Patials - - - - - Ropar 100 108.16 - 108 - Sangrur 150 (10) 73.41 190.32 49 61 State Total 750 (57.5) 673.02 1,164.13 90 65 N. Rajasthan Ajmer 100 (10) 95.57 120.65 98 39 Alver 100 (10) 62.19 283.71 62 92 Banswara - - - - - Sharatpur -- - - - 8hiivara 100 103.70 - 104 - Bskaner 150 (10) 148.24 88.84 99 29 Churu - - - - - Canganagar - - - - ;J1pur 150 (10) 221.00 196.13 147 63 Jalore - - - - - Jodhpur 100 (5) 93.64 - 94 Kota 25 13.27 - 53 - Pat% - - -- oink 6 S. Hadhopur - - - - SliLar - ---- .deipur 25 15.55 - - - State Total 750 (40) 755.16 689.33 101 56 Annex 10 -305- Page 6 (%) Processing Milk Powder Capacity Utilization Capacity Throughput Manufactured Liquid Milk Drying (TLPD) (TLPD) (NT) Plant Plant 0. Sikkim Sikkim 15 4.37 - 29 P. Tamil Nadu Chingleput - - -- Coimbatore 30 67.76 - 226 - Oharmapuri 100 (10) 84.99 141.62 85 46 Erode 150 (10) 165.22 217.12 110 70 Madurai 150 (10) 171.07 194.02 114 66 Doty 50 21.19 - 42 - North Arcot 70 156.37 - 223 Pudukottai - - - - Thanjavur 20 17.80 - 89 - Trichy 20 39.37 - 197 - Salem 100 (10) 178.04 187.58 178 - South Arcot - - - - - State Total 690 (40) 901.81 740.34 131 60 Q. Tripura Agartala 10 5.60 - 56 - -306- Annex 10 Page 7 Processing Milk Powder Capacity Utilization Capacity Throughput Manufactured Liquid Milk Drying (TLPD) (TLPD) (MT) Plant Plant R. Uttar Pradesh Agra 5 14.56 - 291 - Aligarh - - - - - Allahabad 20 15.31 - 77 - Ballia - - - - - Barabanki - - - - - Bulandeahar - - - * - Itah - - - - - Etawah - - - - - Farrukhabad - - - - - Fatehpur - - - - - Gaziabad - - - - Cazipur - - - - - Hardoi - - - - - Jaunpur - - - - - Kanpur 50 57.12 - 114 - Lucknow 40 34.85 - - - Mainpuri - a - - - Mathura 10 8.60 - 86 - Meerut 100 (10) 95.93 136.37 96 43 Mirzapur - - - - - Moradabad 60 (15) 62.98 - 105 - Musaffarnagar - - - - - Raebareli - - - - a Saharanpur - - - - - Sitapur - - - - a Sultanpur - - - - - Unnao - - a - - Varanasi 100 (5) 31.33 45.52 31 29 State Total 385 (30) 320.68 181.89 83 27 S. West Bengal Darjeeling 100 (10) 36.12 - 36 - Boogly - - - a Malda - - - - a Midnapore - a - - - Mursidabad - - - a - Nadia - - - - a State Total 100 (10) 36.12 - 36 - T. Andaman & Nicobar South Andaman - - - - - U. Goa Ponda-Goa 30 21.12 - 70 - -307- Annex 10 Page 8 (s) Processing Milk Powder Capacity Utilisation Capacity Throughput Manufactured Liquid Milk Drying (TLPD) (TLPD) (MT) Plant Plant V. Pondicherry Pondicherry 10 12.32 - 123 - Crand Total 10,883 (583) 10,184.00 9,769.00 93 TLOP * Thousand litres per day. ( * Indicates drying capacity in NT per day. - 308 - Annex 11 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT Training Centres Created Under National Dairy Project State Training Center Gujarat Palanpur Junagadh Uttar Pradesh Bulandsahar Meerut Agra Lucknow Allahabad Haryana Bhatinda Hoshiarpur Bhatia Robtak Orissa Kalyani Bihar Patna Tamil Nadu North Arcot South Arcot Coimbatore Salem Madurai Karnataka Gulbarga Mysore Andhra Pradesh Cuddappah Nalgona - 309 - Annex 12 Page 1 PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT (CR. 824-IN) Summary of Research and Development Work Carried Out by NDDB (April 1, 1979 to March 31, 1985) 1979-80 1. The work on product standardization and process development for production of indigenous dairy products--Gulab Jamun was started on laboratory scale. 2. To carry out the trial runs at the pilot plant stage, additional food processing equipment were procured and necessary modifications made in the equipment. 3. During the year the NDDS completed the design fabrication, standardization and trial runs of manual milk vending system using fibre glass reinforced plastic containers of 200-400 litres capacity. 4. The NDDB assisted M/s. Instrumentation Limited in entering into a col- laboration agreement with M/s. N. Foss Electric, Denmark for the manufac- ture of electronic milk fat testing machine. S. An economic solar water heater, designed and fabricated by NDDB is undergo- ing trials at the year end. 6. The NODB provide analytical services to IDC, GCMMF, Mother Dairies, Federa- tions, etc. related to quality control of dairy products. 1980-81 1. The p-icess parameters for production of indigenous dairy products--Gutab Jamun %,as standardized at pilot plant level. 2. An indigenous prototype machine for sealing polystyrene cups has been developed for marketing Shrikhand in 100 gas and 500 gas cups. - 3. Prototype of the electronic milk fat testing instrument developed in col- laboration with M/s. N. Foss Electric, Denmark were field tested exten- sively in five villages and the results were found satisfactory after subjecting each instrument to more than 0.3 million tests. 4. A unit designed and commissioned for operating a chaff cutter at Bidaj farm w operated by a dual fuel engine (14 HP) using 80% bio-gas and 20% diesel. - 310 - Annex 12 Page 2 5. The composition standard of Shrikhand was standardized, and recommended to ISI, New Delhi. Based on this work ISI standards for Shrikhand have come into effect vide IS:9532tl980b 1981-82 1. The product standardization, process development and commercial scale production of an indigenous dairy product--Gulabjamun was carried out. 2. A ball forming machine was designed and developed for making smooth surface round food products. 3. An automatic machine for bulk filling of semi solid consistency food products was designed and developed. 4. A process was standardized for deep freezing and subsequent thawing of 'Kaska' for long term storage. 5. A continuous mixing process for Shrikhand production using metering devices for various ingredients was standardized. 6. In order to eliminate boiler and thereby conserving energy a milk chilling centre was designed, installed and commissioned with solar heater for heating water required by the centre. 7. Setting up of an Animal Disease Diagnostic Laboratory was completed and research activities in the area of virology, bacteriology, parasitology and pathology were taken up. 1982-83 1. A product similar to cream cheese was developed using 'Kaska' as a base. The product is suitable for use as spread. 2. Product standardization work was carried out on indigenous dairy product--Rosogolla. 3. A process was developed to pasteurize an indigenous dairy product- Shrik- hand for extended shelf life at room temperature. 4. A process was developed to manufacture urea molasses mineral block. S. An easier economic process was developed to treat the straw with urea and ammonia. The process developed was found to be suitable under Indian condition and nutritive values were enhanced. 6. Improvements were carried out in powder packing system for better accuracies and efficiency of powder filling operations. -311- Annex 12 Page 3 7. Monitoring systems were developed in existing process conditions to improve the savings in the consumption of fuel, power and steam during processing of oils and fats 8. A prototype equipment to test fat and SVP simultaneously was developed. 1983-84 1. A system was standardized and tested to enhance the shelf-life of milk collected at village level collecting centres. 2. A method was devised to detect presence of skim milk powder in regular milk supplies. 3. The gas chromatographic procedures were evolved and standardized for the estimation of pesticides residues in milk and milk products. 4. A rotary filling and sealing machine for liquid and semi solid products like Mishtidoi, Shrikhand, etc. was designed and developed. 5. A process to manufacture Rasogolla cn pilot plant scale was developed. 6. A portioning and shaping machine for Rasogolla was developed. 7. Further improvements were carried out on bulk lending system design. 8. Improvements were carried out for packaging dairy products using cost effective laminates and packaging material. 1984-85 1. Product standardization and process development work was carried out to manufacture indigenous dairy product--Mishtidoi. 2. A bulk container for milk suitable for rail and road transport was designed, developed and tested. 3. A vaccine for Theleriosis disease was developed. 4. An electronic moisture tester for rapid determination of moisture content in oilseeds suitable for village level operations was developed and field tested. S. A dal analogue formulation was developed using partially defatted soydal. 6. An industrial scale process for manufacturing urea molasses block was developed. 7. For btter texturial properties and keeping quality, a method of manufac- turing ghee using thermal classification was carried out. - 312 - Annex 12 Page 4 Patents Filed/Granted During the Period 1981-85 Year Patent Number 1. A method to prolong the shelf life of 1983 Application No. Shrikhand 941/CAL/1983. 2. Method for prolong storage of Chakka 1983 Application No. 940/CAL/1983. 3. Method for separating Chakka from Curd 1983 Application No. 939/CAL/1983. 4. Liquid dispensing 1983 150670 5. Animal feed and method of producing the 1985 156047 same 6. Method for preserving raw milk 1985 156048 Important Research Paper Published during the Period 1. Stability of Soybean Oil and Its Blends with Groundnut Oil, J. Food Packaging, August-September 1981. 2. Distribution of FMD Virus Types in Some of the Milksheds of India, Agric. Sci. Digest, 1(2) 114-116, 1981 3. Studies on Dermatomycossis in Dairy Animals, Mykosan, 26, 317-323, 1983. 4. Monitoring and Evaluation of Programme of Animal Health Care Systems, Indian Dairyman, 36:63-67, 1984. 5. Safety Aspects of Raw Milk Handling, Indian Dairyman, December 1984. 6. Thermal Classification of Chee Part I & II, Indian Joural of Dairy Science, 37, 2, 1984. 7. Urea--Molasses Animal Lick--An Approach to Increase the Utilization of Crop Residues, Paper presented at the "Fodder Seminar" held at Anand, September 1984. 8. Applications of Lactoperoxidase System of Milk Preservation under Indian Conditions, Paper presented at the "Workshop on Preservation and Processing of Milk" held at NDRI, Karnal, January 28th, 1985. 9. Partially Defatted Soydal, Indian Food Technology, Vol. 4, 1985. 10. Colorimetric Determination of Skim Milk Powder in Normal Milk, Journal of food Science and Technology, 22, 1985. T A T A T A T A T A t A T A T _ T A T A i. H .00 .00 32.00 .00 192.00 13.M 30.00 127.37 306.00 182.20 9.00 245.39 .00 323.60 .00 413.16 .00 277.72 1000A0 15M.24 .0A .00 00 A0 28.90 .00 06.50 100.55 144.30 48.% 144.30 45.68 115.A0 80.98 51.70 39.58 .00 110.94 577.10 307.M 3. a) DM aF .00 .00 1.70 .00 5.90 .00 11.60 .00 12.50 .00 8.50 .00 2.10 .00 .0 .00 .00 .00 42.20 .00 kotb=r then XWE \b) [h~ Al nd £ 10 35-%. 5 .00 34 .4. 00 8.10 AX 1.10 -W .0 .CZ)_0g .00 141.00 . Sut* 3 .00 .0 12.50 .00 40.90 .00 63.40 8.78 46.70 44.15 16.50 70.79 3.20 82.62 .0 61.W .0 50.06 13.20 318.25 - wc .00 .00 1.10 .00 4.10 .00 7.90 .00 8.60 .00 5.70 .00 1.0 .00 .00 .00 .00 .00 28.80 .00 - trmno .00 .00 5.20 .00 18.20 .00 35.80 .00 38.30 .00 26.00 .00 6.50 .00 .00 .00 .00 .00 130.03 .00 - D M mann .00 ,00 6.60 .00 13.20 .00 13.20 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 33.00 .00 ~ £0 2M £0 5,50 40 5.90 .0 4A 0 LgÆ .00 X M . 2D .00 nalto-1 4 .00 00 13.70 .00 38.30 .00 62.40 6.06 52.80 28.01 35.70 38.54 8.90 63.94 » 61.28 .00 64.36 211.0 22.19 5. thri ~ raaj ^ .00 400 10.90 .00 24.50 .00 27.40 .00 5.80 .00 .60 .0 .00 .00 .00 .00 .00 .00 69.20 .00 - NM tra~ ntre 2.00 .00 9.20 f0 12.00 .50 3.00 6.40 .00 2.58 .00 5.32 00 8.87 .00 119 .00 6.34 2.20 41.50 - ARD .00 0 5.30 .20 3.40 .00 4.20 1.70 4.50 2.60 5.60 3.39 .00 7.4 .00 6.33 .00 .00 23.00 21.62 - DCS tf =nd oer £ 0 12.50 "& 35,90 4.41 59.30 12A9 51.70 »,.1 35.10 24.2 1.0 2 2 69.1 O 31,8 20.» 187.% uto*tal 5 2.00 .00 37.90 5.68 75.80 4.91 93.90 20.59 62.00 24.14 4130 32.98 11.00 37.89 .00 86.95 .00 37.92 323.90 251.06 6. Techncal assistance / .00 .00 3.90 £00 4.70 6A2 5.60 .00 4.70 3.51 3.90 5.07 3.00 .00 1.30 7.13 .00 2.65 27.10 24.78 7. Supring inve~tet - i i m*in .00 .00 15.60 1.50 7.90 11.82 1.80 8.44 .00 15.10 .00 10.06 £0 1.13 .00 .53 .00 .10 25.30 48.68 SRail tnkge A0 .00 12.80 W0 20.00 A0 13.60 £0 9.60 .00 00 .00 4.00 25.50 .00 8.95 .00 .00 63.00 35.45 - stMe .00 AD .50 2.50 1.50 1.30 1.30 32.20 .00 7.A .00 7.77 .00 5.97 .00 1.29 .00 .00 3.30 29.44 - Other direcet . -t _. .0 .3 .e 2.47 .M .16 a 2 .. -145 _M 92 .4 _0 .0 M31. ~btotal 7 .00 .00 28.90 4.39 29.40 15.42 16.70 14.11 9.60 31.67 .00 39.47 40 19.01 .00 20.49 .00 .10 88ff0 144.66 wo -314- A 2NEX13 Pae ii-4 1 i 8 ~ 31 3~ . - 315 - ANNEX 14 Mciwr a1Em lEs DDIA INWGWL DAM¡ PA!R= ('000tnn) '2brugpu fraat in ~op pul~ & BO0=1e thou~u aspecntg private metr mp~re ~hte cblmfni of =oal Year ~ ~ ~ ~ E (TAlklds)s uter 1+2+30ropu 1950-1 3.5 6.7 0.5 10.7 67.3 1951-52 4.3 11.9 0.7 16.9 74.6 1952-52 7.5 9.7 0.3 17.5 57.1 1926 12.7 18.8 0.6 32.1 60.4 1~45 18.3 27.9 0.5 46.7 60.8 195-5 20.3 28.6 2.3 51.2 60.4 1956-7 21.9 31.6 0.2 53.7 59.2 1957-58 24. 1 16.5 - 40.6 40.7 1M8-59 27.2 38.5 - 65.7 58.6 1959-60 29.9 32.6 0.8 63.3 52.8 1961 33.9 18. - 52.7 35.7 1961-62 40.2 47.5 - 87.7 54.2 19%243 42.1 42.1 - 84.2 50.0 1963-64 41.8 52.8 - 94.6 55.8 1%44 54A4 25.0 9.4 88.8 38.7 154 53.7 35.7 1.1 90.5 40.7 1~&7 82.0 46.1 0.8 128.8 36.4 1967-68 92.0 31.8 1.1 124.9 26.3 1~89 108.7 45.4 1.5 155.7 30.1 196970 109.3 27.4 3.4 140.1 22.0 1970-71 111.7 19.0 1.3 132.0 15.4 1971-72 10.1 28.1 2.4 180.6 16.9 1972-73 148.2 27.0 3.2 178A4 16.9 1973-74 147.2 24.8 4.4 176.4 16.6 1974-75 139.0 28A4 3.8 171.2 18.8 1975-76 195.2 18.6 4.2 218.0 10.5 1976-77 2=.9 20.2 10.7 258.0 12.1 1977-78 282.6 20.8 8.3 311.7 9.3 1978-79 270.8 27.3 4.3 302.4 10.4 1979-60 317.2 24.4 9.1 350.7 9.6 19~i 353.3 28.3 11.8 393.4 10.2 1981-82 364.3 56.6 16.6 437.5 16.7 198~ 383.3 41A4 10.6 435.3 11.9 198-8 442.0 26.3 9.1 477.4 7.4 198~ 470.1 41.8 11.1 52.0 10.1 198Hi~ W4.0 25.9 8.2 574.1 5.9 S ed old calculad mn the basio of 14 percet flqudmik **Prmåis~a (ao per IDC' recor by My 1. 1986). MM: Go"m~ a ots cea~ ~ic 1975-76. r~ 1970-71 m~srd the 21~re are for ~cua isu~ by the IDC ef *mprteSW and B0. Sa : Base w~iteg frun In~a De~rma (195-61). IDA ~ovrre (~%½ ). D~r In~ 198 and M~nthl 8ati tic ofk~e Tr~d of ~ni and LWk S~bb fig~e for iw~ dnmtr~nbu 1998) DI~II - 316 - ANNEX 15 km G R~~R DDIA NMC DM a~ lulch Mnimal ldidn and Dawsy Cooperative ~er2hip Ty otal %aa4m1 Land Uoldiug Gou of 110 Uni tal1 0Oratiau1 Land Nolding Grege * Partcular 1 2 3 4 5 All (4) fndaian mesu d ('000) No. 2.131 1.690 1.025 658 508 6,012 % 33.45 28,11 17.05 10.94 8A6 100.00 (b) Hou~nds a~ng mUilch adaffla by ('000) No. 322 186 89 42 27 666 % 48.35 27.93 13.36 6.31 4.05 100.00 - Imr (Mn C/IT) No. 265 415 301 171 98 1.250 % 21.20 33.20 24.08 13.68 7.84 100.00 -Odrr No. 186 453 411 349 327 1.726 % 10.78 26.25 23.81 20.22 18.94 100.00 All No. 773 1.054 801 562 452 3.642 % 21.23 28.94 21.99 15.43 12.41 100.00 (c) VDC as ('000) No. 180 115 52 24 15 386 % 46.63 29.79 13.47 6.22 3.89 1W.00 -I~er (noM C/s) No. 174 263 197 114 69 817 % 21.30 32.19 24.11 13.96 8.45 100.00 - Mts No. 135 300 279 234 218 1.166 2 11.58 25.71 23.93 20.07 18.69 100.00 Al No. 489 678 528 372 302 2.369 % 20.64 28.62 22.29 15.70 12.75 100.W (4) DC mas h~ o1 No. 411 561 439 304 245 1.960 ('000) 2 20.97 28.62 22.19 15.51 12.50 100.00 ( g> tr~ie di ~* : of ailch ada1l ('M00) - Ceeaed we No. ' 88.3 12r.7 117.3 86.9 99.4 578.6 % 15.26 32.27 20.27 15.02 17.18 100.00 - 0thm Ye No. 454.4 769.1 709.9 557.6 762.8 3.253.7 % 13.96 23.64 21.82 17.14 23.44 100.00 - add buffaloms No. 143.9 140.2 149.2 169.6 202.2 805.0 2 17.87 17.41 18.53 21.07 25.12 100.00 - 0thr bufaldo No. 710.7 1.000.3 960.5 844.2 832.8 4.348.5 % 16.35 23.00 22.09 19.41 19.15 100.00 - Eta1 milch eanal No. 1.397.32.0 .3 1.936.9 1.658.3 1.897.2 8,986.0 % 15.55 23.33 21.56 18.45 21.11 100.00 gc Society Villag Dourion condcted durfin April 1984. O im~ l LffNdS U1L oi. Laidless 1 Up to 2.50ac 2 2.51 - 5.00 c 3 5.01- 10.00acres 4 10.01 6 ab 5 !EM 1. 2bar ~ re 26.224 functiona ~ oie~tes at the timaf conductin theawetåa (1.e. on April 1984). at the total functioal encI.t 23.609 ee kd Fattan ocite ad 2.615 ~ere othr ut~aties. (m =C'a m~nhly progam~. rprt for April 1984). 2, Rer C under the uesmmutia id 22.480. - 317 - ANNEX 16 PR=T 101i r m Professonals A~ong the Total State/.kion Mani,ower R!iployed- Territores Mnaerial Superviory Techmician Others Total Vety. Agri. 52gg. Teç. btal Goa 14 19 12 34 79 2 - 3 11 16 Oujarat 197 1,453 721 6,957 9,328 217 26 82 256 775 Madhya Pr~desh 101 598 155 931 1,785 96 30 12 167 308 Mharashtra 79 528 403 2,444 3,454 39 86 114 108 457 >hryma 80 223 100 889 1,292 22 8 7 106 165 imchal Pradesh 12 19 14 176 221 - - 9 26 35 Ja~ 6Kahir 8 5 10 45 68 3 - 1 5 9 Pmajab 84 3% 344 1,966 2,790 80 8 39 113 363 Rajathn 58 381 331 971 1,741 105 41 21 71 248 Ltar Pradesh 351 718 166 1,209 2,444 199 154 32 126 469 Andhra Pradesh 143 653 556 4,359 5,711 93 2 63 237 727 Kamnataka 26 316 23 1,603 1,968 80 20 - 1 295 K-räls 29 101 51 612 793 22 2 12 32 68 Amdih y10 15 10 148 183 - - 1 5 6 Taal auI 192 427 272 1,459 2,350 124 7 72 233 460 A~sa 3 20 2 6 31 2 - 1 1 4 Andamn 6 Nicobar 2 1 1 13 17 - - - 1 2 32 47 38 133 250 11 2 7 27 48 r aa 13 41 14 55 123 14 - - 16 30 ~t Bma1 33 122 68 429 652 32 7 4 53k 96 Tripura - 9 - 11 20 3 - 1 5 Skkm 6 14 6 35 61 3 1 2 2 8 Total 1,473 6,106 3,297 24,485 35,361 1,147 395 482 1,598 4,594 m-trD [hries 286 782 1,230 10,528 12,826 - 1 83 374 398 Gran Total 1,759 6,888 4,521 35,013 48,187 1,147 3% 565 1,972 4,992 Year of Q merati 1 2 3 4 5 6 7 8 9 10 11 12 »ilk prcurxd by DCS (UP) 85 102 127 151 177 205 238 273 306 320 342 360 PhIk Procue (yearly) 31025 37230 46355 55115 64605 74825 M870 9%45 111690 116800 124830 131400 Sale of milk to uniom 57396 781f3 114033 152117 190585 232706 272641 31388 351884 367920 393215 413910 Cah cost 25 of milk sale 14349 19546 28508 3DD29 47646 58177 68410 78471 8793% 91980 98304 103478 Cashf low 43047 5M37 85525 114088 142939 174529 205231 235411 263868 275940 294911 310432 DCS r 94 101 107 115 123 129 141 153 165 171 177 183 Cashflc of average DS m-hr 458 581 799 992 1172 1353 1456 1539 1599 1614 1666 16% Transferred fra the Anemure-17.2 ite«r4.0 (Pocrmenw~t by DC8). It is the arage price p~:i to the pro~ær ran~es between R.1.85/lit. to Rs.3.15/lit. Ihe Wbrld Rk Staff Appraisal Report for nation~l Dai y Project has taken direct production cst of milk for an an&rage fe r as 22. It is tranferred frm annsse 17.2 it~m-1.0. Year of cpeamtion atialme 1 2 3 4 5 6 7 8 10 11 12 DM = rip fmilies 94 101 107 11s 122 129 141 153, 165 171 177 18 cattle ,Gmntincous th. 69 74 79 84 86 88 92 95 95 95 88 81 la1 yield m 22429 25225 28131 30996 32438 33901 36212 38091 39464 40135 39055 36135 Crosrecas ND. - - - - 3 7 11 17 25 34 45 57 nul yield m - - - - 2843 6497 11165 17257 24802 34372 4520 57305 &ff&lo bffalo tb. 91 98 105 112 119 125 137 148 160 171 177 182 k,mal yield UT 57995 64798 71872 78230 84804 92126 102744 113767 125173 136974 150380 157315 A~al roductim 't00 U 80.4 90.0 100.0 109.2 120.1 132.5 150.1 169.1 189.4 211.5 234.7 250.8 Inrmtal prouctiou '000 in 3.4 13.0 23.0 32.2 43.1 55.5 73.1 92.1 112.4 134.5 157.7 173.8 Cam tic 000 1m 24.1 27.5 31.0 34.4 38.4 45.1 49.5 56.6 4A 73.0 82.1 89.0 Procxw t by DCS '000 m 31.3 37.2 46.4 55.1 64.6 74.8 87.0 99.8 111.0 116.8 124.8 131.4 Daily jf ID 85 102 127 151 177 205 238 273 306 320 342 360 Iocal sale of milk IffD 2 3 4 5 7 9 11 13 15 16 17 18 Cattlefeed sold 2/ 1mT 4.0 5.7 8.3 11.4 15.0 19.5 24.9 31.3 38.7 42.9 49.1 55.2 ~a (R$. '000) Camin on *ilk N 3.63 4.47 6.26 7.77 9.90 11.63 13.61 15.68 17.66 18.53 19.78 20.84 Cisim on cattlefeed 0.08 0.11 0.17 0.23 0.30 0.39 0.50 0.63 0.76 0.86 0.98 1.10 Total 3.71 4.58 6.43 8.00 10.22 12.02 14.11 16.31 18.42 19.39 20.76 21.94 ratist cot (Es. '000) Wage 4.10 4.20 44 5.40 6.00 6.60 7.20 7.0 8.40 9.00 9.60 10.20 Rent 0.30 0.30 0.30 0.36 0.A2 0.A8 0.60 0.60 0.60 0.60 0.90 0.90 Statier 0.25 0.28 0.30 0.33 0.35 0.38 0.40 0.43 0.45 0.47 0.49 0.50 ?ilk testing 0.26 0.28 0.31 0.33 0.36 0.39 0.42 0.45 0.46 0.47 0.49 0.50 Audit fee / 0.32 0.38 0.47 0.57 0.67 0.78 0.91 1.04 1.17 1.23 1.31 1.38 Miacellm m exqenes 0.26 0.27 0.29 0.35 0.39 0.43 0A 0.52 0.55 0.59 0.64 0.67 'tal 5.49 5.71 6.07 7.34 8.19 9.06 10.01 10.84 11.63 12.36 13.42 14.15 D~erating urplus (s. '000 (1.78> (1.13) 0.36 0.66 2.01 2.96 4.10 5.47 6.79 7.03 7.33 7.79 cashf~o (]w. 000) Sources of funds: mare capital & aembrship 1.03 0.08 0.07 0.09 0.08 0.08 0.13 0.13 0.13 0.07 0.07 0.07 5 = g 1.50 - - - - - - - - - - grant / 2.0 1.00 - - - - - - - - - Hae4 n t grn ~ruh fon~r - 0.2 0.09 - - - - - - - - - »_t operating up~lus - - 0.36 0.66 2.01 2.96 4.10 5.47 6.79 7.03 7.33 7.79 11 4.53 1.30 0.52 0.75 2.09 3.04 4.23 5.60 6.92 7.10 7A0 7.86 Year of Opration hartijyglal 1 2 lt 4 5 6 7 8 9 1. 11 12- thesof funds: "ilk testivg (equp, frniture,etc) 1.50 - - - - - - - - - - - ha to A j - - 0.22 0.40 1.21 1.78 2.46 3.28 4.07 4.22 4.40 4.67 Rese funs 0.92 0.08 0.25 0.25 0.58 0.82 1.16 1.50 1.83 1.83 1.90 2.02 0peratial deficits 1.78 1.13 - - - - - - - - - - Equity cotributien 2/ 0.11 - - - - - - - - - nutilized ma t grat 0.22 0.09 - - - - - - - - - - 0t fus - - 0.05 0.10 0.30 0.44 0.61 0.82 1.02 1.05 1.10 1.17, Total 4.53 1.30 0.52 0.75 2.09 3.04 4.23 5.60 6.92 7.10 7.40 7.86 If Sale of milk to wim over and aboe the local sale of milk. 2/ It iswrked out at 125 g= per litre in year ne which goes upto 400 ~u in year 12. il IncImba actual comuisin @ Rs.0.05/litre, wight/volume difference 2 percent, saple milk sales 1.4 percent, local milk sale 2 percent in year on, dich goes upto ab~ut 5 percent in year 12. Q Calculated @ Ra.0.02 per kg. 5 Empnditure an glasrure and equi¥mt, chemirals for milk testing are provided free of cost. J It is worked at Rø.0.01 per litre of milk procured plus local sae of mik. -/ In order to coer the operational deficits of DM, the &mount of Rs.2,000 is given in the 1st year and Rs.1,000 DCS in the 2nd year. 1 maer DCS bye-la=s a mini= of 25% of the an urpus and the full am-t of share capital and anuti1i wd anagmt grant ust be placed in a reere fund. Ihe --i-m baus allocati<n is =L of the anml surplus after the reqi application to be reserve fund and any declaratic of divided on ae capital. ~J Ech society has to purchase ane minimaa share of RB.100/-and pay Pa.5/- as fee ace to beæua tbe i-r of the cooperative unaan. - 321 - ANNEX 17.A PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT Discounted Cashflow Rate of Return - DCS (Rs. in '000) Year Cash* Cash+ Net Discounted Value Outflow Inflow Cashflow 27.00% 29.00% 1 3.50 -1.78 -5.28 -4.16 -4.09 2 1.00 -1.13 -2.13 -1.32 -1.28 3 0.00 0.36 0.36 0.18 0.17 4 0.00 0.66 0.66 0.25 0.24 5 0.00 2.01 2.01 0.61 0.56 6 0.00 2.96 2.96 0.71 0.64 7 0.00 4.10 4.10 0.77 0.69 8 0.00 5.47 5.47 0.81 0.71 9 0.00 6.79 6.79 0.79 0.69 10 0.00 7.03 7.03 0.64 0.55 11 0.00 7.33 7.33 0.53 0.45 12 0.00 7.79 7.79 0.44 0.37 TOTAL 0.25 -0.31 Change in cash outflow by 0.0% and Change in cash inflow by 0.0%. (DCF) Rate of Return = 27.8% * Cash outflow is worked out from DCS production and cashflow statement (Annesure-13.2). Item No. 8.1 (management grant) and item no. 8.2 (milk testing equipment, furniture, etc). * Cashflow is transferred here from DCS production and cashflow statement (Annexure-13.2) item 7.0 (operatng surplus). mnmn am2 02 hurv OWngnsuulW luM2 1wam m na mtmOan Qi. --öYte . Rå Yr o tbut at Ral1 Qaa or sp_______________ ;____________________ rtdfmamn atmf tI2 2 3 4 6 7 8 9 10 11 1l PlanCamm r(,00 kyd) Dary PIn 60 60 60 100 100 100 150 150 150 50 200 200 hlla eer 20 20 2 20 20 20 20 40 40 40 BD 80 "tc Pr~ffi= (millimn litera) /1 am Wlk 4.49 5.26 7.68 10.13 13.22 16.99 21.47 26.57 31.96 35.28 36.93 40.00 Chilled "ik 1.10 1.46 1.92 2.54 3.32 4.25 5.47 6.57 8.04 9.13 12.78 14.00 Total KLIk 5.59 6.72 9.60 12.67 16.54 21.24 26.94 33.14 40.00 44.42 49.71 54.00 ~Axit ILilil=maa (2) Dairy Pimt 25.50 30.70 43.80 57.80 75.50 58.20 73.80 90.80 73.07 81.13 68.10 74.00 Chilling centre 15.00 20.00 26.00 34.75 45.00 58.00 74.90 45.00 55.00 62.50 43.75 50.00 ma (Fat/SMX) (Ro.) (Ro ilion) St=derd Milk Sold 4.5/8.5 2.80 to 4.30/L 1.53 2.19 4.09 10.12 18.40 30.66 43.95 49.44 54.93 60.43 65.92 71.00 T d Milk 3.0/8.5 2.60 to 3.80/L - 0.95 1.53. 3.81 7.01 11.83 16.64 18.72 20.81 22.88 24.97 27.00 Proces~ed ik Sold 6.5/8.6 2.40 to 4.10/L 12.22 14.23 23.19 28.96 36.12 42.48 51.54 69.75 92.16 104.22 121.19 128.00 to e Dairie Ghee Sold 29 to 40/g - 1.50 2.13 2.85 2.31 4.56 6.80 7.16 6.48 6.44 5.48 9.00 'UZIL 13.75 18.87 30.94 45.74 63.84 89.53 118.93 145.07 174.38 193.97 217.56 236.00 ~praim,Cesta Dimet Cokats: am 5.7/8.9 1.85 to 3.20/L 8.53 11.31 19.28 28.47 39.66 53.69 68.70 85.02 102.27 112.93 118.18 128.00 Cbilled Iilk 5.7/8.9 1.91 to 3.28/L 2.16 3.23 4.93 7.32 10.19 13.77 17.94 21.55 26.37 29.95 41.92 47.00 Aimal Rhbendr . Eenlion Services (AI): »bile vety mn Hired 5 units 40 to 60,000/unit - 0.04 0.08 0.15 0.20 0.30 0.12 0.18 0.24 0.24 0.35 0. 4 units 45,00/0 it - - - - - - 0.18 0.18 0.18 0.18 0.18 0.18 medin 500 to 950/DCB - 0.03 0.08 0.12 0.18 0.24 0.33 0.38 O. 0.8 0.52 0. Glas.aresanud awicab 30 to 50/D8 - - 0.01 0.01 0.01 0.01 0.02 0.02 0.02 0.03 0.03 0. Pduictin, Pruaeand 100 to 250 5 to 6 per dse - 0.01 0.02 0.05 0.08 0.12 0.19 0.25 0.32 0.40 0.41 0.45 POviion of r 8~ Doe Al dses Yaeada. of Ymr of Unt at t%l g ~ omgW i knaamm Pram a 1/2 --1 2 3 4 5 6 7 8 9 10 11 12 h ~s of ug 130 1 6 to 7/L - - 0.04 0.07 0.11 0.14 0,19 0.22 0.25 0.29 0.29 0.29 Direct a a &pviory 66 pera 1 a 8/Oth 0.08 0.23 0.32 0.39 0.46 0.55 0.64 0.74 0.85 0.88 0.92 0.% &afi: allUd 12 mlyr Nik CoLi ad byø~ Iklaræ ariao f W1k 0.22 to0.15/L 1.23. 1.48 2.11 2.66 3.31 4.04 4.85 5.63 6.40 6.63 7.46 8.20 rm Dm Di~et &lor: killed 50 perno~ x 700/~th 0.25 0.27 0.28 0.29 0.32 0.38 0.40 0.41 0.49 0.51 0.64 0.65 12 ma/yr : r laitd 60 person x 400/aonth 0.19 0.20 0.21 0.22 0.23 0.32 0.34 0.35 0.46 0.47 0.49 0.51 12 uDyr ft~, 1el, Iåaicat, etc. 0.12/L to 0.08/L 0.45 0.60 0.96 1.27 1.82 2.34 3.23 3.98 4.80 5.33 5.97 6.56 C i~n and ic iela~ 0.06 to .04/L 0.22 0.27 0.58 0.76 0.91 1.06 1.35 1.66 2.00 2.22 2.45 2.73 Ikeriala Packig %aterials: Secbete 0.13 to 0.10/pack 0.11 0.22 0.38 0.92 1.61 2.52 3.80 4.27 4.75 5.22 5.69 6.17 ~ik Diatributim nd Mketim: Traportation to Retail Outlets 0.05/L to 0.04/L 0.02 0.04 0.08 0.20 0.33 0.55 0.73 0.82 0.91 1.04 1.10 1.19 Rtail Cmiaimn on local Sale 0.10/L to 0.05/L 0.03 0.05 0.09 0.22 0.37 1.95 1.46 1.64 1.83 2.01 2.19 2.37 %b~tota 13.27 17.98 29.45 43.15 59.79 81.98 104.47 127.30 152.57 168.81 188.83 207.31 Kmav~ 5 pem x 3,500/ nth 0.16 0.20 0.21 0.22 0.23 0.24 0.25 0.26 0.27 0.28 0.29 0.30 12 =D/yr Techn , Ad~inistrative &ipervision Peren: - Anii Eambanry, 19 Psan x 2,O0I0 th 0.05 0.09 0.15 0.21 0.32 0.41 0.43 0.50 0.52 0.56 0.61 0.63 bu==m, Al andilk 12 solyr - k Dietribution and 10 pern x 2,000/ h 0. 0.05 0.08 0.10 0.13 0.14 0.19 0.3 -0.26 0.29 0.31 0.32 Nut~tn 12a/y Uiecouated Casheilow at. of Retutn - re.0tatton (ae. "1ti5on) 1eld/1o. of Coot or St. uat at tell price/ no. particule developmeat unit 2/ AdmitletretIve *apeneoo ) Including insurance : AnUal buabedry. eatonsion ) 70.000 to Service. Al.ailk collection ) 2.10.000/ath 0.84 0.90 0.95 1.06 1.16 1.41 & processing. milk dsetta- bution 6 aarketing and maiteenance including notorials: AN. Ratenston. Al 8 persons a 12 "Olyr 1000/month 0.04 0.05 0.06 0.07 1&lk processing 10 persons a 12 1O/yr 1000/month 0.06 0.07 0.08 0.09 0.10 0.11 1 Milk distribution & 12 persons z Marketang 12 NO/yr 1000/month 0.06 0.07 0.08 0.09 Union wvthead 50.000 to 100.000/yr 0.05 0.05 0.06 0.06 Interest on working capital 4/ e 10.502 0.03 0.04 0.06 0.09 Subtotal Total Operating Cost Net Operat*ng Surplus 51 Fized coat 4/ Depreciation Interest Working Copital Avg. turnover 7 days I/ The model represents a typical union amalgamating about 550 DCS. 2/ Un:t cocts have been obtaned from various malkabeds under Operation Flood Programme. The wages & salaries of labour an* managerial is phased out as per expansion of dairy. The analysis is based on constant prices for project period. 31 Transferred from DCS production and cash flow table. 4/ All fluid milk is marketed with an average turnover of 7 days and therefore. constituted the reimbursement of working capital h"ch have been "0 financed under project. 5/ Although milk production continues to increase, investments mainly in milk processing & marketing under the project would not alLow handLing t o of volumes projected beyond year 5 in the life of a union. Further investments detail have been worked out for the expansion of dairy plant. 6/ Fixed cost represent book value of existing assets plus the further investment made on technical inputs and dairy plant on which depreciation is charged at 52 on civil and 102 on equipment. Interest is calculated on 702 investment at value of assets at the interest rate of 8.5%. * Years of Opertim Partia~larI 2 3, 4 5 . .6 7 8 9 10 11. 12 Equity Al ~hre captal 6 mm hip fee 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Grantø Al ,% r to ville operatiws 0.77 0.77 0.65 0.50 0.62 1.08 1.06 2.54 1.73 1.27 1.16 - Capital grat - 0.03 0.04 2.59 1.83 0.38 2.11 2.85 2.21 2.03 0.24 - l~a- 0.07 0.10 6.05 4.26 0.89 4.91 6.63 5.12 4.75 0.55 - asfer of existing plæts 24.00 - - - - - (~eratig rem= 13.75 18.87 30.94 45.74 63,84 89.53 118.93 145.07 174.38 193.97 217.86 236.49 cmis$ion }f 0.04 0.05 0.08 0.12 0.17 0.24 0.33 0.43 0.56 0.67 0.81 0.95 Total sørces of funds 38.57 19.80 31.82 55.01 70.73 92.13 127.35 157.53 184.05 202.70 220.63 237.45 es of fund Inves jat in umion facilities §f 0.77 0.87 0.79 9.14 6.71 2.35 8.08 12.02 9.10 8.05 1.95 - Requisition of existing plæt & 24.00 - - - - - - - - - - perating Costs 14.60 19.50 31.17 45.11 62.10 84.14 107.51 130.69 1%.36 172.85 193.37 212.14 Dt servic lDg te= li principal including interest - - - - - - 0.01 0.02 0.81 1.36 1.47 3.70 m~rking capital 21 0.26 0.10 0.23 0.29 0.34 0.50 0.56 0.50 0.56 0.38 0.45 0.36 Cnti~butien to federation ßf 0.02 - - - - - - - - - - - Total uses of funds (before diviA~na, b=us 6 trnsfer) 39.65 20.47 32.19 54.54 69.15 87.59 116.16 143&23 166.83 182.64 197.24 216.20 Am~1 caflow, Det (1.08) (0.67) (0.37) 0.47 1.58 1.94 11.19 14.30 17.22 20.06 23.39 21.25 @/ R as.105 per DCS tords he capital 6 vamership fees. Figres ~nde uPto Rs.10,0001-. ~ Spport to villge cooperatiws at 10I= atright grants and 30% capital grant on procssing of technical puts prg . .f 70% of inesmeæt in mim facilities. I fhe existing p1ats oed by ~t. are trasferred to the uniæ= at their book vale. }j C~aission n tradi g of cattlef~ed @ five paise per kg. / inves~nt in niom n facilities inc~a proeing faciliti egpansion, tecnicaal inputa prg and support to Villa~ Cooertve. year. (Ro. Millien) y.ar. o. O ~ " PR;icU~r 1 2 3, 4 5 6 7 8 9 10 11. 12 hare capical & en~arhip fee 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Gztc 2 uprt to villege coprativea 0.77 0.77 0.65 0.50 0.62 1.08 1.06 2.54 1.73 1.27 1.16 - Cepital grat - 0.03 0.04 2.59 1.83 0.38 2.11 2.85 2.21 2.03 0.24 - sarsfo ietmt / - 0.07 0.10 6.05 4.26 0.89 4.91 6.63 5.12 4.75 0.55 - nfer of existing pients 4 24.00 - - - - - - - - - - - r~peratiia r 13.15 18.87 30.94 45.74 63.84 89.53 118.93 145.07 174.38 193.97 217.86 236.49 ~'a iin j/ 0.04 0.05 0.08 0.12 0.17 0.24 0.33 0.43 0.56 0.67 0.81 0.95 Ttal fou of fuda 38.57 19.80 31.82 55.01 70.73 92.13 127.35 157.53 184.05 202.70 220.63 237.45 i mnt in uimon facilities / 0.77 0.87 0.79 9.14 6.71 2.35 8.08 12.02 9.10 8.05 1.95 - Requiition of azisting plant / 24.00 - - - - - - - - - - - Operati~g cots 14.60 19.50 31.17 45.11 62.10 84.74 107.51 130.69 156.36 172.85 193.37 212.14 Debt service IoMg term loam prinw~pe1 inclung interest - - - - - - 0.01 0.02 0.81 1.36 1.47 3.70 Vrking capital j1 0.26 0.10 0.23 0.29 0.34 0.50 0.56 0.50 0.56 0.38 0.45 0.36 ctribatin to federatn i/ 0.02 - - - - - - - - - - - lotal uses of fnds (before divi~mns, bo=m & trasfer) 39.65 20.47 32.19 54.54 69.15 87.59 116.16 143å23 166.83 182.64 197.24 216.20 kAmal caa"lm. Det (1.08) (0.67) (0.37) 0.47 1.58 1.94 11.19 14.30 17.22 20.06 23.39 21.25 @ Rs.105 per DCS to~ads re capital & =nmhership fees. Figures rumnd upto Ra.10.000/-. ~ Suppot to village coperaties at 10= m ~tright grants amd 3M capital grant on proceasi~g of techich2 inca *a progrme. ,I 70% of inestmnt in min facilities. b existing plants owne by Gmt. are transferred to the unio at their book valu. / Ocmission an tradig of cattle~ed @ five pise per kg. / investnt in inion facilities ineixbno processing facilities empnin, tøcnienl i~puts prgmm and muport to Vilg cop~atve. . years. - 326 - ANNEX 18.A PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT Discounted Cashflow Rate of Return - Union (Rs. in Million) Year Cash* Cash+ Net Discounted YVAiue Outflow Inflow Cashfloy 17.00% 18.00% 1 24.82 -0.81 -25.63 -21.91 -21.72 2 0.93 -0.58 -1.51 -1.10 -1.08 3 0.84 -0.15 -0.99 -0.62 -0.60 4 9.78 0.75 -9.03 -4.82 -4.66 5 7.18 1.91 -5.27 -2.40 -2.30 6 2.51 5.03 2.52 0.98 0.93 7 8.65 11.75 3.10 1.03 0.97 8 12.86 14.81 1.95 0.56 0.52 9 9.74 18.58 8.84 2.15 1.99 10 8.61 21.79 13.18 2.74 2.52 11 2.09 25.00 22.91 4.07 3.71 12 0.00 25.30 25.30 3.84 3.47 13 0.00 25.30 25.30 3.29 2.94 14 0.00 25.30 25.30 2.81 2.49 15 0.00 25.30 25.30 2.40 2.11 16 0.00 25.30 25.30 2.05 1.79 17 0.00 25.30 25.30 1.75 1.52 18 0.00 25.30 25.30 1.50 1.29 19 0.00 25.30 25.30 1.28 1.09 20 0.00 35.28 35.28 1.53 1.29 TOTAL 1.14 -1.73 (DCF) Rate of Return 17.39% * Cash outflow is worked out from uniform cashflow (Annexure-18.2) item no. 2.1. & 2.2 wth NDDB/IDC direct expenditure of 7% on item no.2.1. + Cash inflow is transferred from union cashflow (Annexure-18.2) item no.1.5 & 1.6 minus item no, 2.3. x==E: GE210 E r cbarat s m of omi 1aai (Cit Din,) j/ (Ra Hillimn) Qet or price~ 2/ r of Gaspatiaa 'atigapa1a Ra. pr 1.2. 3. 4 5 6 7 8 9 10 11. 12. ity- - 0 100 10 200 200 200 300 300 300 400 400 pmmd (milli=- - 10.95 16A3. 23.73 38.33 52.93 63.88 76.65 91.25 109.50 127.75 n~ vlili~ (- - 30.00 45.00 65.00 105.00 723> 87.50 70.00 83.33 75.00 .50 mal Paa~re by fei -n3 - - 10.95 16.A3 23.73 34M 47.45 55A0 69.35 74.83 91.25 109.50 s equired (t) - - 9.W 14AD 21.0 354.W S . 537M 709.00 152.010 1~ 1714.00 ~ åg D -99. Killi=- - ~ ~k sold (4.5/8.) 3.40 to 4.60/L - - Z.% 41.39 64.77 11.% 170.42 M5A8 24 AM 29.82 352.59 41.- - U raik soml (3.0f/8.5g) 2.90 to 3.901L - - 9.3 14.78 24.20 4.59 61.92 74.73 89.68 106.76 128.11 149.47 sold 30 to 40/Ig - - 5.6 8.29 12.31 15.0 21.2 28.08 32.04 20.88 28.28 39.84 Ta c aiim- - 40.75 64.6 101.28 174.65 253.54 308.49 368.53. 421.6 508.98 600.67 - F~=csa of ,ålk (5.7/8.62) 2.95 to 4.10/L - - 32.30 %. 91.36 140.45 19.55 2394 284.34 306.80 374.13 448.95 - 21 to 24/kg - - 0.19 0.31 OAS 8.14 12.62 12.89 17.2 36A8 40.70 4.14 Micletion 6 prno=~se - ~ " - ~t of milk 0.0 to 0.05/L - - 0.55 0.82 1.19 1.73 2.85 3.50 4.16 4.49 5AS 6.57 -Unreci ~a-ar illed (70 pams) W/~tl - - 0.42 0A4 OA4 0AB 0.61 O4 0.77 0.D 0.94 0.97 ~d (8 MD~ - - 0.35 0.37 0.38 0.D OA 0.50 0.59 0.62 0.70 0.72 - Er Dm, fu1, 1e*wicent . 0.12 to 0.11/L - - 1.20 1.81 2.61 4.29 6.35 7.67 9.2O 10.95 13.14 15.33 - cm~ 6 Em. Mntmia GAJ95/L to 0.01/L - - 0.11 0.16 0.24 0.38 0.9 0.% 1.15 1.37 1.64 1.92 0 - ~Men ntran 0.13 to 11/L e500 cma ck - - 2.30 345 5.22 8.82 13.6 16.61 19.8 23.73 28.47 33.22 - lm-mi~ to z~ai1 ~et 0.0/L to 9O~L - - 0A4 0£6 0.95 1.53 2.5 3.19 3.8 4.% SA4 6.39 -~fflil - .0.10L to0.05/L - - 0.55 0.82 1.19 1.92 5.29 6.39 7.67 9.3 10.95 12.78 - - 38A41 65.32 I1MAB 168.07 239.5 2%9g 34£.6 3=8. 481.63 5U.9 Q pr prace / --u. Yr eataan DuAsd . lt 12 3 4 5 6 7 8 9 10 11 12 - ms- (3 peaaa) 4000/month - - 0.14 0.15 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 - prvswry pm l (20 per.) ( ~=k receptsn 4 dstrbutco) 2000/oth - - 0.24 0.25 0.2 0.28 0.34 0.35 0.44 0.46 0.47 0.49 - AMALnIataw ea Wnc11d~ng asan 1.50,000 to 2,75,000a~h - - 1.80 1.86 1.92 1.98 2.24 2.30 2.56 2.62 3.06 3.30 - nrmest on w~rking capital @ 10.5 - - 0.08 0.13 0.20 0.35 0.51 0.62 0.74 0.85 1.02 0.21 - aintenaninclu~dg eterials: hilk processiz (15 per.) 1500/.nnth - - 0.09 0.10 0.11 0.12 0.20 0.21 0.25 0.Z 0.33 0.34 ilk distributiom (15 per.) 1500/~nth - - 0.09 0.10 0.11 0.12 0.20 0.21 0.25 0.3 0.33 0.34 eratim omrd 2,0,000/yar to S,00,000/yfar - - 0.20 0.30 0.40 0.50 0.50 0.50 0.50 0.50 0.50 0.50 sut-lhtal - - 2.64 2.89 3.16 3.52 4.47 4.38 4.94 5.16 5.93 6.41 Total gperating cost - - 41.05 68.41 107.24 171.59 244.12 296.17 353.60 404.09 487.56 574.40 %t cnmtim Eufflhs f - - (0.30) (3.95) (5.~) 3.06 9.42 12.32 14.93 17.3J7 21.42 2.27 a k apit An. turnw~er 7 day - - 0.79 0.45 0.70 1.41 1.51 1.06 1.15 1.01 1.68 1.76 - - 2.45 2.23 2.04 1.86 3.39 3.09 4.24 3.87 4.95 4.51 - interest - - 1.99 2.16 2.89 3.72 4.15 4.68 5.07 5.51 5.28 4.75 l 1be 1de1 represts a typical city dairy plmt bavios coerty of 4.00 lU by 1991. _ Ihit costs bae been obtain fr=m various netr 6 city duiries under (eration Flood pncracm. ihe ani aries of labor and a staff is phased out as per epwnimn of dairy plant. To. analysis is baed an co=at prices for project period. 3 ~f~.sferred fr~m fedratis's Fiket table. 4 A1ltuh metik pr ocrmt on~ims to inrae investmt ~y in milk poc and markering under the project wuld rot allo~ bunling of mik projected beynd six years in the life of a fme.tia- Eher *Insten detailo b~s beoa w~e ou for the ""~noin of the da~ plant, j All ~ zinilk is i t with g tummer of 7 days and therefre onsti~nt the reqare~ni king capi hich be be fiaaw inder the project. PW~r 020~4ZO R~Œ MA emtina Statemn t of Cattlefeed Plant 1/ Cost or price - Yeam of nmtin PR,micular8 R.er M 1 2 3 4 5 6 7 8 9 10 11 12: "nt capecity (MIlD) 100 100 100 100 100 100 100 200 200 200 200 200 Quntity mufacred ('000 N }/ 3.0 4.50 6.00 7.50 12.00 16.50 24.00 36.00 45.00 48.00 54.00 57.00 Quntity procua '000 o) 3.06 4.59 6.12 7.65 12.24 16.83 24.48 36.72 45.90 48.96 55.08 58.14 Capcity utilizatifi (%) 10.00 15.30 20.40 25.50 40.80 5.10 81.60 61.00 76.50 81.60 91.80 96.90 ~ ka=n L. miLl * by sale o cattlefeed 1,00 to 1,400 3.12 4.77 6.60 9.00 15.00 21.78 32.88 50.40 63.00 67.20 75.60 79.80 - 1mnI mot of ra mterial 825 to 1,150 2.52 3.86 5.32 7.42 12.48 18.01 27.42 42.23 52.79 56.30 63.34 66.86 Processi cst: - Direct labor 20 to 15 0.06 0.09 0.12 0.15 0.23 0.32 0.47 0.66 0.78 0.79 0.83 0.87 - Fr, fuel & =ter 15 to 13 0.05 0.07 0.09 0.11 0.17 0.24 0.34 0.48 0.60 0.64 0.72 0.76 - åImjr and wointance 10 to 9 0.03 0.05 0.06 0.08 0.12 0.17 0.24 0.33 0.41 0.44 0.50 0.52 Marbeting & distri*utim cost: - Pacaging cot 50 0.15 0.23 0.30 0.38 0.60 0.83 1.20 1.80 .2.25 2.40 2.70 2.85 - 'Tansportation cot 40 to 38 0.12 0.18 0.24 0.30 0.47 0.64 0.94 1.37 1.71 1.82 2.05 2.17 - Adverti-nt e 5 0.02 0.02 0.03 0.04 0.06 0.08 0.12 0.18 0.23 0.24 0.27 0.29 Geral ovessd~o - kela~y inl~Mng ktg. staff 15 to 13 0.05 0.07 0.09 0.11 0.17 0.23. 0.34 0.47 0.59 0.62 0.70 0.74 - Office Owende~ 10 to 9 0.03 0.05 0.06 0.08 0.12 0.17 0.24 0.32 0.41 0.43 0.49 0.51 - Interest en ~>ker capital 10.5 an ane wonth tur r 0.03 0.04 0.06 0.08 0.13 0.19 0.29 0.44 0.55 0.59 0.66 0.70 - Insura 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.13 0.13 0.13 0.13 0.13 Total cot 3.11 4.71 6.42 8.80 14.60 20.93. 31.65 48.4160.4564A0 72.39 76.40 get operating urplus i 0.01 0.06 0.18 0.20 0.40 0.85 1.23 1.99 2.55 2.80 3.21 3.40 1i~ nedct: - Deprw tir " 0.43 0.39 0.36 0.33 0.30 0.27 0.25 0.68 0.82 0.75 0.68 0.62 Interest - - - - - 0.27 0.50 0.54 0.59 0.64 0.73 0.69 1 Wrking capital 0.2 0.14 0.15 0.20 0.50 0.57 0.88 1.50 1.10 0.30 0.70 040 1/ Ihe =Mdel re~te cattlefeed plant h~ving a cpqe~ty of 100 EUD ernand~ to 200 MD. 2 d Unit c=ts hase been obtainad frn ioau m~lkdlumi under 4~eration Food prgrame. M 'Imuferred fran the fod~ations table for re~ ~iret of cattlefeed for varions niana. ~ T imn is pmopo~s in the 8th yer in order to andle in~creased da~n= of cattlaf~. - 330 - ANNEX 19.3 ~c 00 000 0 0O:0 00.-4 1113 l ti i1 t li ll fi lii ii ii l li i '- lii i Iii Ii i{li i ~ow Cl0 TradiM Acount - Milk & lilkr lPduct: F~aration Year of Opetation Prtipularu 1 2 3 4 5 6 7 8 9 10 11 12 - Sale to 14 ('000/litre) 4,977 10,837 7,674 7,300 7,300 7,300 7,300 7,300 7,300 10,950 14,600 18,250 - Milk pzducts (Mr): ite butter - - - 600 900 900 1,000 1,100 1,500 2,000 2,300 2,800 Qee 4 12 31 86 400 440 558 589 827 1,245 1,474 1,607 SIP - - - 856 1,406 832 742 260 571 593 810 1,358 Cein 2 5 9 16 25 33 44 56 70 86 102 118 - Iaquid milk 1.00 2.18 11.53 1.46. 1.46 1.46 1.83 1.83 1.83 2.74 3.65 4.56 - mitebutter - - - 0.30 0.45 0.45 0.75 0.83 1.13 1.15 1.73 2.10 - Chee - 0.01 0.02 0.06 0.30 0.33 0.56 0.59 0.83 1.25 1.47 1.61 - Se - - - 0.43 0.70 0.42 0.56 0.20 0.43 0.44 0.61 1.20 - Casein - - - - - - - - - - - 0.01 Total 1.00 2.18 1.55 2.25 2.91 2.66 3.70 3.45 4.22 5.58 7.46 9.30 * Ihe federation would generate the cashflo through tradi~g of iålk and milk prcducts at the follo~ing rates: - Liquid milk @ Rs.0.20 to 0.25/litre - mite butter @ Rs.0.50 to 0.75/kg - Qiee @ Rs.0.75 to 1.00/kg SfP @ Rs.0.50 to 0.75/kg > - Casein @ Rs.0.05/kg MKimrtiffn Caéh~ (<s 1illia) Year of omeatim Particulara 1: 2 - e 4 5 6 7: 8 9 10 11 12 cap d 0.02 0.02 0.02 0.05 0.05 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Cqpia gats 4.26 4.62 - - 2.75 4.59 5.61 4.44 3.21 3.24 - - Ias for investments / 9.94 10.78 - - 6.44 10.71 13.09 10.36 7.49 7.56 - - 'Jaamfer of eistimg planta y 5.00 - - - - - - - - - - - Cash f~ortf - City dairy plant - - - - - 3.06 9A2 12.32 14.93 17.37 21.42 26.27 - Cattlefd planta 0.01 0.06 0.18 0.20 0.40 0.85 1.23 1.99 2.55 3.27 4.29 4.93 - Tradi g a/c for oik products 1.00 2.18 1.55 2.25 2.99 2.66 3.70 3.45 4.22 5.58 7.46 9.30 Total mources of funds 20.23 17.66 1.75 2.50 12.56 21.88 33.06 32.57 32.41 37.03 33.18 40.51 ome of fud Ins* t :oin federation facilities §f 14.20 15.40 - - 9.20 15.30 18.70 14.80 10.70 10.80 - - Iequisition of eiting plant - 5.00 - - - - - - - - - - - Operatio 1 deficit-City dairy debt service - - 0.30 3.95 5.96 - - - - - - - k%ss ter= loam principal inchnding interest - - - - - 1.85 3.85 3.85 3.85 5.04 12.33 16.60 Incremta1 ki copital 0.26 0.14 2.14 2.36 3.39 4.29 5.03 6.18 6.17 7.21 7.38 7.08 Total use of unds (before divideans, bmw & transfer) 19.46 15.54 2.44 6.31 18.55 21.44 27.58 24.83 20.72 23.05 19.71 23.68 "nn1 088f~ow, net 0.77 2.12 (0.69) (3.81) (5.99) 0.44 5.AS 7.74 11.69 13.98 13.47 16.83 l Ro.21,000 per union as dhre capital. R.101 as ~aership fee and Ro. 1,000 per anm as a~=1 subscription. ff 3M of capital invesm eno city dairy plant and cattlefed planta. }j 70 of capital inem t provided by poject ~*rity n city dairy plant and catt,dfee plant. / Jhe existing cattlefeed plant aned by state >euum* transferred to the federatin at their bok vaue. } wufrna~erred fra operating tatn of city duiy plant, tuw cattleee plants and tradig acnt~ statent. 4/ Copital investment ande on city dairy plant and eanwion of mne cattlefeed plant fram 100 =OD to 200 =ED and setting up of em cattle~ed plant of 100 MID. - 333 - ANNEX 19.A PROJECT COMPLETION REPORT INDIA NATIONAL DAIRY PROJECT Discounted Cashflow Rate of Return - Federation (Rs Million) Cash Cash Net Discounted Value Year Outflow /1 Inflow /2 Cashflow 17.00% 19.00% 1 20.19 1.01 -19.18 -16.39 -16.12 2 16.48 2.24 -14.24 -10.40 -10.06 3 0.00 1.43 1.43 0.89 0.85 4 0.00 -1.50 -1.50 -0.80 -0.75 5 9.84 -2.65 -12.49 -5.70 -5.23 6 16.37 6.57 -9.80 -3.82 -3.45 7 20.01 14.35 -5.66 -1.89 -1.67 8 15.84 17.76 1.92 0.55 0.48 9 11.45 21.70 10.25 2.49 2.14 10 11.56 26.22 14.66 3.05 2.57 11 0.00 33.17 33.17 5.90 4.89 12 0.00 40.50 40.50 6.15 5.02 13 0.00 40.50 40.50 5.26 4.22 14 0.00 40.50 40.50 4.50 3.55 15 0.00 40.50 40.50 3.84 2.98 16 0.00 40.50 40.50 3.28 2.50 17 0.00 40.50 40.50 2.81 2.10 18 0.00 40.50 40.50 2.40 1.77 19 0.00 40.50 40.50 2.05 1.49 20 0.00 63.40 63.40 2.74 1.96 Total 6.92 -0.176 Change in cash outflow by 0.0% and change in cash inflow by 0.0%. (DFC) Rate of Return - 18.80%. /1 Cash outflow is worked out from Federation cashflow (Annexure 19.5) item nos. 2.1 & 2.2 with NDDB/IDC direct expenditure of 7% on item no. 2.1. /2 Cash inflow is transferred from Federation cashflow (Annexure 19.5) item nos. 1.5 & 2.3. imaTrii ixn lam r n-m to iA 1zocr 1979-80 198" 1981-82 1982- 1984 1984-85 1985-a 1ar,iclars (has& YeG) (a) Peak procuroomet ( 3.31 3.39 3.93 6.25 6.32 7.90 10.03 (b) Amge prm na) l. -andsmn 0.59 0.64 0.70 1.10 1.30 1.45 1.87 - alland other fame 1.77 1.92 2.08 3.32 3.91 4.33 5.60 1btal 2.36 2.5% 2.78 4.42 5.21 5.78 7.47 (c) ament to milk prouæm.s /2 (Ra Million) - 1~8aa1u.ginal 398.40 490.56 628.53 1,108.14 1,399.78 1,645.97 2,150.03 - &all and other farmers 1,195.19 1,471.68 1,867.63 3,344.57 4,210.09 4,%5.20 6,438.60 Total 1,59B.59 1,962.24 2,4%.16 4,452.71 5,609.87 6,561.17 8,588.63 (d) <hat to milk producra /3 (RS Million) - Iandess/maginal 199.20 245.28 314.27 554.07 699.89 822.99 1,075.02 - all and other f rs 298.80 367.22 466.91 86.14 1,052.52 1,228.80 1,609.65 1btal 498.00 613.20 781.18 1,390.22 1,752.41 2,051.79 2,684.67 (e) Ibt realiation 1,095.59 1,349.04 1,714.98 3,062.50 3,857.46 4,509.38 5.903.96 (Ra Million) Ret Increase in milk po~ducers iccae in 1985-86 ovr base year: Rs 4,808.37 M. /l Assiuing 22 of milk procured frm the Iandless/zarginal and remining 75 fram the anall nd other fnms. Il 1he averege pric paid during the unnth of March of evey year for all the milkahda (averge for em and buffalo milk) mee Rk 1.85, 2.10, 2.46, 2.76, 2.95, 3.11, and 3.15 during 1979-80, 80-81, 81-82, 82-W, 8-84, 84-85 and 85-86 repectively. /3 he lirld Bnk Staff Appraisa Rep~rt for Nati~al Dairy Prject, May Z, 1978, has take direct prnu+ion cst of =ilk for landless and aver~ge farmers as 50% and 2% respectively. MAP SECTION HIMACHAL wNDIA - APRDESH INDIA STATE AND NATIONAL DAIRY PROJECTS PAKISTAN P A K i THA N C H I N A NEPAL U TITKAKR tBHUTAN RA^ STHA d~W~ AA MADESH B1HAh ýBANGLADESH GUJARAT s -\- HYA PRADESH A OR.ISSA IskD 】 艸23 궉