Comparative Study of delivery systems in Livestock Development in Badaun

(Uttar Pradesh)

November 2008

Submitted to

ITC LTD, Kolkata

Submitted by

Siddharth Misra, Lokesh Kumar Singh and Niraj Pareek of Samridhi Financial Services

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Table of Contents Livestock and Indian Rural Economy .................................................................................................. 3

Artificial insemination in livestock ...................................................................................................... 5

Problems of Technology Adaptation .................................................................................................. 5

ITC – Mission Sunahara Kal ................................................................................................................. 7

District Rural Development Agency .................................................................................................... 8

Process of Artificial Insemination at ITC Sponsored Centres ........................................................... 10

Comparative Study of two delivery systems in Livestock Development .......................................... 11

Financial Sustainability ..................................................................................................................... 13

Farmer’s Story – Prem Pal Singh (Guladiya Village) ......................................................................... 14

Observations ..................................................................................................................................... 15

SWOT Analysis of the ITC- Mission Sunehra Kal Cattle Development Center .................................. 16

SWOT Analysis of the DRDA- Cattle Development Center ............................................................... 16

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Livestock and Indian Rural Economy The cattle play a significant role in the life and economy of the people in India where 70% of the population id

dependant on agriculture. From subsistence to commercial farming, cattle form an integral part of farming

providing draught power for various phases of agriculture operations from ploughing, irrigation, harvesting and

transportation to supplying manure, fuel and milk. It is estimated that cattle yield more than 50% of the

agriculture income in India. Most of the families owing livestock are poor farmers and landless agricultural

labourers. Between 30-50% of the rural house-hold incomes earned is through the means of livestock activities.

Among the livestock, cows and buffaloes play a significant role, because of dairy farming is a reliable source of

livelihood for small and marginal farmers. Buffaloes are maintained by all sections of the community and unlike

other natural resources, they are well distributed among small and large land holders.

The production of buffalo milk in the Asian-Pacific region exceeds 45 million tonnes annually of which over 30

million tonnes are produced in India alone. With selective breeding, improved management and the

establishment of more dairy herds, milk yields are increasing worldwide. The individual 3,000 litre-per-lactation

female, considered a record 30 years ago, is now common. There are many which yield 4,000 litres in a lactation

of 300 days. And, some have even attained a record of 5,000 litres. The potential for increased milk production,

therefore, exists.

Indian Cows: Blessed Bovines!

India is the top-ranking position milk producing nation in the world. In 2006, the milk production was 97.1 million

tonnes. India shares one sixth of cattle and half of world's buffalo population with annual growth rate at 5 %. The

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growth rate in buffaloes is lop-sided with she-buffaloes accounting for 91% of the 95 million (84 million).

Generally, the Indian bovine stock is considered a very poor quality and mostly uneconomical.

India possesses 27 acknowledged indigenous breeds of cattle and seven breeds of buffaloes. Various Central and

centrally sponsored schemes are being implemented for genetic improvement of cattle and buffalo with a view to

enhance the per capita availability of consumption of milk through increased milk production. Efforts are also

made to protect and preserve the indigenous cattle and buffalo in their native tract, which are facing threat of

extinction. The elite animals are selected and registered on the basis of their performance for production of

superior pedigree bulls, bull-mothers, frozen semen and frozen embryos for future breeding improvements.

Among the States, Uttar Pradesh, Tamil Nadu, Maharashtra, Kerala and Punjab have the largest number of

crossbreed cattle and together they account for nearly 65% (9.50 million) of all the cross breed cattle population

in the country in 1992.

The high-yielding Murrah is the Holstein-Friesian of the buffalo world. There is no reason why the Murrah and

other riverine breeds should not exceed the volumetric yield of the best milk cows. Buffalo milk contains about

twice as much butterfat as cow milk. There is no physiological need for concentrate feed to maintain this level.

When concentrates are fed, the fat content rises. When fed ad lib, it can exceed 15 per cent. Fed to excess, this

figure can be much higher. The buffalo, in fact, releases unwanted fat in the milk and stores only a minimum in

the body tissues

In spite of this, productivity per animal is very poor. It is only 987 Kgs/lactation as against 2038 Kgs/lactation as

the world average. This reflects the low productivity of our animals. This is mainly due to poor plan of nutrition

as well as low genetic potential for milk production and health care. Unfortunately, a majority of them are low

productive, nondescript and lack adequate feed resources and health cover to enhance the milk yield.

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Artificial insemination in livestock Artificial insemination is used in animals to propagate desirable characteristics of one male to many females or

overcome breeding problems, particularly in the cases of sheep, horses, and cattle. Semen is collected, extended,

then cooled or frozen. It can be used on site or shipped to the female's location. If frozen, the small plastic tube

holding the semen is referred to as a "straw". To allow the sperm to remain viable during the time before and

after it is frozen; the semen is mixed with a solution containing glycerol or other cryoprotectants. An "extender" is

a solution that allows the semen from a donor to impregnate more females by making insemination possible with

fewer sperm. Antibiotics, such as streptomycin, are sometimes added to the sperm to control some bacterial

venereal diseases.

Artificial insemination of dairy animals is very common in today's agriculture industry. It provides an economical

means for a livestock breeder to improve their herds utilizing males having very desirable traits.

Problems of Technology Adaptation

1. Poor Rate of Conception: Chilled semen sent from the collection centres in the morning reached the AI Centres

late due to poor transport facilities, while a majority of the farmers brought their cows for AI in the morning.

Unsatisfactory transportation and storage facilities resulted in deterioration of semen quality thereby causing

poor rate of conception. Poor health status of cows and improper time of AI also contributed to the failure.

2. Poor Quality Germplasm: The technique of using liquid semen demanded a large number of bulls for semen

collection thereby compromising on their genetic merits. In the absence of performance recording of cows, it was

impossible to select the bulls of desired merit in large numbers.

3. Inadequate Feed Resources and Health Care: Most of the farmers owning livestock do not have adequate

fodder and feed resources to nurture their animals. As a result, the animals are not able to exhibit their genetic

potentials. Inadequate health care further affected the production capabilities.

4. Lack of Motivation: For a long time, most of the rural people were unaware of the merits of AI technology and

the advantages of crossbreeding, while others who were aware about this programme had lost trust in the

technology due to repeated failures. Even today, there is scepticism about crossbreeding, in spite of its proven

benefits.

5. Poor Marketing Outlet: In the absence of effective marketing network, farmers had no opportunity to sell the

surplus milk. Hence, farmers had no interest in availing the breeding services. In interior areas, where milk

collection was not possible, farmers stopped feeding their animals.

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The Cost Benefit details of Crossbred Cows

Parameters Local Cow Foreign Breed

Quantity Amount Quantity Amount

Income: Average Milk Production per lactation of 305 days excluding milk suckled by calf (Rs.6.00/litre)

200 1600 2200 17000

Dung, farmyard manure (t/year) 3 1800 5 3000

Total Income (Rs.) 3400 20600

Expenses: Feed: Concentrate (Rs.5/k) Dry Fodder (Rs. 1.5/kg) Green Fodder (Rs. 0.8/kg) Vaccinations and Veterinary care

250 2100 400

1250 3150 320 10

1100 2000 1000

5500 3000 800 300

Total Expenses (Rs.) 4730 9600

Net Income (Rs.) (Excluding Labour Costs) -1330 11000

National Labour Cost Breeding and other Services Cost of growing stock

2500 300

1500

Net Profit (Rs.) 6700

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ITC – Mission Sunehra Kal

ITC’s ‘Mission Sunehra Kal’ is it’s corporate social responsibility initiatives , that encompass it’s sustainable

development initiatives of triple interventions viz., natural resource management (wasteland, watershed and

agriculture development), sustainable livelihoods comprising genetic improvement in livestock and economic

empowerment of women and community development with focus on primary education, health and sanitation.

The Company is currently running ‘Mission Sunehra Kal’ social development projects in various districts of the

following states: Andhra Pradesh, Bihar, Kerala, Karnataka, Maharashtra, Madhya Pradesh, Orissa, Rajasthan,

Tamil Nadu, Uttar Pradesh and West Bengal. Realising the opportunities to convert their liabilities into assets,

rural families are motivated to breed their low productive nondescript cattle with high milk yielding genetically

superior breeds resulting in the birth of the `Kamdhenu’ – a boon for the rural poor. Simultaneously, conservation

of elite native breeds is also taken up.

In collaboration with BAIF Institute for Rural Development, a national NGO specializing in livestock development,

ITC focuses on small and landless farmers, assisting them to genetically upgrade their cattle through artificial

insemination with semen from superior strains such as Jersey and Holstein-Friesian for cows, and Murrah for

buffaloes.

ITC trains and equips technicians to provide an integrated package consisting of artificial insemination, cattle

health and nutrition, pregnancy and post-natal services right at the farmer’s doorstep Crossbred livestock outputs

are 7-9 times higher than current yields - generating income to invest further in dairy farming or other avenues of

income or savings. Door-to-door collection of milk by marketing co-operatives, fostered by ITC with seed capital,

channels the farm family’s domestic milk production to large dairies, connecting farmers to the formal milk

market. The programme for cattle development involves genetic improvement of cattle through artificial

insemination to produce high-yielding crossbred progenies.

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Bharatiya Agro Industries Foundation (BAIF)

Manibhai Desai who was a disciple of Mahatma Gandhi established BAIF in 1967 and later renamed it as BAIF

Development Research Foundation, to replicate his novel program in rural development. Soon he thought of

experimenting with crossbreeding of local cows with exotic dairy breeds of Holstein Friesian and Jersey. Reason

was by doing so he wanted to use the low productive cows as seed beds for producing crossbreds, thus

converting farmer’s liability into an invaluable asset. This unique experience motivated BAIF to launch the Dairy

Cattle Development programme in 1967 through genetic improvement, health care, nutrition management and

up gradation of local skills for the benefit of larger sections of the rural poor. BAIF initiated cattle development as

a programme to ensure sustainable livelihood for the rural poor. Hence, the focus is on the participation of small,

needy families to produce crossbreds at their doorsteps without any heavy capital investment. This has ensured

the involvement of the entire family.

District Rural Development Agency

The District Rural Development Agency (DRDA) has traditionally been the principal organ at the District level to

oversee the implementation of different anti-poverty programmes. As indicated, the role of the DRDA is to

perform tasks which are distinctly different from other institutions / departments. However, the DRDAs are very

much a part of the district. They shall function accordingly. The DRDA shall be a registered society registered

under a Societies Registration Act or a district cell in the Zilla Parishad having a separate identity. The chairman of

the Zilla Parishad shall be the chairman of governing body of the DRDA. The Executive and financial functions shall

however lie with CEO, Zilla Parishad / District Collector who shall be designated as the Chief Executive Officer or

Executive Director. It shall be his responsibility to ensure that the administration of DRDA and the programmes

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are conducted in accordance with the guidelines. Wherever the Zilla Parishads are not in existence or are not

functional, the DRDAs would function under the Collector / District Magistrate /Deputy Commissioner of the

District, as the case may be.

The scheme of `DRDA Administration shall be a centrally sponsored scheme. The funds required under this

programme shall be shared between the Centre and the States in the ratio of 75:25 Funds will be released directly

to the DRDAs.

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Process of Artificial Insemination at ITC Sponsored Centres

Cattle-owner calls

up center in-charge

or drops the

information in the

drop-box

Center In-charge

goes to the door

step of the cattle-

owner for the

purpose of AI

Pregnancy

Diagnosis done

after 45 days

The cattle gives

birth after 300 days

The Levy amount is put in

the Levy Account

Once a Center breaks even,

the revenue generated is

used to open a new center

AI is done when it is

sure that cattle is

on heat

The Levy amount is

collected from the cattle

owner

Pregnancy diagnosis levy

is collected from cattle

owner

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Comparative Study of two delivery systems in Livestock Development

Service ITC DRDA

Year of Inception 2004 1987

Villages Outreach 100+ 47

Outreach (Districts in UP) 5 30+

Outreach (Badaun)* 5 Centers 10 Centers

Levy Charges for Artificial Insemination** Rs. 100 Rs. 40

Time Taken to Break Even**** 4 years 8 years

Shifting of a Center from a venue After 3-4 years After 8 years

Venue Door Step Service Center Only

Pregnancy Diagnosis Charges Rs. 30 Free

De Horning Charges Rs. 30 NA

Cattle Crèche Facility (At the Center) Yes No

Accessibility of Funds As per Demand Annually

Monitoring by Officials Monthly as well as when required Once in a year

Other extension Services Yes No

Mobile Phones provided to Center Incharges Yes Yes

Motorcycles for Center Incharges Yes No

Running Costs Low High******

Monthly Targets 100-150 45-90

Center Incharge employee status (before Break Even) ITC BAIF

Center Incharge employee status (After Break Even) Independent BAIF

* - From location point of view DRDA has many considerations like, location of the centre should be away from

veterinary hospital and distances between two centres must be of 10 KM. However in this regard ITC has tried to

look for business synergy, whereby they started their first five centres to those location that were already been

served by their e-Choupal initiative. Now the advantage from this is the extension services that can be offered by

ITC to the local farmers. Also, this helps ITC in have a close eyes on the activities of these centres.

** - Initially DRDA offered the services free of cost, then for the first time in the year 1996 a levy of Rs. 20 was

charged for every AI. Later on, it was raised to Rs. 40 per AI service since Apr.01, 2000, this remain unchanged till

date. ITC, however started with a levy of Rs. 50 in year 2004, changed it to Rs. 75 and finally to Rs. 100 for each AI.

However on interacting with local farmers we realised that they are not too much concerned about the services

charges, as they are about the kind of services.

*** - The charges for others apart from the DRDA and ITC Centers are not fixed and vary from Rs. 120 to even Rs.

450 by some small private players.

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**** - Breaking even depends on various factors such as Response from the locals, Cattle Population in the

district, Availability of Funds, etc.

*****- The Govt Veterinary Hospitals have the cattle crèche facilities.

****** - The village meetings conducted by ITC are held in the villages every 3 months in order to educate the

villagers about the benefits of AI and other livestock services.

******* - Providing services such as Pregnancy Diagnosis Tests for free and charging nominal rates for AI has left

DRDA with very high running costs.

As is clear from the below given graph that the average levy collection by the ITC sponsored centre is almost

double than that of the DRDA sponsored centres, which helps these centres to break-even in almost half the time.

The salient features of ITC’s Cattle Development Programme are:

Conservation of native breeds and crossbreeding with non-descript animals

Use of state-of-the-art technology with high quality frozen semen of proven bulls

Breeding at the doorsteps of farmers for motivation and efficient services

Close follow-up, technical guidance and monitoring

Integration of breeding with extension, training, fodder resource development and health care

Provision of support services like disease investigation, vaccination and nutritional advice

Training of local youth to take over the operational responsibilities in due course

Targeting of the underprivileged and sensitivity to social and gender issues

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Financial Sustainability

Biggest difference between the two delivery models has been the achievement of self-sustainability of the various

ITC centres. It has helped ITC to use its resources in the new and untapped market. The very idea of centre has to

be self-sustain after four years has helped in developing a new entrepreneur model, whereby the old centre in

charge can now start his personal practice to serve the local farmers. However there are many critical issues in

this, and if the concerned personal didn’t worked hard he may suffer.

The main reason why ITC’s centres have able to achieve this is due to the fact that slowly and slowly ITC was

withdrawing its financial supports. For example after enhancing its service charge from Rs. 75 to Rs. 100, in

comparison to the DRDA’s Rs. 40 has mobilised enough cash flows for them. The graph below explains the fact

that the break-even for ITC sponsored BAIF centres come by fourth year whereas the DRDA sponsored centres

take about the double of the time.

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Farmer’s Story – Prem Pal Singh (Guladiya Village)

Prem Pal Singh’s is one of the success stories of the livestock development programme being run by BAIF in

association with ITC. Being from a well of family of farmers in the Dataganj block of Badaun, he began his

association with BAIF way back in 1995. Back then he just had about 2 buffaloes which gave hardly any spare milk

that they he sold to the local dudhia.

Such has been his turnaround of fortunes as far his livestock is concerned that now Prem Pal Singh has employed

one person to look after his cattle. Talking over a jug of fresh sugar cane juice made from his from his farm’s fresh

stock, he gave us an account of his growth story. He gave us an account of how the cross breeding of his first

‘desi’ buffalo lead to an increase in the milk given by that buffalo. Since then he’s had all his buffaloes cross bred

close to 75% “Murrah”. Today at any point of the year he has at least 3-4 of his buffaloes which are being milked,

each giving around 8-9 litres every day.

Having heard of the success story of the Gujarat Dairy Cooperatives, Prem Pal emphasized the need of a similar

model in U.P. as well. In fact he even mentioned how the people in his village stopped selling their produce to the

largest cooperative in the state after hearing about its contamination story. There are around 12000-14000

people living in his village out of which so far only close to 100 people have been associated with the Mission

Sunahara Kal program.

He now prefers to sell his milk to the local Dudhias who gives him around Rs. 14-16 per litre. The price is given

based on the fats content in the milk. He sells on an average of 20-25 litres every day. Perhaps one of the areas

where Mr. Prem Pal felt missing was the need for a small chilling plant in or around his village so that they could

realize a better price.

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Observations

Villagers are unhappy with the current cooperative structure where the farmers are neither benefitting

nor do they have much of a say. In fact they are reduced to mere procurement sellers and it’s a buyers’

market they feel.

One of the more well of farmer in fact even talked about the need of replicating the “Anand” model of

Gujarat Cooperative Society.

The DRDA funded Centre In-charges are not able to provide doorstep services as they do not have

motorcycles provided to them.

The farmers staying close to towns, in a radius of 4 kilometres get around Rs 15-17 for selling one litre of

milk, where as villagers who live in a radius of 6-7 kilometres of the towns realize around Rs 14-16 and if

the village lies in the interiors and is far off from the towns, the villagers only get about Rs 10-12 for the

same quantity.

Most of the farmers sell their milk to the milk vendors from the towns fondly known as “Dudhias”

Bigger players such as Parag, Mother Dairy and Paras have a good presence in the district.

Some of the villagers are still suspicious about the Artificial Insemination Programme being run by BAIF,

Govt. Veterinary Hospitals and even local private players.

In some cases, the local doctors charge around Rs 450 for an A.I.

There are a few cases, wherein the cattle died or had some illness after getting the A.I. and hence the

villagers no more trust anything except the natural way of breeding their animals

The BAIF Centre In charge also writes medical prescriptions for the cattle

BAIF only provides de-wormers & Mineral Mixtures as medicines, while the other medicines have to be

purchased from the pharmacies

The villagers are given their payments for their milk 3 times in a month, i.e. – after every ten days.

The lower price realization is leading to reduced profitability for the villagers, which in turn discourages

the people to engage in livestock rearing

Some of the ITC Centres are situated very close to a DRDA Centre which leads to duplication of efforts

Once a Centre becomes self sustainable, ITC stops funding the Centre and sells it to the Centre In charge

at an agreeable rate. All the things are sold at a depreciation value

The Centre In charge give their mobile phone numbers to the villagers so that they can call and get the

A.I. done for their cattle from their homes

Normally the Centres have a monthly target of 100-150 A.I.’s in a month

The village populations are segmented into 2 categories of BPL and APL

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SWOT Analysis of the ITC- Mission Sunehra Kal Cattle Development Center

Strengths Weaknesses

Door Step Services Perceived High Cost compared to DRDA rates

Other Facilities apart from AI available

Creating Entrepreneurs out of Center Incharges Good Quality Semen when compared to the

Govt. Hospitals

Extension Services

Regular visits by the company representatives

Awareness Programs in villages to showcase the benefits of AI

Better equipped Center In-charge

Regular flow of funds to centers on demand by ITC

Shorter break-even period

Opportunities Threats

Open Centers in newer blocks where there's no competition

Entry of new players such as Bill & Melinda Gates Foundation

Procuring milk from the villagers to ensure the villagers get a fair value for their milk

Having centers near the DRDA centers is leading to duplication of efforts

SWOT Analysis of the DRDA- Cattle Development Center

Strengths Weaknesses

Low Rates for AI (Rs. 40 only) No door step services

Wider outreach reach in the district Longer duration for becoming self sustainable

Good Quality Semen when compared to the Govt. Hospitals

Shortage of funds at times limiting the number of AI's per month

Funds are given only once a year

No visits from the Govt Officials or the local coordinators

Opportunities Threats

Taking advantage of the presence of DRDA's across the state

Entry of new players such as Bill & Melinda Gates Foundation

Providing extension services ITC Center opening up close by