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Sunny money

DHANII has built financial inclusivity into the dairy farming model and that has been a source of security for the women involved in it

Dairy farming can be a good money-earner but the initial investment needed to buy a milch animal is often too heavy a burden, putting it out of reach for most marginal farmers. Take 36-year-old Sarita Devi, a native of Jhunjhunu in Rajasthan who used to depend on farming a small plot of land to keep the home fires burning. Ms Devi had one cow that gave her only a few litres of milk a day, far from enough to make a living.

In 2019, Ms Devi joined the Sakhi Mahila Milk Producer Company (MPC) and this opened up a world of new possibilities for her. The MPC helped her secure a bank loan of 150,000 for dairy farming. Ms Devi used this to buy four cows, her business started growing and, with the extra money earned, she has been able to increase her herd size.

 Today, with 17 cows on her farm, Ms Devi contributes 80 litres of milk to her MPC every day and pulls in up to 150,000 every month as a result. One thing she promptly did as her income pot got bigger was admit her two children to an English-medium private school.

Thanks to the Sakhi MPC, started in 2016 by the Tata Trusts-supported Dairy Health and Nutrition Initiative India (DHANII) Foundation, the lives of many women like Ms Devi have taken a turn for the better.

A staffer (right) from the Indujaa MPC in Maharashtra with a dairy farming family
A staffer (right) from the Indujaa MPC in Maharashtra with a dairy farming family

The five MPCs under the DHANII umbrella — two in Rajasthan and one each in Punjab/Haryana, Uttar Pradesh and Maharashtra — have been vital in mobilising women dairy farmers to, first of all, dive into the business, to get better returns on their investment and to make judicious use of the money earned. Financial inclusion, once a concept alien to most of the women in the initiative, is now a given.

The MPCs operate as professionally managed enterprises, with qualified personnel and boards of directors. DHANII has ensured that its MPCs have good infrastructure, assured markets for the milk they produce and the latest in technology — cloud-based data management systems, for instance — to ensure smooth functioning.

Discipline and self-regulation are built into the model. The MPCs work only with members who meet the minimum membership criteria. Their equity in the company depends on their contribution, which in turn increases their interest in the success of the company.

Financial finery

The financial inclusion part means that loans are facilitated, and savings schemes made more accessible to the women dairy farmers who power the MPCs. To ensure that members get financial backing when required, the MPCs have tied up with the likes of Bank of India, State Bank of India and HDFC Bank. Every MPC member has a bank account, transactions are digitised and payments for milk credited directly to the farmers’ bank accounts.

“Financial inclusion was a bottom-up approach,” says Baljinder Singh Saini, head of operations at DHANII. “Beneficiaries saw an opportunity to buy more milch animals and earn more profits. For the banks there is regular cash flow and creditworthy beneficiaries.”

Bank representatives even go to the MPCs’ milk pooling points to provide doorstep services. “Banking services are available in the village and at my doorstep,” says Nita Shriram Elpate, an MPC member from Kharbi Udapur village in Maharashtra’s Yavatmal district. “Plus, we get our money directly in our account every 10 days.”

The MPCs also help farmers access related financial products and services, be it with insurance, government schemes or farmer credit cards. The five MPCs in the DHANII fold have successfully mobilised more than 630 million thus for the benefit of around 20,000 members.

Members of the Asha MPC in Rajasthan

By bringing members under the purview of formal banking channels, the MPCs have aided women in becoming financially independent. “Earlier, many of these women were dependent on their husbands for money for daily expenses,” says Sanjesh Sharma, a senior facilitator at Sakhi. “Now they get funds directly in their accounts, giving them the freedom to make household decisions related to money. It’s a radical transformation in their lives.”

 The women are trained in concepts related to financial literacy so that they can make informed decisions. The training sessions cover budgeting, saving, investing and borrowing, information about products and services, benefits and risks. With large funds involved, it’s important that borrowers make optimal use of their capital.

The focus on financials is about more than loans. Fair pricing is a tenet that has been followed from the beginning. Before the MPCs were established, farmers had no option but to sell milk to local traders or middlemen, who would often pay them less than the market price. The MPCs, instead, have transparent pricing.

High and stable

Farmers bring their milk to a milk pooling point in each village. Sahayaks (women employees) use tamper-proof machines to measure the fat and SnF (solid-non-fat) content of the milk. The farmers get their money based on these metrics. “I’m able to earn a higher and more stable income this way,” says Mishri Devi, a member of the Sakhi MPC.

The advent of the MPCs has led to a better quality of life for its members. It has also triggered new employment opportunities in ancillary activities such as milk chilling. More than 2,700 youth and women are employed as sahayaks, artificial insemination technicians, transporters and workers. Many of them have been able to double their income since joining the programme.

The success of the MPCs has put their members on a satisfying and stable growth path. There are plans to invest in improving infrastructure and technology — by installing solar panels, biogas plants, milk analysers, etc — and to adopt best practices and standards for quality and safety. Their milk will get tastier still for DHANII’s women entrepreneurs when all those pieces are in place.

Members of the Sakhi MPC at the nodal pooling point in Thanagazi in Rajasthan’s Alwar district

Members of the Sakhi MPC at the nodal pooling point in Thanagazi in Rajasthan’s Alwar district

Milk and more

In May 2020, the Sakhi Mahila Milk Producer Company (MPC) marked a significant milestone: it launched its first milk product, branded as Sakhi Ghee (ghee means clarified butter). The other MPCs soon followed suit. Ruhaanii in Punjab launched its branded ghee in December 2020, followed by Rajasthan’s Asha in October 2021. The success of the ghee venture has led to Sakhi and Asha manufacturing and selling branded paneer (cottage cheese), rasgullas and gulab jamuns (syrupy sweets).

The expansion into milk products has strategic benefits for the women driving the MPCs. For instance, they help use up surplus milk, add diversity to the product portfolio, meet the growing local demand and enable the MPCs to extend market reach and broaden their customer base.

Starting a range of milk byproducts called for significant planning and investment. The first step was identifying infrastructure and the MPCs have pinpointed processing plants and packaging units. The next step was capability building: members were trained to handle production, quality, hygiene, packaging and marketing (these members are employed in processing and packaging units on a salary-plus-incentive arrangement).

Marketing was a challenge in itself. The MPC-branded products are sold in local markets and towns, which means competing directly with established players. To get a competitive advantage, MPCs adopted cost-based pricing, which adds a reasonable profit margin to production expenses. “The prices are adjusted to fit the market,” says Dharmendra Chaudhary, chief executive of Sakhi MPC.

Distribution was another focus area. Tamper-proof packaging ensures that the quality and safety of products are maintained throughout the cycle of distribution, storage and sale. A wide distribution network ensures that the products are available in various retail outlets. The MPCs have also gone digital, with a mobile application that makes their products available online and allows customers to track deliveries.

The MPCs are now working on increasing production capacity and products. Also on the anvil are plans to launch curd, butter and packaged milk. That should translate into additional profits for members (the Sakhi MPC has generated revenues of 8 million thus far from the sale of milk products and expects to cross 20 million in the next two years).