Savage Harvest

7/31/2019 Savage Harvest

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Environmental Destruction

“[T]hose who claim to care about the well-being of human beings and the preservation of ourenvironment should become vegetarians for that reason alone. They would thereby increase the

amount of grain available to feed people elsewhere, reduce pollution, save water and energy, andcease contributing to the clearing of forests.…

“[W]hen nonvegetarians say that „human problems come first‟ I cannot help wondering whatexactly it is that they are doing for human beings that compels them to continue to support thewasteful, ruthless exploitation of farm animals.”

Peter Singer, Animal Liberation, 1990

The following findings were compiled from the executive summary of Livestock’s Long

Shadow: Environmental Issues and Options ,* a 2006 report published by the United Nations

Food and Agriculture Organization:

Hog farm waste lagoons inGeorgia (above) and North

Carolina (below). Click images for larger views;courtesy of USDA.

Climate change: With rising temperatures, rising sea levels, melting icecaps and glaciers,shifting ocean currents and weather patterns, climate change is the most serious challenge facingthe human race. The livestock sector is a major player, responsible for 18 percent of greenhousegas emissions measured in CO2 equivalent.… Livestock ar e also responsible for almost two-thirds (64 percent) of anthropogenic ammonia emissions, which contribute significantly to acidrain and acidification of ecosystems. [See also A Truly Inconvenient Truth.]

http://www.veganoutreach.org/globalwarming.html



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Water: The livestock sector is a key player in increasing water use, accounting for over 8percent of global human water use, mostly for the irrigation of feedcrops. It is probably thelargest sectoral source of water pollution, contributing to eutrophication, “dead” zones in coastal

areas, degradation of coral reefs, human health problems, emergence of antibiotic resistance andmany others. The major sources of pollution are from animal wastes, antibiotics and hormones,

chemicals from tanneries, fertilizers and pesticides used for feedcrops, and sediments fromeroded pastures.

Manure runoff from a dairy

farm in Maryland (click image for larger view;courtesy of USDA NRCS).

Land degradation: Expansion of livestock production is a key factor in deforestation, especiallyin Latin America where the greatest amount of deforestation is occurring – 70 percent of previous forested land in the Amazon is occupied by pastures, and feedcrops cover a large part of the remainder.

Biodiversity: Indeed, the livestock sector may well be the leading player in the reduction of biodiversity, since it is the major driver of deforestation, as well as one of the leading drivers of

land degradation, pollution, climate change, overfishing, sedimentation of coastal areas andfacilitation of invasions by alien species.

*Note: The term “livestock” refers to all farmed animals, including pigs, birds raised for meat,

egg-laying hens, and dairy cows.

For more information, see the media release and full report.

“The way that we breed animals for food is a threat to the planet. It pollutes our environment

while consuming huge amounts of water, grain, petroleum, pesticides and drugs. The results aredisastrous.”

David Brubaker, PhD, Center for a Livable Future, Johns Hopkins University Environmental News Network, 9/20/99

According to the EPA‟s “Animal Waste: What’s the Problem?”:

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Above: Algae bloom fromrunoff. Below: Runoff of waste.

[T]he growing scale and concentration of AFOs [animal feeding operations] has contributed tonegative environmental and human health impacts. Pollution associated with AFOs degrades thequality of waters, threatens drinking water sources, and may harm air quality.

By definition, AFOs produce large amounts of waste in small areas. For example, a single dairycow produces approximately 120 pounds of wet manure per day. Estimates equate the wasteproduced per day by one dairy cow to that of 20 –40 humans per day.…

Manure, and wastewater containing manure, can severely harm river and stream ecosystems.Manure contains ammonia which is highly toxic to fish at low levels. Increased amounts of

nutrients, such as nitrogen and phosphorus, from AFOs can cause algal blooms which block waterways and deplete oxygen as they decompose. This can kill fish and other aquaticorganisms, devastating the entire aquatic food chain.

“A single dairy cow produces about 120 pounds of wet manure per day, which is equivalent to

the waste produced by 20 –40 people. That means California‟s 1.4 million dairy cows produce asmuch waste as 28 –56 million people.”

U.S. Environmental Protection Agency Notes from Underground , Fall 2001

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In 2002, after collecting thousands of records from state and federal regulatory agencies, SierraClub researchers compiled a report and database called The RapSheet on Animal Factories, documenting “crimes, violations or other operational malfeasance at more than 630 industrialmeat factories in 44 states.”

The two-and-a-half-year investigation revealed that “environmental violations by the meatindustry add up to a rap sheet longer than War and Peace.” Among other findings, the RapSheetdocuments:

Government files show that approximately 50 corporations, or their managers, racked upa total of more than 60 misdemeanor or felony indictments, charges, convictions or pleas.Criminal fines total nearly $50 million. The criminal counts included animal cruelty,bribery, destroying records, fraud, distributing contaminated meat and pollution.

Millions of gallons of liquefied feces and urine seeped into the environment fromcollapsed, leaking or overflowing storage lagoons, and flowed into rivers, streams, lakes,wetlands and groundwater. Hundreds of manure spills have killed millions of fish.

Despite lax federal and state law enforcement, these companies were assessed tens of millions of dollars in fines, penalties and court judgments. More than 20% of the 220 companies profiled indetail have been hit with criminal charges or convictions.

Intensive pig farms have made the air so unbearable in some rural communities that someresidents must wear masks while outdoors 29 and made some people sick . Poultry and pig wastehas contributed to the growth of pathogenic organisms in waterways, which have poisoned

http://www.sierraclub.com/factoryfarms/rapsheets/



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humans and killed millions of fish.30 From 1995 to 1997, more than forty animal waste spillskilled 10.6 million fish.31

See also: “Rethinking the Meat-Guzzler” from the New York Times, regarding environmentaldestruction and resource allocation; “Eating as if the Climate Mattered” provides more links.

For more general environmental information, see this report by Lacey Gaechter of the Universityof Colorado.

Update, May 2008: The prestigious Pew Commission on Industrial Farm Animal

Production just concluded its 2.5-year study of American animal agriculture with unanimousfindings from its 15 members. The Commission was chaired by former Kansas governor JohnCarlin and included, among others, former U.S. Secretary of Agriculture Dan Glickman, formerDean of the University of Tennessee‟s College of Veterinary Medicine Dr. Michael Blackwell,

and more.

The panel concluded that factory farms pose unacceptable risks to public health, the environmentand animal welfare. It also issued a series of recommendations, including a phase-out of batterycages, gestation crates, veal crates, foie gras, and tail docking of dairy cows, along with inclusionof poultry under the Humane Methods of Slaughter Act.

The Washington Post story is titled, “Report Targets Cost of Factory Farming.” USA Today’s story begins, “The way America produces meat, milk and eggs is unsustainable, creates

significant risks to public health from antibiotic resistance and disease, damages the environmentand unnecessarily harms animals, a report released Tuesday says.” The Wall Street Journal’s coverage focuses both on the problems caused by factory farming, and the Commission‟s

conclusion that the “agriculture industry is exerting „significant influence‟ on academicresearch.” And the Des Moines Register’s piece highlights the fact that the Commission isaccusing “some livestock interests of trying to disrupt a wide-ranging study of the industry bythreatening to yank financing for scientists and universities.”

See also: The Union of Concerned Scientists‟ report CAFOs Uncovered: The Untold Costs of

Confined Animal Feeding Operations.

.1. General description and concepts

LLR systems have direct and indirect effects on the environment. The livestock - environment

interactions (LEI) can be negative, but also positive interactions occur. The LEI are related to thestage of the production process:

(a) the production and delivery of inputs to LLR systems;

(b) directly to the production process itself; and

(c) the processing and marketing of the products from LLR systems.







http://www.nytimes.com/2008/01/27/weekinreview/27bittman.html?_r=1&oref=slogin


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The advantage of this classification is that the system becomes more transparent, causes and

consequences become clearer and the development of policy recommendations will be easier.

a. LEI related to inputs

The main external inputs of the LLR production system are: (1) feed, mainly in the form of concentrates; and (2) livestock for further fattening (or milking).

(1) Feed (concentrate) production.

The effect on the environment of the demand for concentrates has been described extensively byHendy et al. (1995). The main aspects are:

-The requirement of land for production of concentrates. The environmental impact includes

competition with humans for food, changes in land-use, increased land pressure (use of rangeland or

forest), effects on soil, water and the atmosphere (use of fertilizers and herbicides/pesticides), and

effects on soil erosion as a result of intensified cropping.

-The utilization of crop-residues and by-products of the agro-processing industry. Largequantities of these types of products are consumed in LLR systems and converted into usefulhigh quality food. If not used, the residues and by-products would form a gigantic environmentalproblem.

-The production of forage for LLR systems. The intensive forage production on a small land areacan absorb part of the manure produced by the animals and reduces the land area required foranimal production making more land available for wildlife, forest, rangeland etc..

-Energy requirement for transport of feed to feedmills, the feed milling and mixing process, andthe transport to the farm. Transport and processing requires fossil energy resulting in emissionsto the air/atmosphere of CO2.

(2) Livestock for further fattening and milking.

Cattle and lambs are required for fattening in feedlots, and dairy cows and she- buffalos arerequired for the urban dairies. The main environmental aspects are:

- Cattle and lambs for fattening. Increased numbers of livestock required for fattening put extra pressure

on rangeland and/or results in expanded rangeland areas at the expense of wildlife and nature

conservation. On the other hand, the lamb fattening system in the Middle East has been developed and

is being subsidized to reduce pressure on the rangeland and prevent rangeland degradation.

- Dairy cows. For the urban dairy systems dairy cows come from the rural mixed farming areas.This trade itself does not have a direct environmental effect on the mixed farming system butbecause the best animals are selected it forms a drain on the genetic resource.



(b) LEI related to the production process.

LEI are related to (1) the production of manure; (2) the use of drugs, growth stimulators etc.; and(3) the use of fossil energy.

(1) Manure production.

The main environmental effects are caused by emissions from manure in the stables, duringstorage, after application to the land or when manure is simply dumped. Emissions are in theform of nitrogen, phosphorus, methane, organic matter and possibly heavy metals. Manure isalso a useful fertilizer and an input for crop and pasture production. Biogas production is anotherform of manure utilization. Brandjes et al. (1995) deal extensively with most of these aspects.The main issues are:

- Manure as fertilizer. The use of manure can improve soil fertility. In certain areas (mainly developing

countries) manure is a valuable commodity and sold especially for vegetable production. The small areas

of land required for intensive roughage production can absorb a part of the manure from the LLRsystem.

- Manure for biogas. Manure can be used for the production of energy (Methane) and theremaining liquid slurry can be used as fertilizer. The manure from intensive systems (lowroughage consumption resulting in low DM content of the manure) is not very suitable for use asfuel in a dried form.

- Nitrogen (N) emissions are in the form of (i) volatilization of NH3; (ii) volatilization of N2 andNxOx; and (iii) run-off and leaching of N-compounds.

(i) Volatilization of NH3 during storage and application on the field. NH3 emissions cause acid rain and

eutrophication of the ecosystem.

(ii) Volatilization of N2 and NxOx occurs in anaerobic situations (in lagoons and after applicationto the soil as (by)-products of nitrification and denitrification processes. N2O is especiallyharmful as it contributes to global warming and breakdown of the ozone layer.

(iii) Run-off and leaching of N-compounds (nitrate etc.) during storage and after application tothe land. These compounds can reach the ground water and make the water unsuitable fordrinking water, eventually contribute to eutrophication of the surface water.

- Main P emissions are through run-off and causes eutrophication of the surface water. However, if P

fertilization is in excess of crop P requirements for longer periods, P saturization of the soil occurs

leading to P leaching to the ground water.

- Odours: animal manure contains a number of volatile organic compounds with an obnoxiousodour The compounds do not have a direct negative impact on the environment except that theyare a nuisance to the people of the surrounding area;



- Methane (CH4) emission is from two sources in LLR systems (1) direct from the digestiveprocess in the rumen; and (2) from the anaerobic decomposition process of organic matter in themanure during storage. Methane causes breakdown of the ozone layer. The impact domain studyMethane will deal with this aspect of environmental impact;

- Heavy metals in the faeces can form a problem where high levels of manure are used asfertilizer, particularly if removal of heavy metals from the land is low, e.g. in case of predominant livestock farms.

(2) Drugs, herbicides and pesticides.

The following categories can be distinguished:

- drug residues: residues in animal products following preventive or curative treatment of diseases;

- pesticides residues: pesticides in products following spraying or dipping for controlling external

parasites;

- growth stimulators: effects of the use of hormones etc. to stimulate and regulate growth;

- pesticides/herbicides residues: herbicides which enter the system through concentrates andcrop-residues and appear as residues in the animal products or in the manure.

(3) Fossil energy utilization.

Fossil energy is used as energy source for the operation of equipment and transport. Emissionsare in the form of CO2, SO2 and NxOx contributing to global warming and acid rain problems.

(c) LEI in relation to processing and marketing of animal products.

Environmental effects are in the form of waste production from slaughterhouses, tanneries anddairy processing plants and for the use of fossil energy for transport and conservation (e.g.chilling) of products. These aspects are described in the impact domain study 'Environmentaleffects of animal product processing' by Verheyen et al (1995).

(1) Environmental effects of slaughterhouses; meat and by-product processing.

Emissions are in the form of:

- Solid waste: manure, paunch, hooves, horns and solid slaughter offal and by-products. Most of the

solid waste can be composted and used as fertilizer, but may pose a threat to human health and surface

water if not treated well.

- Waste water: water from cleaning can contain slaughter offal and by-products (e.g. blood). Thewaste water mainly contains organic matter. The quality is measured in Biological oxygendemand (BOD) i.e. the quantity of oxygen required to break down the organic matter.



- Volatile compounds: emissions of volatile compounds is mainly from the use of fossil energy,further from the singeing of pig skins for hair removal, and for the further processing of meat(smoking).

(2) Environmental effects of the tanneries.

For the tanning of 1 ton of raw hides around 300 kg of salts and minerals are required.Chromium is the main tanning agent and at the same time a major polluting factor as it is highlytoxic. Emissions are in the form of:

- Solid waste: in the form of scrapings of the raw hide (meat offal etc.), and chromium containing

scrapings and cuttings of semi- or fully tanned hides. Discarded leather products also contain ± 3 %

chromium.

- Waste water: from cleaning, soaking etc contains organic material, salts and chromium.

- Volatile compounds: emitted to the air mainly from the use of fossil energy and the use of dyesfor finishing leather products.

(3) Environmental effects from the dairy plants.

Emissions are in the form of:

- Waste water: containing residues of milk and milk products; whey from cheese production is a major

water pollutant in some cases.

- Volatile compounds: emitted to the air mainly the result of use of fossil energy, and limiteddust emissions in milk powder manufacturing.

- Whey and other dairy by-products: which can be, and are increasingly, used for feeding calvesand pigs.

Following processing, emissions to the air also occurs when energy is used for transport to the retailer

and consumer as well as during storage (

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India: Increasing demand challenges the

dairy sector

Meeta Punjabi Dairy consultant

New Delhi

Over the span of three decades, India has transformed from a country of acute milk shortage tothe world‟s leading milk producer, with production exceeding 100 million tonnes in 2006. This

phenomenal success is attributed to a Government initiative known as Operation Flood (1970 –

1996) and its intense focus on dairy development activities. In that initiative, rural milk shedareas were linked to urban markets through the development of a network of village cooperativesfor procuring and marketing milk. And milk production and productivity were enhanced byensuring the availability of veterinary services, artificial insemination (AI), feed and farmer

education. The investment paid off, promoting production gains of 4 – 5 percent per annum.

However, that growth has slumped to less than 3 percent in recent years, raising cause forconcern. The slowdown is attributed to the decline in investment in the dairy sector since the endof the Operation Flood initiative. Central and state government allocation for dairy developmenthas diminished in the past two five-year plans.

Emerging situation

Dairy is currently the top-ranking commodity in India, with the value of output in 2004 at 1.179billion rupees (US$39 million), which is almost equal to the combined output value of rice and

wheat. Despite the importance of the dairy sector in overall GDP, it receives less governmentbudgeting than the agriculture sector. Further, there has been no concentrated investment in thedevelopment of value-added or innovative products, nor any serious effort to support andmodernize the informal sector.

In light of the increasing demand driven by the growing population, higher incomes and morehealth consciousness, the slowdown in dairy industry growth is severely worrisome. Based onestimates by the National Dairy Development Board (NDDB), the demand for milk is likely toreach 180 million tonnes by 2022. To supply the market, an average incremental increase of 5million tonnes per annum over the next 15 years is required – a doubling of the averageincremental rate achieved over the past 15 years. In the absence of sufficient increased

production, India will need to rely on the world market for imports. And because of the hugevolume required, it will affect global milk prices. Thus, focusing on areas for local dairydevelopment is critical.

Traditionally, the policy environment has favoured the expansion of cooperatives, whichultimately crowded out the private sector. However, liberalization of the sector in recent yearshas encouraged private investment in dairying. In 2002, the Milk and Milk Products Order(MMPO) ushered in major policy changes friendly to the private sector and a momentum of



activity that is likely to increase dramatically in the coming years. Large Indian andmultinational corporations, such as Reliance, Pepsi and Coca-Cola, are planning significantinvestments.

Nowadays, both the private sector and the cooperatives drive the value chains. Because of the

many unsuccessful cooperatives in the country, other models of dairy farmer organizations arebeing explored, such as mutually aided cooperative societies (MACS) and producer companies.

Millions of small and marginal farmers in dairying who own two to three animals and produce anaverage of 5 litres comprise a critical portion of India‟s dairy industry. Livestock development in

general and dairy development activities in particular are key components of pro-poordevelopment strategies because livestock distribution is much more equitable than landdistribution. Thus, changes in the dairying environment have important implications for thesmallholder farmers and for poverty reduction.

The following characterizes India‟s dairy farming and its relevance to inclusive growth:

Small and marginal farmers own 33 percent of land and about 60 percent of female cattle and

buffaloes.

Some 75 percent of rural households own, on average, two to four animals.

Dairying is a part of the farming system, not a separate enterprise. Feed is mostly residual from

crops, whereas cow dung is important for manure.

Dairying provides a source of regular income, whereas income from agriculture is seasonal. This

regular source of income has a huge impact on minimizing risks to income. There is some

indication that areas where dairy is well developed have less incidence of farmer suicide.

About a third of rural incomes are dependent upon dairying.

Livestock is a security asset to be sold in times of crisis.

Factors affecting the competitiveness of the dairy sector

To assess the dairy sector‟s competiveness, a performance analysis looked at five factors:demand conditions, market structure, factor conditions, related supporting industries, andgovernment and the enabling environment.21

Demand conditions

Demand for dairy products in India is likely to grow significantly in the coming years, driven bymore consumers, higher incomes and greater interest in nutrition. Consumption of processed and

packaged dairy products is increasing in urban areas. Because of the increasing competition fromthe private sector, several national and international brands have entered the market andexpanded consumers‟ expectation of quality – although only among a small proportion of thepopulation. In many parts of the country, people still prefer unpacked and unprocessed milk delivered by a local milkman because of its taste and the perception of freshness. The priceelasticity for milk is high, thus demand for milk is very sensitive to price changes.

Table 1: Demand conditions

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Market size and growth Market growth is due to high per capitaconsumption, increasing population and healthconsciousness

Consumption patterns Consumption of processed and packaged dairy products isincreasing in urban areas

Consumption patterns Unpackaged milk is still preferred because of taste andprice

Sophistication of consumers Consumer awareness on product quality is increasing butin a very small portion of the population

Receptivity to new products Mostly urban consumers have a very low but increasinginterest in new products

Price elasticity Price elasticity is high

Impact of market opening on demand Consumers now have a variety of quality products

Market structure

Until 2002, cooperatives traditionally were the dominant players in the formal sector. Withliberalization of the dairy industry, private investment has increased quite significantly.However, the organized sector‟s share in milk procurement is very low because a large

proportion of the milk and milk products are sold through the informal channel (Table 3). Theinformal demand absorbs approximately 41 percent of the milk and milk products produced inthe country, accounting for about 75 percent of the marketable surplus of milk. The formalchannel, with its packaged milk and dairy products, accounts for only about 25 percent of themarketable surplus, which is about 15 percent of production.

Table 2: Market Structure

Performance Still large share of produce; 85% of marketable surplusgoes through informal channel

Quality of milk through informal channel is an issue and tosome extent in formal channel as well

Competitive structure Little competition to cooperatives because private sectorwas not allowed in the sector until recently

Entry of supermarkets in retailing of milk is increasing thecompetitive structure

Governance (value chain type) Governance of cooperative structures is constainingefficiency and expansion

Role of "lead" or organizing firms Role of lead agency has been hampered by governmentinterference in cooperatives

Farmer organization Immense scope for improving management andgovernance through farmer organizations

Marketing chain capacity andefficiency

Scope for enhancing efficiency of distribution

Distribution channels Cooperatives have a well-developed distribution channel



in urban areas

How market signals are conveyed ordistorted

Government and political interference in price setting,limits prices being determined by market forces.

The informal sector consists of the village milk vendors who procure loose milk from farmers

and sell it in urban and peri-urban areas directly to consumers, small private processors or hotels.The milk vendors also may sell processed products, such as paneer or separated cream. Thequality of the vendors‟ milk and milk products is not guaranteed. Largely sold in loose form, it is

often adulterated with several additives to control spoilage.

Table 3: Flow of milk through different channels

Share of

marketable

surplus % of production

Total production

(million tonnes) Use

100% 100

45% 45 Home consumption

55% 55Marketable surplus sold in urban andrural markets (informal and formal)

34.5% 19% 19 Sold in urban markets as loose

unpackaged milk

40% 22% 22 Sold as processed products through

informal markets

14.5% 8% 8Sold as packaged milk through formalmarkets

12.7 % 7 % 7Sold as packaged milk products through

formal markets

Cooperatives are the central players in the formal dairy sector. The cooperatives have a three-tierstructure – i) primary societies at the village level, ii) unions at the district level and iii)federations at the state level. Currently, there are 14 federations in India.

The success of the Gujarat Cooperative Milk Marketing Federation (GCMMF), known for itsAmul brand and its Amul model of cooperative, is acclaimed. However, there is a perception thatcooperative organizations generally have failed in other parts of the country. A less recognizedfact is that the cooperatives in other states are organized differently than the GCMMFcooperatives. The GCMMF cooperatives operate as a true representative of farmers and are run

by professionally qualified managers. In most other states, the cooperatives are managed by civilservants, function more as government bodies and are weak representatives of farmers.

Of the 14 major state cooperatives in the country, 10 have state government equity, of which 6have government equity in excess of 51 percent. Twelve of the 14 cooperatives have governmentofficers as managing directors who are appointed by the state government. It is not uncommonfor these officials to change up to three times a year. Because of such governance, cooperativesare mere parastatals and do not work in the true spirit of cooperatives – with elected farmer



representatives and professionals who run the organization. This governance structure influencesthe functioning of the entire chain, from the state federation to the village societies and thussignificantly impacts farmers‟ involvement in the chain.

The primary differences between the GCMMF cooperatives and other state cooperatives are

price and services. In Gujarat, the price paid to farmers is based on fat content; there is regulartesting of milk each farmer supplies. In most of the other states, there is hardly any testing of milk. In other state cooperatives, the village society president wields a lot of power and typicallydecides the prices paid to farmers. Reportedly, farmers with some degree of influence receivehigher prices while those without receive lower remuneration. Being the lead organizations, thecooperatives also set a benchmark for prices paid by other buyers, such as local vendors andprivate dairies, who tend to pay 50 paise or 1 rupee ($ .02) more than that paid by thecooperatives. Thus, if the farmgate price paid by the cooperative is low, other players also pay alow price.

For most of the private dairies, agents procure the milk from farmers. Some private dairies have

established village societies for milk collection that follow the cooperative model. However, thismodel requires much larger investment and is not economically feasible, considering thatcooperatives receive considerable development support from the government (such as feedsubsidies). It is not uncommon for private dairies to make loans to farmers, which is a key reasonfor the somewhat large share of milk directed to this channel.

Factor conditions

Factor conditions for dairying entail the quality of animals, human resources and technical skills,land availability, capital, credit, infrastructure and other inputs relevant to the value chain, as thefollowing explains.

The quality of animals is critical in determining its milk productivity and hence overallproduction. Currently, low productivity per animal hinders development of the dairy sector.Despite being the world‟s largest milk producer, India‟s productivity per animal is very low, at

987 kg per lactation, compared with the global average of 2 038 kg per lactation.

The low productivity is a result of ineffective cattle and buffalo breeding programmes, limitedextension and management on dairy enterprise development, traditional feeding practices that arenot based on scientific feeding methods, and limited availability and affordability of quality feedand fodder. In addition, the limited supply of quality animals is exacerbated by policies limitinginterstate movement of animals. Indigenous cattle and buffalo make up 45 percent of thecountry‟s total milch population, in contrast to the cross-bred cows at 10 percent.

Animal health and breeding services provision, veterinary infrastructure development andvaccinations are the responsibility of the state government. These services have traditionallybeen provided for free or at a very subsidized rate. In the past few years, there has beenincreasing awareness that the state pays heavily to offer these services, which are easily availableto farmers (Ahuja et al.). Consequently, many states have instituted partial or full-cost recoveryfees for providing the services.



Table 4: Factor conditions

Herd

Herd inventory Very large number of indigenous animals with lowproductivity and a small portion of cross-breeds

Breed Lack of policy focus on strengthening indigenous breeds

Very poor awareness of quality feed, which hindersproductivity

Feed Farmers not interested in quality feed because of the lowprice of milk

Increasing feed costs

Veterinary medicine Availability is not an issue

Veterinary medicine costs Duplicate or cheap medicines

Human capacity

Farmer technical capacity Knowledge and new techniques are not accessible

Support services technical capacity Accessibility to good quality veterinary services is an issuein many parts of the country

Organization and managerialcapacity

Organizational and managerial capacity of farmercooperatives is very poor

Entrepreneurial capacity Entrepreneurial capacity is hindered by a low capacity totake risks

Credit or finance market

Formal credit mechanisms Access to formal credit mechanisms is very poor

Informal credit mechanisms Accessible but at very high interest

External economies

Transmission of learning Very poor extension support services, leading to very poorknowledge transfer

Social capital and trust Strong social capital and trust in the villages, which cansustain dairy farmer organizations if properly managed

In addition to the State Department of Animal Husbandry, Dairying and Fisheries, the milk cooperatives and NGOs (BAIF, JK Trust) provide services in many states. So do trained privatesector AI technicians, although for a fee. As well, state livestock development agencies are beingset up as autonomous bodies to offer services in animal breeding in the form of procurement,production and distribution of breeding inputs (such as semen and liquid nitrogen), training andpromotional activities.

Despite these initiatives, the availability of services remains limited. Currently, AI services coveronly 15 percent of the breedable animals. Cattle and buffalo breeding programmes have beeninitiated but have not had the desired impact because of a lack of coordination between thedifferent state departments. And extension activities in dairy management are woefully lacking.Farmers have not been able to take advantage of the potential of their animals because they lack information on feeding and management practices. Extension, especially for women involved inlivestock rearing, would enhance dairy production considerably.



Crop residues are the single largest bulk feed material available to farmers for feeding livestock,specifically ruminants. They include coarse straws, fine straws, leguminous straws, pulses strawsand sugarcane tops. Fodder from common property resources is another major source of feed foranimals. But lack of efficient management of common property resources is a major constraint inavailability of these resources for fodder. The area under cultivated fodder production is limited

only to 5 percent of the total cultivable land. In the states of Haryana, Punjab, Gujarat and someparts of Rajasthan, land use for green fodder production is estimated at 10 percent or more. Thereis a need for restructuring the land use strategy to elevate the overall proportion of cultivablelands for fodder production.

Concentrates used for fodder include coarse grains, such as maize, sorghum, bajra and othermillets, and other cereal by-products, such as rice bran/polish and various oil meals, includinggroundnut cake, mustard cake, coconut cake, soybean meal, cotton seed meal and sesame cake.The escalating price of feed ingredients is a major cause for concern. In many states,cooperatives are involved in producing feed concentrate and selling to farmers at subsidizedrates.

Scarcity of fodder resources is likely to be a major constraint in the development of the dairysector unless adequate measures are undertaken to augment them. Another important issueregarding feed is the lack of regulations to ensure quality. In the absence of a coherent policy, allkinds of substandard feeds are available in the market.

Formal/informal credit: Lack of access to credit to expand the herd is a critical problem forfarmers. There is little access to formal credit through the cooperatives. Informal credit isavailable from private traders and agents of private companies, but the interest rate is very high.And these loans may or may not be linked to dairy activity. When taking a loan from a trader, thefarmer is then tied to selling the milk to that trader, often at a low rate. The Working Group

Report on Animal Husbandry emphasizes the low or non-availability of credit as a primaryconstraint in livestock sector activity, indicating that: “Public sector lending is abysmally verylow. The commercial banks are not favourably disposed to providing credit to livestock farmersand the cooperative credit system is very weak, resulting in excessive dependence of livestock farmers on informal sources [and] usually at exorbitant interest rates. Efforts should be put oncorrecting these distortions and ensure timely availability of inputs and services, including creditto livestock.”

Vaccines/medicines: The Government and the private sector are involved in producingmedicines and vaccines. However, quality control is a critical issue. An important policyquestion is whether the government should be involved in the manufacturing and production of vaccines or should it instead take on a regulatory role to ensure quality and availability at areasonable price.

Related supporting industries

Strong supporting industries are critical for the development of any industry. In the case of dairying, the National Dairy Research Institute pursues research and education in all aspects of dairying: microbiology, chemistry, technology, engineering, animal genetics and breeding,



livestock production and management, animal nutrition, animal physiology, dairy economics anddairy extension education.

Table 5: Related and supporting industries

Processing capacity Lack of processing capacity in the country, including

primary processing by bulk chillingProcessing capacity There are government subsidies on bulk chilling and

processing infrastructure

Transportation and distribution Because of low productivity, transportation costs forprocurement are high

Dairy farmer services Availability of health and breeding services could beenhanced; extension is almost non-existent

Specialized finance and credit Exists on paper but is very difficult to access

Relevant research capacity and use Good research capacity

Processing capacity: At present, there are 678 registered dairy processing units processing 12 – 15percent, or 26.63 tonnes, of the milk produced in the country each year. Of the total unitsregistered under the MMPO, 403 are private dairies processing around 11.83 tonnes per year,whereas 212 cooperative dairies process 10.36 tonnes per year. The remaining 63 governmentplants process 4.44 tonnes per year. These dairy plants are registered in the different states of India. There is immense scope to increase the processing capacity and direct a greater share of milk and milk products through the formal channel.

Primary processing is another factor in need of critical attention to ensure the quality of milk through the supply chain. In addition to the Clean Milk Programme and other rural developmentschemes, the Government has provided subsidies for bulk chilling and processing infrastructure

to support the dairy industry. But credit remains a problem; specialized credit exists on paper butis difficult to access for dairying. There is significant private sector investment in feedmanufacturing and the manufacturing of medicines and vaccines.

Government and the enabling environment

The dairy sector in India has traditionally been highly regulated. The government projects andprogrammes in place for enhancing dairy development include subsidies for developinginfrastructure for milk processing and testing. The Clean Milk Production Programme is acentrally sponsored scheme that is being implemented by the State Department of AnimalHusbandry, Dairying and Fisheries with several objectives: i) the creation and strengthening of

necessary infrastructure for the production of quality milk and milk products at the farm level upto the points of consumption; ii) improvement of milking techniques; and iii) training to enhanceawareness on the importance of hygienic milk production. Several other rural developmentinitiatives support dairying, such as through the District Rural Development Agency andwomen‟s self -help groups.

An area of government support that has not been capitalized on so far is the investment inpromoting the nutritional aspects of milk, particularly pasteurized milk versus loose milk.



Detailed information about policy regulations regarding the dairy sector in India is availableonline at www.indiandairy.com.

The policy history

Until 1991, the dairying sector was licensed under the Industries Development and RegulationAct (IRDA, 1951). This resulted in preferential treatment given to milk cooperatives that wereoutside the purview of the legislation. In 1991, the dairy sector was swept up in the move toliberalize the economy. Consequently, the IRDA was replaced by the Milk and Milk ProductOrder in 1992, which contained the following provisions:

1. The main objective of the MMPO is to maintain and increase the supply of liquid milk of desired

quality in the interests of the general public and to regulate the production, processing and

distribution of milk and milk products.

2. Any person or dairy plant handling more than 10 000 litres of milk per day or 500 tonnes of milk

solid per annum needs to be registered, with the registering authority appointed by the central

Government.

3. Every holder of a registration certificate can collect or procure milk only from the milk shed

assigned under the registration certificate. The milk shed, is defined as "an area geographically

demarcated by the registering authority for the collection of milk or milk product by the holder

of a registration certificate''.

Amendments were made to MMPO in 2002 to further liberalize the sector and encourage dairyentrepreneurs from the private sector. The milk shed concept was abandoned, allowing for milk supplies to be procured from any area.

Traditionally, the cooperatives have not had much competition from the private sector. In theliberalized environment characterized by open procurement of milk, there is incentive for private

players to invest in the sector. Consequently, many agencies, organizations and agents havestarted buying milk. But a major difference is that they are not backward investing in dairydevelopment activities through the offering of producer services. In the coming years, the lack of involvement in dairy development by the various players is likely to constrain further growth of the industry.

In this environment, dairy farmer organizations and cooperatives will have a strong role to playin supporting dairy development activities. If they were to establish higher prices to farmers, forinstance, the private sector and other players would be forced to pay at least that much as well.

Policy and regulatory issues

Agriculture is a state responsibility in India, and the State Department of Animal Husbandry,Dairying and Fisheries, within the Ministry of Agriculture, is responsible for the dairy activities.Consequently, the focus of the activities and budgetary allocation is biased towards agriculturerather than livestock.

Table6: Enabling environment

http://www.indiandairy.com/






National sector regulation

Key regulatory actors (ministries) Department of Animal Husbandry is under the Ministry of Agriculture, hence focus on livestock is underemphasized,particularly in light of the high value of the sector.

Price regulation Rice setting by cooperatives

Food safety Regulated through the Milk and Milk Products Order

Informal regulations Very difficult to control quality in traditional channels

Huge premium on fat content of milk compared with formalregulations; thus buffalo milk fetches much higher price

Formal sector support

Domestic sector (national) Approaches being taken to modernize the sector

Subsidy support Various subsidies available for milk processing and testinginfrastructure

Inward investment promotion Very little investment on the promotion of health or quality

of milk Provincial/local

Key regulatory actors (ministries) State Department of Animal Husbandry, Dairying andFisheries is the implementing agency at the state level

Informal regulation & transparency Lack of milk testing equipment and thus transparency,leading to low payments

Formal sector support Availability of veterinary services; paravets are workingwith the Department of Animal Husbandry. Dairying andFisheries

Formal sector support Availability of services in remote areas through thegovernment

Donor/NGO roles Donor agencies are very actively involved in livestock sector development

There are several issues related to milk pricing policies that require serious review andreconsideration. Because cooperatives are mostly managed by civil servants, there is somegovernment influence in determining milk prices. But the state cooperatives are supposed to basethe price paid to farmers on the fat and solid-not-fat (SNF) content of milk. In the case of thebetter-managed cooperatives in Gujuart, the system works that way.22 However, it is less thepractice elsewhere. As noted previously, the village society president often wields a lot of powerand determines the price randomly, without testing the fat or SNF content.

Also as previously mentioned, the cooperative price becomes the benchmark price for otherbuyers (vendors and private dairy agents) and when it is low, so are the other prices paid. Thusthere is no incentive for farmers to sell to the other buyers; only about 15 percent of the milk issold this way for the marketing of packaged milk and milk products. Policy efforts should focuson enforcing testing as the basis for milk pricing. This can be achieved by ensuring availabilityof testing machines at all milk collection centres, educating farmers to sell milk only based on







testing and setting up policy norms for all players in the sector to collect milk only when it hasbeen tested.

Another important aspect of milk pricing is the huge premium on the fat content compared to thenon-fat solid content. Thus buffalo milk fetches a much higher price than cow milk, which has

lower fat content.

Industry SWOT analysis

Within the framework of the competitiveness drivers and issues, the smallholder dairy sector‟s

strengths, weaknesses, opportunities and threats have been assessed. The strengths andweaknesses are factors that are directly controllable, while opportunities and threats derive fromthe external environment. As evident in Table 7, there are a large number of weaknesses in thesector, implying considerable scope for interventions. This SWOT analysis entailed matchingeach of these elements with an appropriate action.

Table 7: SWOT analysis of performance drivers

Strengths How to build on them

Large number of small and marginal

farmers involved in dairying

An effective marketing channel helps to

meet the demands of the urban consumer

Very large number of animals and huge

scope to enhance productivity

Self-sufficiency in medicine production and

do not have to rely on exports

Strengthen economic viability of dairy farms

by interventions on the input side as well as

ensuring more fair farmer prices

Increase the link between rural production

areas and urban markets

Focus on strengthening the indigenous

breed to help significantly enhance

productivity

Ensure availability of quality medicines bystrengthening regulatory framework for

quality

Weaknesses How to correct them

Large share of milk (70 –85%) of marketable

surplus goes through informal channel

where quality is a big concern

Sometimes quality is an issue in the formal

channel as well

Very little competition to cooperatives

because private sector was not allowed toparticipate in until recently

Farmers do not share in the benefits of

high demand because of poor governance

of cooperatives

Milk production is scattered over a large

number of farmers producing miniscule

quantities

Focus on quality issues even in the informal

channel by training traders and by enforcing

food quality regulations

Develop infrastructure and training for clean

milk production

Support a fair playing field for the private

sector Bring about changes in cooperatives to

make them true representatives of farmers

instead of functioning as parastatals.

Support to dairying as an enterprise to

encourage commercial dairy farming and

encourage production and productivity by

extension and breed development





Low productivity and scattered production

leading to high cost of transportation

Emphasis on milk fat and not on SNF

content maintaining relatively lower prices

of milk

Enhance productivity by breed

improvement and extension

Enforce price setting of milk based on fat

and SNF content to encourage production of

cow milk

Four dairy enterprise models

The following section presents analysis and comparisons of four dairy enterprise models in India.Chosen for the analysis: i) a private dairy operating in Andhra Pradesh, ii) the Orissa StateCooperative as an example of a weak functioning cooperative, iii) the Gujarat Cooperative Milk Marketing Federation as an example of a strong functioning cooperative and iv) a mutually aidedcooperative society as an alternative model. Models such as producer companies (emerging as anew generation cooperative) are still in a developing stage.

Table 8: Model features Privatedairy

Statecooperative

GCMMF MACS

Number of farmers involved 150 000 224 000 2 700 000

Average litresof milk procured perday

700 000 322 000 60 000

Litres of milk processed at dairyplant per day

10 200 000

Number of primary cooperatives 3 500 3 800 13 141

As previously noted, cooperatives have been successful only in some parts of the country. This is

largely because the cooperative law falls under the state policy and is formulated differently indifferent states. In states such as Gujarat, where the model succeeds, the cooperative is headed byelected managers and managed by professionals. In many other states, civil servants manage thecooperative, which results in a lot of government interference in the day-to-day functioning andleads to a lack of democracy and hence no sense of ownership or responsibility at the villagelevel.

Three key differences distinguish the Gujarat (GCMMF) cooperatives from the other states: i) anoversight board elected by farmer members; ii) professionals employed by the cooperatives tomanage the cooperatives and iii) the cooperatives have autonomy and freedom in their operatingpolicies from interference by government and politicians (Tushar Shah et al.).

To address the governance issues related to cooperative management, the MACS Act was passedin 1995. It de-linked the district level cooperative from the state level, giving autonomy todistrict and village mutually aided societies. However, only the state of Andhra Pradesh hasimplemented the legislation.

Changing from the cooperative model to the society model has many associated bureaucraticproblems. To overcome the hassles, the concept of producer companies was introduced as a way



of transforming cooperatives to work more efficiently as representatives of farmers. However,while promising, it is a relatively new idea that needs more time to develop. Meanwhile, with theliberalization of dairy sector, private sector dairies have emerged as prominent players in thedairy industry.

i) A private dairy

The private dairy selected for the comparative analysis is an ISO 9001-certified dairyheadquartered in Andhra Pradesh. The company set up there in 1992 after the MMPO opened thedoor to private dairies, and it now trades on the Indian stock exchange. Milk collection is about 7lakh litres per day from 150 000 households in 3 500 villages in 3 states, although the majoroperations are in Andhra Pradesh. The company serves three main metropolitan areas with freshmilk (Hyderabad, Chennai and Bangalore) and is about to enter Mumbai. It also markets a widerange of products, including milk, curd, butter milk, pedha and paneer as well as new items suchas flavoured yoghurt and flavoured milk to cater to the changing tastes of the young generation.The company has several chilling and bulk cooling units across its collection region in Andhra

Pradesh to ensure quality of milk through the chain.

The company obtains its milk supply through village agents who have personal relationshipswith the farmers; it does not get directly involved with farmers. Depending on the socialstructure of the village, there may be more than one agent per village. The agents collect the milk and deliver to the company. The two parties have negotiated a price, but the company is notinvolved with what price the agent pays the farmers (although it is slightly above what thecooperatives pay in the state). Agents often provide loans to farmers to maintain their loyalty;typically, the agent competes with agents of other private companies for a farmers‟ milk supply.

Company employees are previous dairy cooperative employees who have enormous experiencein this area. Collection areas depend on milk density and areas in which the district cooperative

is less active and access to markets is efficient.

ii) The Orissa State Cooperative

The state cooperative is a dairy cooperative society registered under the Cooperative Society Act(1962). Currently, milk collected from 3 800 village societies and 224 000 farmers within 12district unions totals about 322 000 litres per day. There has not been much competition with theprivate sector in this region because of low productivity and little dairy development, althoughprivate sector investment in the dairy sector is on the rise.

iii) Gujarat Cooperative Milk Marketing Federation

The Anand Milk Union Limited (Amul) cooperative formed in 1946; but it has become a brandname managed by the Gujarat Cooperative Milk Marketing Federation (GCMMF). The GCMMFconsists of 13 district unions, involving 13 141 village dairy cooperative societies and nearly 2.7million farmer members. With an aggregate milk processing capacity of 10.2 million litres perday, it is Asia ‟s biggest dairy business venture. The marketing network encompasses 3 000wholesale distributors and over 500 000 retail outlets, giving GCMMF a national reach that veryfew fast-moving consumer goods companies can boast. GCMMF has been exporting UHT -



processed milk, ghee, skimmed and whole milk powder, butter, cheese and indigenous milk products to the China , Hong Kong , Singapore and the USA , among others.

Structure

GCMMF‟s Amul model of dairy development is a three-tiered structure, with the dairycooperative societies at the village level federated under a milk union at the district level and afederation of member unions at the state level. Farmer members milk their cows twice daily(morning and evening). GCMMF collects the milk twice a day, makes regular payments to thefarmer members and provides them with cattle feed, fodder, animal breeding and veterinarianservices.

Anyone who owns a cow or a buffalo and makes a one time payment of 11 rupees (10 rupees forthe share certificate and 1 rupee for registration) can become a member of the village cooperativesociety. The applicant must agree to provide a set minimum quantity of milk, generally between600 and 700 litres, to the society each year. The farmer members elect a managing committee

that then chooses a chairman. The managing committee appoints a secretary to discharge thesociety‟s administrative functions.

At the second tier, there is a district level union that processes the milk procured from individualsocieties. Each of the 13 unions has a board of directors chosen by an electoral college drawnfrom the chairpersons of its affiliated societies. The union board in turn elects its chairman.

The final tier is constituted by the GCMMF, which is responsible for marketing the milk procured and processed into various value-added products at the union dairies. All the productsare sold under the Sagar or Amul umbrella brands. The federation‟s board consists of the

chairpersons of all 13 district unions. They elect the federation chairperson and appoint the

managing director, who is accountable to the nearly 2.7 million strong Amul dairy societymembers.

Elected representatives of the farmer members make policy decisions at all three levels, whichare then implemented by professional managers and skilled personnel employed by the farmermembers. This structure eliminates all middlemen. By placing the farmer members in command,in essence, of the dairy cooperative involves them in the development process.

This cooperative structure is democratic, and the farmers are in control, from the milking of theiranimals to the final marketing by the federation. For every rupee that GCMMF earns, roughly 75paise goes to the farmers. The mandate is clear – production by the masses, for the masses, at itsefficient best.

The farmer members democratically govern the entire cooperative structure to ensure that thehigher tier organizations are geared to serve the purpose of the lower levels and that the gains atall levels flow ultimately back to the farmers in a significant measure. The core feature of thisstructure is farmer involvement in decision-making at all three stages – procurement, processingand marketing of milk and milk products. The value addition at procurement and processing



stages can be realized only with effective marketing of products, thus making it an essentialfeature for success.

Services provided to farmer members

The dairy unions affiliated to GCMMF provide various inputs that contribute to enhancing theproductivity and quality standards, such as:

breed improvement and animal healthcare programmes;

extension activities;

supplies of balanced cattle feed on a no profit –no loss basis;

quality fodder seed distribution at subsidized cost;

a network of artificial insemination centres aimed at genetic upgrading of the animals using

frozen semen of pedigree bulls; these centres are managed by educated unemployed rural

youth who provide breeding services to the farmers;

frozen semen, liquid nitrogen and other consumables;

24-hour mobile veterinary services for emergencies.

It is this integrated approach to dairying and addressing farmers‟ needs at all levels that gives theAmul model its uniqueness. And it is why every third litre of milk from a cow or buffalo inGujarat is processed in a GCMMF union dairy.

iv) MACS in Andhra Pradesh (AP)

Dairy activities started at the district level in 1971. The originally chosen district union wasregistered under the Andhra Pradesh Cooperative Societies Act (1964). After the introduction of the MACS Act (1995), the district union opted for registration as a MACS to acquire betterfunctional autonomy for servicing its farmer members. The union is currently collecting 60 000litres of milk per day from 650 villages, though it likely to increase up to 100 000 litres in thenext two to three years.

The MACS have a two-tier operation: at the village and district levels. A village society withelected officers manages operations at the lower level; an elected board of directors managers thedistrict society. The village and district societies each registered separately, and each has thefreedom to use its own profits.

The union provides its members with a range of services required for dairy development activity:

organizing thrift and credit cooperative society to facilitate the financial assistance for buying

milch cattle;

organizing AI services through an NGO;

making cross-breed or graded animals for farmers to purchase;

providing inputs such as concentrate feed, fodder seed, fodder slips and mineral mixtures at

subsidized rates to members;

supplying breeding bulls to societies;

providing veterinary health facility, de-worming and vaccination to the animals of members;

compensating members in the event of the death of an animal with either a grant or loan;



providing insurance coverage to members.

Comparative analysis of the four value chains

The following compares performance criteria for the four dairy value chains to determine how

they are likely to endure against future competition.

Demand conditions

The GCMMF has a wide range of traditional products as well as several new products catering tothe demands of the new generation, such as sugar-free ice cream. It is one of the largest sellingbrands of dairy products, with a presence in all parts of the country. The private dairy also has arange of modern products catering to the young generation, such as flavoured yoghurt. TheAndhra Pradesh MACS largely sells traditional products, such as milk, to urban consumers aswell as rural markets through village societies (small packets, 250 ml). The Orissa StateCooperative also largely sells milk and a few traditional products.

Market structure and governance

The competitive structure for the four models varies. Dairy is a regional industry with regionaldairies serving the local market, especially in the case of packaged milk. There is more scope forinter-regional trade.

The GCMMF competes with other multinational companies, such as Nestlé and Britannia, withcertain products but leads among dairy products in India. The private dairy is a leading brand inthe city of Hyderabad. However, the state of Andhra Pradesh has a well-developed dairy industrywith several private dairies present in the state and rigorous competition among them. The

Andhra Pradesh MACS largely sells packaged milk to the nearby areas and thus encounters lesscompetition in marketing its products. And as mentioned earlier, Orissa finds very littlecompetition to its packaged dairy products because there are hardly any private players in thestate.

The supply chain is closely linked to the governance structure of the chain. For instance, theGCMMF network is very strong, with farmer involvement at all levels in the chain. Thus it isdifficult for private players to procure milk directly from farmers. It is a similar situation withinthe Andhra Pradesh MACS. In Orissa, however, the cooperative network is not very strong andthe president of the village society wields a lot of power; farmer involvement in decision-makingat all levels is virtually non-existent. This has created keen competition from milk vendors in

milk procurement in that area. The private dairy in Andhra Pradesh experiences intensecompetition from several private dairies in milk collection. But most of these companies do notdeal directly with farmers. Milk is collected through village agents. There is no involvement of any company in any dairy development activity, and thus the companies compete with each otherfor milk collection.

The GCMMF collects its milk through village societies, with the cooperative setting the price.But it pays one of the highest prices in the country; milk collection is done in a transparent



manner (based on testing fat and SNF content). The MACS society also has similar norms (fortesting fat and SNF content) for milk collection. The MACS has the freedom to decide the pricepaid to farmers for their milk because they have autonomy in setting prices. Societies makingprofits through the sale of milk products can give higher returns to farmers because they do nothave to follow the cooperative price. The prices paid that the Andhra Pradesh MACS declares at

the district union are higher than the cooperative prices.

The Orissa State Cooperative collects its milk supply through a village society run by the president who wields a lot of power; its farmers‟ price is relatively low compared with the

GCMMF. In most cases, there is no testing for fat and SNF content on which prices should bebased. Average prices are fixed for cow and buffalo milk; however, influential people incommunity get better prices. In the case of the private dairy, milk purchases are done through theagent, with prices based on competition with agents of other companies and the declaredcooperative price. A large number of societies have electronic milk testing machines and moreare acquiring them.

Factor conditions

Livestock assets are likely to be better where organizations serving the area are involved in dairydevelopment activities. The GCMMF has been providing good AI services, which has enhancedthe quality of buffalo in the area. The Andhra Pradesh MACS have created a good network of services by involving the State Department of Animal Husbandry, Dairying and Fisheries andNGOs working in its area. With efficient services and involvement in breed development, thequality of herd is likely to improve in the near future.

The GCMMF as well as the Andhra Pradesh MACS provide their farmers with feed, animalmedicines and vaccines and breeding services. In the Orissa State Cooperative, feed is made

available at a subsidized rate through the village society. The society is also involved inproviding health and breeding services; however, the farmers still need to largely rely on thestate government to provide health and breeding services, which are somewhat inadequate. Thereis no facility for loans; however, medicines are available at cost, although supply tends to be aproblem. Because the private dairy collects milk through agents, it is not directly involved withthe farmers for service provision. The agents sometimes extend loans to farmers, which ensuresmarketing commitment by producers. These are general loans not specifically used for dairyactivities, and the interest rate typically is quite high.

Milk productivity depends on the level of extension support provided to farmers. The GCMMFprovides ongoing extension activities, including training sessions and exposure visits for women.The Andhra Pradesh MACS are also involved in extension to some extent. The Orissa StateCooperative offers hardly any extension activity; the private dairy does not involve itself inextension services at all.

Related and supporting industries

The GCMMF has created good processing and primary processing infrastructure. Its plants areISO certified and meet all the quality requirements. The private dairy processing plant also is



ISO certified; however, the primary processing at the village level is not very strong. The AndhraPradesh MACS have developed adequate processing facilities and plan to expand significantly inthe coming years. Milk quality was an issue previously for the Orissa State Cooperative, but thesituation has improved in recent years.

Prospects

The GCMMF is the most organized in meeting future growth because of its investing in dairydevelopment activities, such as ensuring the availability of feed and fodder and veterinaryservices. It is in a position to increase its procurement in the coming years. Also, in terms of development, the GCMMF leads the country in modern products, such as sugar-free ice cream.

The private dairy is not involved in dairy development activity and is only focusing on milk procurement. Faced with increasing competition, it will have to move to newer areas forexpansion. Because of low involvement of farmers in the Orissa Cooperative, the private sectorwill find it easy to move into milk procurement in its area. The lack of variety and quality of its

products will make it difficult for Orissa to compete with the private sector.

If the MACS model becomes popular, procurement will be affected. MACS involvement in dairydevelopment activity will help the model grow and expand the milk procurement. It is geared toface competition from the private sector because of close links with farmers at the village level.

Conclusions

Dairy has a lot of potential to improve rural incomes, nutrition and women empowerment, andhence is a very critical area for investment. A well-developed industry will enable millions of farmers to capitalize on the emerging opportunities and make a significant impact on rural

incomes. On the flip side, weak efforts towards dairy development also can have a significant butnegative impact on the dairy industry. The growth rate has been sluggish over the past few years.With an increase in demand on one hand and sluggish supply on the other, there is a likelyshortfall in demand in the coming years.

Major areas of intervention in the dairy sector have been highlighted in this review. Carrying outinterventions requires resources and commitment from key actors – government, NGOs,development agencies and the National Dairy Development Board – to partner and work together.

A comprehensive policy addressing the critical issues is required for the robust growth of the

sector. The following highlights those issues:

1. The first issue is defining and implementing a policy for dairy development. Though a livestock

policy has been established at the national level, its implementation is at the state level because

agriculture is a state responsibility in India. But state policies addressing critical needs in dairy

development have yet to be clearly defined across the country. Some progressive states have a

well-defined policy, but it is lacking in most of the others. But even where a policy is clearly

developed, oftentimes implementation is a problem.



2. Lack of clarity between the roles of the State Livestock Development Agency and the State

Department of Animal Husbandry, Dairying and Fisheries is an issue for effective policy

implementation. For example, the National Cattle and Buffalo Breeding programme has not

been well implemented in several states. Further, availability of funds is a major issue in

implementing livestock activities. The Livestock Department is within the Department of

Agriculture and thus the resources are biased towards agriculture. There is need to emphasize

the importance of dairying to smallholder incomes to direct more resources towards dairy

development.

Two very significant factors for the growth of the dairy sector are dairy development activitiesand milk prices paid to farmers. In the liberated policy environment, any player can procure milk in any region. This is a very different situation from the earlier concept of milk sheds, whichlimited the agency or organization procuring milk to a particular area. Hence, earlier it madesense for agencies and organizations to invest in dairy development activities.

But the freedom for procurement has thwarted the incentive for private companies to invest indairy development activities. However, private sector investment in procurement is increasing.What is clear is that while the number of buyers is increasing, little is being done to develop thesector. In this situation, farmer-owned organizations (such as cooperatives, producer companies,common interest groups and women‟s self -help groups) have to be strengthened at the grassrootslevel and linked to service and input providers.

Dairy farmer organizations can be used as a platform to address issues regarding availability of all inputs, including feed, fodder, breeding, veterinarian services, medicines, vaccines, credit andinsurance. As is evident from the examples presented previously, the GCMMF has been the mostsuccessful in meeting the input requirements of farmers. However, this model has not beensuccessful in other states because of issues with the basic organization of cooperatives.

Dairy cooperatives in several states function as parastatals and lack the spirit of cooperativeorganization with farmer involvement in ownership and decision-making. Alternative models of dairy farmer organizations – such as the MACS, producer companies, women‟s self -help groups – also need to be explored. International agencies and donor groups need to be directed towardscreating political will to strengthen dairy cooperatives and to set them up.

A very important aspect of dairy development is the price paid to farmers. Currently in manystates, the milk price is set by the cooperatives; this price is used by all other players to set theirprices, typically by paying 50 paise or 1 rupee more than the cooperative price in that area. Thefarmer‟s price for milk ranges from 9 to 11 rupees for cow milk and 13 to 14 rupees for buffalomilk (a key comparison is a litre of bottled water, which costs 10 – 12 rupees then why are milk

prices so low? The GCMMF pays the highest prices in the country. In the areas where theAndhra Pradesh MACS have set up, their prices are higher than the cooperative prices (MACShave the freedom to declare their own prices). It is evident that where dairy farmer organizationsare strong, farmer prices are higher.

Low productivity per animal is another factor hindering development of the dairy sector. Manyissues related to low productivity have been discussed – an inadequate cattle and buffalobreeding programme, extension and management on dairy enterprise and feeding practices, and



availability of quality feed and fodder. Another important aspect related to low productivity isthe lack of quality animals for farmers to purchase. A major hindrance to the availability of quality animals in dairy developing areas is the policy regarding interstate movement of animals.

Finally, it is important to discuss the hygienic issues. Milk quality concerns go beyond the farm

level and require assurance of safe milk at all stages, including within the informal sector.Through the formal channel, cooperatives, private dairies or any other form of dairy farmerorganization, quality can be addressed through training and education on clean milk practices,including the use of bulk coolers. It is also important to develop diagnostic facilities for milk testing, including infrastructure and human resources, that enable constant monitoring forquality. At the processing level, plant certification will help to enhance consumer confidence.

Milk quality in the informal markets is an important issue. As noted, 70 – 85 percent (based ondifferent estimates) of milk is obtained and sold through the informal channel. In recent years,initiatives have focused on working with and providing training to traders. In Kenya, forinstance, licensing has been used to formalize the traditional sector. In India as well, the

Capitalisation of Livestock Programme Experiences programme, along with the InternationalLivestock Research Institute, have undertaken some initiatives in this direction.

In the current situation, traders collecting milk at the farm then deliver it and milk products tourban and peri-urban areas. Each trader buys only small amounts of milk. There is scope toorganize the traders into groups and create joint facilities where they can test, process and storetheir milk supplies. These trader facilities could serve as wholesale or bulk suppliers for hotels,chaiwalas (tea sellers) and small sweetshops. These initiatives can help to address the qualityissues in the informal sector and also create employment opportunities in the non-farm sector.

An argument against working with traders is that formal sector involvement in dairying is

increasing and eventually there will be no room for informal players. However, looking at thecurrent reality, it will be several years before this materializes. In the meantime, the informalsector should not be ignored and organizing informal traders should be pursued.

Annex I: Overview of dairy marketing channels in India



Annex II: Income from dairy enterprise

Income from dairy enterprise per month (two-animal farm)

Economic analysis (accounting for household

labour and cost of green/dry

fodder obtained for free from

common resources or

neighbour fields)

Financial analysis (Does not account for

household labour and free

fodder)

Feed cost 2 000 1 400

Labour cost 750

Medicine cost 60 60

Total cost 2 810 1 460

Total revenue (4 litre/animal/day @ 9 rupeescow milk or 14 rupees buffalo

milk)

2 160 – 3 360 2 160 – 3 360

Net income -(650) – 550 700 – 1 900

Source: Punjabi



Annex III: Milk price chart

GCMMF Orissa State

Coop MACS Private dairy (heritage)

COW Buffalo Cow Buffalo Cow Buffalo Cow Buffalo

Farmer price 9 – 9.5260/kg

fat

225+ someamount

(cooperativepricing)

Agent price 10Get

salary92 – 105 +incentive

240+incentive

Consumerprice

Source: Punjabi

Annex Table 1: Identifying critical issues in the dairy chain

Stage Priority Agent Issues

Policy

environment Developing livestock policyBreed development

Dept. of AnimalHusbandry,Dairying andFisheries

Lack of a coherent livestock development policyIneffective implementation of policyand projects due to lack of clarity inroles of different agenciesLack of resourcesLack of clarity between roles of different departments

Lack of regulation for quality of feedand medicines

Services Disease control/ health/breeding/extensionservicesSupport to dairy farmerorganizations/women‟s

self-help groups

Dept. of AnimalHusbandry,Dairying andFisheriesCooperativesNGOsPrivate dairies

Inadequate coverage of veterinarianand breeding servicesNon-existent extension servicesScope to enhance activities of NGOs inthese areasLack of private sector involvement indairy development services andactivities

Inputs Feed supply

FodderMedicines/vaccine supply

Cooperative

FeedcompaniesMedicinecompaniesMedicine store

Quality/cost of feed

Ineffective approach for managementof common property resourcesQuality of medicines

Formal credit for animalpurchase

Banks/financialinstitution

Very poor access to formal credit atthe farm level



CooperativesSelf-help group

Informal loans for animalpurchase or other dairyneeds

TraderPrivatecompany agent

Very high rate of interest; farmer hasto sell milk at low price to the trader if he/she has borrowed money from the

traderProduction Dairy farming

Selling milk cooperatives/traders/privatedairy agents

Farmer Poor management and feedingpractices because of lack of information in the absence of extension activities.Low productivity because of poorgenetic potential, poor feeding andmanagement practices, poor access tohealth and breeding services, lack of good-quality animalsAvailability of milk per household

very lowLow profitability from dairy enterprise

Marketing/

processing Collection of milk fromfarmers through villagesociety, processing andmarketing of milk in citiesand urban areas

Cooperativesociety

Lack of coverage of villagesLack of transparency in milk testingand pricingLack of democracy in village societiesMarketing only in peri-urban/urbanareasMaintaining quality of milk/infrastructureMilk prices declared by cooperatives

kept low and used as a benchmark price by other players

Purchase milk fromfarmers and selling milk and processed products toconsumers

Trader No transparency in milk pricingAdulteration and quality of milk andmilk productsUnhygienic conditions for milk processing

Purchase of milk fromfarmers through villageagents, processing andselling milk

Private dairy No transparency in pricing of milk Quality of milk

Retailing Selling of milk and milk products processed bycooperatives and privatedairies

Retailers



21 The first four factors were drawn from the diamond model; see Dr Michael E. Porter, 1985.Competitive advantage creating and sustaining superior performance. The fifth factor is from anadaptation of a model for agro industry value chains by Carlos Da Silva; see Carlos Da Silva andHildo M. de Souza Filho. 2007. Guidelines for rapid appraisals of agrifood chain performance indeveloping countries. FAO publication. Rome.22

Gujarat farmers receive the highest share of consumer prices compared to any other state in thecountry.

India: Increasing demand challenges the

dairy sector Meeta Punjabi

Dairy consultant

New Delhi

Over the span of three decades, India has transformed from a country of acute milk shortage tothe world‟s leading milk producer, with production exceeding 100 million tonnes in 2006. This

phenomenal success is attributed to a Government initiative known as Operation Flood (1970 –

1996) and its intense focus on dairy development activities. In that initiative, rural milk shedareas were linked to urban markets through the development of a network of village cooperativesfor procuring and marketing milk. And milk production and productivity were enhanced byensuring the availability of veterinary services, artificial insemination (AI), feed and farmereducation. The investment paid off, promoting production gains of 4 – 5 percent per annum.

However, that growth has slumped to less than 3 percent in recent years, raising cause forconcern. The slowdown is attributed to the decline in investment in the dairy sector since the endof the Operation Flood initiative. Central and state government allocation for dairy developmenthas diminished in the past two five-year plans.

Emerging situation

Dairy is currently the top-ranking commodity in India, with the value of output in 2004 at 1.179billion rupees (US$39 million), which is almost equal to the combined output value of rice andwheat. Despite the importance of the dairy sector in overall GDP, it receives less governmentbudgeting than the agriculture sector. Further, there has been no concentrated investment in thedevelopment of value-added or innovative products, nor any serious effort to support andmodernize the informal sector.







































In light of the increasing demand driven by the growing population, higher incomes and morehealth consciousness, the slowdown in dairy industry growth is severely worrisome. Based onestimates by the National Dairy Development Board (NDDB), the demand for milk is likely toreach 180 million tonnes by 2022. To supply the market, an average incremental increase of 5million tonnes per annum over the next 15 years is required – a doubling of the average

incremental rate achieved over the past 15 years. In the absence of sufficient increasedproduction, India will need to rely on the world market for imports. And because of the hugevolume required, it will affect global milk prices. Thus, focusing on areas for local dairydevelopment is critical.

Traditionally, the policy environment has favoured the expansion of cooperatives, whichultimately crowded out the private sector. However, liberalization of the sector in recent yearshas encouraged private investment in dairying. In 2002, the Milk and Milk Products Order(MMPO) ushered in major policy changes friendly to the private sector and a momentum of activity that is likely to increase dramatically in the coming years. Large Indian andmultinational corporations, such as Reliance, Pepsi and Coca-Cola, are planning significant

investments.

Nowadays, both the private sector and the cooperatives drive the value chains. Because of themany unsuccessful cooperatives in the country, other models of dairy farmer organizations arebeing explored, such as mutually aided cooperative societies (MACS) and producer companies.

Millions of small and marginal farmers in dairying who own two to three animals and produce anaverage of 5 litres comprise a critical portion of India‟s dairy industry. Livestock development in

general and dairy development activities in particular are key components of pro-poordevelopment strategies because livestock distribution is much more equitable than landdistribution. Thus, changes in the dairying environment have important implications for the

smallholder farmers and for poverty reduction.

The following characterizes India‟s dairy farming and its relevance to inclusive growth:

Small and marginal farmers own 33 percent of land and about 60 percent of female cattle and

buffaloes.

Some 75 percent of rural households own, on average, two to four animals.

Dairying is a part of the farming system, not a separate enterprise. Feed is mostly residual from

crops, whereas cow dung is important for manure.

Dairying provides a source of regular income, whereas income from agriculture is seasonal. This

regular source of income has a huge impact on minimizing risks to income. There is some

indication that areas where dairy is well developed have less incidence of farmer suicide.

About a third of rural incomes are dependent upon dairying.

Livestock is a security asset to be sold in times of crisis.



Factors affecting the competitiveness of the dairy sector

To assess the dairy sector‟s competiveness, a performance analysis looked at five factors:

demand conditions, market structure, factor conditions, related supporting industries, andgovernment and the enabling environment.21

Demand conditions

Demand for dairy products in India is likely to grow significantly in the coming years, driven bymore consumers, higher incomes and greater interest in nutrition. Consumption of processed andpackaged dairy products is increasing in urban areas. Because of the increasing competition fromthe private sector, several national and international brands have entered the market andexpanded consumers‟ expectation of quality – although only among a small proportion of thepopulation. In many parts of the country, people still prefer unpacked and unprocessed milk delivered by a local milkman because of its taste and the perception of freshness. The priceelasticity for milk is high, thus demand for milk is very sensitive to price changes.

Table 1: Demand conditions

Market size and growth Market growth is due to high per capitaconsumption, increasing population and healthconsciousness

Consumption patterns Consumption of processed and packaged dairy products isincreasing in urban areas

Consumption patterns Unpackaged milk is still preferred because of taste andprice

Sophistication of consumers Consumer awareness on product quality is increasing but

in a very small portion of the populationReceptivity to new products Mostly urban consumers have a very low but increasing

interest in new products

Price elasticity Price elasticity is high

Impact of market opening on demand Consumers now have a variety of quality products

Market structure

Until 2002, cooperatives traditionally were the dominant players in the formal sector. Withliberalization of the dairy industry, private investment has increased quite significantly.However, the organized sector‟s share in milk procurement is very low because a large

proportion of the milk and milk products are sold through the informal channel (Table 3). Theinformal demand absorbs approximately 41 percent of the milk and milk products produced inthe country, accounting for about 75 percent of the marketable surplus of milk. The formalchannel, with its packaged milk and dairy products, accounts for only about 25 percent of themarketable surplus, which is about 15 percent of production.

Table 2: Market Structure







Performance Still large share of produce; 85% of marketable surplusgoes through informal channel

Quality of milk through informal channel is an issue and tosome extent in formal channel as well

Competitive structure Little competition to cooperatives because private sector

was not allowed in the sector until recentlyEntry of supermarkets in retailing of milk is increasing thecompetitive structure

Governance (value chain type) Governance of cooperative structures is constainingefficiency and expansion

Role of "lead" or organizing firms Role of lead agency has been hampered by governmentinterference in cooperatives

Farmer organization Immense scope for improving management andgovernance through farmer organizations

Marketing chain capacity and

efficiencyScope for enhancing efficiency of distribution

Distribution channels Cooperatives have a well-developed distribution channelin urban areas

How market signals are conveyed ordistorted

Government and political interference in price setting,limits prices being determined by market forces.

The informal sector consists of the village milk vendors who procure loose milk from farmersand sell it in urban and peri-urban areas directly to consumers, small private processors or hotels.The milk vendors also may sell processed products, such as paneer or separated cream. Thequality of the vendors‟ milk and milk products is not guaranteed. Largely sold in loose form, it isoften adulterated with several additives to control spoilage.

Table 3: Flow of milk through different channels

Share of

marketable

surplus % of production

Total production

(million tonnes) Use

100% 100

45% 45 Home consumption

55% 55Marketable surplus sold in urban andrural markets (informal and formal)

34.5% 19% 19 Sold in urban markets as loose

unpackaged milk

40% 22% 22 Sold as processed products through

informal markets

14.5% 8% 8Sold as packaged milk through formalmarkets

12.7 % 7 % 7Sold as packaged milk products throughformal markets



Cooperatives are the central players in the formal dairy sector. The cooperatives have a three-tierstructure – i) primary societies at the village level, ii) unions at the district level and iii)federations at the state level. Currently, there are 14 federations in India.

The success of the Gujarat Cooperative Milk Marketing Federation (GCMMF), known for its

Amul brand and its Amul model of cooperative, is acclaimed. However, there is a perception thatcooperative organizations generally have failed in other parts of the country. A less recognizedfact is that the cooperatives in other states are organized differently than the GCMMFcooperatives. The GCMMF cooperatives operate as a true representative of farmers and are runby professionally qualified managers. In most other states, the cooperatives are managed by civilservants, function more as government bodies and are weak representatives of farmers.

Of the 14 major state cooperatives in the country, 10 have state government equity, of which 6have government equity in excess of 51 percent. Twelve of the 14 cooperatives have governmentofficers as managing directors who are appointed by the state government. It is not uncommonfor these officials to change up to three times a year. Because of such governance, cooperatives

are mere parastatals and do not work in the true spirit of cooperatives – with elected farmerrepresentatives and professionals who run the organization. This governance structure influencesthe functioning of the entire chain, from the state federation to the village societies and thussignificantly impacts farmers‟ involvement in the chain.

The primary differences between the GCMMF cooperatives and other state cooperatives areprice and services. In Gujarat, the price paid to farmers is based on fat content; there is regulartesting of milk each farmer supplies. In most of the other states, there is hardly any testing of milk. In other state cooperatives, the village society president wields a lot of power and typicallydecides the prices paid to farmers. Reportedly, farmers with some degree of influence receivehigher prices while those without receive lower remuneration. Being the lead organizations, the

cooperatives also set a benchmark for prices paid by other buyers, such as local vendors andprivate dairies, who tend to pay 50 paise or 1 rupee ($ .02) more than that paid by thecooperatives. Thus, if the farmgate price paid by the cooperative is low, other players also pay alow price.

For most of the private dairies, agents procure the milk from farmers. Some private dairies haveestablished village societies for milk collection that follow the cooperative model. However, thismodel requires much larger investment and is not economically feasible, considering thatcooperatives receive considerable development support from the government (such as feedsubsidies). It is not uncommon for private dairies to make loans to farmers, which is a key reasonfor the somewhat large share of milk directed to this channel.

Factor conditions

Factor conditions for dairying entail the quality of animals, human resources and technical skills,land availability, capital, credit, infrastructure and other inputs relevant to the value chain, as thefollowing explains.



The quality of animals is critical in determining its milk productivity and hence overallproduction. Currently, low productivity per animal hinders development of the dairy sector.Despite being the world‟s largest milk producer, India‟s productivity per animal is very low, at

987 kg per lactation, compared with the global average of 2 038 kg per lactation.

The low productivity is a result of ineffective cattle and buffalo breeding programmes, limitedextension and management on dairy enterprise development, traditional feeding practices that arenot based on scientific feeding methods, and limited availability and affordability of quality feedand fodder. In addition, the limited supply of quality animals is exacerbated by policies limitinginterstate movement of animals. Indigenous cattle and buffalo make up 45 percent of thecountry‟s total milch population, in contrast to the cross-bred cows at 10 percent.

Animal health and breeding services provision, veterinary infrastructure development andvaccinations are the responsibility of the state government. These services have traditionallybeen provided for free or at a very subsidized rate. In the past few years, there has beenincreasing awareness that the state pays heavily to offer these services, which are easily available

to farmers (Ahuja et al.). Consequently, many states have instituted partial or full-cost recoveryfees for providing the services.

Table 4: Factor conditions

Herd

Herd inventory Very large number of indigenous animals with lowproductivity and a small portion of cross-breeds

Breed Lack of policy focus on strengthening indigenous breeds

Very poor awareness of quality feed, which hindersproductivity

Feed Farmers not interested in quality feed because of the lowprice of milk

Increasing feed costs

Veterinary medicine Availability is not an issue

Veterinary medicine costs Duplicate or cheap medicines

Human capacity

Farmer technical capacity Knowledge and new techniques are not accessible

Support services technical capacity Accessibility to good quality veterinary services is an issuein many parts of the country

Organization and managerial

capacity

Organizational and managerial capacity of farmer

cooperatives is very poorEntrepreneurial capacity Entrepreneurial capacity is hindered by a low capacity to

take risks

Credit or finance market

Formal credit mechanisms Access to formal credit mechanisms is very poor

Informal credit mechanisms Accessible but at very high interest

External economies



Transmission of learning Very poor extension support services, leading to very poorknowledge transfer

Social capital and trust Strong social capital and trust in the villages, which cansustain dairy farmer organizations if properly managed

In addition to the State Department of Animal Husbandry, Dairying and Fisheries, the milk cooperatives and NGOs (BAIF, JK Trust) provide services in many states. So do trained privatesector AI technicians, although for a fee. As well, state livestock development agencies are beingset up as autonomous bodies to offer services in animal breeding in the form of procurement,production and distribution of breeding inputs (such as semen and liquid nitrogen), training andpromotional activities.

Despite these initiatives, the availability of services remains limited. Currently, AI services coveronly 15 percent of the breedable animals. Cattle and buffalo breeding programmes have beeninitiated but have not had the desired impact because of a lack of coordination between thedifferent state departments. And extension activities in dairy management are woefully lacking.

Farmers have not been able to take advantage of the potential of their animals because they lack information on feeding and management practices. Extension, especially for women involved inlivestock rearing, would enhance dairy production considerably.

Crop residues are the single largest bulk feed material available to farmers for feeding livestock,specifically ruminants. They include coarse straws, fine straws, leguminous straws, pulses strawsand sugarcane tops. Fodder from common property resources is another major source of feed foranimals. But lack of efficient management of common property resources is a major constraint inavailability of these resources for fodder. The area under cultivated fodder production is limitedonly to 5 percent of the total cultivable land. In the states of Haryana, Punjab, Gujarat and someparts of Rajasthan, land use for green fodder production is estimated at 10 percent or more. There

is a need for restructuring the land use strategy to elevate the overall proportion of cultivablelands for fodder production.

Concentrates used for fodder include coarse grains, such as maize, sorghum, bajra and othermillets, and other cereal by-products, such as rice bran/polish and various oil meals, includinggroundnut cake, mustard cake, coconut cake, soybean meal, cotton seed meal and sesame cake.The escalating price of feed ingredients is a major cause for concern. In many states,cooperatives are involved in producing feed concentrate and selling to farmers at subsidizedrates.

Scarcity of fodder resources is likely to be a major constraint in the development of the dairy

sector unless adequate measures are undertaken to augment them. Another important issueregarding feed is the lack of regulations to ensure quality. In the absence of a coherent policy, allkinds of substandard feeds are available in the market.

Formal/informal credit: Lack of access to credit to expand the herd is a critical problem forfarmers. There is little access to formal credit through the cooperatives. Informal credit isavailable from private traders and agents of private companies, but the interest rate is very high.And these loans may or may not be linked to dairy activity. When taking a loan from a trader, the



farmer is then tied to selling the milk to that trader, often at a low rate. The Working Group

Report on Animal Husbandry emphasizes the low or non-availability of credit as a primaryconstraint in livestock sector activity, indicating that: “Public sector lending is abysmally very

low. The commercial banks are not favourably disposed to providing credit to livestock farmersand the cooperative credit system is very weak, resulting in excessive dependence of livestock

farmers on informal sources [and] usually at exorbitant interest rates. Efforts should be put oncorrecting these distortions and ensure timely availability of inputs and services, including creditto livestock.”

Vaccines/medicines: The Government and the private sector are involved in producingmedicines and vaccines. However, quality control is a critical issue. An important policyquestion is whether the government should be involved in the manufacturing and production of vaccines or should it instead take on a regulatory role to ensure quality and availability at areasonable price.

Related supporting industries

Strong supporting industries are critical for the development of any industry. In the case of dairying, the National Dairy Research Institute pursues research and education in all aspects of dairying: microbiology, chemistry, technology, engineering, animal genetics and breeding,livestock production and management, animal nutrition, animal physiology, dairy economics anddairy extension education.

Table 5: Related and supporting industries

Processing capacity Lack of processing capacity in the country, includingprimary processing by bulk chilling

Processing capacity There are government subsidies on bulk chilling and

processing infrastructureTransportation and distribution Because of low productivity, transportation costs for

procurement are high

Dairy farmer services Availability of health and breeding services could beenhanced; extension is almost non-existent

Specialized finance and credit Exists on paper but is very difficult to access

Relevant research capacity and use Good research capacity

Processing capacity: At present, there are 678 registered dairy processing units processing 12 – 15percent, or 26.63 tonnes, of the milk produced in the country each year. Of the total units

registered under the MMPO, 403 are private dairies processing around 11.83 tonnes per year,whereas 212 cooperative dairies process 10.36 tonnes per year. The remaining 63 governmentplants process 4.44 tonnes per year. These dairy plants are registered in the different states of India. There is immense scope to increase the processing capacity and direct a greater share of milk and milk products through the formal channel.

Primary processing is another factor in need of critical attention to ensure the quality of milk through the supply chain. In addition to the Clean Milk Programme and other rural development



schemes, the Government has provided subsidies for bulk chilling and processing infrastructureto support the dairy industry. But credit remains a problem; specialized credit exists on paper butis difficult to access for dairying. There is significant private sector investment in feedmanufacturing and the manufacturing of medicines and vaccines.

Government and the enabling environment

The dairy sector in India has traditionally been highly regulated. The government projects andprogrammes in place for enhancing dairy development include subsidies for developinginfrastructure for milk processing and testing. The Clean Milk Production Programme is acentrally sponsored scheme that is being implemented by the State Department of AnimalHusbandry, Dairying and Fisheries with several objectives: i) the creation and strengthening of necessary infrastructure for the production of quality milk and milk products at the farm level upto the points of consumption; ii) improvement of milking techniques; and iii) training to enhanceawareness on the importance of hygienic milk production. Several other rural developmentinitiatives support dairying, such as through the District Rural Development Agency and

women‟s self -help groups.

An area of government support that has not been capitalized on so far is the investment inpromoting the nutritional aspects of milk, particularly pasteurized milk versus loose milk.Detailed information about policy regulations regarding the dairy sector in India is availableonline at www.indiandairy.com.

The policy history

Until 1991, the dairying sector was licensed under the Industries Development and RegulationAct (IRDA, 1951). This resulted in preferential treatment given to milk cooperatives that were

outside the purview of the legislation. In 1991, the dairy sector was swept up in the move toliberalize the economy. Consequently, the IRDA was replaced by the Milk and Milk ProductOrder in 1992, which contained the following provisions:

1. The main objective of the MMPO is to maintain and increase the supply of liquid milk of desired

quality in the interests of the general public and to regulate the production, processing and

distribution of milk and milk products.

2. Any person or dairy plant handling more than 10 000 litres of milk per day or 500 tonnes of milk

solid per annum needs to be registered, with the registering authority appointed by the central

Government.

3. Every holder of a registration certificate can collect or procure milk only from the milk shed

assigned under the registration certificate. The milk shed, is defined as "an area geographically

demarcated by the registering authority for the collection of milk or milk product by the holder

of a registration certificate''.

Amendments were made to MMPO in 2002 to further liberalize the sector and encourage dairyentrepreneurs from the private sector. The milk shed concept was abandoned, allowing for milk supplies to be procured from any area.







Traditionally, the cooperatives have not had much competition from the private sector. In theliberalized environment characterized by open procurement of milk, there is incentive for privateplayers to invest in the sector. Consequently, many agencies, organizations and agents havestarted buying milk. But a major difference is that they are not backward investing in dairydevelopment activities through the offering of producer services. In the coming years, the lack of

involvement in dairy development by the various players is likely to constrain further growth of the industry.

In this environment, dairy farmer organizations and cooperatives will have a strong role to playin supporting dairy development activities. If they were to establish higher prices to farmers, forinstance, the private sector and other players would be forced to pay at least that much as well.

Policy and regulatory issues

Agriculture is a state responsibility in India, and the State Department of Animal Husbandry,Dairying and Fisheries, within the Ministry of Agriculture, is responsible for the dairy activities.

Consequently, the focus of the activities and budgetary allocation is biased towards agriculturerather than livestock.

Table6: Enabling environment

National sector regulation

Key regulatory actors (ministries) Department of Animal Husbandry is under the Ministry of Agriculture, hence focus on livestock is underemphasized,particularly in light of the high value of the sector.

Price regulation Rice setting by cooperatives

Food safety Regulated through the Milk and Milk Products Order

Informal regulations Very difficult to control quality in traditional channelsHuge premium on fat content of milk compared with formalregulations; thus buffalo milk fetches much higher price

Formal sector support

Domestic sector (national) Approaches being taken to modernize the sector

Subsidy support Various subsidies available for milk processing and testinginfrastructure

Inward investment promotion Very little investment on the promotion of health or qualityof milk

Provincial/local

Key regulatory actors (ministries) State Department of Animal Husbandry, Dairying andFisheries is the implementing agency at the state level

Informal regulation & transparency Lack of milk testing equipment and thus transparency,leading to low payments

Formal sector support Availability of veterinary services; paravets are workingwith the Department of Animal Husbandry. Dairying andFisheries



Formal sector support Availability of services in remote areas through thegovernment

Donor/NGO roles Donor agencies are very actively involved in livestock sector development

There are several issues related to milk pricing policies that require serious review andreconsideration. Because cooperatives are mostly managed by civil servants, there is somegovernment influence in determining milk prices. But the state cooperatives are supposed to basethe price paid to farmers on the fat and solid-not-fat (SNF) content of milk. In the case of thebetter-managed cooperatives in Gujuart, the system works that way.22 However, it is less thepractice elsewhere. As noted previously, the village society president often wields a lot of powerand determines the price randomly, without testing the fat or SNF content.

Also as previously mentioned, the cooperative price becomes the benchmark price for otherbuyers (vendors and private dairy agents) and when it is low, so are the other prices paid. Thusthere is no incentive for farmers to sell to the other buyers; only about 15 percent of the milk is

sold this way for the marketing of packaged milk and milk products. Policy efforts should focuson enforcing testing as the basis for milk pricing. This can be achieved by ensuring availabilityof testing machines at all milk collection centres, educating farmers to sell milk only based ontesting and setting up policy norms for all players in the sector to collect milk only when it hasbeen tested.

Another important aspect of milk pricing is the huge premium on the fat content compared to thenon-fat solid content. Thus buffalo milk fetches a much higher price than cow milk, which haslower fat content.

Industry SWOT analysis

Within the framework of the competitiveness drivers and issues, the smallholder dairy sector‟sstrengths, weaknesses, opportunities and threats have been assessed. The strengths andweaknesses are factors that are directly controllable, while opportunities and threats derive fromthe external environment. As evident in Table 7, there are a large number of weaknesses in thesector, implying considerable scope for interventions. This SWOT analysis entailed matchingeach of these elements with an appropriate action.

Table 7: SWOT analysis of performance drivers

Strengths How to build on them

Large number of small and marginal

farmers involved in dairying

An effective marketing channel helps to

meet the demands of the urban consumer

Very large number of animals and huge

scope to enhance productivity

Self-sufficiency in medicine production and

Strengthen economic viability of dairy farms

by interventions on the input side as well as

ensuring more fair farmer prices

Increase the link between rural production

areas and urban markets

Focus on strengthening the indigenous

breed to help significantly enhance







do not have to rely on exports productivity

Ensure availability of quality medicines by

strengthening regulatory framework for

quality

Weaknesses How to correct them Large share of milk (70 –85%) of marketable

surplus goes through informal channel

where quality is a big concern

Sometimes quality is an issue in the formal

channel as well

Very little competition to cooperatives

because private sector was not allowed to

participate in until recently

Farmers do not share in the benefits of

high demand because of poor governance

of cooperatives Milk production is scattered over a large

number of farmers producing miniscule

quantities

Milk distribution is limited to urban and

peri-urban areas

Low milk prices because of lower prices

declared by cooperatives, which results in

low prices of milk paid by all players

Ad hoc export policies and a ban on

exports

Quality of milk and milk products are a

barrier to entry to the export market,

especially the EU and the USA

Lack of policy focus on strengthening

indigenous breeds

Non-existent extension facilities

Farmers’ prices are not based on fat

measurement, which affects their

profitability

Because of low access to credit and risk-

taking ability, farmers cannot increase their

herd size

Focus on quality issues even in the informal

channel by training traders and by enforcing

food quality regulations

Develop infrastructure and training for clean

milk production

Support a fair playing field for the private

sector

Bring about changes in cooperatives to

make them true representatives of farmers

instead of functioning as parastatals.

Support to dairying as an enterprise toencourage commercial dairy farming and

encourage production and productivity by

extension and breed development

Enhance packaged milk distribution in more

areas

Strengthen dairy farmer cooperatives to

enable farmers to get a higher price for milk

Create rational export policy to enable

farmers to take advantage of higher prices

Strictly implement quality regulations and

improve infrastructure and training for

quality

Strengthen the breed development

programmes

Strengthen extension facilities

Create policy regulations to make

mandatory testing as a basis for setting milk

price

Increase access to credit through dairy

farmer organizations and other agencies

Opportunities How to pursue them

Increased farmer income by exploiting the

high demand

Increased consumer sophistication and

awareness of quality reception of quality

packaged products (though slowly)

Entry of large corporations in retailing,

Create policies and activities geared towards

enhancing dairy farming activity by

increasing, production, productivity and

ensuring fair farmer price of milk

Establish enabling policy environment to

enhance investment



which can lead to more investment

Immense scope to enhance governance of

dairy farmer organizations and thus enable

dairy farmers to demand higher prices

Potential for exports due to low cost of

production Overall positive growth environment,

which is triggering the Government to

enhance infrastructure

Create policy support to enhance

governance of producer companies

Focus on quality issues that are a barrier to

exports

Encourage private sector to increase

investment in dairying

Threats How to avert them

Large portion of the population does not

care about quality issues in milk

Because of high price sensitivity for dairy

products, people are not willing to pay for

quality

Significant increase in maize prices canincrease feed prices

Large informal markets that extend credit

are constraining farmers

Low productivity and scattered production

leading to high cost of transportation

Emphasis on milk fat and not on SNF

content maintaining relatively lower prices

of milk

Initiate consumer education about the

negative health impacts of unpackaged

products

Develop packaging in small quantities to

meet the needs of the poor

Increase milk prices in accordance with feedprices

Support expansion of dairy farmer

organizations

Enhance productivity by breed

improvement and extension

Enforce price setting of milk based on fat

and SNF content to encourage production of

cow milk

Four dairy enterprise models

The following section presents analysis and comparisons of four dairy enterprise models in India.Chosen for the analysis: i) a private dairy operating in Andhra Pradesh, ii) the Orissa StateCooperative as an example of a weak functioning cooperative, iii) the Gujarat Cooperative Milk Marketing Federation as an example of a strong functioning cooperative and iv) a mutually aidedcooperative society as an alternative model. Models such as producer companies (emerging as anew generation cooperative) are still in a developing stage.

Table 8: Model features Private

dairy State

cooperative GCMMF MACS

Number of farmers involved 150 000 224 000 2 700 000Average litresof milk procured perday

700 000 322 000 60 000

Litres of milk processed at dairyplant per day

10 200 000

Number of primary cooperatives 3 500 3 800 13 141



As previously noted, cooperatives have been successful only in some parts of the country. This islargely because the cooperative law falls under the state policy and is formulated differently indifferent states. In states such as Gujarat, where the model succeeds, the cooperative is headed byelected managers and managed by professionals. In many other states, civil servants manage thecooperative, which results in a lot of government interference in the day-to-day functioning and

leads to a lack of democracy and hence no sense of ownership or responsibility at the villagelevel.

Three key differences distinguish the Gujarat (GCMMF) cooperatives from the other states: i) anoversight board elected by farmer members; ii) professionals employed by the cooperatives tomanage the cooperatives and iii) the cooperatives have autonomy and freedom in their operatingpolicies from interference by government and politicians (Tushar Shah et al.).

To address the governance issues related to cooperative management, the MACS Act was passedin 1995. It de-linked the district level cooperative from the state level, giving autonomy todistrict and village mutually aided societies. However, only the state of Andhra Pradesh has

implemented the legislation.

Changing from the cooperative model to the society model has many associated bureaucraticproblems. To overcome the hassles, the concept of producer companies was introduced as a wayof transforming cooperatives to work more efficiently as representatives of farmers. However,while promising, it is a relatively new idea that needs more time to develop. Meanwhile, with theliberalization of dairy sector, private sector dairies have emerged as prominent players in thedairy industry.

i) A private dairy

The private dairy selected for the comparative analysis is an ISO 9001-certified dairyheadquartered in Andhra Pradesh. The company set up there in 1992 after the MMPO opened thedoor to private dairies, and it now trades on the Indian stock exchange. Milk collection is about 7lakh litres per day from 150 000 households in 3 500 villages in 3 states, although the majoroperations are in Andhra Pradesh. The company serves three main metropolitan areas with freshmilk (Hyderabad, Chennai and Bangalore) and is about to enter Mumbai. It also markets a widerange of products, including milk, curd, butter milk, pedha and paneer as well as new items suchas flavoured yoghurt and flavoured milk to cater to the changing tastes of the young generation.The company has several chilling and bulk cooling units across its collection region in AndhraPradesh to ensure quality of milk through the chain.

The company obtains its milk supply through village agents who have personal relationshipswith the farmers; it does not get directly involved with farmers. Depending on the socialstructure of the village, there may be more than one agent per village. The agents collect the milk and deliver to the company. The two parties have negotiated a price, but the company is notinvolved with what price the agent pays the farmers (although it is slightly above what thecooperatives pay in the state). Agents often provide loans to farmers to maintain their loyalty;typically, the agent competes with agents of other private companies for a farmers‟ milk supply.

Company employees are previous dairy cooperative employees who have enormous experience



in this area. Collection areas depend on milk density and areas in which the district cooperativeis less active and access to markets is efficient.

ii) The Orissa State Cooperative

The state cooperative is a dairy cooperative society registered under the Cooperative Society Act(1962). Currently, milk collected from 3 800 village societies and 224 000 farmers within 12district unions totals about 322 000 litres per day. There has not been much competition with theprivate sector in this region because of low productivity and little dairy development, althoughprivate sector investment in the dairy sector is on the rise.

iii) Gujarat Cooperative Milk Marketing Federation

The Anand Milk Union Limited (Amul) cooperative formed in 1946; but it has become a brandname managed by the Gujarat Cooperative Milk Marketing Federation (GCMMF). The GCMMFconsists of 13 district unions, involving 13 141 village dairy cooperative societies and nearly 2.7

million farmer members. With an aggregate milk processing capacity of 10.2 million litres perday, it is Asia ‟s biggest dairy business venture. The marketing network encompasses 3 000wholesale distributors and over 500 000 retail outlets, giving GCMMF a national reach that veryfew fast-moving consumer goods companies can boast. GCMMF has been exporting UHT -processed milk, ghee, skimmed and whole milk powder, butter, cheese and indigenous milk products to the China , Hong Kong , Singapore and the USA , among others.

Structure

GCMMF‟s Amul model of dairy development is a three-tiered structure, with the dairycooperative societies at the village level federated under a milk union at the district level and a

federation of member unions at the state level. Farmer members milk their cows twice daily(morning and evening). GCMMF collects the milk twice a day, makes regular payments to thefarmer members and provides them with cattle feed, fodder, animal breeding and veterinarianservices.

Anyone who owns a cow or a buffalo and makes a one time payment of 11 rupees (10 rupees forthe share certificate and 1 rupee for registration) can become a member of the village cooperativesociety. The applicant must agree to provide a set minimum quantity of milk, generally between600 and 700 litres, to the society each year. The farmer members elect a managing committeethat then chooses a chairman. The managing committee appoints a secretary to discharge thesociety‟s administrative functions.

At the second tier, there is a district level union that processes the milk procured from individualsocieties. Each of the 13 unions has a board of directors chosen by an electoral college drawnfrom the chairpersons of its affiliated societies. The union board in turn elects its chairman.

The final tier is constituted by the GCMMF, which is responsible for marketing the milk procured and processed into various value-added products at the union dairies. All the productsare sold under the Sagar or Amul umbrella brands. The federation‟s board consists of the



chairpersons of all 13 district unions. They elect the federation chairperson and appoint themanaging director, who is accountable to the nearly 2.7 million strong Amul dairy societymembers.

Elected representatives of the farmer members make policy decisions at all three levels, which

are then implemented by professional managers and skilled personnel employed by the farmermembers. This structure eliminates all middlemen. By placing the farmer members in command,in essence, of the dairy cooperative involves them in the development process.

This cooperative structure is democratic, and the farmers are in control, from the milking of theiranimals to the final marketing by the federation. For every rupee that GCMMF earns, roughly 75paise goes to the farmers. The mandate is clear – production by the masses, for the masses, at itsefficient best.

The farmer members democratically govern the entire cooperative structure to ensure that thehigher tier organizations are geared to serve the purpose of the lower levels and that the gains at

all levels flow ultimately back to the farmers in a significant measure. The core feature of thisstructure is farmer involvement in decision-making at all three stages – procurement, processingand marketing of milk and milk products. The value addition at procurement and processingstages can be realized only with effective marketing of products, thus making it an essentialfeature for success.

Services provided to farmer members

The dairy unions affiliated to GCMMF provide various inputs that contribute to enhancing theproductivity and quality standards, such as:

breed improvement and animal healthcare programmes;

extension activities;

supplies of balanced cattle feed on a no profit –no loss basis;

quality fodder seed distribution at subsidized cost;

a network of artificial insemination centres aimed at genetic upgrading of the animals using

frozen semen of pedigree bulls; these centres are managed by educated unemployed rural

youth who provide breeding services to the farmers;

frozen semen, liquid nitrogen and other consumables;

24-hour mobile veterinary services for emergencies.

It is this integrated approach to dairying and addressing farmers‟ needs at all levels that gives theAmul model its uniqueness. And it is why every third litre of milk from a cow or buffalo in

Gujarat is processed in a GCMMF union dairy.

iv) MACS in Andhra Pradesh (AP)

Dairy activities started at the district level in 1971. The originally chosen district union wasregistered under the Andhra Pradesh Cooperative Societies Act (1964). After the introduction of the MACS Act (1995), the district union opted for registration as a MACS to acquire betterfunctional autonomy for servicing its farmer members. The union is currently collecting 60 000



litres of milk per day from 650 villages, though it likely to increase up to 100 000 litres in thenext two to three years.

The MACS have a two-tier operation: at the village and district levels. A village society withelected officers manages operations at the lower level; an elected board of directors managers the

district society. The village and district societies each registered separately, and each has thefreedom to use its own profits.

The union provides its members with a range of services required for dairy development activity:

organizing thrift and credit cooperative society to facilitate the financial assistance for buying

milch cattle;

organizing AI services through an NGO;

making cross-breed or graded animals for farmers to purchase;

providing inputs such as concentrate feed, fodder seed, fodder slips and mineral mixtures at

subsidized rates to members;

supplying breeding bulls to societies;

providing veterinary health facility, de-worming and vaccination to the animals of members;

compensating members in the event of the death of an animal with either a grant or loan;

providing insurance coverage to members.

Comparative analysis of the four value chains

The following compares performance criteria for the four dairy value chains to determine howthey are likely to endure against future competition.

Demand conditions

The GCMMF has a wide range of traditional products as well as several new products catering tothe demands of the new generation, such as sugar-free ice cream. It is one of the largest sellingbrands of dairy products, with a presence in all parts of the country. The private dairy also has arange of modern products catering to the young generation, such as flavoured yoghurt. TheAndhra Pradesh MACS largely sells traditional products, such as milk, to urban consumers aswell as rural markets through village societies (small packets, 250 ml). The Orissa StateCooperative also largely sells milk and a few traditional products.

Market structure and governance

The competitive structure for the four models varies. Dairy is a regional industry with regionaldairies serving the local market, especially in the case of packaged milk. There is more scope forinter-regional trade.

The GCMMF competes with other multinational companies, such as Nestlé and Britannia, withcertain products but leads among dairy products in India. The private dairy is a leading brand inthe city of Hyderabad. However, the state of Andhra Pradesh has a well-developed dairy industrywith several private dairies present in the state and rigorous competition among them. The



Andhra Pradesh MACS largely sells packaged milk to the nearby areas and thus encounters lesscompetition in marketing its products. And as mentioned earlier, Orissa finds very littlecompetition to its packaged dairy products because there are hardly any private players in thestate.

The supply chain is closely linked to the governance structure of the chain. For instance, theGCMMF network is very strong, with farmer involvement at all levels in the chain. Thus it isdifficult for private players to procure milk directly from farmers. It is a similar situation withinthe Andhra Pradesh MACS. In Orissa, however, the cooperative network is not very strong andthe president of the village society wields a lot of power; farmer involvement in decision-makingat all levels is virtually non-existent. This has created keen competition from milk vendors inmilk procurement in that area. The private dairy in Andhra Pradesh experiences intensecompetition from several private dairies in milk collection. But most of these companies do notdeal directly with farmers. Milk is collected through village agents. There is no involvement of any company in any dairy development activity, and thus the companies compete with each otherfor milk collection.

The GCMMF collects its milk through village societies, with the cooperative setting the price.But it pays one of the highest prices in the country; milk collection is done in a transparentmanner (based on testing fat and SNF content). The MACS society also has similar norms (fortesting fat and SNF content) for milk collection. The MACS has the freedom to decide the pricepaid to farmers for their milk because they have autonomy in setting prices. Societies makingprofits through the sale of milk products can give higher returns to farmers because they do nothave to follow the cooperative price. The prices paid that the Andhra Pradesh MACS declares atthe district union are higher than the cooperative prices.

The Orissa State Cooperative collects its milk supply through a village society run by the

president who wields a lot of power; its farmers‟ price is relatively low compared with theGCMMF. In most cases, there is no testing for fat and SNF content on which prices should bebased. Average prices are fixed for cow and buffalo milk; however, influential people incommunity get better prices. In the case of the private dairy, milk purchases are done through theagent, with prices based on competition with agents of other companies and the declaredcooperative price. A large number of societies have electronic milk testing machines and moreare acquiring them.

Factor conditions

Livestock assets are likely to be better where organizations serving the area are involved in dairydevelopment activities. The GCMMF has been providing good AI services, which has enhancedthe quality of buffalo in the area. The Andhra Pradesh MACS have created a good network of services by involving the State Department of Animal Husbandry, Dairying and Fisheries andNGOs working in its area. With efficient services and involvement in breed development, thequality of herd is likely to improve in the near future.

The GCMMF as well as the Andhra Pradesh MACS provide their farmers with feed, animalmedicines and vaccines and breeding services. In the Orissa State Cooperative, feed is made



available at a subsidized rate through the village society. The society is also involved inproviding health and breeding services; however, the farmers still need to largely rely on thestate government to provide health and breeding services, which are somewhat inadequate. Thereis no facility for loans; however, medicines are available at cost, although supply tends to be aproblem. Because the private dairy collects milk through agents, it is not directly involved with

the farmers for service provision. The agents sometimes extend loans to farmers, which ensuresmarketing commitment by producers. These are general loans not specifically used for dairyactivities, and the interest rate typically is quite high.

Milk productivity depends on the level of extension support provided to farmers. The GCMMFprovides ongoing extension activities, including training sessions and exposure visits for women.The Andhra Pradesh MACS are also involved in extension to some extent. The Orissa StateCooperative offers hardly any extension activity; the private dairy does not involve itself inextension services at all.

Related and supporting industries

The GCMMF has created good processing and primary processing infrastructure. Its plants areISO certified and meet all the quality requirements. The private dairy processing plant also isISO certified; however, the primary processing at the village level is not very strong. The AndhraPradesh MACS have developed adequate processing facilities and plan to expand significantly inthe coming years. Milk quality was an issue previously for the Orissa State Cooperative, but thesituation has improved in recent years.

Prospects

The GCMMF is the most organized in meeting future growth because of its investing in dairy

development activities, such as ensuring the availability of feed and fodder and veterinaryservices. It is in a position to increase its procurement in the coming years. Also, in terms of development, the GCMMF leads the country in modern products, such as sugar-free ice cream.

The private dairy is not involved in dairy development activity and is only focusing on milk procurement. Faced with increasing competition, it will have to move to newer areas forexpansion. Because of low involvement of farmers in the Orissa Cooperative, the private sectorwill find it easy to move into milk procurement in its area. The lack of variety and quality of itsproducts will make it difficult for Orissa to compete with the private sector.

If the MACS model becomes popular, procurement will be affected. MACS involvement in dairy

development activity will help the model grow and expand the milk procurement. It is geared toface competition from the private sector because of close links with farmers at the village level.

Conclusions

Dairy has a lot of potential to improve rural incomes, nutrition and women empowerment, andhence is a very critical area for investment. A well-developed industry will enable millions of farmers to capitalize on the emerging opportunities and make a significant impact on rural



incomes. On the flip side, weak efforts towards dairy development also can have a significant butnegative impact on the dairy industry. The growth rate has been sluggish over the past few years.With an increase in demand on one hand and sluggish supply on the other, there is a likelyshortfall in demand in the coming years.

Major areas of intervention in the dairy sector have been highlighted in this review. Carrying outinterventions requires resources and commitment from key actors – government, NGOs,development agencies and the National Dairy Development Board – to partner and work together.

A comprehensive policy addressing the critical issues is required for the robust growth of thesector. The following highlights those issues:

1. The first issue is defining and implementing a policy for dairy development. Though a livestock

policy has been established at the national level, its implementation is at the state level because

agriculture is a state responsibility in India. But state policies addressing critical needs in dairy

development have yet to be clearly defined across the country. Some progressive states have a

well-defined policy, but it is lacking in most of the others. But even where a policy is clearly

developed, oftentimes implementation is a problem.

2. Lack of clarity between the roles of the State Livestock Development Agency and the State

Department of Animal Husbandry, Dairying and Fisheries is an issue for effective policy

implementation. For example, the National Cattle and Buffalo Breeding programme has not

been well implemented in several states. Further, availability of funds is a major issue in

implementing livestock activities. The Livestock Department is within the Department of

Agriculture and thus the resources are biased towards agriculture. There is need to emphasize

the importance of dairying to smallholder incomes to direct more resources towards dairy

development.

Two very significant factors for the growth of the dairy sector are dairy development activitiesand milk prices paid to farmers. In the liberated policy environment, any player can procure milk in any region. This is a very different situation from the earlier concept of milk sheds, whichlimited the agency or organization procuring milk to a particular area. Hence, earlier it madesense for agencies and organizations to invest in dairy development activities.

But the freedom for procurement has thwarted the incentive for private companies to invest indairy development activities. However, private sector investment in procurement is increasing.What is clear is that while the number of buyers is increasing, little is being done to develop thesector. In this situation, farmer-owned organizations (such as cooperatives, producer companies,common interest groups and women‟s self -help groups) have to be strengthened at the grassroots

level and linked to service and input providers.

Dairy farmer organizations can be used as a platform to address issues regarding availability of all inputs, including feed, fodder, breeding, veterinarian services, medicines, vaccines, credit andinsurance. As is evident from the examples presented previously, the GCMMF has been the mostsuccessful in meeting the input requirements of farmers. However, this model has not beensuccessful in other states because of issues with the basic organization of cooperatives.



Dairy cooperatives in several states function as parastatals and lack the spirit of cooperativeorganization with farmer involvement in ownership and decision-making. Alternative models of dairy farmer organizations – such as the MACS, producer companies, women‟s self -help groups – also need to be explored. International agencies and donor groups need to be directed towardscreating political will to strengthen dairy cooperatives and to set them up.

A very important aspect of dairy development is the price paid to farmers. Currently in manystates, the milk price is set by the cooperatives; this price is used by all other players to set theirprices, typically by paying 50 paise or 1 rupee more than the cooperative price in that area. Thefarmer‟s price for milk ranges from 9 to 11 rupees for cow milk and 13 to 14 r upees for buffalomilk (a key comparison is a litre of bottled water, which costs 10 – 12 rupees then why are milk prices so low? The GCMMF pays the highest prices in the country. In the areas where theAndhra Pradesh MACS have set up, their prices are higher than the cooperative prices (MACShave the freedom to declare their own prices). It is evident that where dairy farmer organizationsare strong, farmer prices are higher.

Low productivity per animal is another factor hindering development of the dairy sector. Manyissues related to low productivity have been discussed – an inadequate cattle and buffalobreeding programme, extension and management on dairy enterprise and feeding practices, andavailability of quality feed and fodder. Another important aspect related to low productivity isthe lack of quality animals for farmers to purchase. A major hindrance to the availability of quality animals in dairy developing areas is the policy regarding interstate movement of animals.

Finally, it is important to discuss the hygienic issues. Milk quality concerns go beyond the farmlevel and require assurance of safe milk at all stages, including within the informal sector.Through the formal channel, cooperatives, private dairies or any other form of dairy farmerorganization, quality can be addressed through training and education on clean milk practices,

including the use of bulk coolers. It is also important to develop diagnostic facilities for milk testing, including infrastructure and human resources, that enable constant monitoring forquality. At the processing level, plant certification will help to enhance consumer confidence.

Milk quality in the informal markets is an important issue. As noted, 70 – 85 percent (based ondifferent estimates) of milk is obtained and sold through the informal channel. In recent years,initiatives have focused on working with and providing training to traders. In Kenya, forinstance, licensing has been used to formalize the traditional sector. In India as well, theCapitalisation of Livestock Programme Experiences programme, along with the InternationalLivestock Research Institute, have undertaken some initiatives in this direction.

In the current situation, traders collecting milk at the farm then deliver it and milk products tourban and peri-urban areas. Each trader buys only small amounts of milk. There is scope toorganize the traders into groups and create joint facilities where they can test, process and storetheir milk supplies. These trader facilities could serve as wholesale or bulk suppliers for hotels,chaiwalas (tea sellers) and small sweetshops. These initiatives can help to address the qualityissues in the informal sector and also create employment opportunities in the non-farm sector.



An argument against working with traders is that formal sector involvement in dairying isincreasing and eventually there will be no room for informal players. However, looking at thecurrent reality, it will be several years before this materializes. In the meantime, the informalsector should not be ignored and organizing informal traders should be pursued.

Annex I: Overview of dairy marketing channels in India

Annex II: Income from dairy enterprise

Income from dairy enterprise per month (two-animal farm)

Economic analysis (accounting for household

labour and cost of green/dry

fodder obtained for free fromcommon resources or

neighbour fields)

Financial analysis (Does not account for

household labour and free fodder)

Feed cost 2 000 1 400

Labour cost 750

Medicine cost 60 60

Total cost 2 810 1 460



Total revenue (4 litre/animal/day @ 9 rupeescow milk or 14 rupees buffalo

milk)

2 160 – 3 360 2 160 – 3 360

Net income -(650) – 550 700 – 1 900

Source: Punjabi

Annex III: Milk price chart

GCMMF Orissa State

Coop MACS Private dairy (heritage)

COW Buffalo Cow Buffalo Cow Buffalo Cow Buffalo

Farmer price 9 – 9.5260/kg

fat

225+ someamount

(cooperative

pricing)Agent price 10

Getsalary

92 – 105 +incentive

240+incentive

Consumerprice

Source: Punjabi

Annex Table 1: Identifying critical issues in the dairy chain

Stage Priority Agent Issues

Policy

environment Developing livestock policyBreed development

Dept. of AnimalHusbandry,Dairying andFisheries

Lack of a coherent livestock development policyIneffective implementation of policyand projects due to lack of clarity inroles of different agenciesLack of resourcesLack of clarity between roles of different departmentsLack of regulation for quality of feedand medicines

Services Disease control/ health/breeding/extensionservicesSupport to dairy farmerorganizations/women‟sself-help groups

Dept. of AnimalHusbandry,Dairying andFisheriesCooperativesNGOsPrivate dairies

Inadequate coverage of veterinarianand breeding servicesNon-existent extension servicesScope to enhance activities of NGOs inthese areasLack of private sector involvement indairy development services andactivities

Inputs Feed supply Cooperative Quality/cost of feed



FodderMedicines/vaccine supply

FeedcompaniesMedicinecompaniesMedicine store

Ineffective approach for managementof common property resourcesQuality of medicines

Formal credit for animalpurchase

Banks/financialinstitutionCooperativesSelf-help group

Very poor access to formal credit atthe farm level

Informal loans for animalpurchase or other dairyneeds

TraderPrivatecompany agent

Very high rate of interest; farmer hasto sell milk at low price to the trader if he/she has borrowed money from thetrader

Production Dairy farmingSelling milk cooperatives/traders/private

dairy agents

Farmer Poor management and feedingpractices because of lack of information in the absence of

extension activities.Low productivity because of poorgenetic potential, poor feeding andmanagement practices, poor access tohealth and breeding services, lack of good-quality animalsAvailability of milk per householdvery lowLow profitability from dairy enterprise

Marketing/

processing Collection of milk fromfarmers through villagesociety, processing andmarketing of milk in citiesand urban areas

Cooperativesociety

Lack of coverage of villagesLack of transparency in milk testingand pricingLack of democracy in village societiesMarketing only in peri-urban/urbanareasMaintaining quality of milk/infrastructureMilk prices declared by cooperativeskept low and used as a benchmark price by other players

Purchase milk fromfarmers and selling milk and processed products toconsumers

Trader No transparency in milk pricingAdulteration and quality of milk andmilk productsUnhygienic conditions for milk processing

Purchase of milk fromfarmers through villageagents, processing andselling milk

Private dairy No transparency in pricing of milk Quality of milk



Retailing Selling of milk and milk products processed bycooperatives and privatedairies

Retailers

21 The first four factors were drawn from the diamond model; see Dr Michael E. Porter, 1985.Competitive advantage creating and sustaining superior performance. The fifth factor is from anadaptation of a model for agro industry value chains by Carlos Da Silva; see Carlos Da Silva andHildo M. de Souza Filho. 2007. Guidelines for rapid appraisals of agrifood chain performance indeveloping countries. FAO publication. Rome.22 Gujarat farmers receive the highest share of consumer prices compared to any other state in thecountry.

TABLE OF CONTENTSABBREVIATIONS 6GLOSSARY 8Types of AEFI 7Cluster of AEFI 10Reporting and Investigation of AEFI 11State Expert Committee on AEFI 13Monitoring and feedback 15APPENDIX 1 EVENTS TO BE REPORTED IMMEDIATELY 19APPENDIX 2 FIRST INFORMATION REPORT FORM 20APPENDIX 3 PRELIMINARY INVESTIGATION REPORT FORM 21APPENDIX 4 DETAILED INVESTIGATION REPORT FORM 22APPENDIX 5 CASE DEFINITIONS AND TREATMENTS FOR AEFI 31APPENDIX 6 DISTRICT REPORTING FORMAT FOR AEFI 35APPENDIX 7 LINELISTING FORMAT FOR AEFI TO BE USED AT STATE LEVEL 37APPENDIX 8 AEFI LABORATORY REQUEST FORM 38Table 1: Classification of Adverse Events Following Immunization 7Table 2: Frequency of common minor vaccine reactions 8Table 3: Summary of Rare Serious AE, onset interval and rate 9aaaa a a a a a a aaaaaaaa aaaaaa a a a a a a aaaaaaa aaaaa aaa a a a a a aaaa

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blankAC (UIP) Assistant Commissioner Universal Immunization ProgrammeAEFI Adverse Event Following Immunization

AE Adverse EventAFP Acute Flaccid ParalysisANM Auxiliary Nurse MidwifeBCG Bacillus Calmette-Guerin - vaccine for tuberculosis (TB)CHC Community Health CenterCommissioner FW Commissioner Family WelfareCMO/ CS Chief Medical Officer/ Civil SurgeonDCG (I) Drug Controller General of India












DF Deep freezerDIO District Immunization OfficerDIR Detailed investigation reportDM&HO District Medical and Health OfficerDPT Diphtheria -Pertussis (whole-cell) -Tetanus vaccineDT Diphtheria-Tetanus vaccine

EPI Expanded Programme on ImmunizationFDA Food & Drugs AdministrationFIR First information reportGoI Government of IndiaHA Health AssistantHep B Hepatitis BHep C Hepatitis CHIV Human Immunodeficiency Virus

ABBREVIATIONS6

ICD 10 International classification of diseases 10 th editionILR Ice lined refrigerator

MO Medical officerMO (PHC) Medical Officer Primary Health CenterMoHFW Ministry of Health & Family WelfareNCL National Control laboratoryNRA National Regulatory AuthorityOPV Oral Polio VaccinePHC Primary health centerPIR Preliminary investigation reportRIT Regional Investigation TeamSC Sub centerSEPIO State EPI OfficerSRA State Regulatory Authority

SOPs Standard operating proceduresTT Tetanus Toxoid VaccineVAPP Vaccine-Associated Paralytic PoliomyelitisVPD Vaccine Preventable DiseaseWHO World Health OrganizationUHC Urban Health CenterUIP Universal Immunization ProgrammeUNICEF United Nations children.s fundUT Union territory7

GLOSSARYAdverse event following immunization (AEFI): A medical incident that takes place after an

immunization, causesconcern and is believed to be caused by the immunization.Serious AEFIs are defined as those that are life threatening and those that result inhospitalization (or prolongedhospitalization), disability (or have the potential to result in disability) or death.Minor AEFI: A reaction that is not .serious..Trigger event: A medical incident that stimulates a response, usually a case investigation.Causal association/link: An AEFI which is caused by administration of a particular vaccine.Causally associated events



are also temporally associated (i.e. they occur within a limited time after vaccine administration),but events which aretemporally associated may not necessariy be causally associated. Causality is usually basedon:l Laboratory findings (e.g. isolation of vaccine virus strain), and/orl Unique clinical syndrome (e.g. anaphylaxis), and/or

l Epidemiological studies showing an increased incidence in vaccinated groups as comparedwith unvaccinated groups.Coincidental adverse event: A medical event that would have occurred whether or not theindividual had received animmunization prior to the event.Cluster: Two or more cases of the same adverse event related in time, the time interval sincevaccination, geography orvaccine administered.Injection safety: The public health practices and policies dealing with various aspects of thecorrect administration ofinjections (including waste disposal) aimed at minimizing the risk of transmission of blood-bornepathogens. All injections,

irrespective of their purpose, are covered by this term (see definition of safe injection practices).Immunization safety: The public health practices and policies dealing with the various aspectsof the correct administrationof vaccines. They focus on minimizing the risk of transmission of disease with the injection andon maximizing theeffectiveness of the vaccine. The term encompasses the spectrum of events from propermanufacture to correct administration.The term usually includes both injection safety (programmatic errors compromising injectionsafety) and vaccine safety(faults in the vaccine itself compromising vaccine safety).Programme-related AEFI or programme error: A medical incident that was caused by someerror in the transportation,

storage, handling, or administration of vaccine.Safe injection practice: Those public health practices and policies which ensure that theprocess of injection carries theminimum of risk, regardless of the reason for the injection or the product injected. This is thepreferred generic term for thissubject.8

Surveillance: The continuing, systematic collection of health data that is analyzed anddisseminated to enable publichealth decision-making and action to protect the health of populationsTemporal association/link: An event which occurs close in time to vaccine administration.Temporal association is

independent of causal association, and an event which is temporally associated with vaccineadministration may or may notbe shown to be caused by the vaccine.Vaccine: Biological substance that is administered to individuals to elicit immunity (protection)against a specific disease.Combination vaccines (e.g. DPT) protect against more than one disease.Live viral vaccines (e.g. poliomyelitis, measles) contain attenuated (weakened) version of thedisease-causing virus. The



vaccine virus causes a mild infection, usually with no or minimal symptoms, that createsimmunity against that virus.Vaccine reaction: A side-effect (usually mild) such as soreness at the site of injection followingadministration of avaccine. It is usually of short duration (two or three days) with no long-term consequence. It mayrequire mild medication

such as paracetamol for a short while to alleviate the symptoms.69

STANDARD OPERATING PROCEDURE (SOP) FORINVESTIGATIONOF ADVERSE EVENTS FOLLOWING IMMUNIZATION (AEFI)An adverse event following immunization (AEFI) is defined asamedical incident that takes place after an immunization,causesconcern, and is believed to be caused by immunization.Types of AEFIAEFIs can be classified into 5 types. These are described and defined in Table 1.

Table 1: Classification of Adverse Events Following ImmunizationType of AEFI1. Vaccine reaction2. Programme Error3. Coincidental4. Injection Reaction5. UnknownDefinition

An event caused or precipitated by the activecomponent or one of the other components ofthe vaccine. This is due to the inherent propertiesof the vaccine.An event caused by an error in vaccine preparation,handling or administration.An event that occurs after immunization but isnot caused by the vaccine. This is due to a chanceassociationEvent from anxiety about, or pain from the injectionitself rather than the vaccineEvent.s cause cannot be determined

ExampleAnaphylaxis due to measlesvaccineBacterial Abscess due to unsterileinjectionPneumonia 4 days after oral poliovaccine administrationFainting spell in a teenager after



immunization10

Table 2: Frequency of common minor vaccine reactionsVaccineBCG1

Hepatitis B

MeaslesOPVTetanusDPT2

TreatmentLocal reaction (pain,swelling, redness)CommonAdults up to 30%Children up to 5%Up to 10%None

Up to 10%3

Up to 50%Cold cloth at injection siteParacetamol5Fever-1-6%Up to 5%Less than 1%Up to 10%Up to 50%Give extra oral fluids

Put on cool clothingTepid sponge or bathParacetamol5Irritability, malaise andnon-specific symptoms--Up to 5%Less than 1%4

Up to 25%Up to 60%¹ Local reactogenicity varies from one vaccine product to another, depending on the strain and the number of viable bacilli.²With whole cell pertussis vaccine. Acellular pertussis vaccine rates are lower.

³Rate of local reactions likely to increase with booster doses, up to 50 to 85%4Diarrhoea, Headache, and/or muscle pains5Paracetamol dose: up to 15 mg/kg every 4 hours, maximum of 4 doses in 24 hours

11

Table 3: Summary of Rare Serious AE, onset interval and rateVaccineBCGHepatitis BMeaslesa



OPVTetanusDPTa Approximately 90% of those receiving a second dose are already immune. Reactions do not occur if the child/woman is alreadyimmune. This is not thecase for anaphylaxis, where this type of reaction is more likely on the second or subsequent doses.b The risk of Vaccine-associated Paralytic Poliomyelitis (VAPP) – is higher after the first dose (1.4 - 3.4 per mil lion doses) compared

with the second and thirddoses (0.17 per million doses).c Seizures are most likely febrile in origin, and rate depends on past history, family history and age, with much lower risk in childrenunder the age of 4 months.

ReactionSuppurative lymphadenitisBCG OsteitisDisseminated BCG infectionAnaphylaxisGuillain-Barre Syndrome (plasma derived)Febrile seizuresThrombocytopenia (low platelets)Anaphylaxis

Vaccine-associated paralytic polioBrachial neuritisAnaphylaxisPersistent (>3hours) inconsolable screamingSeizuresHypotonic hypo responsive episode (HHE)Anaphylaxis/shockEncephalopathyInterval between vaccinationand onset2-6 months1-12 months

1-12 months0-1 hour1-6 weeks5-12 days15-35 days0-1 hour4-30 days2-28 days0-1 hour0-24 hours0-3 days0-24 hours

0-1 hour0-3 daysNumber of eventsper million doses100-10001-70021-25



333331-501.4-3.4 b

5-101-6

1,000-60,000570c

570200-112

Programme ErrorsNon-sterile injection:l Improperly sterilizing syringe & needlel Contaminated vaccine or diluentl Reuse or reconstituted vaccine at subsequent sessionsl wiping the needle with a swab, administering injection

over clothesReuse of disposable syringe & needleReconstitution Error/ Wrong vaccine preparationl Reconstitution with incorrect diluentl Drug substituted for vaccine diluentl Inadequate shaking for T series vaccineInjection at incorrect sitel BCG given subcutaneouslyl DPT/DT/TT given superficiallyl Injection into buttocksVaccine transportation/storage incorrectContraindications ignored

Possible Adverse event that may occurInfection such as local abscess at site of injection, sepsis,toxic shock syndrome, or death.Transmission of blood-borne infections such as HepB, HIV, Hep CVaccine ineffectiveNegative effect of drug, e.g. insulinDeathLocal abscessLocal reaction or abscessLocal reaction or abscessSciatic nerve damage

Local reaction from frozen vaccineVaccine ineffectiveAvoidable serious reaction

CLUSTER OF AEFIWorking definition for adverse event clusterA cluster of AEFIs is defined as two or more cases of the same adverse event related in time,place or vaccineadministered. The exact nature of the relationship between the adverse events (e.g., duration of.time., proximity of .place.)



will differ by the nature of the events and the circumstances within which they occur.13

Different types of AEFI clusters are illustrated by the following examples:l Two (or more) cases of abscesses following vaccinations administered in a single immunizationsession, whetherfixed or outreach. (Duration of time in hours.)

l Two or more cases of deaths following measles vaccination during a mass immunizationcampaign over severaldays.l Two (or more) cases of disseminated BCG infection in a district or province in a month.(Duration of time maybe in months and will depend on background rate of risk factors for disseminated BCG infectionsuch as severeimmune deficiency states. Similarly the definition of the relationship in place may extend beyonda single healthunit or district, depending on population size and the background rate of risk factors.)

Reporting and Investigation of AEFIAt Field Levell ANMs, HAs and other field level health workers and Medical Officers of Primary Health CentersMO(PHC)should follow-up all children and mothers they vaccinated during the next vaccination session orfollow-up field/ home visits (or post and ante-natal visits), to monitor the occurrence of any AEFI.l During the vaccination session, vaccinators should inform all parents and guardians about therisk of mild AEFIsthat could occur and encourage them to report the AEFIs described or any illness that causesconcern after theimmunization to the respective ANM/ HAs or to the MO (PHC). Parents and guardians shouldbe given instructionsto manage fever with sponge baths, paracetamol and extra oral fluids. In cases of fever that

remains intractable(with or without a febrile seizure) and for other severe illness, the child should be taken to atreatmentfacility for urgent treatment.l In case of a serious AEFI or other AEFI which warrants investigation (see AEFIs to be reported& investigatedin the Annex 1), the MO (PHC) should be informed by telephone immediately.l On receipt of information about any other AEFI, the ANM/HA should report the same in themonthly reportingform as per the existing timeline for monthly reports.At PHC levell Once information regarding an AEFI, including any concerns reported by the parents, is

received by the MO(PHC), he/she should personally initiate an investigation to verify the facts, for any serious eventhe will fill theFirst Information Report (FIR) (Annex 2).l If the event is a reportable AEFI (see annex 1), FIR should be filled in duplicate and a copyshould be sent to theDIO as soon as possible. For serious events (see annex 1) the completed form should be sentwithin 24 hours ofthe report. For all other events the report should be sent monthly.



114

l If the reported AEFI is an event that needs investigation (see annex 1), the MO/PHC shouldinform the DIO ofthe case(s) by telephone or fax immediately. The MO (PHC) will keep copy of FIR at PHC level.l In the event of death following AEFI, the incriminated vial of vaccine and syringe used toadminister the vaccine

should be collected and sent under cold chain requirement to DIO. If required, a post-morteminvestigationshould be conducted to assist with the investigation.l If the event is due to a programmatic error, actions should be taken to correct wrong practices.l In situations where no reports of AEFIs are received during the month, a .Nil. report should beprepared bywriting word ..NIL. across the monthly reporting form and sent to the DIO and the copy kept in aseparate fileat the PHC.At Medical Institution Levell All medical officers treating patients with conditions, as given in the list of reportable AEFIs,(especially among

the children admitted to pediatric units and children with injection site abscess to the surgicalunits) shouldascertain their immunization history. If the event is in the list of events to be reportedimmediately then FIRshould be filled in duplicate and sent to the DIO within 24 hours. Rest of the events should bereported in themonthly reporting form.l If the AEFI is an event that needs investigation (see annex 1), it should be informed to the DIOby telephone orfax immediately and followed up by FIR within 24 hours.l In the event of death following AEFI, the incriminated vial of vaccine and syringe used toadminister the vaccine

should be collected and sent under cold chain requirement to DIO. If required, a postmorteminvestigationshould be conducted to assist with the investigation.l Medical officers should give their fullest cooperation to DIOs and RITs to investigate AEFI byproviding clinicalinformation and by carrying out the appropriate laboratory investigation, and facilitatingpostmortem investigationwhere needed.At District (DIO) Levell On receipt of FIR from hospitals and MO (PHC), for cases that warrant investigation, the DIOshould initiatean investigation by filling up PIR and Detailed investigation form (DIR). Remaining reports in the

monthlyreporting forms will be compiled for future reference and further analysis using the form inAnnex 6. The FIRshould be sent to AC (UIP) within 24 hrs, the PIR within 7 days and the DIR within 90 days.Original copies ofFIR/PIR and DIR should be maintained in a separate file at district level.l Events that need to be investigated by RIT (see annex) should be intimated to the coordinatorof the respective



RIT through the SEPIO by telephone or fax. The DIO should assist the RIT to carry out theinvestigation.15

When applicable the AC (UIP) should always be informed of the investigation to take place;he/she will assist inthe investigation whenever possible.

l In the event of death following AEFI, the incriminated vial of vaccine and syringe used toadminister the vaccineshould be collected and sent under cold chain requirement to CRI Kasauli for laboratoryinvestigation.l On completion of the investigation, the DIO should provide feedback on the outcome of theinvestigation to theMO (PHC) and HA with appropriate corrective measures.l DIO should maintain a line listing of all cases of AEFI reported to him/her throughFIR/PIR/monthly reports.This line listing according to blocks should be maintained on a monthly basis and a copy shouldbe forwarded tothe SEPIO before 20th of following month. Form similar to appendix 7 may be used for this.

Regional Investigation Team (RIT)l The epidemiologist in each RIT should act as the coordinator and focal point for that team.l All deaths incriminated to AEFI, AEFIs causing public concern, serious events not specified inthe reportingform but warrant detailed investigation, AEFI clusters, where cause is not clear and any othersituations whenrequested by SEPIO should be investigated and a report made available.l The coordinator of the RIT will receive requests for investigations from SEPIOl Since RIT members are located in the main referral hospitals in the regions, medical officersand nodal personswho are in charge of AEFI reporting also can in parallel inform RIT through the SEPIO to initiatean early

investigation.l In the event of a death, the RIT should after an onsite investigation make a preliminary reportavailable to theSEPIO within 72 hours. The final report should be ready within a reasonable time (3 months)period aftercompleting necessary tests and detailed investigations. Report should be prepared according tothe DIR and anyadditional details deem necessary can be forward with it.

State Expert Committee on AEFINote: These generic terms of reference have been drafted as a single TOR to cover (a) caseinvestigation andimplementation issues and (b) expert review or causality assessment of cases. Options for

establishment of separate committeesfor the respective areas of responsibility, a single committee (with or without subgroups for therespective areas) oralternative structure may be decided by States.I. Terms of reference for Case Investigation and other Implementation issues· Provide technical advice on the implementation of the AEFI system (including trainingactivities, developmentof training materials in local language if required)16



l Review aggregate reports and advise on analysis and reporting of AEFI data advising ondevelopment & maintenanceof a state databasel Recommend cases for expert review and causality assessment, oversee regularl Evaluations of the surveillance system and recommendations for further strengthening.l Investigate serious and unusual AEFI (investigation will be initiated within 24 hours of being

reported to theteam).Composition: It is recommended that the committee/team with overall responsibility asdescribed above shouldcomprise as a minimum, the SEPIO, an epidemiologist, a paediatrician/clinician. Additionalmembership (or participation onan ad hoc basis) of a microbiologist, and 1 or more DIOs should be considered.II. Terms of reference for Expert Review and Causality AssessmentAn expert advisory committee/panel will be established to:l Review individual serious and unusual AEFIs and other AEFIs referred to it by the .CaseInvestigation andImplementation group. in order to assess a potential causal link between the event and the

vaccine. This reviewwill be most effective if done in a comprehensive and standard manner consistent with theinternational criteriafor causality assessment listed below.l Monitor reported AEFI data for potential signals of previously unrecognized vaccine-relatedadverse events andmake recommendations for further investigation.WHO criteria for assessment and classification of the likelihood of a causal association betweena vaccine (ordrug) and an adverse event:l Very likely/Certain: Clinical event occurring in a plausible time relationship to vaccineadministration, and

which cannot be explained by concurrent disease or other drugs or chemicals.l Probable: Clinical event with a reasonable time relationship to vaccine administration, andwhich is unlikely tobe attributed to concurrent disease or other drugs or chemicals.l Possible: Clinical event with a reasonable time relationship to vaccine administration, but whichcould also beexplained by concurrent disease or other factors.l Unlikely: Clinical event whose temporal relationship with vaccine administration makes a causalrelationshipimprobable, and in which other factors or underlying disease provide a plausible explanation.l Unrelated: Clinical event with a temporal relationship which is not compatible with vaccineadministration, and

which could be explained by underlying disease or other factors.l Unclassifiable: Clinical event with insufficient information provided to allow for an assessmentof the cause.17

Criteria (Evidence) for Establishing Causality:l Biologic plausibility (coherence with existing information)l Strength of the associationl Consistency of the associationl Specificity of the association



l Temporal sequenceComposition: It is recommended that the committee/panel with above responsibility should havebroad expertise,including a paediatrician/neurologist, physician, microbiologist, epidemiologist, the SEPIO, arepresentative of the StateDrug Control Authority. In addition, the DIO and/or other designated officers from concerned

districts should be invited toparticipate in meetings of the committee to review AEFI cases.The committee will meet at least twice a year to review the serious and unusual AEFI.

Monitoring and feedbackAt Community Levell When ever a parent, public or any other interested group brought any AEFI to the notice of anymember of thehealth team, they should be assured that after an investigation they will be informed about thetrue facts of thesituation.l In situations were cause of an AEFI is obvious, after in consultation with the MO (PHC),parent/public should

be informed the reason for the AEFI and if it is due to a programme error, it blame should beadmitted and publicshould be assured that all possible corrective measures has been taken to prevent anoccurrence of such event inthe future.At PHC Levell At every monthly meetings, MO (PHC) should discussed the types of AEFI reported, results ofinvestigations,action taken and corrective measures adopted with ANM/ HAs and other field health staff.l Contents of the Quarterly and annual feed back reports received from district and state levelshould also be apart of feedback to field health staff during these meetings when they core received.

At District (DIO) Levell DIO should maintain a log to monitor the completeness and timeliness of FIR/PIR/DIR/ Monthlyreport receivedfrom MO (PHC), RIT and from the reporting hospitals come under his/her purview.l When Monthly report or the FIR/PIR is not received from a particular hospital or from a PHCbefore the dead158

line, reminder should be sent and DIO should make sure that he/her received all reporting formsin reasonabletime.l At the end of every quarter and annum DIO should analyze the data available in FIR/PIR/DIR/ Monthly reports

by filling the form in annex 6, a summary report of this should be sent to the MO (PHC)s and tothe SEPIO.At State Levell SEPIO should maintain a log to monitor the completeness and timeliness of all reporting formsreceived fromDIO.l When the reports are not received from a particular DIO before the dead line, reminder shouldbe sent andSEPIO should make sure that he/her received all AEFI forms in reasonable time.



l At the end of every quarter and annum SEPIO should analyze the data available in annex 6 & 7and compile areport, and feed back it to the DIOs, Reporting Hospitals, RIT, Expert committee, to the nationallevel and tothe all interested officials and institutions. It.s contains should be discussed at least Quarterly atthe DIOs

meeting.General Instruction for report writingl The basic principles of field investigations of infectious diseases should be adopted for theinvestigation of AEFI,especially if there is clustering of cases. Preliminary diagnosis from first reports must beclinically examined. It isimportant that non-immunized children . of the same age group in the locality are alsoinvestigated and examinedto include temporal relationship.l Particularly if the type of AEFI is unexpected and not easily explainable, views other expertsmust carefullyrecord all signs and symptoms and timing of these for review.

l A detailed write-up is necessary as the reports are likely to be reviewed by both at the Stateand National level.Uniformity in the format of the reports facilitates review. The report should start with generalinformationregarding the place where the events occurred. The name of the state, district and PHC / wardshould be stated.The following points should be covered in the report:a. General information and details of investigation:- When the first symptoms were observed, what they were and who reported the event;- Who conducted the investigations and how long after the first symptoms were these started:- How was the investigations conducted (was active search included, were relevant recordschecked and

whether parents of children and other representatives of the community contacted?)- No. of children immunized and the type of reaction observed. The line lists and summarytables shouldbe attached;- If any unimmunized children in the area had similar symptoms.19

b. Clinical aspects for affected child:- Site of injection of each vaccine and time given;- Detailed clinical picture;- History of previous doses;- Treatment given;- Outcome of illness;

- Diagnosis by treating physician and any relevant observation;c. Operational aspects:- Batch no. of involved vaccines;- How are immunization sessions generally provided in the area? Procedure followed on the dayof theevent (whether the session was on the scheduled day);- When and from where the vaccines were received. How were the vaccines stored andtransported.Batch no. of the vaccines;



- How many syringes and needles were available and procedure followed for the sterilization ofequipment;- Who administered the vaccines and the training they had received;- Have similar reactions been observed in the past and were not reported;d. Laboratory investigation:- The samples will be sent to CDL, Kasauli for testing. (The test reports are not expected to be

availableat the time of writing the report);- The samples should be sent under proper cold chain condition. The forwarding letter shouldexplain thecircumstances under which the samples were sent. The used vial with the remaining vaccine aswell asunused vials of the same batch from the same storage point should be sent.- Any other samples sent for testing; name of the laboratory;e. Autopsy;- If a post-mortem was conducted relevant findings may be included.Since the purpose of investigations is to identify the underlying cause of AEFI and suggestcorrective measures,

operational aspects of the program must be carefully reviewed and noted in the written report.Also please mention followingat the end of the report.20

f. Follow . up:- State briefly follow . up measures taken;g. Suggestions and recommendations:- What was the likely cause of the adverse event;- Further steps would you recommend to minimize the risks in the future:21

Events to be reported and investigated immediatelyl Any death, hospitalization, disability or other serious and unusual events that are thought by

health workers orthe public to be related to immunizationl Anaphylaxisl Toxic shock syndrome (TSS)l Anaphylactoid reaction (acute hypersensitivity reaction)l Acute flaccid paralysis*l Encephalopathyl Sepsisl Any event where vaccine quality is suspectedl Any cluster of events*Any case of AFP will be reported through the current system for AFP surveillance and reportingEvents, which are to be reported in the monthly reporting forms.

l Persistent (more than 3 hours) inconsolable screaming,l Hypotonic hypo-responsive episode (HHE),l Severe local reaction,l Injection site abscess (bacterial),l Seizures including febrile seizures,l Brachial neuritis,l Thrombocytopenia,l Lymphadenitis,l Disseminated BCG infection,



l Osteitis / Osteomyelitis.Common minor reactions usually resolve without any serious consequences.However, if there is a change in the nature, severity or the frequency with which these reactionsoccur, health staffshould report this to their supervisor.Also, if any of these events occur in cluster or cause a major public concern then they should be

reported andinvestigated immediately following the same guidelines as for the serious AEFIs.

APPENDIX 122

FIRST INFORMATION REPORT FORMFirst Information ReportAdverse Events Following Immunization

(To be reported within 48 hrs to the GoI)State DistrictBlock Date of reportName

Age (DOB) Sex: Male/ FemaleMother.s / Father.s NameComplete Address of the caseDate & time of vaccination Date & time of onset of symptomsComplete address of place of vaccinationVaccines givenBatch Number & Expiry date of each vaccineType of reactionDate of DeathAny other comment1

Name of person filling the reportSignature and Designation1 Preliminary report will follow in a week and detailed investigation report will be submitted in three months.

On completion the form should be sent along with the monthly surveillance report of AEFI toAssistant Commissioner(UIP), CH division of Govt. of India (Fax No. 011-23062728 or email: [email protected]

APPENDIX 223

PRELIMINARY INVESTIGATION REPORT FORMPRELIMINARY INVESTIGATION REPORTAdverse Events Following Immunization

(To be reported within 7 DAYS to the GoI)State DistrictBlock Date of report

Name:Age (DOB): Sex: Male/ FemaleMother.s / Father.s NameComplete Address of the caseDate & time of vaccination Date & time of onset of symptomsVaccines givenComplete address of place of vaccinationBatch Number & Expiry date of each vaccine



Type of reactionDate of DeathProbable cause of death:Probable cause of the AE: Programme error/ Vaccine reaction/ Coincidental/ UnknownFurther action planned: Yes/ No (if Yes Details)Any other comment

Name of person filling the report Signature and DesignationOn completion the form should be sent along with the monthly surveillance report of AEFI toAssistant Commissioner(UIP), CH division of Govt. of India (Fax No. 011-23062728 or email: [email protected]

APPENDIX 324

DETAILED INVESTIGATION REPORT FORMDETAILED INVESTIGATION REPORTAdverse Events Following Immunization (AEFI)

(To be reported within three months)Adverse event following Immunization or Death after Immunization

Date of Investigation: Case ID No.: IND (AEFI)/_ _ /_ _ _ /_ _ / _ _ _ Usesame coding as done for AFP cases1. Name of child affected (In Block Letters)2 Name of Parents Father.s nameMother.s name3 Age and Sex . ./. ./ . . Date of Birth Male/ Femaleyrs mo days ( if know)4 Full detailed address

5 Place of immunization Health facility/ Out reach session site/Field camp/ Hospital/ Maternity home/ Private clinic/ any other place6 a. Date and time of immunization

b. Location of immunization session(Full address)7 No. of children immunized at the session8 Date and time of onset of AEFIDate of Initial report

APPENDIX 4BCG___ DPT1___ DPT2___ DPT3___ DPT B___ OPV1___ OPV2___ OPV3___ OPV B___ HEPB 1___ HEPB 2___ HEPB3___ MEASLES___ DT___ TT1___ TT2___ TT B___ VITA___ OTHERS___ 25

9 Type of AEFI

10 Was the patient admitted to hospital Yes/ No/ Unknown11 If Yes, date & Time of admissionName of HospitalWard noCentralized admission numberOutcome Recovered/ still in hospital/ death/ unknown/ Residualproblem12 SYMPTOMS AND SIGNSa. Time of onset



b. Sign of shock present/absentc. Temperatured. Pulsee. Respirationf. Convulsiong. Vomiting

h. Diarrhoeai. Altered sensorium

j. Rashk. Any other symptoms & sign (pl specify)l. Progress of symptoms and signs withbrief history & chain of events (Pleaseattach additional sheet if required orpatient records if available)26

m. Mention whether above sign andsymptoms are seen by investigating officeror whether above sign and symptoms are

noted from hospital record13 Treatment given (attach copy of case sheet,if available)14 GROWTH & DEVELOPMENT/PAST/ FAMILY HISTORY (please fill as relevant to case)a. Type of Delivery Normal delivery/ LSCS/ Assisted birthb. Gestation Full term/Premature/Post datedc. Complications during birthd. Birth weight (if possible)e. Present Weight (if possible)f. Present length/ height (if possible)g. Present head circumference (if possible)h. Developmental milestones Gross motor

Fine MotorLanguageAdaptive & Sociali. Past illness like allergy, asthma,convulsion etc

j. Any previous history of similar event Yes/ No/ Unknownafter immunizationk. Family history - history of epilepsy,allergy, asthma etc in the family27

l. Any history of similar event in siblings Yes/ No/ Unknownm. Was the child on any concurrent Yes/ No/ Unknown

medication for any illness If yes: Indication & Dosage15 INFORMATION ON IMMUNIZATION (IN CASE PROGRAMME ERROR SUSPECTED)a. Name of worker who administeredvaccineb. Designationc. Length of serviced. Experiencee. When did worker receive the lasttraining in immunization



f. Name of Health Assistant (Supervisor)g. Designationh. Length of servicei. Experience

j. When did Health Assistant (Supervisor)receive the last training in immunization

16 k. Total number of mother and childrenimmunized. Attached detailed list givingname/age/sex/vaccines givenl. Any history of similar event reported a. At same clinic: Yes/ No/ Unknown( among those vaccinated) b. Using same vaccine type at previous clinic sessions: Yes/ No/ UnknownIf Yes Specify eventNumberPlace28

m. Any history of similar event reported a. At same clinic session: Yes/ No/ Unknown(among unimmunized) b. In the field: Yes/ No/ Unknown

If Yes Specify eventNumberPlacen. At what stage was the index child a. Within the first few doses of the vialimmunized b. Within the last few doses of the vialc. Within the first vaccinations of the clinic sessiond. Within the last vaccinations of the clinic sessione. Unknowno. Vaccination technique (observe the Reconstitution: Satisfactory/ Unsatisfactory/ Not observedrelevant vaccinator) Drawing of vaccine: Satisfactory/ Unsatisfactory/ NotobservedInjection technique: Satisfactory/ Unsatisfactory/ Not

observed17 DETAILS OF VACCINE GIVEN PRIOR TO AEFIa. Date of receipt of vaccine of implicated MoH/ Statebatch by Regional StoreDistrictPHC/CHC/ Urban Health CenterSub center/ Out reach session siteb. Status of maintenance of cold chain at StateRegional storeDistrict Head QuarterPHC/ Urban health postSubcenter

Session Sitec. Is there a suspicion of breach of coldchain as per records? (If so, when &where?)29

d. Is there a suspicion of freezing of .T.series vaccines? (If so, when & where?)e. Where are the vaccines and In the PHC/CHC:diluents stored In the Subcenter:



In the Clinic:Others (specify)f. How are the vaccines transported In a vaccine flask or vaccine carrier/ In a cold box/ Others(specify)g. Is the packing of vaccine Satisfactory/ Unsatisfactory/ Not observedh. Maintenance of cold chain for unopened/ Satisfactory/ Unsatisfactory/ Not observed

opened vials during immunization sessioni. Status of the vaccine storage in the Deep freezer: Satisfactory/ Unsatisfactory/ Not observedrefrigerator/s Status of the VVM: Satisfactory/ Unsatisfactory/ NotobservedMain compartment of refrigerator: Satisfactory/ Unsatisfactory/ Not observed

j. Are any other drugs or food stored in Yes/ No/ Unknownthe refrigerator/s If yes, specifyk. If vaccine given by private practitioner, Source of vaccine: Govt supply/ procured frommanufacthen turer/ pharmacyStatus of cold chain at clinic: Satisfactory/ Unsatisfactory/

Not observedStatus of cold chain at procurement site: Satisfactory/ Unsatisfactory/ Not observedIF VACCINE GIVEN DURING FIELD CAMP/ OUTREACH SESSIONl. Time of collection of vaccine fromHealth Post/ PHC for field camp immunization

30

m. Time of receipt of vaccine at fieldcamp site (immunization session site)n. Maintenance of cold chain duringtransit from Health Post/ PHC to field

camp siteo. Name of person collecting vaccinefrom fixed centre to field camp sitep. Vaccines used BCG/ DPT/ OPV/ Measles/ Hepatitis/ Vit A/ others(specify)q. If reconstituted, what diluent was usedr. Which type of syringe was used for Reusable/ Disposable/ ADreconstitution?s. Practice of reconstitution Same syringe used for multiple vials of same vaccine/ Samesyringe used for reconstituting different vaccines/ Separatesyringe for each vial/ Separate syringe for each vaccinet. Is the needle left in reconstituted Yes/ No/ Not observed

vaccine vialu. Whether label of vial intacti) Batch Noii) Expiry dateiii) Manufactured byv. Date and time when vial openedw. Date of vaccine sent for testingx. Result of sample of vaccine sent fortesting



y. Is the vaccine collected by FDA or SRAi) Name of the officerii) Date when vaccine sent for testing31

iii) Place where vaccine sent for testingiv) Result of vaccine sent for testing

18 STERLISATION OF SYRINGE AND NEEDLEa. Types of syringes used to vaccinate Reusable/ Disposable/ ADthe child.b. Method of sterilization if reusablesyringes usedc. Name and Designation of person whowas responsible for autoclaving/ boilingfor 20 minutesd. Date and time of autoclaving/ boilingstartede. Date and time of autoclaving/ boilingcompleted

f. Sterilization satisfaction as per recordsof Signolac strip registerg. No of syringes & needles autoclavedh. No of syringes & needles used for thesession.19 INVESTIGATIONS DONEa. Whether any blood tests were doneb. If yes, results of blood tests

c. Whether CSF was examinedd. If yes, result of CSF tests

32e. Any other investigation donef. Results of other investigations20 IN CASE OF DEATHa. Any post mortem doneb. If yes, were was it donec. Post mortem findings in brief(Please attach the post mortem report)21 Probable cause of death/ Residual problem22 Probable cause of AE Programme error: Injection Sterility/ Vaccine reconstitution/ Administration technique/ Vaccine storage/ Vaccinetransportation/ Unknown/ Others (specify)____________

Vaccine reaction: Vaccine lot problem/ Known vaccinereaction at expected rate/ othersCoincidental: Similar events in unimmunized/ othersUnknown23 Remarks including recommendation (orany addition information / action takenor to be taken)Name/s of the person doing investigationSignature and Designation



Please attach photocopies of relevant documents such as case records, inpatient records, labreports etcIf certain information is not available at the time of filling report to don.t delay in sending thereport, please send theform within 90 days. You can forward additional information whenever it becomes availableOn completion the form should be sent along with the monthly surveillance report of AEFI to

Assistant Commissioner(UIP), CH division of Govt. of India (Fax No. 011-23062728 or email: [email protected]

CASE DEFINITIONS AND TREATMENTS FOR AEFIAdverse eventAcute flaccidparalysis (Vaccineassociated paralyticpoliomyelitis)Anaphylactoidreaction (acutehypersensitivity

reaction)AnaphylaxisDisseminated BCGinfectionsEncephalopathyCase definitionAcute onset of flaccid paralysis within 4 to 30days of receipt of oral poliovirus vaccine(OPV), or within 4 to 75 days after contactwith a vaccine recipient and neurological deficitsremaining 60 days after onset, or death.Exaggerated acute allergic reaction, occurring

within 2 hours after immunization, characterizedby one or more of the following:l wheezing and shortness of breath due tobronchospasml laryngospasm/laryngeal oedemal One or more skin manifestations, e.g.hives, facial oedema, or generalizedoedema.Less severe allergic reactions do not need tobe reported.Severe immediate (within 1 hour) allergic reactionleading to circulatory failure with or

without bronchospasm and/or laryngospasm/ laryngeal oedema.Widespread infection occurring within 1 to 12months after BCG vaccination and confirmedby isolation of Mycobacterium bovis BCG strain.Usually in immuno-compromised individuals.Acute onset of major illness characterized byany two of the following three conditions:l seizures



l severe alteration in level of consciousnesslasting for one day or moreTreatmentNo specific treatmentavailable; supportivecare.

Self-limitingAnti-histamines may beUsefulAdrenaline injection(See Appendix 5)Should be treated withanti-tuberculous regimensincluding isoniazidand rifampicin.No specific treatmentavailable; supportivecare.

VaccinesOPVAllAllBCGMeasles,Pertussis

APPENDIX 534

FeverHypotonic, hyporesponsive episode

(HHE or shockcollapse)Injection site abscessl Distinct change in behaviour lasting oneday or more.Needs to occur within 48 hours of DPT vaccineor from 7 to 12 days after measles vaccine,to be related to immunization.The fever can be classified (based on rectal temperature)asMild fever: 100.4 OF to 102 OF (38 to 38.9oC),High fever: 102 OF to 104.7 OF (39 to 40.4oC)and

Extreme fever: 104.7 OF or higher (>40.5oC).Event of sudden onset occurring within 48 [usuallyless than 12] hours of vaccination and lastingfrom one minute to several hours, in childrenyounger than 10 years of age. All of thefollowing must be present:· limpness (hypotonic)· reduced responsiveness (hypo responsive)· pallor or cyanosis . or failure to observe/ recall



Fluctuant or draining fluid-filled lesion at thesite of injection.Bacterial if evidence of infection (e.g. purulent,inflammatory signs, fever, culture), Sterile abscessif no evidence of bacterialInfection on culture. Sterile abscesses are usually

due to the inherent properties of the vaccine.Symptomatic; paracetamol.Give extra oral fluids.Tepid sponge or bath.In cases of high andextreme fever, other signsand symptoms should besought and reported/ managed as appropriate.The episode is transientand self-limiting, and doesnot require specific

treatment. It is not acontraindication tofurther doses of thevaccine.Incise and drain;Antibiotics if bacterial.AllMainly DPT,rarely othersAll injectablevaccines35

Heals spontaneously (overmonths) and best not totreat unless lesion issticking to skin. If so, oralready draining, surgicaldrainage and local instillationof anti-tuberculousdrug. Systemic treatmentwith anti-tuberculousdrugs is ineffectiveShould be treated withanti-tuberculous regimens

including isoniazid andrifampicin.Settles within a day or so;analgesics may help.Self-limiting; supportivecare; paracetamol andcooling if febrile; rarelyanticonvulsants.Critical to recognize and



treat early. Urgent transferto hospital for intravenousantibiotics and fluids.Settles spontaneouslywithin a few days to aweek.

Either at least one lymph nodes enlarged to>1.5 cm in size (one adult finger width) or adraining sinus over a lymph node.Almost exclusively caused by BCG and thenoccurring within 2 to 6 months after receipt ofBCG vaccine, on the same side as inoculation(mostly axillary).Inflammation of the bone with isolation of Mycobacteriumbovis BCG strain.Inconsolable continuous crying lasting 3 hoursor longer accompanied by high-pitched screaming.Occurrence of generalized convulsions that are

not accompanied by focal neurological signs orsymptoms. Febrile seizures: if temperature elevated>100.4 OF or 38 OC (rectal)Afebrile seizures: if temperature is normalAcute onset of severe generalized illness due tobacterial infection and confirmed (if possible)by positive blood culture. Needs to be reportedas possible indicator of programme error.Redness and/or swelling centred at the site ofinjection and one or more of the following:l swelling beyond the nearest jointLymphadenitis

(includes suppurativelymphadenitis)Osteitis/ OsteomyelitisPersistent inconsolablescreamingSeizuresSepsisSevere local reactionBCGBCGDPT, Pertussis

All, especiallyPertussis,MeaslesAll injectablevaccinesAll injectablevaccines36

Toxic shock



syndrome (TSS)l pain, redness, and swelling of more than 3days durationl Requires hospitalization.Local reactions of lesser intensity occur commonlyand are trivial and do not need to be

reported.Abrupt onset of fever, vomiting and watery diarrhoeawithin a few hours of immunization.Often leading to death within 24 to 48 hours.Needs to be reported as possible indicator ofprogramme error.Symptomatic treatmentwith analgesics. Antibioticsare inappropriate.Critical to recognize andtreat early. Urgent transferto hospital for intravenous

antibiotics and fluids.All injectablevaccines37

APPENDIX 6 DISTRICT REPORTING FORMAT FOR AEFIState __________________ District_____________Month_________________ Year___________ Please indicate the no. of events in the relevant cageAdverse events1. Local adverse eventsInjection site abscessBCG lymphadenitis

Severe local reactions2. Central Nervous System adverse eventsVaccine associated paralytic poliomyelitis (within 4-30 days afterimmunization)Guillain-Barre syndrome (within 30 days after immunization)Encephalopathy (within 72 hours after immunization)Encephalitis (within 1-4 weeks after immunization)Meningitis (within 1-4 weeks after immunization)Seizures (febrile/afebrile)3. OthersAllergic reactionAnaphylactic shock

ArthralgiaHigh fever (>39 deg. C)Persistent screamingOsteitis/ Osteomyelitis (within 8-16 months after immunization)Toxic shock syndrome (within few hours after immunization)Others (please specify)BCG



OPVDPT

DTMeaslesTTJEMR

HepatiteBothers38

What are the possible explanations for the above-mentioned AEFI?Actions takenWere there any hospitalisations or deaths among the reported AEFI? Please explain

Did any cluster of events come to your notice during the monthIf Yes, Please provide detailsName ______________________ Designation __________________Date ___________ Signature__________________ 39

LINELISTING FORMAT FOR AEFI TO BE USED AT STATE LEVELThis is to be used to identify trends and clusters of AEFIState_______________________ Year_____________ * 1 = injection site abscess; 2 = BCG lymphadenopathy; 3 = severe local reaction; 4 = acuteflaccid paralysis;5= encephalopathy/encephalitis/meningitis; 6 =seizure; 7=acute anaphylaxis; 8 = fever; 9 = toxicshock;

10 = other (enter as many as required)Note : Similar form according to blocks should be used by DIO to maintain line listing of AEFIcases at District level.Name/IDDistrictDate of Birth(dd/mm/yyyy)Date of immunization(dd/mm/yyyy)



Outcome (Recovered/ Died)Suspect Vaccine(name & dose egDPT-2)Batch number

Onset time(hours,days, weeks)Date of report(dd/mm/yyyy)Investigated(if yes, date)Conclusion*Reaction type(code)

APPENDIX 740

AEFI LABORATORY REQUEST FORMThis section should accompany specimens to the laboratory and be completed by the sender ofthe specimensState: IND (AEFI)/_ _ /_ _ _ /_ _ / _ _ _ Patient.s Full Name Age(DOB): SexMale FemaleComplete Address of patientDate of onset of symptoms of AEFI Day Month YearDate of collection of specimen Day Month YearDate specimen sent Day Month YearPrecise description of the samples (Batch no / Expiry date/ manufacturer/ Quantity sent)How were specimens shipped (e.g. with dry ice, ice-pack)Tests requestedPreliminary clinical diagnosis (working hypotheses)Name & complete address of person to whom laboratory results should be sentTelephone number Fax number

APPENDIX 841

This section should be completed by a virologist at the receiving laboratory and, when complete,sent to the EPImanager and the sender of the specimens.Date of receipt of specimen at laboratory Day Month YearName of person receiving specimen(s) at laboratoryCondition of specimen upon receipt at lab (circle response) good poor unknownResults:Comments by pathologist, virologist or bacteriologist:Date specimen results sent from this lab (if applicable) Day Month YearName of laboratory professionalSignatureTelephone number Fax number

Vaccine samples should be sent for testing to the National controllaboratory, Kasauli. The



samples have to be sent in cold chain (2-8 degree Celsius) and by fastestmeans (by courieror by messenger). The forwarding note should clearly state thecircumstances under whichthe sample(s) is/are sent. It is important that the used vial with remainingvaccine anddiluent (if applicable and available) is sent for testing along with unusedvials of same batch.50 ml of each vaccine has to be sent (e.g. 25 vials for vaccine coming in2ml vials and 10 forthose coming in 5 ml vials)It should be ensured that the label of the vaccine is intact and the used vialis packed inpolythene and kept upright in the vaccine carrier to avoid contamination

and leakage

42Standard Operating Procedures (SOPs) help maximum safety and operational efficiency forthese kind of organisations:- Pharmaceutical organizations- Government organizations- Emergency response operations- Clinical research organizations- Power producing organizations

SOPs are detailed written instructions to achieve uniformity of the performance of a specific

function.

A well-written SOP can be used to satisfy compliance requirements. SOPs are recommended forall procedures that pose a potential risk to the health and safety of personnel.

Standard Operating Procedures (SOPs) lets you operationalize documents such as plans,regulation, compliance, and policies. SOPs distil requirements contained in these documents intoa format that can be used by staff members in their work environment.

Standard Operating Procedures (SOPs) should be tranfered without every modification to insurethe expected results. Every modification or divergence of a given standard, the Procedure should

being served, while an investigation and results of the investigation documented according to theinternal divergence procedure. All high-class processes and procedures should be put on in aStandard Operating Procedure.

This Standard Operating Procedure should be the base for the everyday training programme of every employee. The Standard Operating Procedure should be often updated to insure of obedience to the realisation conditions and the working practise.



A minimum review list of 3 years is recommended. Changes of the Standard OperatingProcedure are activated generally by the process or the procedure changes or the adaptations.These changes should be led by the internal site controlling procedure. A part of the activity listof such changes should be to update the coherent standard operating procedure. Standardoperating procedure should be in the place for all high-class systems plus the specific operational

activities on the side.

The structure of a the Procedure System and the sum of all SOPs should be considered carefully.Too many standard operating procedure could lead to a breakdown of the SOP Sstem.

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