Krishnan Gounder, a 3-acre and 4-cow farmer, brings milk twice every day to the Hatsun Agro Product Ltd’s procurement centre at Ariyakulam in Dharmapuri district of Tamil Nadu.

The person at the centre first draws a 90ml sample of the milk and puts it in an automatic stirrer for 10 seconds to remove any air bubbles. The testing-ready sample is next placed on an ‘Ekomilk’ analyser, even as Krishnan’s producer code gets entered on a keyboard. In about 40 seconds, the analyser shows his milk to have 4.6 per cent fat and 7.8 per cent solids-not-fat (SNF).

Once the testing is done, Krishnan’s entire consignment of milk is taken to a connected electronic weighing scale. At this point, the keyboard is punched again. The display screen in the Ekomilk analyser now indicates the total quantity poured, the rate corresponding to the fat/SNF content in the sample and payment to be made, besides the date and time of supply.

Transparency and trust

All this happens in front of Krishnan, who gets a printout of whatever is displayed and payment in cash for the milk procured from him.

The beauty of the system is its transparency. Not only is the farmer paid for the quality of milk supplied — the rates against different fat/SNF percentage combinations are fed into the analyser — but he also gets to ‘see’ everything.

Moreover, unlike the traditional Gerber-lactometer method that uses chemicals (sulphuric acid and amyl alcohol) to estimate fat/SNF content and requires a minimum batch of testing samples, the Ekomilk analyser gives instant results. Krishnan doesn’t have to wait till some 24 other farmers also deliver their samples.

Nor is there scope for the procurement centre person to ‘play favourites’ by swapping one farmer’s sample with that of another. Also, every transaction is recorded: The moment the keyboard is punched, the data enters the system for transfer to Hatsun Agro’s server either directly via GPRS or a USB flash drive collected by the dairy tanker.

“When farmers are being paid for quality without scope for manipulation, it increases their faith in us. So, they are incentivised to supply more and better quality milk,” says R.G. Chandramogan, CMD of the Rs 2,200-crore Hatsun, which has put up the Bulgarian-made ultrasonic Ekomilk analysers in 2,500 of its 4,800 procurement centres covering 8,000-odd villages. At an average of Rs 1.2 lakh for each system — that includes, apart from the analyser, stirrer and printer, a UPS, stabiliser, keyboard and electronic weighing scale — Hatsun would have so far invested roughly Rs 30 crore in this ‘transparency-and-trust-creating’ technology.

“The return from it is basically milk containing more solids, yielding extra ghee and powder. We have seen the total solids rising from under 11 to 12 per cent in many centres after installing the analysers. It means transporting that much less water to the dairy,” notes Chandramogan.

The investment also pays by way of each centre collecting more milk than before, as farmers are enthused to increase production because of the system of transparent daily payments.

Krishnan Gounder, until two years back, cultivated turmeric on one acre and cotton or paddy (if the rains were good) on his remaining two acres. Last year, he bought two cows for around Rs 58,000 each. He has added two more this year, costing only Rs 43,000 each because of having already undergone two calvings.

Today, Krishnan grows Co-4, a napier-bajra hybrid fodder grass developed by the Tamil Nadu Agricultural University, on 1.75 acres and ‘regular’ crops in the balance 1.25 acres. “I am concentrating on milk since returns are assured and steady. This is unlike in turmeric, where prices were Rs 16,000-17,000 a quintal three years ago and Rs 5,000 now,” he points out.

Krishnan’s cows yield an average 15 litres daily for 270-275 days of the year. During this period, the daily ration for a cow comprises 2.5 kg of concentrated cattle-feed (costing Rs 19/kg), 2.5 kg of other feed (straw, rice bran, wheat husk, and so on at Rs 15/kg) and 20 kg of Co-4 fodder (Rs 0.20/kg). For the remaining 90-95 ‘dry’ days, their daily concentrate/other feed consumption gets reduced to 1.5 kg each.

The total annual feed cost for a cow, thus, works out to about Rs 29,000, as against a revenue of Rs 81,000 from selling 15 litres at Rs 20 a litre for 270 days. It makes for a decent return even after factoring in labour and other expenses. And it helps when there is an assured buyer for the 28-30 litres Krishnan sells daily now, which will double once his two pregnant cows also calve.

While Krishnan is in the process of becoming a ‘pure’ dairy farmer, T.S. Sumathi from Pannapatti village in Omalur taluka of Salem is already one.

Since 2010, she has diverted her entire 7-acre holding for growing either Co-4 or CoFS-29 multi-cut sorghum fodder to feed a herd of 11 cows and nine heifer calves. Sumathi’s eight in-milk animals currently supply 80 litres daily to the Hatsun dairy, which will cross 150 litres once the North-East monsoon fully sets in.

“Earlier, I mainly cultivated paddy, ragi and marigold flowers. With milk, there is daily cash flow and no uncertainty, though it entails lot of work in fodder cutting, feeding and milking the animals,” the enterprising 25-year-old observes.

Outsourcing perils

Hatsun’s milk procurement efforts deserve highlighting for departing from the beaten track model followed by most private dairies in India — of leaving collection from farmers and further aggregation to a network of village agents, bulk vendors and contractors.

While outsourcing may work for the IT services industry, it is neither cost-effective nor does it guarantee quality when it comes to perishable agri-produce.

Hatsun has shown that direct procurement from farmers when combined with appropriate technological interventions can bring down costs — by inducing farmers to produce more milk with higher solids content and eliminating intermediaries. The fixed investment costs incurred in this are recovered by spreading them over more number of litres or fat/SNF kgs.

In that way, Hatsun’s model is similar to Amul’s, though the latter pays up three-fourths of the consumer milk price to farmers. That share may be two-thirds for Hatsun and roughly half for most private dairies. But then, Amul is a cooperative owned by farmers and not a company obliged to service investors. Nor are its shares listed.

But even within these limitations, Hatsun has shown that engaging directly with farmers can be a profitable proposition — a win-win for both.

We need more private dairies undertaking not just direct milk procurement, but even extension activity from breed improvement (Hatsun undertakes nearly 5.5 lakh artificial inseminations annually) to promoting on-farm fodder production (as Hatsun has done for Co-4).

All this will eventually ‘pay’. More so in milk for which there is no dearth of consumers in India.

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