"Quick Look" at AKASHGANGA:
Simple Technologies in Indian Dairy Cooperatives


The Problem
Twice a day, farmers in rural India gather to sell their milk to their local milk cooperative. Weighing, testing of fat content to determine quality, and pricing are all done manually, resulting in long lines, large staff requirements, and inaccurately recorded information. Extended wait times frequently cause the milk to spoil in the hot weather. Corruption is also common, and poor infrastructure often results in payments getting held up making life difficult for farmers who depend on dairying as an important primary or supplementary source of income.


Company Profile
Established in December 1996, Shree Kamdhenu Electronics Pvt. Ltd. (SKEPL) provides integrated solutions that automate the milk collection process in village dairy cooperative societies. The company is commonly known as AKASHGANGA or "the milky way," and products are marketed under that brand name. SKEPL has its operational office in Mumbai and its registered office cum operational headquarters in Vallabh Vidyanagar, a town located in the Anand district of Gujarat. The company has been profitable since its first full year of operation ended in March, 1998.


Marketplace
AKASHGANGA Automatic Milk Collection Systems (AMCS) are successfully being used at more than 550 dairy cooperative societies (DCS) spread throughout the Indian states of Gujarat and Maharashtra.

A dairy cooperative society is the village-level, farmer-owned cooperative institution to which members sell their surplus milk and buy various services provided by the cooperative. Each DCS has a collection center where farmers deliver their milk twice a day. Between 100 and 1,000 farmers deliver a total of up to 10,000 liters per day to each DCS.

Milk collected through the DCS is channeled through a cooperative union, a district-level grouping of several village cooperatives for collecting, processing, and marketing milk. The cooperative union also organizes a variety of services for the benefit of members, including veterinary care and animal husbandry. The DCSs pay for these services out of the profits made from the milk they sell.

Dairy cooperatives are found in more than 96,000 villages across 200 districts in India. Dairy farmers become members by buying a share of the local DCS, and agreeing to sell their milk only to that society. Across the country, cooperative members total almost 11 million, producing close to 17 million liters of milk each day.


The Business Model
Through AKASHGANGA, SKEPL is integrating appropriate information technology into all DCS processes and functions. The systems are marketed to the DCS, whose decisions are directed by the dairy farmers. Benefits at both the DCS and individual farmer level drives demand for the system. For farmers, lines are shorter, and payment is quick and accurate. The DCS benefits by being able to process greater quantities of higher quality milk, while saving money through reduced staff requirements.

SKEPL started computerizing DCS operations in early 1997, and has already installed over 550 AKASHGANGA systems in various districts located primarily in South Gujarat and Maharashtra. Having established a track record for high quality products and services over five years, AKASHGANGA has become a well-known brand name in the dairy sector. The brand is further enhanced by the user-friendliness of its products as well as SKEPL's strong after sales support.

The systems are sold directly to the DCS, or to the unions who purchase the systems on behalf of their member DCSs. Local entrepreneurs also play an important role. Language and cultural differences across vast geographical areas make them indispensable in marketing, training, implementation, and after-sales service.

The company aims to make milk production data and information available online, thereby streamlining production planning, improving management communications and bringing transparency to operations. Its long-term goal is to become the IT backbone for rural milk producers in India, helping to improve the quality of milk throughout the country.


Products & Services
Hardware
The company currently sells two unique automatic milk collection systems: one microprocessor-based and the other PC-based. The microprocessor-based system utilizes the latest microcontroller technology, while the PC-based system runs on MSDOS and contains an ID card reader, an electronic stainless steel weighing scale with a digital display, and an Epson Wipro printer. The Pentium-based PC system offers the added advantages of information storage and analysis, and also allows for linkage to procurement operations at the union level. Both user-friendly systems use simple technologies to quickly identify the farmer, weigh the milk, test the fat content, and calculate the payment owed.



The cost of each system varies according to the hardware configuration and weighing capacity, with the price typically ranging between US$1,500 and $2,000. SKEPL offers a discount to unions who buy the systems in quantity. A typical DCS that collects on average 300 liters of milk per day can pay for the system in two and a half to three years from savings in labor costs and higher profits accruing from decreased spoilage of milk.

Complementary to the automated collection system are AKASHGANGA's Milk Analyzers, which measure both the percentage of fat and non-fat solids (including proteins, lactose, minerals, acids, enzymes, and vitamins) contained in the milk. Typically, farmers are paid at the DCS-level based on the fat content of the milk, while the DCS is paid at the union level based on the non-fat solids content of the milk. This inconsistency occurs because milk analyzers that only analyze the fat content are cheaper, and therefore more readily available at the DCS level. The AKASHGANGA Milk Analyzers correct the inconsistency by making it fast and cost-effective to test both components. The equipment is able to analyze between 60 and 65 samples in an hour.

In DCSs where the AKASHGANGA Milk Analyzers are being used, the quality of the milk procured has gone up. Farmers no longer add water to increase the volume of the milk weighed (a common process that has little effect on fat content but is noticeable when measuring non-fat solids). With the newer milk analyzers, testing results can be transmitted to the unions online, providing the DCSs with confirmation of milk quality and quantity on a daily basis. The result has been higher quality milk processed and paid for at the union level.

Software
SKEPL also produces two software applications: Rojmel and RMRD. Rojmel is a bookkeeping and accounting suite for use at the DCS level. RMRD, or Raw Milk Receiving Dock, is software that unions use to track and generate reports about all aspects of procurement from the cooperative societies.

Support
Extensive after-sales support is provided with each purchase. Upon installation of the AMCS, intensive operational training is given to two or three society members, the cost of which is included in the price of the system. A one-year on-site warranty is provided for all systems, and maintenance is performed by motorcycle-borne service engineers who quickly attend to any malfunctions. When SKEPL works directly with a union, it also assigns one full-time resident technical engineer to look after service in that region. The engineer remains a SKEPL employee, and the company covers all associated costs. Once the warranty expires at the end of the first year, the union enters into a service contract with SKEPL who continues to maintain the systems.


Management
SKEPL has a diverse management team of nine professionals with both technical and commercial competencies. Taken together, the team has over 120 years of experience in dairying, information technology, electrical engineering, commerce, finance, and software development.

The dairy cooperative societies are managed by farmers who are members of the society. Organized under the guidance of a supervisor or milk supply officer of the Dairy Cooperative Union to which it belongs, DCS members elect a managing committee and a chairperson who are responsible for recruitment of staff and management of day-to-day operations. The committee ensures the quality of the milk collection procedure and makes the determination whether to purchase the AKASHGANGA system for its particular DCS.


Challenges
SKEPL faces challenges as it seeks to deploy its AKASHGANGA system, most notably the attitudes of people who must be thoroughly convinced of the benefits of a new system before signing on. The initial building of support takes time. The cost of the system, though priced competitively, contributes to a high burden of proof. Other factors, such as reliable electrical infrastructure and harsh environmental conditions, are also determinants of whether or not AKASHGANGA is a practical investment for any particular DCS.

To combat any doubts and ensure customer satisfaction, SKEPL has installed its systems free of charge in many DCSs. This demonstrates its utility and helps farmers become familiar with and confident in the technology before making a purchase. Word of mouth publicity on the benefits of using the system helps speed its adoption among DCSs located close to one another.

The rural market for products like SKEPL's is highly unorganized, with many local players. The biggest competitor to SKEPL is Rajashtan Electronics India Ltd., a Jaipur-based company with a major presence in the AMCS and milk analyzer markets. Other competitors include Capital Electronics in Anand.

SKEPL appears to retain a competitive advantage over its rivals. The company is an integrated solutions provider that has built its reputation on user-friendly products, training, and after-sales service. It also benefits by being headquartered near Anand, famously known as "Milk City" for its strong history of dairy production. Location has helped the company form a strong business relationship with Kaira District Milk Producers Union, Ltd., or Amul Dairy, a pioneer in the cooperative concept and also the leading milk-producing union in India. The National Dairy Development Board (NDDB) is also in close proximity, speeding quality certification and other required approvals for SKEPL's new products, which can easily be demonstrated to NDDB officials. In these institutions, along with the nearby Gujarat Agritech University, SKEPL enjoys access to a large pool of dairy technical experts in the region.

As the company scales up its operations, its biggest challenge is to create an infrastructure capable of supporting its expansion. Hiring competent staff, as well as ensuring security and accessibility at their software development center and proposed laboratory, are both priorities. The company must also work to maintain quality control and keep up with current technology as it introduces new products and services.


Key Lessons
AKASHGANGA's popularity demonstrates ICT's potential to help solve day-to-day problems in the rural developing world. Cost-effectively automating the milk collecting process at hundreds of traditional dairy cooperative societies, SKEPL has shown that even simple technologies can provide significant benefits to rural communities.

For the DCS, computerization enables immediate access to daily accounts and profitability positions, helping to streamline planning and operations. The system also reduces the manpower necessary to collect the milk, effectively lowering the society's costs. With less milk spoiled waiting in long lines, the DCS is also able to increase the volume and quality of its production.

Increased production at the DCS level means higher volumes of milk collection at the union level. The timely collection of milk from the farmers allows for more efficient scheduling of the truck routes that transport it to the unions. Planning is further aided through accurate database information about the society and its producers.

For the farmers, speedier collection of the milk results in shorter lines. Together with faster payment, the system results in significant time savings for the farmers. For many, dairying is a supplemental livelihood. By reducing wait times to only a few minutes, AKASHGANGA makes producing milk a more viable and profitable venture for rural families. Computerization of all procedures also lowers the prevalence of malfeasance and under-payment to farmers. In the past, these practices were often alleged but hard to substantiate. Through transparent weighing and measuring processes, farmers are reassured that they are receiving fair compensation.

Within India, SKEPL's business model appears to be highly scaleable, since the basic milk cooperative structure is replicated throughout the country. Industry automation is still in its infancy and less than 10% of total milk production undergoes organized handling.

SKEPL also appears to be in a good position to diversify its product offerings. The farmers' newfound familiarity and acceptance of technology, along with their familiarity with the AKASHGANGA brand name, allows SKEPL to quickly integrate newly-tested products and services throughout the societies. Future plans include upgrading current infrastructure and software to speed growth and improve the range of products and services that SKEPL can offer. A comprehensive regional language dairy and agricultural information portal is also in the works.

The company's long-term vision is to take advantage of Internet technology for the benefit of the rural masses. Possible add-on applications include providing e-mail services, or access to local language information about agriculture, education, and government. The provision of such services would transform the AMCS into an information and services kiosk available to all.