Module 14. Dairy development in India phases and schemes

Lesson 24

24.1 Introduction

This chapter describes Operation Flood programme. It gives detailed description about objectives, achievement and impact of all the three operation flood Programmers.

24.2 Operation Flood - I

The five year operation Flood – I project, a brain child of Dr. V. Kurien, commissioned on July 1, 1970 by Government of India, with technical help of NDDB and financial help of IDC; further extended for 6 yrs (upto March 1981), is the largest project of its kind in the Third World.

24.2.1 Objectives
  • To capture a commanding share of milk markets in four metropolitan cities
  • To develop 18 hinterland milk sheds (in 10 states) by organizing dairy cooperative on the Anand pattern and encourage farmers to supply as much milk as they could.
  • To organize an efficient transportation system, to collect milk from villages and sending to dairies for processing and supplying to cities.
  • To set up feeder balancing dairies and storage systems to convert excess milk into powder and butter oil, storing it during flush season and reconstitute them into milk during lean season.
  • To increase the yield of milch animals.
  • To train personnel to plan and operate the services efficiently.
Thus, OF – I Scheme aimed at establishing a broad base for accelerating development of the national dairy industry.

24.2.2 Mechanism of the OF – I Project

Agreement signed between European economic community( EEC) through world food programme (WFP) (for the United nations (UN) / Food and Agricultural organization (FAO) and Government of India (GOI); as per this, WFP supplied free of cost 1,7,500 MT of Skim milk powder (SMP) and 39,700 MT of Butter oil (BO), worth Rs. 41.90 crores at international price to India. Generated fund from sale of this food aid ( Rs. 954 millions) was to be used by existing urban dairies for recombining SMP and BO into milk to be used to supplement production and procurement of milk in rural areas to cater to liquid milk demand of four metro cities, having 25% of country’s urban demand. Funds also to be used for increasing organized milk production and procurement in rural areas mainly concerned with milk supply to 4 metros extended over 10 adjoining states (Punjab, Haryana, Rajasthan, U.P., Bihar, West Bengal, Tamil Nadu, Andhra Pradesh, Maharashtra, Gujarat and Union Territory of Delhi)

The objectives are to be achieved through Provision of technical inputs like Production of ready mix concentrates and green fodder, AI, Veterinary Services and medicines, calf rearing assistance, Development of improved milk animals. Project was also to provide for resettlement of city – kept cattle and buffaloes in the suburbs.

24.2.3 Achievements
  • Benefit to 14.6 million rural families
  • Creation of extra action centers in 18 rural milk sheds (districts) in 10 states, covering 9 more milk sheds (total = 18+9 =27), where infrastructure for rural milk procurement and its processing to marketing in 4 metro markets had been developed.
  • Anand type cooperative created in the 10 states. They own and operate feeder Balancing Dairies (3 million Liters / day), cattle feed compounding plants (1300 MT / Day), animal health care facilities (219 mobile and 127 emergency veterinary units), AI (4,868 AI sub – centres in Villages), extension of services linked to a modern transfer system.
  • Milk procurement increased to 21 LLPD (1982 – 83) from 7 LLPD before OF – I in 1970.
  • Milk market captured = 68% in Bombay, 50% in Madras, 53% in Delhi, 32% in Culcutta.
24.2.4 Bottle necks
  • Inadequate progress in long term objective of increased milk production and supply.
  • Organized production only 80 lakh litres and only 30 lakh liters was its procurement.
  • However, milk production in country went upto 30 million MT (1979-80) from 21 million MT in 1970; per capita milk consumption increased from 110gm to 122 gm.
  • Rs. 112.7 crores generated through sale of donated commodities (by October,1980) and total expenditure under project was Rs. 112.7 crores. Government could not keep pace with schedule of OF – I. There was delay in arrival of equipment to expand existing dairy plants which led to procedural delays in execution of programmes by state and central governments. Non receipt of SMP and BO on time, hence under – utilization of expanded capacity in 4 metro dairy plants ( 20 LLPD, but actual 21, LLPD). On June, 1975 (original termination date of OF-I), only 38.5% SMP and BO received.
24.3 Operation Flood – II

Operation flood-II was inaugurated on October 2, 1978 (before the end of OF-I) with a Budget allocation Rs. 485 Crores. It was to be financed by sale of 1.86 lakh tonnes of SMP and 0.76 lakh tonnes of BO ( equivalent to Rs. 235 Crores) donated by EEC, World Bank loan of Rs. 173 crores, and Rs 77 Crores by IDC with main aim of continuation of OF-I with wider perspective (i.e. development beyond four metro cities).

24.3.1 Objectives of OF-II programme
  • Bridging gap between demand and supply of milk and milk productions through increased milk production from 68.7 million lits / day to 103.2 mill lits / day by 1985
  • To help milk producers to rear a National Milch Herd of 5 million cross bred cows and upgraded buffaloes by mid – 1985.
  • To erect required infrastructure to support a viable dairy industry system through:
a. Indigenous development of dairy processing and conservative methods with enlarged facilities.

b. Provision of man power development programmes, additional interim programs to supply BO as a low priced cooking medium of extended foods as the basis for infant supplementary feeding programms;

c. Erection of a MIS.
  • To develop national milk grid linking rural milk sheds with major urban demand centers (153 towns with more than 1 lakh population) to cover a total population of 150 millions in 19 states.
  • To encourage 10 million farm families in 155 districts (as identified by Nation Commission on Agri. 1976), to establish 33,390 village cooperative societies, in turn to form district cooperative unions (with 200 – 800 VCs) and 25 cluster state level cooperative federations, so that, a viable and self – sustaining dairy industry can be built up by 1985.
  • To increase per capita daily consumption of milk from 114 gms (1979) to 144 gms (1985) and to 185 gms (1988-89)

Table 24.1 Projected impacts of OF-II


Table 24.2 Employment generation during OF – II (In Thousands)


  • Does not include employment to be generated by urban milk marketing network, National Milk Grid and other activities.
Indian Dairying is highly labour intensive, use of family labour (women, children) in animal care, picking and collecting natural herbage and other free feeds – are important factors of milk production. Thus, it provides, productive use of available labour (otherwise it will go as waste) and increased overall participation of rural / labour force.

Impact of OF – II on employment of milk producers in rural areas is substantial ; It helped 16 % male and 48% female labour force in rural areas to be engaged in productive activity. Man days of work generated due to more number of improved animals would increase from 4.74 million to 932.8 million between 1981-82 to 1987-88; equivalent to employment of 3.73 million full time workers ( 8hrs. / day, for 250 days) by 1987-88. OF – II implementation will need 1.7 lakhs man power to run VCMPs by 1987-88, and 0.11 lakh persons for establishment and management of cluster federations.

24.4 Operation Flood – III (1985 – 96)

Operation flood-III was started from June 1987 with total outlay was Rs. 68.29 crore which was extended by World Bank up to April, 30 1996 with increased total outlay of Rs. 1303.1 crore. The major emphasis was as follows:
  • Consolidation of achievements gained during OF – I to II by improving productivity and efficiency of cooperative dairy sector and its institutional base for its long term sustainability.
  • Investment in OF III focused on strengthening the institutional management aspects of dairy cooperatives at its various levels to establish financially strong farmer owned and managed organizations.
  • Productivity enhancement inputs and institutional strengthening in the form of training, research, market promotion, monitoring and evaluation.
  • Institutional and policy reforms.
  • Expanding infrastructure in major markets, linking them to milk sheds through national milk grid (NMG) to ensure year round milk supply.
24.4.1 Resources and Fund Outlay of OF– III (1987-96)

Resources: Rs. Crore

NDDB’s own resources: 207.7

External Assistance:

World Bank: 872.8

EEC: 222.6

24.4.2 Component Wise fund outlay

Processing facilities: 634.6

Technical input for milk production: 89.4

Milk Marketing Systems: 359.7

Support to Village Cooperative: 101.2

Planning, information system, market promotion, training and research: 52.5

National milk grid and stabilization: 34.8

Disease control and progeny testing etc. 30.9

24.4.3 Operation Flood – III : Physical Targets and Achievements (1995-96)

Item T A

Anand Pattern DCS: (‘000)

Organized: 70.00 - 72.74

Functional: 55.04

DCS membership (lakh): 93.14

Av. Milk Procurement (lkpd): 110.0 - 109.42

Build up of dairy processing capacity (lkpd): 195.0 - 193.0

Urban milk marketing (lkpd): 100.0 - 99.38

24.4.4 Investments in infrastructure under OF (1970 – 1995)

Infrastructure Investment (Rs. Million)

Rural processing facilities: 8,742

Urban marketing facilities: 3,727

Milk Production enhancement: 2,050

Training in Research: 1,765

Cooperative education: 776

24.5 Reasons for the Success of Operation Flood
  • OF was based on sound, successful model of Anand cooperatives. Main emphasis on organization, milk producers’ participation and expansion of market with gifted commodities and gradual replacement with locally produced milk.
  • No financial problems as the gifted commodity were available to generate necessary funds.
  • Gifted commodity was handled efficiently for reconstitution purpose, after ascertaining gap between demand and supply. Moreover, gifted commodity was priced keeping in mind local milk price to avoid misuse of commodity to replace locally produced milk.
  • Project was implemented by professionals of NDDB, free from bureaucratic control. IDC helped in handling the commodity and funds. Both organizations had a common board of Directors and chairman, hence proper coordination.
  • NDDB’s head quarters at Anand is the center of AMUL dairy. It provides a live model to impart training to the farmers and professionals, for replication of Anand model Cooperatives in their respective areas.
  • NDDB prepared detail sub-project plans to implement each project. NDDB also sent their professionals for initial starting of the project and continued to provide consultancy until it reached a take off stage. The progress of the project was monitored closely against set targets.

Table 24.3 Operation flood at a glance


Last modified: Monday, 1 October 2012, 6:38 AM