Onderstaand artikel is gepubliceerd in: Frontier, 11-1-1986      

Milk Manifesto

'India as EEC Cow'

For 15 years already the EEC is supplying India with large amounts of dairy aid for the national dairy development programme called Operation Flood. The official aim of this programme is to make the country self-sufficient in milk production. At the same time India is exporting even larger amounts of highly nutritive concentrate feed to the EEC, while there is a serious shortage in India itself. With this feed India could produce many times the amount of milk that it has received as dairy aid for Operation Flood. One of the reasons for this strange situation is that dairy aid is depressing the local milk price for producers and because export is sending up the price of concentrate feed exports. Dairy aid also plays an important role in the production of babyfood, to the detriment of hundreds of thousands of babies. As part of Operation Flood a cross-breeding programme of Indian cows with Western dairy animals is being implemented. The programme will lead to a reduced availability of coarse foodgrains, concentrate feed and animal draught-power.
India has asked the EEC for dairy aid from 1986. In the first half of 1986 (probably March) a decision will be taken on this. The Operation Flood programme in India has already been extended to 1990, whether the extra dairy aid will be given or not. Another five years of dairy aid to India and the continuation of EEC animal feed imports will most probably reinforce the more objectionable aspects of this programme and constrain a healthy development of dairying in general.
The decision about possible new dairy aid to India and the conditions under which this takes place, will also be of great importance for EEC dairy aid in general. The EEC is spending around 1800 milion rupees a year on dairy aid out of its surpluses. Even the European Commission (and more particularly the European Parliament) have criticized this ineffective and often harmful form of food aid. Pressure from the European Parliament has brought down the amount of donated milkpowder from 150,000 tons in 1983 to 108,600 tons, the amount of butteroil has been brought down from 40,000 tons to 28,700 tons. According to a recent EEC policy paper (Food Aid for Development, 1983) objections to dairy aid as a costly and dangerous type of aid (in the sense that new consumer habits are created and lead to commercial imports in the future) are generally sound. Depression of local food prices by food aid should be avoided, according to this document.
An exception to all this self-criticism is made for Operation Flood. According to a recent EEC statemeet it is 'an ideal manner of development cooperation', which can be a model for other developing countries. Pakistan, the Philippines, Sri Lanka and China have now also asked for EEC dairy aid for programmes similar to Operation Flood. Is a spreading of the Operation Flood model a good reason for the EEC to keep on giving massive amounts of dairy aid? Or is it just another manner of developing export markets for dairy products under the guise of aid, at least as long as the dairy surpluses last?
The recent cut-backs in milk production in the EEC will probably make massive dairy aid much too expensive, both for export promotion and for the 'humanitarian purposes' it is supposed to serve.
India's bovine population of more than 240 million (181 million zebus and 63 million buffaloes) plays a very important role in its economy. More than threequarters of all the energy used in the rural areas is provided by animal draught-power. Milk is usually not the first purpose but an important by-product of cattle-keeping. Buffaloes however do produce around 60% of India's total milk production. In 1970 the biggest dairy programme in the world was launched in India to improve the flow of milk to the cities and to increase milk production. The project is being implemented by the National Dairy Development Board (NDDB) and the Indian Dairy Corporation (IDC). For this project the European Economic Community (EEC) agreed to give the following amounts of dairy aid to India:

Skimmed Milk Powder (SMP)
Butteroil (BO)
Operation Flood I
1970-1975 (extended to 1981)
126,000 tons
42,000 tons
Operation Flood II
186,000 tons
76,000 tons

The donated milk powder and butteroil is recombined in India into milk and sold in the cities. The proceeds of this are being used for building dairy and cattle-feed plants, transporting milk to the cities, developing improved dairy-cattle and other expenses. AII of it is being handled through a system of village cooperatives, cooperative unions and state-level federations of unions (the so-called Anand model of Gujarat). The Operation Flood II programme has recently been extended to 1990, because of considerable delay in the implementation. It is not yet sure whether EEC dairy aid for Operation Flood will be extended after 1985 as well.
Compared with the way EEC dairy aid is often used in other developing countries Operation Food certainly has positive aspects. In India the donated dairy products are not dumped indiscriminately: revenues are being used to expand the indigenous Indian dairy industry. Also the cooperative approach has clear advantages for milk producers, because it gives them a guaranteed outlet for their milk against a stable price.
As a whole the results of Operation Flood are nevertheless disappointing, especially judged against the original objectives. The target of providing more milk to the rural poor in order to improve their protein-intake, has been tacitly discarded. For more than half of the city population milk is too expensive as a food product. Not so for higher income-groups in the city who can now buy milk for a price reasonable for them.
In the rural areas it is especially the bigger farmer and to a much lesser extent the small farmer who profit from the project. For landless labourers it hardly offers any perspective, primarily because they lack their own animal feed resources.
Women, who usually take care of the cattle, are rarely members of the cooperative. The village cooperatives are mostly dominated by the (relatively) rich in the villages. About two-thirds of all the funds for Operation Flood were spent on building large-scale dairy plants. This has caused loss of gainful employment in the villages. For increasing milk production NDDB and IDC have also chosen a capital-intensive strategy of exotic cross-breeding and growing green fodder on irrigated land.

EEC's Role
The EEC constantly praises Operation Flood as an exemplary dairy project. That claim turns out to be a considerable exaggeration. It is even more important to look much closer at the role the EEC is playing in India's dairy development.
One of the main objectives of Operation Flood II was to create a self-sustaining dairy industry by mid-1985. Instead India is now more dependent on imports than ever. The Operation Flood dairy plants in New Delhi are still making 55% of their total milk output out of skimmed milk powder and butteroil. In Calcutta this is 74%.
Between 1979 and 1985 India received 20,000 tons of Skimmed Milk Powder (SMP) in excess of the earlier agreed amount for that period. In 1975 commercial imports of SMP stopped but in 1984 India imported more than 25,000 tons of SMP from the USA. More than three-quarters of this were commercial imports at dumping prices and the rest was donated. For the period 1986-1990 India has again asked the EEC for dairy aid. An internal EEC note states: "The Operation Flood system itself appears largely dependent on the EEC food aid."
An important "cause" of the continuing dependence on dairy imports is the political importance of supplying relatively cheap milk to the middle and higher income-groups in the cities. EEC dairy aid and cheap American milk powder are used for this. The imported milk powder and butteroil is being resold by the IDC from a national bufferstock to the Operation Flood dairy plants for a price which makes recombined milk cheaper than fresh milk. The National Cooperative Dairy Federation of India, the umbrella organization of federations and unions under Operation Flood, has condemned this because it depresses the price of milk for the local producers (especially in the northern and eastern parts of India). This reduces the supply of milk to cities like New Delhi and Calcutta which in turn necessitates dairy imports. The circle is closed.
A second cause of import-dependency is the fact that most of the indigenously produced milk powder and butteroil is used for manufacturing luxury dairy products like table butter, chocolate and in particular, babyfood. This milk powder and butteroil is officially meant to supply the cities with extra milk. Now imported dairy products are used for this.
Continuing dairy aid or cheap imports is also attractive for the project-authorities because reselling these products brings in money for further investments in Operation Flood.
Because of the created dependency, Indian dairy imports can probably not be done away with immediately. The EEC is now in the process of reducing its dairy surpluses. Five more years of unconditional dairy aid will probably confront India with a situation in 1990 in which dependancy on imports has again increased, dairy aid is no more available and the world market price for dairy products has risen considerably. At the same time this aid will keep on depressing the milk price for the local producer.

Export of dairy products from the EEC to India (in tons)

skimmed milk powder
non-skimmed milk powder
butter, fat content till 85%
butter, fat content more than 85%
condensed milk
infant food

Instead, phasing out dairy aid and stopping all commercial dairy imports within a few years, in the meantime taking care that it does not compete with fresh milk, will very probably lead to a higher producer price in the north and the east. This could cause an increase in the milk supply to the cities and a better capacity utilization of the dairy plants. Whether to subsidize specific groups of producers or consumers a clear matter of internal political choice, where it now is a more or less 'covert consequence' of the way dairy aid is being used.

[Circulated by India Committee of the Netherlands]

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