EEC-India cooperation with particular reference to Operation 'Flood'

Doc. A 2-247|87


on EEC-India cooperation, particularly as regards Operation Flood

The European Parliament,
  • having reqard to the motion for a resolution tabled by Mr. van der Lek and Mrs. van Dijk on the European Community "Operation Flood" programme of aid for India (Doc. B2-67/87),

  • having regard to the published extracts from the joint EEC/World Bank review Mission's report about India's Operation Flood II activities (December 1986),

  • having regard to the report from the Commission to the Council and the European Parliament on the implementation of India's Operation Flood II financed through the European Communities through the supply of food aid (COM(86) 138 final),

  • having regard to the report of the Commission services to the Council and European Parliament on Community support to India's dairy industry development (PE 116.348),

  • having regard to the report of the Committee on Development and Cooperation (Doc. A2-247/87),
  1. Noting that in recent years assistance in the form of food aid to Operation Flood has accounted for roughly half of Community aid to India, the remainder consisting mainly of project and programme aid including trade promotion under Budget Chapter 93, with co-financing of projects with NGOs (Budget Article 941) accounting for some 3-4 % of the total;

  2. Noting that India has the largest cattle and buffalo population in the world, which is providing through draught power around three-quarters of the total energy supply in the rural areas: that according to official Indian statistics nearly half of India's rural households own milch animals (cows, buffalos, goats), most herds consisting of only 1 or 2 animals, and that some 51 % of milk is produced by landless labourers or farmers with less than 2-hectare holdings;

  3. Noting that, due to the shortage of feed, and because of the fact that milk production mainly constitutes a useful by-product, productivity is very low and, because of the seasonal nature of milk production, dry season production drops to about half the flush season level;

  4. Noting that the main purpose of Operation Flood is to change this traditional pattern and ensure a regular, year round supply of good quality milk and milk products at reasonable cost to consumers in India's major urban centres through an integrated system of cooperatives involving, in particular, small and landless milk producers organised in local cooperative societies, cooperatively owned processing plants and transport networks, and cooperative distribution and marketing outlets, at the same time offering a substantially better price to producers;

  5. Noting that the Indian authorities would prefer the Community's contribution to Operation Flood to be in the form of food aid in dairy products rather than a cash contribution as
    • these products could be reconstituted into milk to cover eventual dry season shortfall in production if the nationally produced milkpowder is not sufficient
    • these products could be sold at local prices in India, thereby increasing their cash value by some 75 % over its international market value
    • any contribution in cash would go to the Indian Finance Ministry and could not directly be used by the IDC (Indian Dairy Corporation) and the NDDB (National Dairy Development Board),

  6. Noting that the Review Mission's report on Operation Flood II, published in December 1986, was critical of certain aspects of the implementation of the second phase of Operation Flood, proposing modifications which should be incorporated into the third phase and that the original targets of Operation Flood, i.e. helping the poor, landless and small farmers, should be taken into account more seriously;

  7. Noting that both the Indian authorities and the Commission apart from certain critics ("weaknesses have become apparent") regard Operation Flood I and Operation Flood II as mainly successful,

  8. Noting that the Indian authorities have proposed a third phase for Operation Flood to run to the end of 1994, which would be financed as follows:
    • World Bank/IDA loans 54 %
    • EC Food Aid 25 %
    • Indian Dairy Corporation resources 21 %
    (left-over counterpart funds of EEC support from Operation Flood II),

  9. Noting that statistically India is self-sufficient in milk and milk products due in part to Operations Flood I and II and that the main problems in supplying milk to everyone all over the country are of distribution and pricing as well as the fact that skimmed-milk powder and butteroil are being used for the production of sophisticated dairy products, especially babyfood,

  10. Noting that the European Community food aid contribution over 7 years, as requested by the Indian authorities, would consist of 75,000 tonnes of skimmed milk powder and 25,000 tonnes of butteroil and that the profit from selling these commodities in India, where prices for milk and milk products are approximately 75 % more than world market prices, would contribute to the further build-up of the Indian dairy system under Operation Flood III,

  11. Noting that the quantities of EC food aid to be committed under Operation Flood III are much smaller than those for Operation I and II and that the yearly volumes to be actually delivered will fall steadily during Operation Flood III.
  1. Insists on the Commission providing the complete joint EEC/World Bank Mission's Report and the report on Operation Flood in preparation by the European Court of Auditors to all members of the European Parliament who request them;

  2. Regrets that information regardinq negotiations and decisions on Operation Flood were communicated to the European Parliament in an insufficient way and insists on better communication in future;

  3. Welcomes nevertheless the major positive effects of Operation Flood, particularly the encouragement of a cooperative approach, and the establishment of direct links between production in rural areas and marketing and distribution in urban areas, thus allowing for an increase in production which may generate employment opportunities in rural areas and prevent migration to the cities;

  4. Insists on Community support for Operation Flood being made compatible with improving the lot of landless, marginal and small milk producers by raising their income levels and integrating them into the process of Indian rural development through active participation in local and regional cooperative societies;

  5. Calls for the reinforcement, on a permanent basis, and the extension of veterinary health services for small milk producers provided free or at low costs in conjunction with Operation Flood;

  6. Aware of the fact that women, as traditional small-holders of cattle, have an important role in dairy farming; concerned that the changes to be brought about by Operation Flood III can be to their disadvantage as public status grows and cash income rises; demands therefore that all is done actively to promote women's participation as members of cooperatives and as elected members in their governing bodies at all levels;

  7. Stresses the importance of the principle of complementarity between milk production and other agricultural activities in India whereby in the traditional rural economy, cattle and buffalo are kept both as draught animals and for milk, are fed on crop residues that would otherwise not be consumed, and produce dung that is used as manure and dried for fuel;

  8. Sees the need for improving the milk yield of Indian cows and buffaloes through better feeding and genetic improvements; insists, nevertheless, that
    1. for buffaloes, genetic improvement should concentrate on indigenous breeds best suited to local conditions,
    2. animal fodder cultivation must not be at the expense of food crop production, neither should fodder be produced at a cost that would adversely affect the profitability of dairying,
    3. the use in India of locally produced concentrate feed which is currently being exported should be encouraged;

  9. Recognises that experimental projects supported by the Indian Government and European charities have shown that certain breeds of European cow are also suited to the Indian environment and can substantially increase the milk yield of local herds, and asks the European Commission to grant aid to the expert charities involved for the expansion of this project work, including aid for the export of more cows of suitable breeds;

  10. Emphasises the need for supplementary feeding programmes in favour of vulnerable groups for which milk is of special value (small children, nursing and expecting mothers etc.);

  11. Notes that while wholesale and retail milk prices have risen steadily since the inception of Operation Flood, prices of certain other commodities have shown greater increases; stresses the importance of pricing milk correctly so that the producer receives a reasonable financial return while the consumer pays a reasonable price;

  12. Insists on establishing a price policy for dairy products donated by the EC which would make it not less expensive to reconstitute milk from imported milk powder in comparison with local fresh milk or local reconstituted milk in order to avoid competition between imported and local milk;

  13. Believes that every effort should be made to absorb all the milk made available by producers affiliated to Operation Flood cooperatives even in the flush milk production period, also through encouraging rural consumption and processing of milk products;

  14. Considers it most important that the milk supply situation in India be carefully monitored; calls upon the Commission to inform Parliament directly should imports of EC milk powder or butteroil result in disruption or create surpluses to the detriment of local producers;

  15. Calls for an evaluation in combination with the progress report which will focus specific attention on the following:
    • the necessity of the continuation of EEC food aid to India in the form of dairy products,
    • the effects of this EEC food aid on pricing, production, and regional inequality of the indigenous dairy sector, in Operation Flood and non-Operation Flood areas,
    • the effects of Operation Flood on landless dairy producers with less than 1 ha. of land, with a specific focus on the position of women,
    • the possibilities to expand the provision of subsidized milk through EEC dairy aid for poor consumers for whom milk is of special value;

  16. Accepts in view of the foregoing paragraphs the proposal to continue Operation Flood while emphasizing that EC food aid contributions planned for Operation Flood III will steadily decline;

  17. Calls upon the Commission to draw upon the experience of Operation Flood and to put this exanple to good use if so requested by other States, but insists that the Commission fully informs the parliament before entering into negotiations on comparable programmes with other states;

  18. Instructs its President to forward this resolution to the Council and Commission and the Government of the Republic of India.

Adopted on 22 January 1988 with 84 in favour, 0 against and 1 abstention.

India Committee of the Netherlands/Landelijke India Werkgroep - 1 augustus 2003