CASE: Shri Kakadva Co-operative Society

At one of the finest evenings, the villagers of Kakadva were discussing their day-to-day activities
and increasing the cost of living, which can be achieved through stable, sustainable and
continuous financial income. Dairy development was one of the most significant aspects of rural
development due to the “White Revolution.” Indian agriculture has made strides with the success
of the "green revolution." But this seed-water fertilizer miracle of agricultural development has
remained beyond the reach of a vast segment of rural households with either very little or no
land. Such a development of activities allied to agriculture assumes a greater significance when
supplementing the income and employment levels of the rural poor in agriculture. Dairy is seen
as an activity with great potential. The villagers have minimal land, so it was next to impossible
to get the sweet fruits of the “green revolution.” After many more discussions, they felt that there
are chances of getting reasonably good amounts through the establishment of dairy. The village
is situated in a very remote place, having no connectivity and electricity. So, they were not in a
position to start a dairy.

After a long and tough struggle, the villagers of Kakadva got the much-awaited road and
electricity connection only in 2007. They planned to derive maximum advantage from this, to
change their living conditions. Kakadva is a small village with about 700 households surrounded
by some other hamlets nearby, making it a cluster of about 1,500 families. Most of the families
are farmers and are involved in cattle rearing as their auxiliary occupation. Milk is available in
abundance in the village, but due to lack of road connectivity, the farmers were not able to
market the surplus milk. The nearest co-operative dairy is located in Mandvi, a town 45
kilometers away from the village. In 2008, the villagers in their panchayat meeting resolved to
establish a milk producer’s co-operative society in the village. The society got registered in April
2008 with the name Shri Kakadva Co-operative Society. Any milk producer can become a
member of society by subscribing to its share of Rs.10/-. During the first month, only 10,000
farmers became its members. By March 31, 2009, the number rose to 1,50,000. KCOS opened a
bank account, and all the money was deposited into it.

With financial assistance received from National Dairy Development Board, in March 2009,
KCOS has installed a bulk milk cooling unit of 7000 liter capacity with a cost of Rs.1,80,000 in
the village, where the milk from the members is collected daily. The assistance includes a 40%
non-refundable grant and a 60% soft loan refunded with 9% interest after two years. As per the
agreement, no interest will be charged for up to two years.

The state government also provided a non-refundable grant of Rs.1,00,000; to purchase a

computer for maintaining the records of KCOS Rs. 30,000; also invested in testing and
measurement equipment Rs.65,000 and purchased furniture worth Rs.5,000. The cooling unit,
furniture and testing equipment have an expected useful life of 8 years, while the expected useful
life of the computer is five years. As per an agreement with SUMUL Dairy, the SUMUL will
pick up all the milk collected by the cooling unit.

KCOS started functioning on April 1, 2009, after completion of the installation of the cooling
unit from Larsen and Toubro (India). The villagers are depositing their milk to a co-operative
society twice a day. An honorary secretary is appointed to look after the administrative aspects

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under the supervision of the managing committee. The executive wing of the federation
comprises of a salaried cadre of professionals from various disciplines headed by a Managing
Director. Under him are three managers responsible for the departments of Administration,
Accounts, Engineering and Development, Animal Husbandry and Fodder Development, Milk
procurement, Quality control, Stores and cattle development. Three employees who were
appointed to manage the work are getting a salary of Rs.3,700/- per month. The payments of
salary to employees are made on a regular basis on the 7th day of the succeeding month.

During 2009-10 total of 2,51,628 liters of cow milk were collected at the unit, out of which
2,51,500 liters is sold to SUMUL. They also collected 3,00,125 liters of Buffalo milk: Out of
which 3,00,000 liters are sold to SUMUL. The difference is due to normal handling loss.
SUMUL paid at the rate of Rs.26 per liter to KCOS and KCOS, in turn, paid Rs.23/- per liter to
its members for cow milk and Sumul paid at the rate of Rs.40 per liter to KCOS and KCOS, in
turn, paid Rs. 37 per liter to its members for buffalo milk. Other expenses during the year are
electricity charges Rs.98,709/-, office expenses Rs.10,000/-, miscellaneous expenses, like
meeting expenses Rs. 15,000, etc. On March 31, 2010, Rs.17,70,895/- was to be received from
SUMUL while Rs.4,02,398/- was payable to members.

Nowadays, villagers knew that access to a market that offers a price for his produce which is
commensurate with the investments and expenditure. They are worried about this
malnourishment, which affects milk productivity, the lactation period, fertility and also cattle
mortality. There is also a relationship between malnourishment and fertility. When the milk yield
is low, income is also low. They got the ray of hope from one of the SUMUL employees who
visited their dairy. He gave the information about ‘SUMULDAN.’ Since 1970, Sumul has been
manufacturing “Balanced, nutritious and scientifically formulated cattle feed" known as
'Sumuldan' for its members on a no-profit - no-loss” basis. An increasing amount of “SUMUL
DAN” has been sold over the years. Two of them visited nearby villages where people used this
‘Sumuldan’.several people interviewed said they preferred to mix Sumuldan with other feeds
(oil-cake, gowar ' ) for better milk yield.

“ If Raw material has good quality, then Finished product will have better quality.”

In January 2010, KCOS resolved to assist the members in productivity enhancement through
providing necessary cattle fodder and other inputs. To start with, the society made the following
purchases of cattle fodder.

January 3, 2010, 400 bags of ‘SUMULDan’ @ Rs. 2,410/-; freight paid Rs.1,650/-. February
2, 2010, ‘cattle fodder dan’ for 5,000 bags @ Rs.287/-; freight paid Rs.4,355/-.

Each bag contains 50 kg. Up to March 2010, all the bags were sold. The selling price for
Sumuldan is Rs. 3,000/- per bag and cattle fodder dan @ Rs.350 per bag.
On March 1, 2010, dairy had organized a free vaccination camp at Kakadva village for
animals of milk producers. The whole expense was paid by ‘SUMUL DAIRY.’ The
veterinary doctor advised them to provide mineral mixtures, fodder block & feed block to
animals who gave more than 10 liters of milk per day for extra protein and minerals.

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 On March 15, 2010, dairy had purchased 500 bags (1kg each) of Mineral Mixture @ Rs.55
from “SUMUL’ and sold the same to the farmers @ Rs.60. They also purchased 1000
Fodder blocks (10 kgs in one block) @ Rs.78 and sold to farmers @Rs.85 per block. They
purchased 1000 feed block (10kg in one block) @ Rs.120 and sold it at @ Rs.130.

All Mineral Mixture bags, Fodder Blocks, and Feed blocks were sold out within one week.

On January 25, 2010, dairy had sold out (on the cost to cost basis received from Government ) 50
units of Suda @ Rs.1200 p.u. and 700 Electric Chaff Cutter @ Rs.25000 (before subsidy). For
Electric Chaff Cutter, they got a subsidy of Rs.5000 from GCMMF, which was passed to
Farmers immediately on January 25, 2010.

On 31.3.2010, dairy had given a loan to twelve farmers for ‘Shanker Calf rearing’. The loan
amount to each farmer was Rs.10,000. Every month they will repay Rs.1000 with interest
(interest will be charged on the balance amount).

During the year, in addition to other training programs, five milk producers have been trained in
the special training programs being arranged in collaboration with the Agriculture Technology
Management Agency (ATMA). Their training fees for 3 days @ Rs.500 per day per person were
paid by the Co-operative Society.

Prepare the income statement of KCOS for the financial year ended on March 31, 2010, and the
balance sheet on the same date. (Ignore the income tax and transfer to general reserve).