01. Low productivity of Dairy industry
There is a trend, in developing the local dairy Industry. The main reason behind this is the escalating price of imported milk powder. People are interested to have a dairy but most of them lack the basic understanding and minimum technical knowledge required to start and manage a dairy farm and make a reasonable profit from an intensive or semi intensive smallholder type dairy farm. Dairy cattle management is largely done by the small to medium scale farmers scattered in all over the country. Nearly 200,000 farmers are involved in dairy industry. The production and the productivity of dairy cattle are well below the potential. Feeding on dairy cattle is mainly done on grasses and other low quality forage. Concentrate feeding is hardly practiced. Selection of good dairy cattle for rearing, proper housing, disease management and evening milking is not practiced.
There are several prerequisite to be a good dairy farmer. First is the good mind setting and he is really interested and prepared to be committed to work. The farmer must be prepared to learn day by day. The success of dairy farming depends on
- Breeding and reproduction
- Animal health
- Management of farm resources
- Markets and Marketing
Lack of knowledge on above factors is the main reason for the low production and productivity.
02. Interventions on Training and technology transfer for higher productivity
NADeP is facilitating dairy development projects proposed by leading companies involved in dairy industry by way of providing grants and low interest credit to provide machineries and equipment and also providing assistance to establish quality fodder in their lands and cattle sheds to protect the animals from adverse weather conditions and to adopt good management practices. Company is supposed to do training and technology transfer to develop dairy industry in their out grower systems and assured market for their produce. Although the project intervening in developing dairy industry in small scale farming community inadequate technical knowledge of both parties involved in farmers and extension staff badly affect the production. Upgrading of technical knowhow on following areas are crucial for better results.
- Cattle feeding
- Preparation of TMR
- Calf feeding and rearing
- Heifer calf management
- Hay and silage making to feed cattle feed during dry season
- Fodder establishment
- Management of dairy cattle as a profitable venture
- Importance and value of using deep freezers, milking machines ect. and cattle sheds.
- Waste management
In-order to implement project activities, company has recruited extension officers to mobilize the farmers to carry out planned activities proposed by the project proposal. However, the main focuses of these officers are to mobilize farmers to carry out planned activities as per the time schedule. Therefore, adequate attention is not given to farmer training and technology transfer. Lack of knowledge of Extension Officers on dairy cattle management is also a one of the reason for giving low priority for technology transfer. Having identified this issues NADeP project management unit has proposed to conduct a training of trainer programme to upgrade the knowledge and skills of the extension officers. Once they were aware of the technological knowledge on dairy cattle management they are able to identify the training needs of the farmer and organize training as and when necessary and be able to transfer of required technical knowledge to convince the farmer in-order to adopt recommended practices for higher productivity.
Finally, farmer must be able to make use of new knowledge and skills in the best possible manner with in the given environment by doing the right things right at all the times, to make profits from dairy industry.
NADeP has introduced value chain credit facility to farmers under Component 1 of the program after 2015 Nov. mission aiming to accomplish farmers value chain credit requirements. For the recipients of value chain finance, such as smallholder farmers are entitled to obtain financing that may otherwise not be available due to a lack of collateral or transaction costs of securing a loan and also can avoided the above abuses if required. In the value chain approach when assessing the creditworthiness of the specific borrowers the health of the value chain as well as the cash and product flows of the clients within the chain are critical for success. However, due to ‘side-selling’ or reneging on purchases which is quite often in rural settings in Sri Lanka when market prices change has become a hindrance for promoting this scheme as majority of PFIs are reluctant to get the risk. This can be somewhat mitigated if the buyer pays the farmers through the bank, which deducts the scheduled loan payments before releasing the net proceeds to the farmer or farmer group and this needs to be scaled up during the next programme introducing an efficient and simple system. May be tri-patriate agreement between company-NADeP and the PFIs would provide a conducive environment. Moreover, capacity development is one other area which should be looked after other than the technical training as NADeP understood that the lack of awareness is one of the main barriers of turning farmers in to entrepreneurs. The issue has been identified as most of them are not aware about the household budget management as well low motives in saving habits and this has been further aggravated by lack of knowledge and understanding with respect to credit management and accessibility. One other aspect is majority of family heads are addicted to liquor and it affects much in balance the family income.
As already experienced by the NADeP management, the existing method of disbursing funds is very complex and time consuming which hinders the project implementation significantly. The current process involves in creating individual bank accounts for all beneficiaries and the funds are disbursed to those individual accounts upon the NADeP receives the certification of individual farmers and the company, mentioning that they have received the specific project inputs to their door step and they are in good working condition (if it is an equipment). If it is a infrastructure this has to be completed according to agreed standards and farmers should be satisfy with the goods supplied as above and upon which NADeP releases funds to their individual accounts and the funds will be transferred to the contractors through the banks or will be released to relevant suppliers.
This mechanism found to be tedious and complicates the process of implementation. Similarly, in this process companies need to negotiate with suppliers to deliver the goods on credit basis until they receive funds from each farmer through NADeP. To simplify this, tripartite agreement can be made in between the project, company, and the fund manager where the company can do the procurement on behalf of the farmers with the guidance of PMU and consideration should be given to farmer preference as well. We should seek a mechanism to pre-finance the project activities and release funds to the identified fund manager and let the company and fund manager to handle it. The funds released to the respective fund manager can be utilized as a guarantee to the supplier and once the goods are supplied in good working condition those funds can be released after getting proper authorization/certification from the company as well as from the farmers. However, to make this happen farmer selection needs to be done prior to the signing of agreements and no dropouts can be entertained. Based on the present experiences, this cannot be expected. Moreover, certain suppliers have already hold their provisions partially as they were not paid fully for the previous provisions of the same projects due to this complex procedure of the disbursement and it aggravates further delay in project implementation. So considering all these factors, simplified version of a fund disbursement procedure need to be designed which will act as a crucial factor for target achievements of the whole programme and also on the prospected projects.
Frequent changes of the Implementing agency were highly affected programme implementation. Once the implementing agency is changed it affects implementation of whole components due to freeze of fund utilization and unavoidable administration issues. With the kick off of the Programme in 2011, there were 5 implementing agencies who took over the Programme. In such a scenario changes of the staff, occurrence of changes as per the new implementing agency, changes of the reporting channel, alteration of the programme agreement, freeze of fund utilization etc hinder the smooth operations and ultimately it leads to severe lag in implementation and poor performance. Such changes are beyond the control of the Programme Management Unit. (PMU)
As per the new IFAD guidelines, beneficiaries are not eligible for any kind of grant unless they are willing to obtain a credit facility with a sum of equal (Approximately) to the grant amount. But in reality many farmers are listed in CRIB which leads to automatic omission from identified projects. It has been a serious issue for the NADeP to help out the affected (CRIB listed) rural farmers as most of them are listed due to signing as a guarantor for someone else but with the above guideline, it will automatically reduce the chances of doing so and should be addressed as a priority. And also some of the farmers are reluctant to get the micro loan instead they want to buy the machinery on their own and wanted the grant to be given for them as well.
As per the original NADeP design Community Organizations (CBOs) were given an opportunity to partner with NADeP to start agri value chain projects. With the redesigning of the project implementation this opportunity was abandoned. But there were lot of requests from enthusiastic potential CBOs who operates profitable agri businesses to partner with NADeP livelihood improvement of their member farmers. The mechanism suggested by them are less complex and equivalent to out grower / contract farming model .(CBO outgrower)
The number of beneficiaries in a value chain partnership project lies between 100 – 2700. It is true that NADeP has a mountain to climb to reach the expected beneficiaries but as our experience the quality is more important than the quantity of the beneficiaries for successful implementation and fund disbursement. It was understood that the range between 200-500 is the ideal amount of beneficiaries to treat them individually and monitor properly. That has been concluded compared to project experience of NADeP compared project comprise of 200 beneficiaries and 2000 beneficiaries.