Dairy production in India is anchored in 80 million rural smallholder households with marginal livestock holdings. Household-based production reflects the traditional gendered division of labour within households. Male members control market transactions and cash flows, while women carry out the bulk of day-to-day production activities.

While time and labour-intensive, women’s work in dairy farming is invisible and under-compensated. Women rarely own productive assets (land or cattle) and have little say in production decisions. The majority are cut off from direct access to their share of dairy income. Their labour is framed as an extension of domestic duties, which leaves little scope for entrepreneurial exploration or independent financial decision-making for personal or productive purposes.

This core disconnect between labour and decision making limits women’s opportunities for income and wealth generation, compromises their freedom of financial choices to meet life goals and contingencies, thus impairing their financial independence.

Financial inclusion by way of building digital and deep tech-infused gender-intentional fintech solutions is one way to bridge this disconnect, create a level playing field and open up a wider opportunity set for women dairy farmers in India.

On January 17, 2023,  we organised “Fintech for Women’s Financial Inclusion: Explorations in the Indian Dairy Sector” – a roundtable of esteemed domain experts, long-term practitioners, dairy collectives, and fintech founders to deliberate on the current gaps and ideate on suitable solutions to boost the financial well-being of women dairy farmers in India.

The Roundtable followed a structure of fluid discussions, insight discovery and synthesis of actionable takeaways in two formats – large-group idea exchange and small-group intensive brainstorming. This note captures the key insights from this exploration.

A  broad context of women’s participation in the Indian dairy value chain

Dairy is an extension of the household and at best provides smoothening of income. Dairy farming households operate at subsistence levels of production and have no visible incentives to upgrade production and improve productivity. For women, dairy activities are often considered an extension of household labour. This is often so because the milk from the cattle is often used within the household (at least partly).

Women do not have control over the household income from dairy farming. Intra-household disparity in distribution of income and poor valuation of women’s labour in the raw milk procurement market not only leads to underpricing of milk and low unit level profitability; but lack of direct access to compensation also challenges the financial independence of women in dairy farming households. This has  negative downstream effects on their ability to save, access credit and participate in financial decision making at the household level.

Rural India lacks an enabling entrepreneurial ecosystem. This is while there is vast unmet demand for milk and dairy products in the consumer market. Women are especially alienated from entrepreneurial ambitions on account of social conditioning, social barriers, missing mental models, absence of exposure to plausible business models, exclusion from formal financial networks and among other factors, exclusion from the formal dairy value chain.

meet NANDINI

A female dairy farmer in India

Nandini is a 30 year old mother of two living in a village 30 kms from the town of Dewas in Madhya Pradesh. She shares a two room semi-pucca house with her spouse, children and mother-in-law. The family cattle – whom Nandini has lovingly named Rani and Sita live in a shed adjoining the house. Nandini starts her day at 4 am to tend to the cows. Rani is expecting a calf and needs special care. Nandini fetches fodder and water, cleans the shed, washes, grooms and feeds the animals before proceeding to milk them. She may spend over 6 hours a day caring for the cows. It is hard work, especially combined with the load of household responsibilities. However, this does not stop Nandini, she deeply cares about the well-being of her cattle.

Dairy farming is a secondary source of income for Nandini’s family. Their primary occupation is agriculture and the family income amounts to less than INR 100,000 a year. Given the seasonal nature and other volatilities of farming, Sita and Rani are useful as they bring in a steady flow of income. Every morning after Nandini is done milking them, her husband carries the milk cans to a local milk collection centre. A collection agent weighs the milk and pays Nandini’s husband in cash. Nandini’s husband has a relationship with the collection agent and approaches him for small ticket loans when finances are tight. In return, he pledges Rani and Sita’s milk to him.

Nandini does not receive payment for the milk, she doesn’t even know what her share is. Her husband holds the payments for safe-keeping and contributes to the household budget as required. As a semi-literate woman who does not own a smartphone, Nandini is not comfortable with payment apps and does not quite know how to browse the internet. An extension officer from a local dairy cooperative office once told her to get more nutritious feed for Rani and Sita to improve their milking capacity.  But Nandini does not really know who to ask about this.

Gaps in the Dairy Value Chain and Potential Solutions

The dairy value chain can be seen as broadly comprised of four sections – input procurement, production, milk procurement and value addition.

• INPUT PROCUREMENT
  1. Dairy farming entails four key input procurement activities Cattle purchase, cattle breeding, cattle feed procurement and management of cattle health.
  2. Women are not equal partners in input selection. Input purchase activities are governed by male members of dairy farming households. While women manage dday-to-day operations, men are custodians of all cash-flow functions, from purchasing inputs to sale of produce.
  3. Input credit can empower women, but there are challenges to access. Formal financial services can serve women who are striving to lead or are capable of leading decisions on expansion of herd size, and quality, volume and source of other inputs. Access to input credit and insurance can help women farmers bypass male control over cash flows. However, women dairy farmers typically lack credit histories and substantial ownership of physical and financial assets. This compels them to depend on male members of the household for collateral to access formal credit, reinforcing their secondary status.
  4. Generating evidence of women’s work in dairy farming can enable access to formal financial resources. Creating digital identities, digitizing work-flows and linking input purchases to women-owned bank accounts can help FSPs profile, underwrite and finance the input procurement choices of women dairy farmers.
  5. Financing cattle purchase could be a priority for intervention. Herd size expansion has a multiplier effect on the business orientation of dairy farming households. Going from marginal herd sizes of 3-5 to 10-11 expands production yields, opens scope for farm-level production of value added products, potentially incentivizes technology adoption and transforms farm-level economies scale. However, the cost of cattle (each unit ranging from INR 80,000 to INR 100,000) is not within comfortable reach of smallholder dairy farming households, especially for women members of the households. Cattle loan and cattle insurance (life and health) products designed to sync with the needs, capabilities, constraints and behaviours of women in dairy farming can drive adoption and further women’s agency in input procurement choices.
  6. FSPs and fintech startups can focus on process and product innovations to support women dairy farmers in cattle acquisition. Such innovations could include (a) paperless application processes, (b) standardised metrics for cattle evaluation and pricing, (c) digital cattle quality certification services, (d) partnerships to solve for lack of documentation, (e) building alternative data trails to financially profile and underwrite women applicants, (f) providing incentives to promote transmission of all dairy farming related cash flows through women-owned bank accounts, (g) designing flexible cattle insurance products that complement borrowers and secure against cattle death or injury etc.
• PRODUCTION
  1. Women carry out the bulk of activities in the production stage of dairy farming. Their work covers shed building and maintenance, daily fodder gathering, feeding and caring for cattle, tending to calves, pregnant or sick cattle, milking and milk pouring, and dung collection and processing.
  2. Women, however, lack primary control of productive assets and processes of production (which are owned and set-up by males in the household). This creates gaps in market alignment and upgradation. Additionally, domestic demands leave women with little time and mental bandwidth for business contemplation and planning. Poor outlook and paucity of undivided time and attention repeats the cycle of production for subsistence.
  3. Women do not apply a business sensibility to dairy farming; it is an extension of household duties. The cattle are treated as children of the household and caring for them a part of the woman’s duties. In the backdrop of these institutional structures, women do not naturally apply an income generation sensibility for dairy activities.
  4. Women’s work is undervalued and subsidises the price of milk. Asking prices neglect the true market value of women’s labour. The daily physical and emotional labour of care-giving, grooming, sanitization and fertiliser management go unaccounted. Moreover, prices do not factor allowances for risks from lack of access to insurance. Dairy farming, therefore, operates with a missed understanding of profitability that manifests in underpricing of produce. The direct cost of underpricing is borne by the unpaid labour of women’s work in the production stage.
  5. Fintech innovations can help quantify and build shareable data trails of women’s work and earnings from dairy farming. Evidence can be subsequently extended to serve targeted modular FaaS and embedded financial services (e.g. DIY insurance) to women in dairy farming. This can open pathways to skilling and specialisation, technology adoption; and improve overall production efficiencies.
  6. Combining technology solutions with micro-entrepreneurship development can unlock superior financial outcomes for women in dairy farming. To shape their thinking, women in dairy farming must be exposed to aspirational success stories. Demonstrating viability, the economics and calculus of profitability, mentorship and detailed toolkits will be key to spark their imagination and instil confidence. This can be delivered through women role models and collectives.
• PROCUREMENT
  1. There are two dominant forms of milk procurement, with regional variations. Farmers may (1) independently sell milk to local collection agents or vendors (40% of procurement) (2) collectively pool their daily milk production at farmer cooperatives/collectives (60%). The former are largely unorganized, offer inconsistent prices and have poor standards of quality verification. The cooperatives/ private sector collectives offer procurement and price stability and have strong forward market linkages. The latter may also offer a host of ancillary services around cattle healthcare for the associated farmers.
  2. Fair price realisation from wholesale buyers is a function of high production volumes and collective action. Dairy farmers working with cooperative societies earn higher prices and have a reliable source of daily income. Stability and higher profitability incentivizes households to maintain quality and increase production. On the other hand, marginal dairy farmers who sell independently are much less likely to have enough income security to invest in bigger herds.
  3. Fostering collective farmer institutions is a step towards enterprise building in small-holder farmer segments. Different models can be explored- from collective entrepreneurship to nano- or micro-enterprise building.
  4. Procurement prices shortchange the value of women’s work. Milk payments are made in cash or bank transfers to male members of dairy farming households. Price computation is unscientific and underestimates the cost of women’s labour in the cost of production. Thus, the invisibility of women’s work has a direct impact on farm-level profitability. Transfer of earnings to males makes this invisibility harder to correct.
  5. Fintech solutions can bring visibility and fair remuneration to women’s work. FSPs and Fintechs can partner with collective bodies and collection agents to incentivize digital transfer of earnings to women-owned bank accounts. They could also partner with SHGs and other collective bodies of women dairy farmers to digitize day-to-day operations data to develop evidence to estimate the true money value of women’s work.
  6. Fintechs and FSPs can leverage transactions and operations to extend capital and insurance solutions. Such solutions could be the next step to higher earnings or profitability; and could be designed to help women farmers acquire larger herd sizes, buy equipment, access capital to take up collective entrepreneurship and obtain security against failure. Customised insurance solutions will be critical to hedge the production risks of new micro-entrepreneurs.
• VALUE ADDITION
• Across the value chain, fintech solutions for women dairy must follow two cardinal rules-

• Design solutions that minimize cognitive and social costs of adoption and usage
• Make women’s participation in decision-making (e.g. decisions regarding input purchase, choice of credit or sale of produce) core to product development ideation.

CATALYZING WOMEN LED ENTERPRISE BUILDING IN DAIRY PRODUCTION

Ecosystem actors must carefully seed entrepreneurial ambition and capability to unlock grassroot level value-creation opportunities for women in dairy farming. Interventions must address –

Awareness building and skilling – This can be done by training, mentoring, demonstrating the business case for enterprise building, providing easy to follow comprehensive toolkits to set-up, break-even and scale nano- micro-enterprises.

Amul uses marketing communication and advertising imagery to spark aspiration. Amul shows success stories of women dairy farmers in their commercials. A confident female dairy farmer with a large raw milk supply business delivering messaging around a price hike in an Amul commercial is inspiring to women dairy farmers who could not imagine going beyond a herd size of 3 cattle.

Leveraging the power of collectives – Collective enterprise building lends a sense of ownership and distributes the risks of venturing. Combined production volumes make it easier to find profitable buyers and develop forward and backward market linkages.

Balaji Dairy, a procurement cooperative completely controlled by women employs close to 60,000 women and supplies to Mother Dairy.

Mango Dairies, an Uttar Pradesh based dairy farming company procures, packages and markets value-added dairy products like curd, ghee and khoya from local collectives of female dairy farm workers.

Gender inclusive digital transformation of the dairy value chain: Women are not well represented in the dairy value chain in India. Cattle registrations are done in the name of male members of the household. Payment for milk production is also disbursed to men. Women find it difficult to access formal credit owing to lack of data on income and cattle ownership. Integrating women producers with the formal value chain is important for them to unlock higher profitability and additional opportunities for value creation. Fintech startups and incumbents can work on business model and financial product innovations to ease women’s access to productive resources.

Stellapps, an end-to-end digitized dairy value chain platform onboards and integrates producers across milk production, procurement and cold-chain distribution. Stellapps’ farmer-facing interface includes embedded credit. The startup has partnered with banks to extend credit to dairy farmers with underwriting based on cash flow and produce-quality trails captured on the app. Women are 60% of farmers registered on the platform. The startup serves 41,000 villages. Over half the number of loans initiated using the platform have gone to female dairy farmers.

ADIS Technologies, a young startup has created cattle tagging technology linked to biometric identity and lifecycle and health record database of tagged animals. The startup has taken initiatives to tag animals to women members of dairy farming households. ADIS views the cattle tagging database as an alternative underwriting database for insurers to extend customised insurance products to underserved dairy farmers, especially women.

ACKNOWLEDGEMENTS

The success of the Roundtable is greatly attributed to the diverse perspectives and insights provided by each participant. We thank you for your participation and active engagement.

List of participants

Dr. Ankur Ojha, NIFTEM

Chandrakiran N. Sant, Gomati Milk Producers Union

Deeptha Kumar, Haqdarshak

Emmanuel Murray, Caspian

Harshada Samant, VKCoE, IRMA

Jayatheertha Chary, Shreeja Mahila Milk Producers Company

Jofi Joseph, Promethean Power

Dr. J.B. Prajapati, VKCoE, IRMA

Keerthi Kamasamudra, Stellapps

Kishore Athota, Social Alpha

Kuldeep Sharma, Suruchi Consultants

Maharshi Thaker, Sampada

Nagarajan Sivaramakrishnan, Omnivore

Nikhil Bohra, Krimanshi

Nikki Pilania, Mango Dairies

Ramakrishna NK, Rang De

Ratul Baruah, Madhur Dairy

Ravi K A, Dvara

Shashikanth Subramanya, Villgro

Sriram Singh, NDDB

Sujith Hukkerikar, ADIS

TVS Ravi Kumar, MSC

Source : Notes from CIIE.CO’s Roundtable on the Dairy Sector on January 17, 2023