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  • Published on: 14th September 2019
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Operation Flood and its Impact on Development in India

Introduction

India's National Dairy Development Board (NDDB) launched the World's biggest dairy development program, Operation Flood (OF) in 1970. It transformed India from a milk deficient country to the world's largest producer of milk. Operation Flood was the policy program underlying “the white revolution”. The program launched multi tiered co-operatives with Primary Village Cooperative Societies at the base, District Unions at the district level, and State Federations at the state level and the National Cooperative Dairy Federation of India as the apex body of this structure. These co-operatives created a national milk grid linking producers and consumers in over 700 town and cities to reduce seasonal and regional price disparities. Apart from that, they were able to link modern technology and application to rural producers that lacked technique.

This program was effectuated over three phases:

Phase l (July 1970 – 1981)

Financed by the sale of commodity gifts of skimmed milk powder and butter oil given by the European Economic Community, in this phase cooperatives were established in 18 milk sheds in 10 states to link them with parent dairies in the four metropolitan cities of Delhi, Mumbai, Kolkata and Chennai. By the end of this phase there were 13,000 village dairy cooperatives involving 15 lakh farmer families. Thus in this phase physical and institutional infrastructure was created for milk procurement at village level. Processing, marketing and production augmentation services were established at the district level and dairies were set up in the cities. Hence, a sound foundation was created.

Phase 2 (1979-85)

This phase was launched when phase 1 was still underway. It established 136 milksheds linked to over 290 urban markets. It was financed by the sale of the commodity gifts and World Bank (WB) loan of $150 million. Self-sustaining system was created of 34,500 village dairy cooperatives covering 36 lakh members. More states like Karnataka, Rajasthan and Madhya Pradesh were covered. A World Bank audit shows that an investment of Rs. 2000 million in OF led to a net return of Rs. 240,000 million per year over a period of 10 years.

Phase 3 (1985-96)

With about Rs. 13,000 million and commodity assistance, this phase the focused on enhancing the marketing and the processing facilities, increased procurement infrastructure and professionalization of dairy industry. This phase ended in April 1996. By September 1996, nearly 73,300 dairy cooperative societies had been laid in 170 milk sheds connecting more than 9.4 million farmer members.

The sizeable vegetarian population in India ascertains a reasonably high level of demand for milk and other dairy products. Despite a deep-rooted tradition of keeping milch animals in households, the rise in demand due population rise, economic advancement, urbanization, higher incomes and high elasticity of dairy products, this rise in demand could not be met. In New Delhi alone the demand for milk swelled by 50 percent between the mid-70s and mid-80s. (Batra, 1990). However the implementation of Operation Flood started the cooperative movement in a sector dictated by an unorganized, informal sector. It changed the policy environment, improved technology and created well-established markets to become the primary reason for The White Revolution.

Literature Review

India, a traditionally milk consuming country had been a milk importer for decades. More than half of dairy industry's throughput was produced outside the nation. However, an umbrella of programs and interventions established a self-sufficing dairy industry. Since 1970, India's dairy products' output has outpaced the crop output and world's 1% annual rate of increase. And one of the major reasons behind this progress has been Operation Flood. By the end of the phase three of this policy, it had integrated over 9.4 million farmers and by 2007 the number had increased to 12 million. The widespread success of this policy has garnered a lot of research analyzing the policy.

The use of donated dairy commodities to fund the program was quite unlike traditional methods of finance. According to Gupta (1997) the total investment in Operation Flood was more than 1600 million in the early 1970s, out of which 40% was the commodity aid from European Economic Community (EEC). The EEC dairy surpluses were combined with domestic milk and then sold to urban consumers. This not only satisfied the unmet demand for milk but also funded the policy and modernized the industry. Cunnigham (2009) states that fortunately the leaders anticipated the dangers to the national markets if the surplus European milk was dumped here, hence they it was used in a manner that would promote technological advancements and self-reliance. Conversely, Doornbos and Gertsch (1994) state that the aid disincentivised local producers to produce and it skewed the market towards a few regions and prevented natural evolution of market forces.

Autonomy of the NDDB was another discussed aspect of the policy. Tikku (2003) states that the independence of the board allowed it to focus decisions on the producers and create ancillary bodies to supplement the budding cooperative movement. NDDB was able to offer technology, equipment, marketing and veterinary servicers at reasonable prices. Alvares (1985) refutes this point by arguing that less intervention facilitated corruption and conflict of interests, leading to a poor replication of the original Anand plan.

Furthermore, the program started deep urban rural linkages especially with the markets of the metro cities. Better linkages assured the producers of secure and profitable dairy sales and allowed steep rise in production and incomes of the farmer households (Cunnigham, 2009). This was supported by quantitative restrictions on dairy imports thus protecting the cooperatives.  Operation Flood also became the biggest sustainable employment program in the rural areas; it led to the development of roads and also created jobs through the urban dairy plants. It was observed that in cooperative villages the mean household income from milk and other income sources was higher and the level of employment also increased.  (Singh and Das, 1984). Atkins (1989) goes on to say that Operation Flood was one the most successful large scale, income generating rural development programs; and accredits the drop poverty from 49% to 38% between 1970 to 1980 to it.

One of the biggest achievements of this program has been the breakthroughs in the production, processing, procurement and marketing techniques in the dairy sector.  This is reflected in the fact that despite the cooperative segment of dairying is still very low and almost 80% of the total market is controlled by the informal sector, the production has drastically increased due to higher productivity and better linkages. Milch animals' productivity tripled between 1970 and the early-1990s and 726 tons of milk powder could be produced per day (Banerjee, 1994). Furthermore, some major advances like the development of rail milk tankers, a network of trucks, railway wagons, refrigerated vans and processing plants created a foundation that went a long way in the years to come (Kurien, 1996).

The program also enhanced the nutritional intake of individuals. Village level studies have shown that consumption of dairy and other food products increased in rural areas indicating that the program improved the dietary diversity and nutritional level here (Kurien, 1996). Moreover, it has a favorable impact on the caloric and protein levels of rural people, as nutritionally weak people received higher share of milk produced. Interestingly, the extension services notably impacted women's knowledge, self-confidence and social standing since they were responsible for caring for the milch animals. Since depositing the milk at the collection centers did not require spending a lot of time outside the house, a lot of women got involved in it thus boosting their employment rates. Through Operation Flood women's participation increased to over 25 percent of cooperative members and over 2,700 all-women cooperatives became operative. Community development augmented as gender disparities and traditional responsibilities gradually faded. Desire for better sanitation and cleanliness also increased. (Cunnigham, 2009).

Thus although most past literature states the accomplishments of OF, many papers do criticize some of its operations and implementation. However, it can be positively stated that the program was unlike any other policy initiative taken in India and brought about many changes.

Analysis

Operation Flood was a success. It achieved its objectives to create a lasting cooperative dairy sector to ensure self-reliance in dairy. The use of foreign commodities aid to fund the program was an anti inflationary strategy that restricted price fluctuations and assured a stable market. If the cheaper aid products were simply dumped in the domestic markets the local markets would have tanked, in fact this strategy ensured a buffer stock incase of a dip in domestic supply. Producer friendly polices boosted production and permitted India to exploit its comparative advantage in production of milk.

Economic and political leadership enabled a flourishing environment for the policy. Low but strategic intervention created an effective business model. The program focused on marketing channels as well as creating a pragmatic design for the producers allowing it to tackle the problem of adverse selection and enjoying economies of scale Tikku (2003). Policy makers analyzed the customer demands and planned the program according to it and thus generated a pull factor for this sector. Furthermore, handling of daily operations by local bodies minimized political intrusion and turf battles. However, it has also been argued that minimal intervention also means that the operation was spotted with corruption and selfish interests of the individuals involved.

The cooperative movement was the backbone of Operation Flood. They raised awareness about the power of collective effort, led to lower political conflicts and allowed the producers to be at the forefront of the decision-making. However, although certain cooperatives weren't able to replicate the success of the original Aanad cooperatives as a whole collective action was a reliable

The program impacted many sectors that accelerated the growth trajectory of the nation and specifically the dairy sector. One of the main aspects was, women employment. Promotion of women led and women managed co-operatives was an important feature of this policy. This not only increased the women's involvement in the dairy sector but also made it efficient as women were well versed with caring for and feeding the milch animals. Nevertheless, to and fro women does not occur. Besides, many women indicated a lesser control over resources then before; with smaller amounts involved in the transaction before Operation Flood, men were less intrusive but with the cooperative system and tendency of men getting listed to collect the milk payment their involvement increased and women enjoyed less control.

Technological advances were also majorly impacted. Better transportation and storage services allowed an all year round supply of milk, which is vulnerable to seasonality. Moreover, better roads and infrastructure also impacted other associated industries like crop cultivation and made resources more mobile between the urban ad rural regions.

Income and nutritional intake of the producers most definitely increased. The income of landless farmers doubled to Rs. 1845 plus the bonus of R. 400 between 1985-86, which also impacted the nutritional intake on these households. The belief in the industry also attracted large sums of investments, which maintained this reasonably high level of incomes. However it is interesting to note that after the implementation of the policy the rural consumption of milk decreased.

Conclusion

Although analyzing Operation Flood's impact is tough due to many problems in-built in the policy data and assessments. Scarce data, predisposed evaluations, and methodological errors abound the literature. While some reports state that Operation Flood was a success, some state that the success was stained with regional disparities. Nonetheless, it is certain the Operation Flood laid a strong footing for the cooperative movement which is operated by 13 million individuals today, it guaranteed a steady and consistent return on investment in the dairy sector and led to an overall development of technology, infrastructure and social standing of women. More than anything the program boosted the availability of dairy in the nation. Collective action led by social entrepreneurs, use of food aid commodities, extension services, market institutions and strategic government intervention all backed Operation Flood to make is a success.  

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