Ukraine Milk Communities

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Ukraine Milk Communities: Developing a sustainable milk production model and improving incomes of small-holder farmers via cooperatives and family farms

Kherson, Mykolaiv, Poltava, Zaporizhzhia, and Dnipropetrovsk regions, UkraineKherson, Mykolaiv, Poltava, Zaporizhzhia, and Dnipropetrovsk regions
Project Stage:
Established
Budget: 
$1 million - $5 million
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Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

The main objective of the project is to help small-holder farmers to increase their revenue and to improve the well-being of their communities. Through creation of agricultural service cooperatives and family farms, not only do the small-scale farmers secure a sustainable income but they become important actors on the dairy market, and important strategical suppliers for a dairy company, like Danone. Both business and social goals are achieved.

About Project

Problem: What problem is this project trying to address?

The project aims to solve several problems. First, it is the economic decline of the Ukrainian countryside. Most people depend on incomes generated in their household through production of agricultural goods, such as milk, in particular. However, with lack of resources and training the milk produced is not of the best quality and each cow does not produce the optimal amount to reach an income of a minimum wage from the farm. There is also a lack of resources to expand the farm and transform it into a small sustainable business. Second, the rural communities are not well-organized and do not have effective means of solving local issues and investing into the community. Many people lack jobs, while Danone always needs quality raw milk.

Solution: What is the proposed solution? Please be specific!

The solution is the creation of agricultural service cooperatives and family farms, which the project helps to finance. Cooperatives provide better means for the community to coordinate their resources and decrease production costs for milk through wholesale prices for feeds and purchasing other services (e.g. veterinary). Cooperatives also significantly improve milk quality through purchasing equipment and create new jobs. They also generate extra funds through taxes paid to the local community. In addition, with the help of extra resources and training, suppliers of cooperatives can build better farms, with better equipment and practices that maximize their profit. They also serve as examples for sustainable agricultural practices.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

The project helps farmers to unite into a cooperative, which enables them to have necessary volumes for a dairy processor to collect milk. They can also pay together for services they could not afford on their own (feed, vet. etc.). They receive training and equipment to cool and test the milk quality. Some farmers receive jobs within the cooperative and they all benefit from improved income because of the higher quality of milk they provide. The project then sends consultants to advise the farmers on how to reconstruct the buildings of their farms to improve cow productivity and reach a better profit from economies of scale (as the project donates two cows to those who have at least 3 cows). The farmers now run small family businesses.

Spread Strategies: Moving forward, what are the main strategies for scaling impact?

In the near future the goal of the project is to serve as a best practice for the rest of the country. The cooperative model will spread to all regions of Ukraine, as it provides both dairy processors and communities a sustainable way to interact in the milk purchasing process. Also, many small-holder farms after seeing the example of their peers will start creating their own family farms with 5 and more cows. The dairy sector in Ukraine will potentially be transformed, as families will now invest in their dairy business and more people will be willing to remain in the countryside to run them. The government of Ukraine has already adopted the strategy of cooperative creation as one of the important means for rural agricultural development.
Sustainability

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

Socodevi project funded by Canadian Department for Foreign Affairs has piloted the model of family farms in Ukraine. We started cooperation 2 years ago. As we had the same goals, similar values and approaches, Socodevi has become an official project partner in the Phase 3 of Milk Communities Project. Together we work to develop the Ukrainian model of family farm, which will satisfy all legal requirements and will generate sufficient income for farmers' families. We are also working with the Ministry of Agriculture on development of the Law on Family Farms that will define the statues of family farms and will ensure their social security. As family farms are very innovative model to Ukraine, there are no other organizations working in this field.
Team

Team

To ensure synergy and co-creation effect, the project partners' roles were defined based on their key competencies. At the same time top management of both companies and the project managers make all the strategic decisions together. To be more precise, Heifer-Ukraine staff responsibility is: consultations on cooperative development; consultations on community mobilization, increasing the number of coop members and their loyalty to coop; assistance with purchase of assets for cooperatives; organizing necessary training events and social studies, ensuring cooperation with local and regional authorities; and administrating project funds. Danone responsibility is: consultations on family farms reconstructions, milk quality consultations; animal well-being and productivity consultation; Danone price formation and stimulation programs; increasing milk volumes.
About the Lead Co-Creation Partners
Organization:
Danone Ukraine
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LEAD SOCIAL-MISSION ORGANIZATION
Type of organization (e.g. NGO, association, not-for-profit, foundation, social enterprise)

International Charitable Fund

Total Number of Full-Time Employees

24

Lead Contact First Name

Tetiana

Lead Contact Last Name

Danyliv

Title

Project Director

Country

Ukraine

Twitter URL
Facebook URL
Website

www.heifer.org.ua

LEAD CORPORATE PARTNER
Organization Name

Danone Ukraine

Total Number of Full-Time Employees

2500

Lead Contact First Name

Anatoliy

Lead Contact Last Name

Shatkovskyy

Title

Milk Projects Manager

Country

Ukraine

Twitter URL
Facebook URL

www.facebook.com/DanoneUkraine

Organization Website

www.danone.ua

Basic Info
Project Starting Year

2010

Primary European Country where this Project is creating social impact

, Kherson, Mykolaiv, Poltava, Zaporizhzhia, and Dnipropetrovsk regions

Additional European countries where this Project is creating social impact
Select the category that best fits the type of your project:

Inclusive supply chains: Entries in this category implement efficient, sustainable and inclusive supply chains, Job Creation: Entries in this category create new jobs for people away from the labor market.

What awards or honors has the project received?

The project has received an annual "Most innovative social impact project" award on the Danone global level

Project Summary
Co-Creation Model: Tell us about your main strategic partners and how the partnership truly create value. For each Partner please include its type (business/social/public), its name, a short description, its key motivation to participate in the co-creation project, and the key contributions it is making in the co-creation project. Please follow the format displayed below:

-Danone Ukraine
-Business
-Danone's mission is to bring health through food to as many people as possible. Danone operates in 140 countries of the world, producing dairy products, medical nutrition products, baby nutrition products and waters. Danone also pursues many social initiatives globally.
-Danone is both committed to its social and economic objectives. On the one hand the project helps with securing the milk supply. On the other hand it strengthens the Danone ecosystem from a social stand point.
-Significant monetary contribution, project management and expert consultancy.

-Heifer-Ukraine
-Social
- Mission of International Charitable Organization “Community Wellbeing” (English short name – Heifer-Ukraine) is to work with rural communities to improve the wellbeing of families, social and economic development of rural areas while caring for the environment. Heifer works in Ukraine since 1994.
-Key motivation to participate in the co-creation project: partnerships with business corporations, enabling to leverage limited resources for greater impact and first of all increase capacity of depressive local communities in Ukraine.
-Key contributions in the co-creation project: Heifer-Ukraine is responsible for cooperatives development, community empowerment and administrating project funds.

Impact
Impact: What is the impact of the work to date? Also describe the projected future impact. Please specify using qualitative and quantitative data (e.g. # of indirect and direct beneficiaries); help us understand how this solution truly makes a difference.

To this date more than 3000 families have received benefits from supplying milk to dairy cooperatives. Taking into account official government statistics, this means around 9000 indirect beneficiaries (family members of the suppliers) that the project impacts. Many of them have received training and skills that will improve their farming approaches. 67 new jobs have been created. In the next year, 92 small-holder farmers will be transformed into sustainable family farms. Villages have received new playgrounds, a gym, boiler for kindergarten and other benefits from the social activity of cooperatives.

Sustainability
Funding: How is your project financial supported? [select all that apply]

Foundations, Businesses, Regional government.

Sustainability Plan: Has your project already reached financial sustainability? If not, what is this solutio’s plan to ensure financial sustainability? Do the main partners have enough stake to sustain the solution? If this project requires limited budget, how will other resources be secured to maintain or grow this work?

The key factors of project sustainability are the following:
1) Project milk cooperatives are well-equipped, economically sustainable, collecting high quality milk. They have functioning governance system, which ensures democratic decision-making and transparency of coop activities.
2) 92 family farms (keeping 10 cows each) that will be built by the end of the project will become the driving force of the cooperative and model for other small-holders in Ukraine to follow.
3) Danone as a reliable and transparent milk processor that is purchasing milk from the cooperatives.
4) Consolidated local communities able to unite the efforts of local citizens, influence decision-making and solve local problems.
Now the biggest risk for project sustainability is unstable political and economic situation in Ukraine and unpredictable economic trends.

Team
Founding Story: Share a story about the "Aha!" moment that led the Partners to get started and/or to see the potential for this to succeed.

When creating milk agricultural cooperatives, we saw that majority of people keep 1 to 3 cows. They often do not calculate their expenses and income. We calculated that only keeping minimum 5 cows can generate profit to the family equivalent to a minimum wage Keeping 10 cows will permit farmers to accumulate profit, which will cover all basic needs of the family of four members.
In Ukraine there were only big farms keeping 200-300 cows and smallholders keeping 1-3 cows. The whole niche of family farms did not exist. Therefore, Heifer-Ukraine and Danone decided to fund building family farms for 10 cows, which will let family generate 500 USD per month, live with dignity, and serve as a model for the neighbors.

About the Co-Creation
Barriers: What main barriers may you have encountered to co-create during the creation and implementation of the project and how did you try to overcome them?

The main barriers for the project implementation were the following:
1) Danone–Ukraine and Heifer-Ukraine have different basic paradigms leading to misunderstanding (business vs charity). This issue was solved thanks to improved communication between partners.
2) Different professional "vocabulary" was another barrier. Quite often, we were talking about the same things but did not understand each other as we used different vocabulary. This issue was solved by conscious efforts of project staff to listen in order to understand, and to find win-win decisions.
3) At the beginning of project implementation, "ME" approach prevailed on "WE" approach. Joint efforts from both sides to build up open communication, trust, and reliable relations led to creation of the professional team able to meet joint commitments and find creative decisions in problem solving.

Governance: What is the type of the relationship between the partners? (e.g. joint venture, contractual relationship, joint project...)

Milk Communities Project is a joint business-social project. The highest governance body is Steering Committee which consists of Danone Director, Heifer-Ukraine President, representatives of Danone Ecosystem Funв and Socodevi. Strategic decisions are taken by the Steering Committee.
Management body of the project is represented by project managers from Danone and Heifer-Ukrane side. They manage the team of coordinators and external experts. Project business and social indicators and expenses are annually audited by two audit companies - Earnst and Young and Deloitte.

Interaction model: How is the project a transformative partnership? How is the interaction transforming the partnering organizations and their employees/ leadership in terms of creating a new vision, new management practices, new skills and new organizational structures? Please provide for concrete examples

At the beginning of the project implementation the conflict of business and social paradigm was clearly observed. After 3 years of joint project implementation both business company (Danone) and social organization (Heifer-Ukraine) have significantly enriched each other.

The main transformations in both organizations are the following:
Danone: 1) increased focus on social aspects of rural community development; 2) created a Manifesto on company’s commitment to rural communities in Ukraine; 3) increased Danoners engagement and reconnection to farming.
Heifer-Ukraine: 1) shifted from social paradigm to the blend of social and business paradigms; 2) added business pillar to coop sustainability; 3) learned business-driven and result-oriented approach and got the experience in cooperating with a business-oriented company.

How did you find out about this competition?

From the representative of Danone Ecosystem Fund (Paris)

File attachments: 
File pr_materials_mc_project.docx