Amal empowers & enriches 8 million small-scale Pakistani dairy farmers by establishing, financing & supporting cooperatives

Amal empowers & enriches 8 million small-scale Pakistani dairy farmers by establishing, financing & supporting cooperatives

Pakistan
Organization type: 
for profit
Budget: 
$100,000 - $250,000
Project Summary
Elevator Pitch

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

Amal aims to generate income, create jobs, and foster opportunities for the 8 million small-scale dairy farmers in Pakistan . Currently, these farmers earn only a fraction of the economic potential of their trade because of low production and losses due to inefficiencies and lack of modern techniques in the Pakistani dairy industry, which is run by small fragmented operators in primitive manners without cold chain, processing plants, balanced feed and veterinary/breeding services. Amal will provide farmer cooperatives the technology and knowledge, at economies of scale, to boost their herd production by 500%; cut 7 billion liters/annum (20%) spoilage and 85% adulteration, process milk into value-added products and distribute these products to domestic and international markets etc.

About Project

Problem: What problem is this project trying to address?

Pakistan’s dairy sector has over 8 million small-scale dairy farmers who have one to three milk-producing animals. These farmers live in rural areas with no access to education, reliable electricity, paved roads and financial services. Animals are raised more as sources of liquid cash than sources of regular income through milk production, and are therefore poorly maintained. Their subsequent poor quality products are sold to middlemen (known as ‘doodhis’) in the village. The quantity per farmer is so small that the farmer cannot sell the dairy product themselves, even if roads are available to access the markets. The milk cannot be stored because the weather is generally hot and there is no refrigerated storage available. Therefore, farmers remain at the mercy of these middlemen to set the price of their produce. The farmers often live in the same compound or in close proximity to their extended families. However, while they live in groups and help each other, they do not do business as a group, mainly because they lack the ability and skills to run a collective business. However, this group structure can be leveraged to organize coops and develop trainings to teach farmers how to do business as a group. Amal will initially keep the transactions simple and similar to what these farmers have been accustomed to, though they will gradually transition to handle their coop business

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

Despite their proven benefits, there are currently no coops in Pakistan engaged in commercial operations. In farming communities, the major reasons for this are a lack of start-up finances and management skills to manage members and coop operations. The Amal model brings in private capital and management resources to fill the capital & management void for farmer coops. Amal will organize farmers into groups and give them start-up capital necessary to buy refrigerated equipment for milk storage & transportation to markets. Amal will conduct trainings to help farmers better understand the coop model and perform their roles as owners and managers of their group’s business. Amal will continue to provide necessary support in the development of these coops. The farmers will pool their produce and labor to produce more milk and preserve its quality. Amal will then link the coops to markets to reduce the need for exploitative middlemen and subsequently generate more income. Amal will then help these farmers reinvest their increased income to further grow their coop’s business. Amal will recover its invested finances through shares in the coops’ profits. This model is innovative because it merges private entrepreneurial capital, knowledge and skills with farmer businesses to bring overall efficiency to the system, empowering farmers to have more ownership in their businesses
Impact: How does it Work

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

Amal will begin by mobilizing and organizing farmers into cooperating groups (coops). Since the farmers do not have resources to invest in modern dairy equipment and services, Amal will finance the coops to buy the equipment, and then train coop members to use the equipment and collectively store their produce in refrigerated tanks. The members will also be trained in improving herd management. These coops will be financed and supported to buy veterinary and breed improvement services. This will result in the higher production of milk, which Amal will collect from the coops and transport it to markets in refrigerated trucks, where the milk will be sold at premium for its quality. This process will ensure that farmers produce more and their subsequent products are not wasted due to the unavailability of refrigerated equipment (which causes up to 20% of spoilage and forces farmers to adulterate milk with hazardous chemicals like Hydrogen per oxide or formalin). Amal will recover its financing through 50% share in profits earned through milk sales. In order to be sustainable, Amal will also charge a professional fee for these managing coop operations
About You
Organization:
Amal Dairy Cooperative
About You
First Name

Asim

Last Name

Hussnain

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About Your Organization
Organization Name

Amal Dairy Cooperative

Organization Country
Country where this project is creating social impact
How long has your organization been operating?

Less than a year

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Innovation
What stage is your project in?

Idea phase

Share the story of the founder and what inspired the founder to start this project

I come from a semi-rural background, where I was raised in a neighborhood with many dairy farming households. In my childhood, I saw firsthand how uneducated people were often exploited in the name of religion and politics. This spurred my desire to build a Utopian system of prosperity, peace and purpose – fully understanding that each of these is a pre-condition for the next. I studied Computer Science because in that subject everything is possible but six years after staring my career in the software industry, I went back to business school. In an agriculture management course, I learned of Amul of India – the cooperative that serves millions of small farmers and delivers them the benefits of owning a fully integrated modern dairy company. I said “Bingo.” I spent a few more years receiving background professional experience, followed by a fellowship with Acumen Fund, where I learned about the role innovation can play in business to empower the 4 billion people in the world living at the Bottom of the Pyramid (BoP). During my Acumen fellowship year, I developed this innovative model that offers income generation opportunities to small-scale dairy farmers in Pakistan through these cooperatives. Amal is the first mover in the Pakistan market

Social Impact
Please describe how your project has been successful and how that success is measured

The dairy coop idea has many successful examples around the world, including Land O’Lakes in the United States (Fortune 226 Company) and Amul in India. Although Amal’s main focus is to work with small scale dairy farmers and foster income generation, the project will provide further indirect benefits to both farmers and consumers. First, with increased incomes, farmers will be able to invest in education and health – something that is important for their progress and empowerment in the long run. Via this community approach, farmers will do business together and will use their coop platform to safeguard their economic interests by influencing political parties and, in turn, policies impacting their well-being. Consumers of dairy products in Pakistan, who currently have only adulterated and unhygienic milk, will also greatly benefit because they will have access to safe, value-added and affordable dairy products produced by Amal coops. The success of this venture will be measured, in the short term, by the increased income of farmers and number of consumers choosing Amal products over competitors. In the medium term, the herd productivity of farmers will be tracked, and at the same time, the change in literacy rates and access to health facilities will be also be measured. Finally, in the long term, qualitative studies will be conducted to assess the behavioral change of farmers, both as individuals and groups, regarding their participation in the matters of community and politics, as a further indicator of their empowerment

How many people have been impacted by your project?

How many people could be impacted by your project in the next three years?

More than 10,000

How will your project evolve over the next three years?

Amal will start as a farmers’ owned (coop) milk collection and marketing business which will collect milk from its member farmers and sell it to markets through milk shops in urban areas. Amal will use cold supply chain to preserve the quality of milk and avoid spoilage. This business will be profitable enough to attract commercial financing, allowing Amal to add more villages to its milk collection network. By 3rd year, Amal will sell 20,000 liters/day which will generate enough profits to finance a milk processing plant, which will be the first step towards value-added dairy product line. Amal will then add other products like yogurt, powdered milk, cheese etc. These products will provide substitutes to customers who currently buy pricy imported or competitors’ dairy products

Sustainability
What barriers might hinder the success of your project and how do you plan to overcome them?

Amal’s success and sustainability will come through scale, i.e., through the expansion of services and including more farmers to produce larger volumes of milk. In the startup phase, Amal’s small team and seed capital will be sufficient to manage and fund operations. However, Amal will need more human and financial resources to scale. Amal will recruit talent at competitive salaries, and will create partnerships with international dairy cooperatives and engage networks like Acumen Fund to build further capacity.
After achieving proof of concept, Amal pitch to impact/social and commercial investors for second round financing.
Both the formal (~6%) and the fragmented informal sector (~94%) in Pakistan’s dairy industry are struggling to create a consistent quality and quantity of milk supply. Amal aims to partner with farmers to produce and sell more milk using modern techniques and ultimately foster income generation.
As Amal expands and its credibility increases, it will be threaten middlemen, who currently have leverage against small farmers, as their farmers may demand prices and benefits similar to Amal’s. The subsequent competition may result in dirty political or power tactics to undermine Amal. However, Amal will establish farmer-friendly positioning through conventional mass and social media. Local political and administrative authorities will always be kept on board to endorse Amal as ‘the white revolution in Pakistan.’

Tell us about your partnerships

Amal has already been endorsed by multiple organizations active in the dairy and social enterprise sectors in Pakistan. Acumen Fund, where I was a 2010 Global Fellow, not only reviewed the business plan, but they also connected me to people who had expertise in the dairy business. Jassar Farms, a modern dairy company working on breed improvement in Pakistan, will provide operational support when the idea gets off the ground. Similarly, Live Stock and Dairy Development Board (a govt. organization) has arranged meetings with farmers to present them the Amal idea (farmers loved it and are excited to be part of it). At present, Amal is reaching out to Amul India (Gujrat Cooperative Milk Marketing Federation) and Land O’Lakes, Inc. USA for technical assistance, contingent on when Amal gets funds to launch its operations

Explain your selections

At this stage, Amal is seeking startup capital of US $ 140,000 to get off the ground and finance its first farmer coops in two villages. This capital is being sought from all possible sources including individuals and govt./non-govt. organizations. Once the initial coops get the necessary equipment and Amal starts working, it will breakeven (including cost of funds invested in coops) with sales of milk just from farmer groups in two villages. Further funds will then be required to scale, and Amal will pitch to investors in social capital markets e.g. Acumen Fund and by collateralizing the cash flows of existing coops to secure commercial funds e.g. bank loans. Following Amal’s first round of funding, the organization will be financially sustainable.

How do you plan to strengthen your project in the next three years?

Amal will be financially sustainable with cash flows just from farmer groups (coops) in two villages. Beyond this point, Amal will pitch to both commercial and social investors to invest funds to scale operations. In this period, Amal will have developed strong farmer communities which will be ready to participate in other programs as well. Amal will then launch veterinary and breed improvement services for its members. Other NGOs and organizations will be invited to run awareness campaigns in Amal’s farmer communities on various topics of social development, such as education, hygiene, gender issues etc

Challenges
Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.

PRIMARY

Lack of visibility and investment

SECONDARY

Lack of skills/training

TERTIARY

Restricted access to new markets

Please describe how your innovation specifically tackles the barriers listed above.

Pakistan’s broken dairy value chain can be attributed to the dominance of fragmented small operators who lack investment and management skills at every step. Better farm management will increase their production; cold supply chains will preserve the quality and reduce spoilage, dairy processing plants will produce value-added products & marketing skills will capture domestic and foreign markets. Amal will engage farmer groups in partnerships, to deliver finances and support for all of above, in which farmers contribute via on-the-ground presence and labor. Initially, all capital & overall management will come from Amal, which will recover costs through shares in farmer coops, but as coop members are trained in these skills, they will increasingly be empowered to run their own businesses.

Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.

PRIMARY

SECONDARY

Enhanced existing impact through addition of complementary services

TERTIARY

Influenced other organizations and institutions through the spread of best practices

Please describe which of your growth activities are current or planned for the immediate future.

Amal’s key success indicators include the # of farmers and volume of milk that are collected. Amal will aim to reach a maximum number of villages. Amal’s first step will be to process milk into value-added dairy products to target foreign & domestic markets.
As Amal expands to more villages, it will start selling additional services e.g. veterinary, breed improvement, farm management trainings etc to its farmer members. These services will help farmers increase production from their animals. Additional services will include social services through partner NGOs (health, education etc.). Amal will present itself as a model of innovation to be emulated by other organizations working in the dairy and other sectors, providing benefits to local communities and small farmers.

Do you collaborate with any of the following: (Check all that apply)

Technology providers, NGOs/Nonprofits, For profit companies, Academia/universities.

If yes, how have these collaborations helped your innovation to succeed?

The Amal model will need to foster collaborations with all actors to be successful and create maximum impact. Amal will first establish an efficient dairy supply chain that will leverage technology and government support esp. when it comes to providing infrastructure e.g. electricity, roads etc. Favorable government policies e.g. taxes, import duties etc will also be important in helping Amal achieve success. A useful partnership can also be developed with the University of Veterinary Sciences in Pakistan, while other NGOs can work with Amal communities on awareness campaigns on basic citizens’ rights, access to education, gender equality, and different community development projects like biogas and compost plants, health, nutrition and hygiene, etc.