January 20, 1988

Urgent call upon European Parliament:

No more dairy aid for Operation Flood in India
without policy change in favour of the poor

The European Community should stop it's dairy aid to India's dairy development programme Operation Flood III. This can best be done after the proposed quantities of skimmed milk powder (SMP) and butteroil (BO) for 1988 (18.000 t. and 6000 t. respectively) have been delivered, because this gives the project authorities of Operation Flood some time to adjust to the new situation.
Also the Dairy Federations, in theory the highest representatives of the milk producers who are participating in Operation Flood, have in a letter to the Ministry of Agriculture of the Government of India (of 8th July 1988) asked for a ban on the import of SMP and BO.
Any additional aid for Operation Flood III (1987-1994), preferably financial aid and not dairy aid, should only be considered if there is a clear policy change in favour of the poor, among which women in particular, and if competition between European dairy aid and indigenous milk production is strictly avoided. In this case any financial transfers or proceeds from dairy aid should be used to support the implementation of these policy changes.

The above is the political conclusion of the analyses on EEC dairy aid for Operation Flood, which is made by the India Committee of the Netherlands(ICN). The ICN is a non-governmental voluntary organization which is active in the field of development education and action. At the end of 1985 we started our campaign 'EEC Milk Out Of India', one of who's most important action points was the phasing out of dairy aid to India within two years.
The ICN is of the opinion that Operation Flood has done little to improve the situation of the poor milk producers and consumers and in some cases even led to a deterioration of their position. The heavy EEC-financed emphasis on capital-intensive dairying in Operation Flood discriminates against other forms of dairy development. And more specifically: up to now EEC dairy aid has been depressing production and prices of Indian milk, especially in the northern and eastern part of the country.
Operation Flood has undoubtedly also positive aspects: the technical aspects of milk collection, handling and transport are competently handled, the proceeds of dairy aid are used to build an indigenous Indian dairy industry and the cooperative approach has, if implemented well, clear advantages for milk producers.
(for more specific information see our campaign manifesto 'EEC Milk Out Of India')

This week the European Parliament has a unique possibility to positively influence the food-aid policy of the European Community towards India and other developing countries. The Parliament will, probably on the 22nd of January 1988, be voting in Strasbourg on a 'Report drawn up on behalf of the Committee on Development and Cooperation on EC-India cooperation particularly as regards Operation Flood'. The rapporteur is Mr. Wilfried Telkämper of the Green Alternative European Link (GRAEL). The report is part of the procedure to take a decision on India's request for new multi-annual dairy aid for Operation Flood III.
In his report on Operation Flood the rapporteur has taken good notice of the independant evaluations by consultants, researchers and non-gouvernmental organizations on the effects of the programme. During the voting on the report in the Committee on Development and Cooperation however, same important political conclusions have been changed by a majority in the Committee. Missing in the present report therefore is the necessity to first have all relevant information (including the complete EEC/World Bank Review Mission Report and the upcoming report of the European Court of Auditors) available before taking any decision on new dairy aid for India. Most important however is that the conclusion is missing (which would clearly follow from the explanatory statement of the report) that dairy or financial aid for Operation Flood should be stopped unless the programme is drastically changed in favour of the poor (roughly along the lines which the resolution itself sets out).

The European Commission has supported this programme since 1970 with massive amounts of dairy aid, constituting at least one fourth of all EC dairy aid to developing countries. The Commission has now proposed to continue this support over the period of 1987-1994 with another 75.000 tons of SMP and 25.000 tons of BO.
An important concession of the European Commission to the critics of Operation Flood, is that it has reached an agreement with the Indian government to avoid competition between EC dairy aid and the price and production of Indian milk and milk powder. Without explicitly admitting that this competition is taking place, the European Commission now states that 'food-aid supplies should be priced at the same level as indigenous milk, taking into account the cost of an efficient transformation into milkpowder in order to be perfectly neutral in respect of local production both of liquid and reconstituted milk'.
The European Commission also stresses the importance of genetic improvement of local breeds of cows and buffaloes, instead of the present emphasis on cross-breeding with western dairy cattle (for the many social and economic drawbacks of large-scale cross-breeding see campaign manifesto 'EEC Milk Out Of India').
A last important concession of the European Commission to the critics of Operation Flood, is that there will be an annual review of the progress of the programme and of the specific amount of dairy aid needed. In case there is no need for dairy aid at all in a particular year, it is possible to replace it with financial aid.

With regard to the disappointing social aspects of Operation Flood however, the European Commission has chosen to ignore the criticism. Reading the most recent report of the Commission Services (SEC/87/1365), one can conclude that that the original social objectives of the programme, which emphasized the benefits for poor producers and consumers, have been tacitly discarded by the project authorities and the European Commission. Not even a word is said about the position of women, who do most of the dairy work. The EEC/World Bank Review Mission Report mentions that 'there are indications that - as dairying acquires more public status and brings in more cash income - women will be participating less in the ensuing benefits'. Vigorous and innovative action is recommended to improve the position of women at all levels of the cooperative structure, including their election to key-positions. Several non-gouvernmental women's organizations are also working on that and together published elaborate 'recommendations for policy planning for women in dairy production (in the book 'Indian women - A study of their role in the dairy movement' by Marty Chen and others).

A last important point with regard to the present proposal of the European Commission, refers to India's self-sufficiency in milk production. This was first to be reached by 1985 and now the Commission is of the opinion that Operation Flood III will allow India to be 'totally self-sufficient' by 1994. According to the 'Draft Commission Decision' allocating food-aid to India however, India's total requirements for 1988 might be 60.000 tons of SMP and 20.000 tons of butteroil. More than twothirds of this will be commercially imported. This large amount might partly be due to the aftereffects of the drought of last year but the recent report of the Commission Services gives indications that commercial imports might in the future be increasing.
On the basis of that report it can be calculated that the average cooperative member will increase his or her milk production a day from 1,7 liter in 1987 to 1,95 liter in 1994. This amounts to an average increase of milk production of 1,5% a year. Unless non-Operation Flood milk producers increase their production by much more than 5%, which is unlikely, it is absolutely not clear how this can lead to a self-sufficient dairy sector in 1994. Why? Because the demand for milk will according to several sources be increasing with about 5% a year.

All this might mean that the European Community has created for itself in India an export market for dairy products. Continuing with dairy aid for another seven years is not the solution to this problem but will only aggrevate it in the long run. EEC dairy aid at present helps to expand a system of capital intensive dairying who's real costs are covered up by the finances generated by dairy aid. This type of dairy industry at same point has to go through a somewhat painfull process of adjustment and consolidation. Operation Flood is now addicted to dairy aid and has to be weaned away.
In this way also more room could be created for types of (possibly cooperative) dairy development which are less capital and more employment oriented as well as better focussed on the needs of the poor.

Manifesto of the campaign 'EEC Milk Out Of India': http://www.indianet.nl/milkman.html.

India Committee of the Netherlands/Landelijke India Werkgroep - 31 juli 2003