Demonetisation move prompts digitisation of milk procurement

Mumbai: Post-demonetisation, digitisation of milk procurement is getting a massive boost in organized segment which represents 20% of India’s dairy industry. Cooperatives and private companies are looking for digital solutions for direct credit to cattle owners’ accounts to ensure uninterrupted supply of milk despite currency shortage.

HDFC Bank’s two-year-old milk-to-money programme, which has been extended to 12 states, is now seeing demand from milk procurers all over the country. The advantage of the scheme is that the collection agents enter details of the quality and quantity of milk and the software does a straight-through processing of the information to ensure that money is credited directly to the farmer’s account.
“As of now, 3 lakh farmers are getting payments directly to their bank accounts. They can withdraw the money from 1,000 ATMs and micro ATMs, which have been set up for them to access funds,” said Michael Andrade, head (agri business), HDFC Bank. The advantage that these farmers have is that the government and the Reserve Bank of India have made special arrangements to provide notes to the 1,000 outlets so that milk supply is not hit. Besides HDFC, mPesa is also doing a programme for private procurers like Prabhat Dairy to credit funds directly into farmer accounts.
“We cannot even comprehend the kind of demand that we have on our hand. The farmers that are already on our milk-to-money system are sitting pretty because they are getting their money faster than before. So now milk procurers in other centres want similar programmes. We recently opened our 1,000th milk-to-money programme in Himmatnagar,” said Andrade.

Historically, farmers got paid by the agents of the cooperative society. “Through milk-to-money, we have introduced direct-to-account payments. Given the small values, we had to really reengineer our internal costs. The whole process of capture of data and payment file had to be automated and have straight-through processing to cut down on operational costs as well,” said Andrade.