Raf Somers

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Fair payment for dairy smallholders

• Raf Somers
• Vietnam Belgium Dairy Project

Nairobi, Kenya, August 2008
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Content

• Vietnam Belgium Dairy Project
• Smallholder dairy farming in Vietnam
• Importance of individual quality control
• Our intervention around Hanoi, Vietnam
• Lessons learned
• Recommendations

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Vietnam Belgium Dairy Project

• Funded by Belgian and Vietnamese Government
• Implemented by the Min. of Agriculture Rural
  Development of Vietnam, with assistance of the
  Belgian Technical Cooperation
• Main activities
• Increase productivity
• Training of farmers
• Introduce practical innovations
• Strengthening Vet and AI services
• Improve milk quality control and payment
• Link Public and Private sector to enhance
  sustainable dairy development Dairy Vietnam
  (www.dairyvietnam.org.vn)

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Smallholder dairying in Vietnam
HF HF cross breeds
Average farm size 5-10 animals
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Cut and carry
Traditional forage Elephant grass (Pennisetum
Purpureum)
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New Forages
Bracchiaria mutica
Australian Mix
Avena sativa
Panicum maximum
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Innovations
Silage bags
Calf rearing practice
Sprinkler irrigation
Heat stress solutions
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Milking
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Milk Collection Center (MCC)
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Milk transport to factory
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Dairy Industry in Vietnam

• Dairy smallholders produce more than 90 of the
  milk
• The informal market is small (about 10)
• Popular dairy products are flavored milk,
  yoghurts and ice cream
• Self supply in Vietnam is only 20

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Milk collection from smallholders

• Dairy processors often struggle to collect the
  milk from smallholders
• poor quality milk
• small volume
• scattered farms
• difficult to do quality testing
• Almost no functioning cooperatives
• Smallholders often receive a group price
• Collectors earn too much compared to the farmers

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One price for the group
Farm
Milk collector
Farm
Processing Company
Milk Collection Center
Farm
Farm
Farm
Milk flow
Payment
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Result of a group price

• Farmers are not encouraged to produce good
  quality milk
• Bad farmers cannot be identified
• Penalties are shared among farmers
• Milk collectors always take their collection
  fee
• Relationship between farmer and collector often
  determines the milk price for each farmer

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Our philosophy

• Milk Quality can only improve if

• Better quality milk receives a higher price
• Quality is tested for each farm!

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Stimulating growth!

• Farmers are encouraged to produce better quality
  milk because of the better price
• Actions to produce better quality will also
  result in better productivity!

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Our intervention Phase 1

• Create a WIN WIN situation
• for all parties!
• Collaborate with the processing companies
• Install testing equipment in milk collection
  centers
• Keep most of the milk collectors, but reduce
  their power!
• From group price to individual price!

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Individual price

• Based on components of the milk (FAT, SNF)
• Penalty for poor quality
• high bacteria
• antibiotic residue
• Bonus for good practices
• Farm evaluation
• Low Somatic Cell Count

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New equipment

• Introducing IT solutions in the milk collection
  centers
• Electronic scale
• Milk analyzer
• Smart cards
• Microprocessor

We know the exact amount quality of each
farmer
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• picture transfer milk from
• milk can to scale

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Quality testing

• Components of the milk (FAT, SNF, added water)
• tested every delivery by milk analyzer
• Bacteria (MBT), antibiotic residue (Delvo test)
• tested every 14 days in the laboratory
• Farm evaluation, somatic cell count (DCC)
• every two months in the farm laboratory

BASIC PRICE
PENALTY
BONUS
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Software
Laboratory data (BCC, SCC, AR)
Field data (Kg, Fat, SNF)
Farm Evaluation
Software
Individual payment for farmers
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Payment to farmers

• Bank transfer (farmers choice!)
• Clear feedback
• 2x per month
• Bank get an insight in the creditability of
  farmers
• Milk collectors only receive a collection
  fee!

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Evaluation of Phase 1

• Good farmers highly appreciate our system
• Good milk price
• Bonus for good farming practices
• Fair and transparent
• Clear feedback
• Timely payment

Thanks, my dear
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Evaluation Phase 1

• Bad farmers
• Angry when they receive individual penalty
• Complain that penalty period is too long
• Cannot receive bonus

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Evaluation of Phase 1

• Milk Collectors
• Many are not so happy
• Less profit than before
• (before they could easily cheat!)
• They do receive a very fair price, but many do
  not want to work honestly and they dont like to
  be controlled
• Still allow bad quality milk to go into the bulk
  tank because they worry to lose farmers

Only the processing company can successfully
control the milk collectors!
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Evaluation phase 1

• Processing company high appreciation!
• Want to intensify the collaboration with the
  project
• Report that our milk quality is better than in
  other regions
• They already apply the lessons learned
• in other MCC
• Individual testing
• Individual payment

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Evaluation Phase 1

• However, some processing companies still
• accept milk with added water
• pay a too high price for
• poor quality milk
• Bad farmers and collectors can still easily
  sell their milk elsewhere.

Need for National Legislation!
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Phase 2 Improvements

• Put one quality control staff in each MCP
• Collector does not perform quality
• control anymore
• Perform more tests in the MCC
• Increase frequency of testing
• For bacteria daily methylene blue test
• For antibiotic residue daily fermenation test,
  confirmation by delvo or copan test
• Reduce the penalty period

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Repeatability?

• The equipment is only a tool, the intentions are
  more important
• individual testing
• individual price
• We want to set an example for
• farmer organizations
• processing companies
• governments
• Raise awareness about the need for
• Transparent quality control
• National legislation

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Recommendations

• 1. Companies should make sure that farmers
  understand the basics about milk quality
• Milk composition (Fat, SNF, protein, ...)
• Added water
• Bacteria
• Residues
• Somatic cells

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Recommendations

• 2. Limit as much as possible the role of
  intermediates between farmers and processors
• In Vietnam, we recommend that the processing
  company has a quality control staff in each MCC
• 3. Always do a good acceptance test
• inspection of milk can (material, cleanliness)
• organoleptic test (look, smell)
• density test (added water)
• alcohol test (bacteria, colostrum)

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Recommendations

• 4. Basic tests can be done daily in the MCC
• Bacteria dye reduction tests (Methylene Blue,
  resazurine)
• Cheap but only a rough indication
• Many false negatives! (This gives the wrong
  impression to farmers that the milk is good...)
• TPC is much better, but needs to be done in a lab
  and takes a lot of time
• Antibiotic residue fermentation test
• cheap
• best is to confirm positive result by Delvo or
  Copan test

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Recommendations

• 5. Milk composition
• Basic milk analyzers can be
• placed in MCC
• close to farmer (transparent)
• can detect added water easily
• BUT they need a lot of maintenance and spare
  parts!
• In many locations it might be better to test the
  composition once every 14 days in a central place
  or with a mobile unit.

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Recommendations

• 6. Somatic cell count
• Interesting information for farmer!
• Bonus for low SCC stimulates good hygiene
  practices
• On farm CMT test (info about each quarter)
• In the MCC DeLaval Cell Counter
• exact number
• relatively expensive per test (about 2 usd/test )
  
• machine can be transported from MCC to MCC

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Recommendations

• 7. Penalty
• Farmers should understand why they receive
  penalty
• Farmers prefer more regular testing and shorter
  penalty period
• Penalty should be balanced with bonus
• Farmers and Collectors should receive penalty for
  their faults, not for someone else fault!

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Recommendations

• 8. Infrastructure in MCC
• Many poor quality cooling tanks
• Frequent power cuts
• Consider cooling tanks with an ice bank
• Short power cuts have no effect on quality
• Milk cools down faster (below critical 10C)
• Use cheaper electricity at night to make ice

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Recommendations

• 9. Cleaning protocol
• Milk cans cooling tanks need to be cleaned
  following the 4 principles of good cleaning
• Time
• Temperature
• Physical action
• Chemicals
• Acid to for protein
• Alkaline detergent for fat

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Useful websites

• Dairy Vietnam
• www.dairyvietnam.org.vn
• A lot of info about the dairy sector in Vietnam
• Free download of manuals including milking
  hygiene and milk quality control
• APCHA
• http//www.aphca.org/reference/dairy/chiangmai_wor
  kshop_feb08.html
• Regional strategy for smallholder dairying in
  Asia
• Many interesting country reports

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Thank you for your attention !