Applying the PMF to AT India's Livestock Feed Supplement Project, 2000
|Implementing agency(ies)||AT India|
|Date completed||April 2000|
|Issues/challenges||The primary purpose of this paper is testing the usefulness and validity of a new performance measurement framework (PMF) by applying it to an existing project. A second objective is to draw out best practices from the case as appropriate for the benefit of our "newly emerging" field of business development services (BDS).|
India is the largest milk producing country in the world. Despite the country's large volume of production, the average productivity of its animals is quite low. Most experts agree that poor nutrition of the animals is the main underlying cause. For years researchers have been working to develop an affordable user-friendly animal feed product, which if widely used could increase milk production by 10 to 15 percent per annum and increase incomes of literally tens of thousands of rural households. To address this opportunity, a project was designed by Enterprise Works Worldwide to develop and commercialize an animal feed supplement and bring economic benefits to rural households. Appropriate Technology (AT) India was established in 1994 to implement the project over a period of eight years. Initially, the project concentrated on the task of research and development. This effort culminated in an innovative user-friendly molasses-urea product branded as Pashu Poshak. The commercialization phase began in 1996. AT India in collaboration with the well-organized cooperative movement started production and marketing Pashu Poshak in four districts of Gujarat.
The PMF requires analysis at three levels: BDS market development, sustainability of the BDS supplier organization and the benefits to customers. Applying the PMF to market development proved challenging in terms of defining the level of analysis and the boundaries of the competitive environment. The PMF places great emphasis on developing competitive markets. In Gujarat, cooperatives dominate the milk sector and offer stiff competition to private companies trying to gain a foothold. For practical reasons, AT India is linked with the cooperatives in a kind of mutually beneficial strategic alliance. AT India, while advancing the sale of Pashu Poshak, has inadvertently stimulated a more competitive private market for animal feed supplements. Yet, as long as the cooperatives dominate the milk sector, the development of a diverse and competitive market, as envisaged by the PMF, for animal feed supplements is very unlikely.
Summary of results
In terms of sustainability, the subsidy element for Pashu Poshak has steadily declined over the four-year period. Break-even is now a real possibility. AT India now boasts a cumulative total of more than 22,000 households that have tried the product out of which about 50% are repeat users. The growth potential is huge, since only about 0.4 percent of the total number of animals have tried the product in the four districts of the project area. The option is still open as to whether AT India will exit and give up the "business" to third party (most likely the cooperatives) once commercial prospects have been demonstrated or go into commercial operations as business venture. In looking at the sustainability question through the lens of the PMF, the indicators seemed rather soft. No service is sustainable unless the organization delivering it is also viable. The indicators should be adjusted to reflect this reality.
The total monetary benefits derived from buying and feeding Pashu Poshak has been estimated by AT India based on field trials, surveys and other assessment tools. For regular users of Pashu Poshak, one can expect total gains (net savings plus increased income) for the average household with two animals to be more than $50 per annum. This is significant in a country where the average per capita GDP is about a dollar (US) a day. While the total project costs ($733,206) over the first three years are still more than the total benefits ($567,743), the gap is closing. Typical of technology development and commercialization efforts, the costs for R&D are heavily front loaded and the cumulative benefits continue to be generated (sometimes exponentially) well into the future.
|Associated Activities and Documents|
|»||Hanoi DC Conference, 2000|