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MYA works on an income-driven model of wealth creation for the poor- not a bet driven or consumption led model. Consequently, rural procurement (Upstream) and market linkages (Downstream) as the two pillars of the company’s Responsible Supply Chain (RSC) solution business.
We are currently operating in the milk and produce value chain, sectors which together create an economic value of more than $80 billion per annum through more than 70 million rural producers – one in five households – in India. They are also the sectors most suitable for the small and marginal farmers that make up 80% of India’s farmer base as they generate near daily cash payments. Furthermore, when farmed together, milk is a source of liquidity and insurance against crop failure where the farmer realizes 60-70% of the consumer price. Produce, on the other hand, is a significant profit generator to a rural household if provided with efficient access to irrigation and markets.
In 2012, MYA undertook a Social Performance Metrics (SPM) study in order to measure and understand the social impact of our business. Over the course of four months, we surveyed nearly 1500 households – those who participate in the Milk Route supply chain compared against those who do not – across 269 villages in Karnataka. After controlling for most external factors, Milk Route households reported monthly incomes that are on average 24% higher than their counterparts. By virtue of being able to access high quality feed and veterinary services, Milk Route households produce milk that consistently beats the industry’s average quality parameters, as measured by percentage fat and non-fat solids. This higher quality milk provides an additional 10% in earnings per liter for participating households.
Thanks to increased, regular and transparent compensation – combined with an excellent support system – nearly half of all producers in the Milk Route supply chain now depend on milk as their primary source of income, versus just a quarter of households before Milk Route had been introduced in these villages. These households are also able to provide on average an additional 5.5 liters of milk per month to their children, compared to their counterparts.
By operating its RSC, MYA is well positioned to transform multiple sectors, livelihoods, and households in rural India. MYA will leverage on it supply chain competency in the milk and produce to launch solutions for additional sectors from 2014.