“EcoDairy” for healthy nation

“EcoDairy” is a venture that provides customers a promising dairy product manufactured with high quality fresh milk in a sustainable manner. Issues in the dairy value chain is addressed with this initiative and lot of stakeholders are engaged. The solution mainly targets smallholder dairy farmers, especially women, and dairy producing companies. When the solution is introduced, whole dairy value chain is improved with new dairy farming technologies which has less environmental impact and high tech dairy processing which can save resources. Farmers are benefited by getting higher price for fresh milk while company can get a high profit with high quality product. Ultimately, final consumers can get a nutritious dairy products with health benefits.

Dairy value chain in Sri Lanka operates with lot of stakeholders. At the moment, it has several issues along the lifecycle. Main issues identified for this solution is low quality fresh milk production by dairy farmers due to poor knowledge, less engagement of farmers with the dairy companies and generation of waste, especially waste water and emissions during processing of fresh milk. Dairy farmers cannot earn a considerable amount of profit from dairy farming with the issues faced by them such as poor management practices, improper feeding techniques, unavailability of chilling facilities etc. While the world average milk yield per cow per day is more than 10 litres In Sri Lanka, the average yield is sometimes less than 2 litres which has made dairy farmers poorer. Due to less quality and low yield from the dairy farmers, dairy producers also facing an issue to go for high quality dairy products to the community those who are willing to buy dairy products to fulfill their requirement. 

Transforming the dairy industry value chain into an Eco-innovative business model is the most sustainable way to tackle this issue. “Eco-innovation” is a tested and proven methodology; UN Environment implemented the first global project on Eco-innovation in nine developing countries in the world including Sri Lanka. National Cleaner Production Centre implemented the project in Sri Lanka in Agri-food sector including the diary industry supply chain. This process helps to address the issues identified throughout the value chain and suggest new business model which it can tackle identified issues covering the triple bottom line; Environment, Economy, Social.

As the most significant issue lies with dairy farming, milk sourcing and processing of fresh milk by the companies, this model suggests to implement dairy farming methods which can give higher yields per cow and milk preservation technology such as community chilling. Thus the dairy farmers get the higher milk yield, can safely store the milk until sold and the company get good quality milk for processing. Community chilling, advanced fresh milk transportation methods and improved milk processing technology with zero waste production process are the technologies used for this development which addresses the entire dairy value chain. 

Dairy farmers and small scale dairy producing companies who are direct stakeholders of dairy value chain are the beneficiaries of new business model. Key important area of new solution is to identify the issues in the value chain and define new business strategies to overcome the issues. During the initial phase, discussing with the dairy producers is utmost important to identify their actual need in having the dairy business in the particular area. Then they also can state the current issues they face and where they need a solution.

The new business model is developed based on the initial information gathered and pitched to the company owners for their consent. From the farmers point of view, they need the best technology to get higher milk yield from existing cows. Transferring of advanced technologies on dairy farming will be done by connecting with universities and government authorities who are responsible for dairy production in the country. Once the technology is transferred to the farmers, they start producing more milk yield with high quality and company starts to get good milk yield. Social wellbeing of dairy farmers will be improved with higher income which the company can cater with improved dairy production.

"EcoDairy" is a solution that address the triple bottom line; social, environmental and economy. Further, it is a solution to address the issues in the lifecycle and implement low carbon applications which ultimately contributes to the environmental sustainability. With the new business models operated based on Eco-innovation, new model solves issues in the value chain starting from dairy farmers up to the final consumer of dairy products. Low carbon cold chains are created in milk collection and transportation by introducing community chilling centres and high tech transportation techniques. 

Sri Lankan dairy industry is very competitive with few big multinational players and lot of small holder producing companies. Thus, milk sourcing is one of the challenging task for all the companies engaged in the business. Eco-innovative dairy production is the first pilot project applied in the country with a success case on transforming the business models. As this model look at the whole value chain of dairy industry and addresses the triple bottom line, it always comes up with innovative solution from all the stakeholders. Finally, it is a win win strategy for all the stakeholder to earn the satisfied income. Usually other dairy industries does not focus on the issues in the value chain targeting the whole value chain but tries to get the maximum amount of milk for their production. So farmers are also not benefited and the final product goes to the consumer is not very healthy. But this approach tries to give the benefit to the farmer as well as to the consumer, at the same time company gets the profit. 

This solution includes technology in different levels. Dairy farming and dairy production are the key areas looked in and both new and additions to existing technology is used. Obtaining high milk yield and delivering the high quality milk to the dairy company is the goal for farmer. This involves techniques to improve milk yield of cows, storage and transportation of fresh milk. Dairy farming techniques such as feeding, milking, housing, preparation of cow rations is considered mainly. For storage, community chilling is introduced as a new technology where farmers can store their milk before sending to the factory so it maintains the quality of milk. For transportation, company is using high tech freezer trucks powered by solar as a new initiative.

Dairy production is changed with high tech machinery from chilling upto final storage in blast freezers. Also, the company introduced diversified product range to the consumers which other competitors does not offer to the market such as low sugar products concerting the nutrition facts. Also, the company is in the process to convert into a “Zero waste “company where all the waste is converted to biogas and reuse for the production. As the new eco-innovative business model looked into lot of areas, it addresses most of the issues in the value chain.  

The concept Eco-innovation was started as a pilot project in 9 countries in the world and published success case studies proving the methodology. Now most of the countries follow the concepts even with new tools. The concept initiated from Europe and tested in these 8 countries; Sri Lanka, Vietnam, Malaysia, Peru, Egypt, Colombia, South Africa and Uganda. Three main sectors as Agri-food, Chemical and Metal were selected to test the pilot project and the project completed with lot of success stories around the world.

Concept “Eco-innovation” is the development and application of a business model shaped by a new business strategy, which incorporates sustainability throughout all business operations based on Lifecycle Thinking and in corporation with partners across the value chain. It involves diverse range of technologies depending on the nature of business. For the Solve challenge, advanced dairy technologies are selected which the company has applied and obtained results successfully.

http://unep.ecoinnovation.org//wp-content/uploads/2017/09/UN_Eco-innovation_Manual_Country_Cases.pdf

Dairy industry contributes by 1.2% of the GDP for the Sri Lankan economy. Social, environmental and economic benefit throughout the dairy value chain is significant as it serves lot of stakeholders. The approach use in this application is also divers where all the sectors are taken into consideration and looked for the solutions for a better outcome. The change expected in this theory is enormous as a total change of the business model is proposed and obtained the results. Both immediate and long term benefits are looked upon on this change as the cross cutting issues are addressed. The immediate outputs are visible for one of the major beneficiaries in this solution “dairy farmers”. Low milk yield, which is the major issue of small holder farmers are addressed by establishing better methods, educating farmers, enhance the link between farmers and company etc. A drastic change in dairy production has seen once best practices are implemented by the farmers. This will leads to improving their social well being in long run. For the dairy company, the change is both ways as they started to get high quality fresh milk in high quantities and they can produce more nutritional products for the customers. Economic gain is getting higher with the high quality production and recognition has started to grow among the consumers with the brand name. Further, as the company is strategically looked into how to increase the quality of their products, more stakeholders such as universities, government organization responsible for dairy production in the area has improved. The company connected with external agencies who have expertise in farmer education to educate the dairy farmers. More prominently, relationship between the company and farmers were improved after this education programmes which was more beneficial to both parties. Farmers now getting a good price for their fresh milk with lots of other benefits such as insurance scheme, annual programmes, free advisory etc. This pilot application was came as a good example for production central to partnership oriented approach which worked well for all the stakeholders in the dairy value chain including the final consumer. 

Initially, the first target group chosen was dairy farmers who directly supply fresh milk to the company which is around 20 farmers. The company expanded the solution for rest of the farmer base which is around 100. In next five years, the plan will be more expanded to get more fresh milk to the company to cater the demand for high quality dairy products. Thus, acquiring more farmers and connect with existing farmers will be looked thoroughly. The total number of farmers at the end will be around 500 who are directly affected positively. In terms of consumers, a large group is benefited from this as the customer base is widely spread throughout the country. More promotion of new products with more nutritional products are expected to be advertised in different media. 

EcoDairy is a solution that tested as a pilot project selecting one dairy company in Sri Lanka. When considering the impacts, farmer communities, consumers in the country, other dairy companies can get the benefits and the aggregated impact will be enormous. Replication of this methodology is very much feasible as this is tested and obtained success stories throughout the project, not even within the country, but outside Sri Lanka. We hope to disseminate the success stories more and more so that any interested party can also change their business model into more sustainable way to achieve the benefits. 

One of the major barriers in this concept is to change the perception of the people. When first introduced this concept to the dairy company, they analysed the benefits which they can get and started the process with the consent. Ones the immediate outcomes are seen, they started to speed up the process as they have seen the real value in long term. But, changing the perception of dairy farmers were not easy due to the level of education they have with their struggling business. Only few farmers realized the value first and started changing their management practices starting from feeding the cows to milking. Some farmers initially rejected to change but after the changes visible in their fellow farmers, few others also agreed to implement the concepts. But still there are farmers who are not willing to change. Another barrier identified is the lack of support from some organizations. Further, investment cost for the technology changes has also become as an issue as the company needs to invest for their own. But with the time, they managed to change the technology of dairy processing gradually for the better product outcome.

Education is the key to overcome the barriers. Frequent awareness programmes to farmers are a good way of changing their perception. If the success stories are published and discussed more in forums and other media, more stakeholders will be interested and the company can get support from government organizations further on knowledge and technology. There are some projects coming up from government for developing dairy industry in the country. The company is planning to link with those programme for further support such as obtaining high tech machinery and advanced production techniques in processing and transportation.

Full time staff-10

Part time staff-5

Contractors-3

Our team has given their interest to learn and develop the core concept of Eco-innovation into a practical action to implement. It was implemented successfully and obtained results with benefits for all the parties. Most of the team members have learnt the concept in different workshops and focus group meetings with the experts across the world. Under the guidance of the CEO, the team was able to deliver the outcome of this pilot project after 18 months implementation. All the team members have the expertise in different sectors such as agriculture, livestock, business administration, energy efficiency, climate change etc. Thus, it helped a lot to succeed by incorporating diverse knowledge into the plan. Moreover, close relationship built with the company and farmers was a success factory for the better implementation. 

The main partner of this pilot project is the dairy company. Another service provide is officially partnered to provide training and education for farmers and improve their well being. Further, there is a collaboration with the university in obtaining the latest dairy production technologies with less environmental impacts and high efficiency. Research activities are on going when the need arises for any processing technology, preservation technology etc. service from the external party is obtained time to time for training programmes where the farmers are invited to the company and given them knowledge using different techniques. It is expected to link with more government organizations in future to obtain support in different means such as funding opportunities, award programmes etc.

The new business model is Eco-innovative dairy products which derived after a thorough analysis of the company and its existing business model. The hotspot analysis conducted revealed some major issues in the value chain and proposed a new value proposition for the company “High quality fresh milk products sustainably sourced from happy farmers/ providing livelihood to farmers”. This model mainly focuses to address the issues in upstream starting from dairy farming. Key partners of this model are Small holder dairy farmers (especially women), Government, Raw material suppliers, Equipment & machinery suppliers, Farmer communities and Recyclable packaging material suppliers. Farmer  development and facilitation, Milk procurement, Quality assurance, Production of dairy products, Distribution, Sales and marketing and Recycling/ Buy back are the key activities of the new business model. The company earns their profit by selling range of dairy products such as ice creams, yogurt products, curd, drinking ice packets, flavored ice lollies and especially the new product range including low sugar and high nutritious products. Main customer segments are Retailers, Distributors, End consumers  (Millennial, elderly people, kids), Schools, Hospitals and Universities. Customer relationship will be maintained by these channels; Directly with retailers, Branding & marketing campaigns, Mobile apps and SMS, Telephone and internet, Public procurement and Website,

Solve is an excellent opportunity for emerging businesses with innovative concepts. We established and piloted with concept of sustainable business models in the dairy value chain targeting a positive impact across the value chain. As the same time, the solve challenge was in place as a real match to pitch our case and we hope this is the correct time to apply. Diverse challenged applied for this challenge is interesting and if this pitch is got selected, there will be an enormous opportunity to share the ideas and explore more. By seeing the opportunity, we decided to apply for the solve challenge.

This project operated mainly in partnership-oriented approach. It is because of the engagement of all the relevant stakeholders in the dairy value chain. Goal of the pilot application is to connect the stakeholders and make the expectation into one vision by creating a value proposition whereas all the partners are benefited in three dimensions, economic, social and environmental.

This solution work better when there is a good collaboration. In local context, technology providers, universities, government, retail chains and knowledge hubs are the most important partners. In broader, it will be valuable to connect with Solve members so that more exposure and experience can be shared.

EcoDairy serve as a solution to address triple bottom line and in that, social aspect is covered. Since the dairy farmers are a key stakeholder of this solution, profile of all the farmers have been analyzed and it was found that lot of women engaged in dairy farming as a source of income. Thus, the solution focus on developing the women dairy farmers and lift up their profession not just as farmers, but as women entrepreneurs. As impact for the women is directly considered in this solution, the whole outcome is socially balanced.