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Decentralized Production Model for THR in the ICDS

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Context

Three Major Areas that require our attention:

- Formulation

- Has not been reviewed for a considerable time period

- From ration sizes to macro nutrient composition to micro nutrient composition – all require a review

and a re-setting.

- Energy density is low, lipid content is low with low essential fatty acids

- Micro-nutrient content is low; low iron content and poor bio-availability of iron compound

- Mainly, children below 2 years need a different formulation, and possibly different ration sizes.

- Technical and programming issues may require further consultations at the National Level.

- Production and Procurement – Are Decentralized Productions Models Operationally and

Economically Feasible?

- Consumption

- Very little attention given to consumption and behaviours at the household level.

- The numbers do not add up – utilization of SNP is reported near full utilization, however coverage

is mostly reported at about a third.

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Context – Decentralised Production Models for THR

• Starting in 2001, many orders on ICDS were passed by the Supreme Court of India, as a result of civil society action,

moving towards universalization of the program reach/coverage.

• In 2004, the Supreme Court directed that the Government should not use “contractors” for the supply of supplementary

nutrition, but should instead use women’s groups such as SHGs and village communities.

• In 2009, the Ministry of Women and Child Development revised the nutritional norms to include micronutrient fortification.

• Nearly half of the budgetary allocation to ICDS goes towards supplementary nutrition.

• Poor quality, irregular supply, leakage and diversion of supplementary nutrition are some of the reasons for intervention by

the Supreme Court of India that has issued directives to improve services in ICDS.

• Large variances exist across the states on implementing the directions of the government and the Supreme Court:

• Most states still continue to procure supplementary nutrition from private manufacturers, e.g. Rajasthan, UP;

• Some states have not moved on micronutrient fortification and continue to supply grain, e.g. Bihar, Jharkhand;

• Some states have only recently begun working with women’s groups, however mostly for the supplementary nutrition

to the older children aged 3-6 years where a hot cooked meal is provided;

• States like Maharashtra have now started working with women ‘s groups for supplementary nutrition for the under 3s;

• Fortification of the supplementary nutrition is still to become the norm nationally.

Delhi- Production of weaning food through Self Help Groups/Mahila Mandals by involvement of NPOs as facilitators under SNP component.

Uttar Pradesh - State Government contracts with various firms for supply of weaning and Amylase Rich Energy Food (A.R.E.F.) to the ICDS projects in the State.

Haryana- Centralized system of procuring food items under Supplementary Nutrition for the beneficiaries of ICDS

Punjab- Production of THR (Panjiri) through various modes – Self Help Groups (SHGs), local procurement by the PRIs or Centralised procurement at the district level.

Andhra Pradesh- Primarily Centralized model (operated by vendors and AP Foods), with pilot Decentralized models in some districts/ blocks

Rajasthan - Centralised and Decentralised models for THR procurement. Decentralised production through WSHGs/Mahila Mandals caters 107 ICDS projects (supplied without micronutrients fortification). Centralised production through manufacturers catering 197 ICDS projects with micronutrient fortification.

Jammu & Kashmir-Procurement of supplies under ICDS has been Centralized at the state level.

Kerala- Production and supply of THR “Amrutham” handed over to Kudumbashree (Decentralised)- 396 micro-enterprises of women across 14 districts.

Karnataka- Through Mahila Supplementary Nutrition Production and Training Centre’s (MSPTC) of Supplementary nutrition fortified with vitamins and minerals.

Chhattisgarh- Supplementary Nutrition is produced and distributed to AWCs through WSHGs in the state.

Madhya Pradesh- THR provided by MP State Agro Industries Corporation, with some decentralized food models run by SHGs

Odisha- THR is prepared by SHGs and the total number of SHGs providing THR across Odisha is 935.

THR: PRODUCTION/ PROCUREMENT

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Features of a Decentralised Production Unit (DPU) – GAIN Pilot in Rajasthan

1. Group of women entrepreneurs members SHG run the unit

2. Production Capacity: 1MT per day for 300 days in a year

3. Production unit: elementary machinery, but it is an industrial

operation and mostly mechanized.

4. Formulation of the product: wheat, full fat soya, roasted and

pulverized with sugar and added micronutrients - Raj Nutrimix

5. Distribution of the product: assured buy-back from the

government for the ICDS

6. Estimated coverage 1 unit: 6000 children <3 yrs and around

2800 PLW – about 130 AWCs – approximately one block

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The DPU meets policy/ regulatory requirements and creates social impact

Decentralized

Nutritious

Quality assured

Assured delivery

Within fixed price

• Mechanized factory process ensures standardized product, with quality control incorporated in all steps of production

• Monthly lab testing confirms high standards of quality

• Has delivered all THR orders/ requirements for the AWCs it serves• Factory based/ mechanized approach ensures large production potential

• Has supplied product within government price, and accrued retained earnings to potentially cover financing and capital depreciation costs (cost of technical assistance is additional)

• Economies of scale from factory (as opposed to kitchen based model)

SC order

Policy mandate

(ICDS)

• Meets ICDS’ calorific and protein requirements• Fortified with a premix that meets micronutrient requirements in ICDS

• The Banswara DPU is run by a local SHG of 10 women• Entire process is administered in a decentralized manner (e.g. local decision making, logistics,

procurement, oversight), resulting in potential benefits of reduced delays and lead times in procurement and supply of THR)

• Leads to women’s empowerment• Improves skills, livelihoods and assets for SHG• Increases access to education and health/nutrition services for community

Requirements Performance of SHG-model

Additional social benefits

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Analysis of the Model

• that a small but industrial production facility can be set up at an affordable cost – CAPEX between

INR 35-40 Lacs and Working Capital approx. INR 20 Lacs

• that this can be managed and operated by a group of women who need not be literate or skilled;

• that this is a viable enterprise model and can become financially sustainable anywhere between 3-5

years;

• that the production process can be quality assured and carried out in a safe and hygienic

environment;

• that such a production facility brings added value as the food can be easily fortified, achieve a

reasonable scale, and foster better off-take of services;

• that this is a good public-public partnership directly between the Government and the community: a

for the community, by the community and of the community model;

• that there is significant benefit of empowerment – financial and societal

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Demonstrated Success at many levels…..

• Nutritious Food

• Product conforms to ICDS formulation norms as a fortified blended complementary food

product

• Production process and the product is quality assured

• Mechanized factory

• Standard Operating Processes enabling strong shop floor quality control

• External Quality validation through NABL certified laboratories

• Assured Delivery

• Ability to meet all the Purchase Orders from the ICDS and supply the product in a timely

manner

• GAIN Pilot – averaging 25 MT delivery per month

• Within Government Price

• Cost of Sales well within agreed Selling / Purchase Price allowing for small margin

• Pilot plant built up retained profits of close to INR 35 lacs over a

three year period.• Input procurement through commercial sources.

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Demonstrated Success at many levels…..

• Collateral benefit:

• Women’s empowerment

• Improved Self Confidence

• Improved social status within households / communities

• Women as Co-owners and Managers of their own enterprise

• Livelihoods

• Higher income

• Wages plus potential profit share – NREGA plus level of daily wage for 300 days

• Better banking and credit linkages

• Contributors to family prosperity

And Lastly:

• Health, Nutrition and Education

- Regular, predictable supply of quality assured fortified complementary food

- Increased community awareness on entitlement, consumption and usage

- Greater interface between ICDS/NHM system and community

Replicating such a DPU model needs certain enabling conditions

Access to financing

• Financing for equipment and operating costs to be available – helps DPU’s economics if either from subsidized loans (e.g. NABARD) or grants

• Funding for initial set-up and training/ handholding of SHG

Technical assistance/ capacity building

• Availability of appropriate partners for TA to SHG at different stages of project (empowerment, livelihoods, enterprise, product innovation), at affordable cost

• Initial training and ongoing handholding support to SHG on production processes and commercial management of the enterprise

Strong political will/ support• Strong political will and support for a decentralized model of procurement,

ensuring all levels of government work towards aim• Harmonization of state govt mechanisms for efficient procurement and payment

Maturity of SHG

• SHG with experience of saving together and strong internal functioning (e.g. clear norms, bookkeeping) before undertaking factory operations

• Ability of SHGs to move from income generation activities to developing entrepreneurial skills

Key ingredients for replication Description

Access to quality inputs and services

• Availability of quality inputs in local market at reasonable cost (e.g. premix, wheat, nearby mandi)

• Access to support services such as for quality testing of product, equipment repair and upgrades

Assured market at appropriate prices, and

timely payment

• Guaranteed purchase of product by ICDS scheme for a minimum period of 3-5 yrs• Guaranteed cost plus prices by ICDS and timely payments• This factory-based model needs a minimum of 1MT production per day to be

economically viable

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