Wednesday, April 15, 2015

Who is poor?

In the past poverty was usually assessed with the famous 1 usd or 2 usd per day poverty lines. However, new poverty assessements are moving away from expenditures and income that are quite difficult to assess correctly to assets that can be assessed through farm household survey easily, as for example the demographic health surveys (DHS).

The wealth index is a composite measure of a household's cumulative living standard. The wealth index is calculated using easy-to-collect data on a household's ownership of selected assets, such as televisions and bicycles; materials used for housing construction; and types of water access and sanitation facilities. - See more at:
Wealth index are the novel way to assess poverty and is computed for any DHS survey or farm household survey that has an extensive asset section. In most simple words, the wealth index ranks household based on assets and categorizes them into wealth quintile. 

In order to define the weight of every asset in the index, a principal component analysis is implemented. The first factor (loading) is used as weight. Find more info about the wealth index here.

However there are also downsides to wealth index. The main one is that it is a relative measurement of poverty that is computed for each country separately.

Many efforts are done to move away from country specific indexes to more regional ones allowing to compare poverty across countries. A very interesting approach is presented in this FAO working paper.

Wednesday, April 1, 2015

Following the formal milk route in Bihar

During my trip in India last year, to Nalanda district in Bihar, i followed the formal (organized) milk route. It is one of the first formal milk value chain i have visited and i learned a lot about the challenges of a cold chain. Let me take you along!

We first visited a village, in which farmers had create. They have a milk collection point, where quality and quantity of the  milk is assessed.
Community collecting point, with the machine to assess milk quality

From there one of the farmers takes all milk by bike to the big road, which is the pick up point and waits for the milk union track that comes and picks the milk. In order to remember from where the milk comes every container has the name of the community market in red.

the milk containers with community name
The milk truck as a fixed agreed route and usually reaches the pick up point with 15 min. From there the track continues to the processing plants.
The milk truck
Between milking and cooling within the processing plant there is a maximum of 4 hours. Every step in the chain is monitored, so when milk arrives bad at the plant, one can find where something went wrong (was the truck late, or did the farmer bring old milk), so that it can be defined who has to bear the loss. The plant pays only for the good quality milk that has arrived.

the processing plant in Nalanda
In some districts it is not possible to reach the plant within 4 hours since milking. Therefore, the milk union also build cooling point. As the milk union continues to grow, there will be a need for more of these cooling points, as distances to the plant will increase.

packed milk arriving at the shop
The milk is processed, pasteurized and brought back to the consumer in a cool chain.The plant also processes powder milk. During holiday season, when the demand for milk is big and farmer supply little (as their home consumption increases), powder milk regenerated and mixed into the fresh milk (up to 50%). If there is too much powder milk, then it is dumped to Bangladeshi and Nepali market.
a milk shop that sells the milk union pasteurized milk in Patna town
Because the quality of the milk is still relatively low, it is just pasteurized and sold in the region. However the Nalanda plant hopes to be able to increase milk quality so that it will fit the standard to be packed into tetra pack that can be sold in Dehli, which implies much higher margins.

I hope i will get a change to go back in some years and see how this value chains has changed.