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Chapter No. 04

• Introduction.

• Milk Production.

• Milk Processing.

• Dairy by-Products.

• Milk Packaging.

• Milk Storage.

• Milk Distribution.

• Marketing of Milk.

• Cooperative Marketing.

• Background Of Milk Marketing.

• Marketing Environment.

• Shifting from one marketing system to another.

• Role of Cooperative In Dairy Industry.

• Milk Trade.

• Dairy Technology.

• Dairy Education and Training.

• Impact on Rural Environment.

• An Overview of Beed District.

Milk Production, Processing, Packaging,

Storage, Distribution and Marketing.

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Introduction:

Most of the dairy plants in the Government, Cooperatives and

Private Sector produce almost similar dairy products like varieties of

milk, butter, ghee, skimmed milk powder and whole milk powder.

There is immense scope for the broadening of the products range and

some of the products, which are likely to have considerable demand

in the coming decade, have been identified. The cheese market,

presently valued at about Rs.80 crore is growing at about 9 per cent

annually. There are more than thousands of varieties of cheese,

which have been listed out of which cheddar; mozzarella, gouda and

processed cheeses are being manufactured in India. This segment

alone commands 5 per cent of the share in the cheese market and

other area is fermented milk products. Dahi even though is Rs.15,000

crore markets, the share of the organized sector is only around 10

per cent.1 This product has immense potential for growth. Varieties

of milk shakes are also increasing wherein milk and fruit pulp are

mixed in different proportions to produce different beverages. Some

of the milk and fruit based beverages which are likely to have

demand are a combination of milk with mango, banana, sapota,

strawberry, papaya, etc. Some of these beverages can also be

produced in dehydrated form and can be an excellent health food.

There are varieties in traditional milk based sweets,

manufactured in the country. The market size is around

Rs.12,000crore. However, there are very few nationally known

brands in this category. Many of the organized dairies are involved in

the manufacture of varieties of milk based sweets: pedha, paneer,

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shirkhand, etc. These are now restricted to certain areas only but can

go national. As the world is getting integrated into one market,

quality certification is becoming essential in the market. There is

scope for introducing newer plants adopting newer processes by the

dairy industry in the country. Packaging of dairy products is also

another very promising area. Foreign investments can take place in

manufacturing dairy processing equipment, fruit packaging

equipment and equipment for biotechnology related dairy industry.2

Dairy industry in India is also unique with regard to availability

of large proportion of buffalo milk. Thus, India can focus on buffalo

milk based specialty products, like Mozzarella cheese, tailored to

meet the needs of the target consumers. If India has to emerge as an

exporting country, it is imperative that we should develop proper

production, processing and marketing infrastructure, which is capable

of meeting international quality requirements. With the trade

liberalization, despite the attempts of Indian companies to develop

their product range, it could well be that in the future, more value-

added products will be imported and lower value products will be

exported.3The industry has to prepare themselves to meet the

challenges. A comprehensive strategy for producing quality and safe

dairy products should be formulated with suitable legal backup.

Some areas of Indian dairy industry can be toned up by the evocation

of differentiated technologies and equipment from overseas. These

include:

1. Raw Milk Handling: The raw milk handling needs to be

elevated in terms of physicochemical and microbiological

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properties of the milk in a combined manner. The use of

clarification and bacto-fugation in raw milk processing can aid

better the quality of the milk products.

2. Milk Processing: Better operational ratios are required to

amend the yields and abridge wastage, lessen fat/protein

losses during processing, control production costs, save energy

and broaden shelf life. The adoption of good manufacturing

practices and Hazard Analysis Critical Control Points would

help produce milk products adapting to the international

standards.

3. Packaging: Another area that can be improved is the range of

packing machines for the manufacture of butter, cheese and

alike. Better packaging can assist in retaining the nutritive

value of products packed and thus broaden the shelf life. A cold

chain distribution system is required for proper storage and

transfer of dairy products.

4. Value-Added Products: There's vast scope for value-added

products like desserts, puddings, custards, sauces, mousse,

stirred yoghurt, nectars and sherbets to capture the dairy

market in India.

Packaging is the technique of using the most appropriate

containers and components to protect, carry, identify and

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merchandise any product. It constitutes a vital link between the

manufacturer and eventual consumer for the safe delivery of the

product through the various stages of manufacture, storage,

transport, distribution and marketing. In spite of all the efforts taken

to produce high grade processed milks or manufactured dairy

products, unless they are delivered in a fresh, sound and convenient

form to the consumer, they are likely to be rejected, thus causing

enormous wastage. This loss can be minimized to a great extent by

adequate protective packaging to withstand the hazards of climatic

changes, transportation, handling, etc.

Milk Production:

In India near about 70 million households are involved in the

production of milk. These are mainly small and even marginal cattle

farmers, but also labourers without land, who have at most two milch

cows or buffaloes. Of these households, 11 million can be

characterized as cattle farmers. These are dairy cattle farmers with

an average of two cows or buffaloes producing between 10 and 12

liters of milk per day. They are organized into no fewer than 1.10

lakh village dairy co-operatives or Dairy Co-operative Societies

(DCSs).4 These co-operatives set up across India following the Anand

Model collect the milk from their dairy farmers and cool it at 4-6

degrees Celsius. Some of this unpasteurized milk they sell to the

village residents. The rest is collected by the travelling milk

collectors, who take the milk to the Co-operative Milk Unions for

processing. This industry is organized on a state by state basis. This

approach connects the predominately small dairy farmers via their

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co-operative system directly with the many hundreds of big cities in

India. India also has various privately owned dairy companies. They

procure their milk from both milk collection centers in the villages.

These traders are responsible for the quality of the milk they supply.

The state of Maharashtra is a case apart because milk production

there is subsidized by the Government and the government is

responsible for the milk collection. The state pays the dairy farmers a

higher price than is paid by the state’s processing industry. Efficiency

is a very important factor of productivity growth especially in

developing economies like India, where resources are scarce and

opportunities for developing and adapting better technologies have

lately started dwindling. It is still possible to increase production and

productivity of milk in Maharashtra and even in India by improving

efficiency. Efficiency of any dairy firms is measured in terms of its

relative performance.

Of India’s total milk production, no less than 65 per cent is

consumed unpasteurized. Of this percentage, 44 per cent is

consumed in the rural area in which it is produced, meeting the

needs of cattle farmers and their families and sold, through the

village co-operatives, to others with no cows or buffalo. The

remaining 21 per cent of the unpasteurized milk is sold to urban

consumers. Of the 35 per cent of the milk production that is

pasteurized, 22 per cent is processed by the unorganized dairy

sector.5Most of this milk is used to make sweets. This is done in

‘halwai’ workshops that are usually located beside a shop. Here,

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sweetened condensed milk, with various additives is produced in

accordance with the region’s traditions, religion and flavors.

In India’s predominately tropical and subtropical temperatures

sweets like chocolate are highly perishable. Thanks to the rich

culture of festivities, the consumption of condensed milk sweets,

which are usually eaten fresh and are also perishable, has surged.

This means that only 13 per cent of the Indian milk procurement is

processed in the co-operative and privately owned dairy industry.

The majority of this, 8 per cent of the total milk procurement, is

processed into packaged or loose pasteurized drinking milk for

consumers in the major cities. The other 5 per cent is used to make

products with added value, such as milk powder, ghee, ice cream,

cheese and fresh milk products.6

The demand for quality dairy products is rising and production

is also increasing in many developing countries. The countries which

are expected to benefit most from any increase in world demand for

dairy products are those which have low cost of production.

Therefore, in order to increase the competitiveness of Indian dairy

industry, efforts should be made to reduce cost of production.

Increasing productivity of animals, better health care and breeding

facilities and management of dairy animals can reduce the cost of

milk production. The Government and dairy industry can play a vital

role in this direction.7

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Milk Processing:

The milk processing industry is small compared to the huge

amount of milk produced every year. Only 10 per cent of all the milk

is delivered to some of the dairy plants. A specific Indian

phenomenon is the unorganized sector of milkmen, vendors who

collect the milk from local producers and sell the milk in both, urban

and non-urban areas, which handles around 65-70 per cent of the

national milk production. In the organized dairy industry, the

cooperative milk processors have a 60 per cent market share. The

cooperative dairies process 90 per cent of the collected milk as liquid

milk whereas the private dairies process and sell only 20 per cent of

the milk collected as liquid milk and 80 per cent for other dairy

products with a focus on value-added products.8The main concern

with milk powder is that it is largely affected by the atmospheric

conditions and hence has to be stored / packed carefully. There are

some techniques that can be employed to achieve a higher level of

safety of the product at reasonable cost.

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Flow diagram of milk processing

RAW MATERIAL (Milk)

Dump Tank

Clarification

Cooling and storing

Preheating

Standardization

Liquid milk (Optional)

Cream Butter

Homogenization

Ghee

Pasteurization Packing Cold storage Distribution Whole milk (6%fat) Standard Milk (4.5% fat) Toned Milk (3% fat)

Double toned milk (1.5%

fat)

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Dairy by-Products:

A dairy by-product may be defined as a product of commercial

value produced during the manufacture of a main product. In recent

years there has been wide spread and increasing interest throughout

the world in creating newer channels of utilization for the by-

products of the dairy industry. Conversion of edible substances into

non-food items is not ordinarily justifiable especially in countries

where there is an overall shortage of milk supplies. It has always

been realized that economic disposal of by-products is an essential

perquisite to profitable dairying.9

Main product By-product

Cream Skim milk

Butter Butter milk

Ghee Lassi, Ghee residue

Chhana/Paneer, Cheese, Casein Whey

By-products and names of food products made are given below:

By-product Food products made

Skim milk Flavored milks

Sterilized flavored milk

Cultured butter milk

Acidophilus milk

Bulgarian buttermilk

Concentrated sour skim milk

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Plain condensed skim milk

Sweetened condensed skim milk

Low-lactose condensed skim milks

(Frozen condensed skim milk)

Dried skim milk

Cottage cheese/Bakers' cheese/Quarg

Gammelost /Sapsago

Casein (edible)

Buttermilk Condensed buttermilk

Whey Whey beverage

Yeast whey

Sweetened condensed milk

Whey paste

Lassi Beverage

Ghee - residue Toffee or paste

Ghee: Ghee is a clarified butter fat prepared from cow or buffalo milk.

The largest ghee producing states are U.P, A.P, Punjab, Rajasthan,

M.P, Bihar, Hariyana etc. The production of ghee is higher in winter

and lower in summer. Cream accumulated after few days is usually

taken in a suitable vessel and heated and stirred on a low flame to

remove the moisture contain. After removing moisture contain

further heating is stopped then cooling is done. On cooling, when the

residue has settled down the clear fat is decanted into suitable

containers.

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Lassi: Lassi, also called chhas or matha, refers to desi buttermilk,

which is the by-product obtained when churning curdled whole milk

with crude indigenous devices for the production of desi butter

(makkhan). It appears that 50-60kg. of lassi are produced for every

kg of ghee. Lassi contains appreciable amounts of milk proteins and

phospholipids.

Buttermilk:

a. Condensed buttermilk: Also known as semi-solid buttermilk,

this is usually sweet cream buttermilk which has been ripened

and condensed in much the same way as concentrated sour

skim milk. Alternatively, sour-cream buttermilk may be used

without ripening it, but the acidity (lactic) of the buttermilk

prior to its being condensed should be greater than 1.6 per

cent. This will ensure in the finished product 5-6 per cent

acidity, which is necessary for long keeping quality. Either sour

whey or an organic acid (such as lactic, acetic, citric or tartaric)

may be used to increase the acidity of buttermilk.

b. Soft cheese from buttermilk: The production of soft cheese

from creamery buttermilk may be outlined as – fresh

buttermilk, obtained by churning sweet-cream butter, is

admixed with fresh skim milk in the proportion of 1:1. The

mixture is pasteurized at 650C for 20 minutes, cooled to 350C,

inoculated with lactic starter @ 10 per cent and allowed setting

for 3 hours. The curd is cut with standard cheese knives and

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the curd cubes subjected to a cooking process during which a

maximum of 400C is reached in 15-20 minutes. The curd cubes

are then collected in a muslin cloth and pressed overnight,

preferably inside cold store (5-100C), to remove excess

moisture. The pressed curd, which has a rather low keeping

quality, can be utilized either for direct consumption after the

addition of sugar @ 15 per cent, or in the manufacture of

processed cheese up to 10 per cent of raw cheese.

Milk Packaging:

Packaging means placing a commodity into a protective

wrapper or container for transport or storage. The main function of

packaging is to protect the product from physical damage and

environmental changes during transit. The packaging materials

should also present deterioration of the product quality as a result of

exposure to sunlight. In most cases, the package should be non-

flexible and firm enough to protect to product and withstand

rigorous of transportation and distribution. Aseptic technology is the

biggest breakthrough in the field of food processing since

pasteurization. Aseptic packaging offers benefits no other kind of

packaging does. The Reputed institute of food technologist considers

the aseptic processing and packaging of liquid foods to be the most

important food science advancement.10

The importance of packaging as a means of promoting exports

has been well recognized in recent times. Packaging is today an

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essential part of any industrial activity and an integral part of the

modern marketing complex.11As a result of socio-economic changes,

packaging has become increasingly important in the scheme of

distribution. The criteria by which a package is judged are usually the

following –

• It must protect and preserve the commodity from the time it is

packed to the point of consumption;

• It must be suitable for the chosen selling and distribution

system;

• It must be attractive to the consumer, easy to open, store and

dispose;

• It must cost no more than the market can bear.

The glass bottle still continues to be the most frequently used

package for milk in the world. Rigid plastic bottles are also in use for

milk and liquid milk products. Although the glass milk bottle is still

the traditional packaging medium for retail milk distribution, single-

service paper/plastic containers are increasingly being adopted for

the same purpose. A survey has shown that in some European

countries they have captured two-thirds of the market. A beginning

in this field has also lately been made in India. As far as milk

packaging is concerned, paper is a carrier for a water-proof layer of

either polyethylene or wax. The provision for 5 to 10 per cent of

synthetic fibers is said not to influence the printing or folding

capacity of the paper, but rather to provide better wet strength.

Dominated, in milk packing, by polylefines, used singly or blended to

offer a wide range of materials, plastics have superseded paper in

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recent times. The polyolefines of interest are coating grades for

cartons, film grades for sachets and extrusion/blowing grades for

bottles.

Cartons:

This is a common package for milk; also used for liquid, frozen

and coagulated milk products. They are made of combinations of food

grade paper and wax or plastics. The distribution advantages of

cartons are: maximum space utilization in vehicles and storage,

ability to carry attractive printing, and convenience for the purpose

of stacking milk on super-market shelves. The carton systems in

common use are: Perga (U.K); Pure Pak (USA); Zupack, Blockpack

(Germany); and Tetra Pack (Sweden).12 When filling the cartons,

either pre-formed or pre-cut blanks may be used. Pre-formed cartons

are supplied in a fully erect form ready for filling; in the pre-cut

system the blanks are supplied in a knocked down shape and the

final carton is set up, formed, filled and sealed on one machine.

Sachets:

Since it is difficult to pour from sachets, they are usually

equipped with a jug. The sachet systems in common uses are: Poly-

pack, Berto-pack (Switzerland); Finn-pack (Finland); Milk Pack, Rota-

pack (Germany); and Pre-pac (France). Sachet filling of milk usually

follows a form/fill/seal system. The sachets are formed from a reeled

film over a shoulder and tube-forming sealer. Their size is changed

simply by pushing a button without stopping the machine. The

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relative advantage and disadvantages of paper/film packaging of

milk over bottling are given below:

Advantages:

• Light in weight, easy to handle and no danger of breakage.

• Distribution costs lower.

• Occupies less space, lower pay-load due to light weight, no

collection of empties.

• Bottle-washing costs eliminated (Saving in equipment,

detergents, steam, etc.).

• Tamper-proof,

• Effective sales message can be printed.

• Less noisy (during filling, sealing and transportation).

• No exposure to sunlight.

• Filling machinery compact and occupies much less space.

Disadvantages:

• Costs higher per unit milk distributed.

• Product not visible.

• Difficult to remove cream.

• Inspection of milk not possible.

• Regular supply of special paper/film essential.

• Not so easy to open.

• Some cases of leakage may occur.

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The packaging industry in developed countries has made

tremendous advances. In contrast, the packaging industry in many

developing countries such as India is still in its infancy. The benefits

of adequate and functional packaging seem to have touched only the

fringe of the population.

Milk Storage:

Modern milk plants hold both raw and pasteurized milks for a

much longer period than before. Normally the milk storage capacity

is equal to one day’s intake. This allows a more nearly uniform work-

day for processing and bottling operations with less dependence on

the time for receiving raw milk. Storage tanks are used in Milk Plants

for the storage of raw, pasteurized, or processed products, often in

very large volumes. Because of the longer periods of holding, storage

tanks are among the most important items of equipment. They must

be designed for ease in sanitation, preferably by the circulation-

cleaning method. In addition, the tanks should be insulated or

refrigerated, so that they can maintain the required temperature

throughout the holding period. Agitation should be adequate for

homogeneous mixing, but gentle enough to prevent churning and

incorporation of air. The Objectives of storage are to maintain milk at

a low temperature so as to prevent any deterioration in quality prior

to processing/product manufacture; to facilitate bulking of the raw

milk supply, which will ensure uniform composition; to allow for

uninterrupted operation during processing and bottling; to facilitate

standardization of the milk.

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Types of Storage:

I. Insulated or Refrigerated: In the former, there are 5 to 7.5 cm.

of insulating material between the inner and outer linings; in

the latter, the space between the two linings is used for

circulation of the cooling medium. Another variation of the

refrigerated type is the cold-wall tank.

II. Horizontal or Vertical: While the former requires more floor

space and less headspace, the latter requires less floor space

and more headspace. Modern circulation cleaning methods

have made very large vertical storage tanks practical.

III. Rectangular, Cylindrical or Oval: Of these, the first suffers

from the disadvantage of having dead corners during agitation,

while the other two do not.

IV. Built for gravity flow, air-pressure or vacuum operation:

The first is the most common. However, air pressure is

sometimes used to evacuate the product. This requires special

construction of the storage tank for greater strength than

necessary for normally operations under gravity flow.

V. Location: In one system, the storage tanks are located on an

upper floor. The milk is pumped from the receiving room to the

floor above. It then flows by gravity to the pre-heater, filter or

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clarifier, pasteurizer, cooler and bottling machine. In another

system, the milk is pumped from the storage tanks through a

pre heater and filter into the pasteurizer. Hence it may flow by

gravity to the cooler, or it may be pumped to the cooler while

hot.

Milk Distribution:

Milk is procured from the farmers at the village cooperative

societies and is then sent to the taluka/district cooperative dairy

union by trucks in cans or by tankers from the bulk coolers located at

the villages. It is weighed and tested for fat at the dairy docks and

then the milk is pasteurized. The dairy then converts the milk into

liquid milk for sale and various milk products as per the product mix

provided by the state-level Dairy Federation which markets the

products of all the dairies in the state. Surplus milk from the dairies,

after meeting the local liquid milk requirement and converting into

various products, is then sent to the Mother Dairies situated in metro

cities by road milk tankers or rail milk tankers. Liquid milk is

generally sold in urban centers in plastic pouches, which is packed at

the district dairies. In metros, milk is also sold through bulk vending

booths, where consumers can obtain a measured quantity of milk by

inserting a coin in an automatic machine.

Distribution of milk is the last or final stage of the market milk

industry. Others are preparatory to placing the product into the

hands of the consumer.13 The quality of the product alone will not

assure its wide distribution, which should be planned and executed

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intelligently. Distribution facilities consist of; the physical equipment

and personnel required for transporting the product from the milk

storage rooms to the consumer/retailer, sales promotion personnel

and advertising. A successful distribution programme requires;

• A product of high quality.

• An attractive package.

• Neat and courteous route salesmen.

• Delivery equipment of pleasing appearance.

• Efficient use of men and equipment.

• Effective advertising.

Organization: This varies with the size and the type of business. In a

small plant, the same drivers and trucks may deliver both wholesale

and retail goods. In larger organizations, wholesale and retail

distributions are usually handled by separate personnel and

equipment. Wholesale routes handle larger volumes and have fewer

stops than do retail routes. For economical operation, the truck

should be utilized for a maximum number of hours per day for milk

distribution.

Payment of salesmen: Three different methods are in use:

• Flat salary. Gives no incentive to sell more products, secure

new customers.

• Salary plus commission. Most satisfactory.

• Straight commission. Used when the driver owns the route and

equipment.

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Checking out: Different systems may be used for loading the trucks

in checking out the routes. The trucks must be loaded rapidly so that

the drivers are not delayed at loading stations. The principal systems

are:

• Loading directly from the storage rooms through one or more

doors.

• Using a long loading platform with conveyors from the milk-

storage rooms.

• Loading platform-trolleys in the storage room with orders for

the different routes. The platform trolleys are the wheeled onto

the loading platform and finally loaded into the delivery trucks.

(The first two systems are suitable for medium size and large

plants, the third for small ones).

This consists of verifying the driver’s count of empty bottles and

unsold goods and conveying the bottles to the washers or to storage.

The driver usually places the bottles on the platform, conveyor or

platform-trolley.

Sales outlets: These include (for both wholesale and retail sales) the

following:

o Home delivery.

o Milk booths or distribution depots.

o Stores.

o Soda fountains.

o Coin vending machines.

o Automatic dispensers.

o Factories, hospitals, jails, restaurants, schools, etc.

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o Lunch counters.

This is usually based on past experience, taking into

consideration holidays, fairs and festivals, special events, etc.

Frequency of distribution: Due to highly changeable temperatures

during most seasons and the lack of refrigeration facilities at the

average customer’s home in India the milk has to be distributed twice

daily- morning and evening. In cold countries, one-time delivery is

usual.

Utilization of returned milk: Unsold milk presents a problem of

economic disposal. Under tropical conditions, as in India, the

returned milk should not be sent again for sale as liquid milk since

exposure to high temperatures during its inward and outward

journeys subject it to quality deterioration and hence may cause

consumer complaints. The unsold milk can be given for separation or

utilized for preparation of dahi, etc.

Systems of collection for the payment of milk: These are credit, cash

or advance payment (coupon/ monthly card).

Marketing of Milk:

Marketing is an integral functional activity of all human being

in their day to day life. It is a body of knowledge capable of

influencing the development of individuals and also organization.

Presently marketing has occupied a predominant role in the process

of industrialization and in-turn emerged as a concept for the

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economic development of a country. Even in these days mostly

unorganized traders who turned milk trading into an exploitative

market, represent milk marketing. As the marketing innovation

evolved over time it lead to improvement of milk testing, increased

its staff, and developed a sense of competition and financial gain. At

farm and village level the technology, which developed, was the milk

testing units available with the agents.14 The changes in technology

such as establishment of milk testing units at agent’s level lead to

reduction of adulteration in the milk by the producers/suppliers.

Ultimately, the small holders developed confidence in the system as a

sustained milk supply to the agents. The micro credit system

developed informally, by the agents themselves, forced small holders

to remain in the system. The form of inclusion of small holders found

in the system was Chain segment meaning thereby that the role of

milk producers was primarily the milk production. There was no

formal participation in post-farm activities. However, there were

some informal activities such as informal interactions between the

producers and staff regarding training/guidance/information. The

milk producers were not participating in the management of the

supply chain.

The evolutions of the supply chain lead to the sustained

inclusion of small farmers. The establishment of quality standards

ensured better marketing of the processed milk. The small holders

had no problem of selling milk especially in winter season when

enough milk is produced. The major attribute that explains the

inclusions of small holders is the price that they receive from the

VMCC agents. The private agent pays at least Rs 0.50/liter more than

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the price agents/staff of other milk processing companies’ pay to

small-scale dairy farmers. Private Dairy owners do not provide any

technical or other assistance to the farmers, especially the small

farmers. This has serious limiting effect on the growth of small

farmers, as it seems that they will continue to remain small

subsistence farmers and would not have any chances or upward

growth in the chain. They might even be excluded as the concept of

VMCC is problematic. Since VMCC agent is not on the company’s

payroll, he is another intermediary who is content with his

commission and tries to meet his collection targets. On the face

value, the VMCC agents only get 0.50 to 0.75 Paisa per liter on the

milk collected. But since the farmers are not in direct contact with

the company, they might get cheated in terms of the price of milk that

they sell to the VMCC agents.

Cooperative Marketing:

The farmers take their produce to their village level Sale-

Purchase Co-operative Society. These societies ensure that the

produce is weighed correctly and the farmer gets a fair price for his

goods. These societies also ensure that deductions of loans extended

to the farmer under various schemes are made and the farmer

receives the balance amount speedily. There are also similar co-

operative sale-purchase unions at the Taluka level and the District

level. The District level co-operative unions join in the Maharashtra

State Co-operative Marketing Federation. Thus there is an elaborate

marketing set-up for marketing of agricultural produce of the

farmers.

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Background Of Milk Marketing:

In the study area predominantly three marketing options were

available for the dairy farmers. In the unorganized sector, private

vendors, and in the organized sector the dairy cooperatives and

integrated contract system were the options. The private system

refers to the system where an individual middleman purchases milk

from dairy farmers and in turn sells it to consumers. The system

works on an informal agreement with the farmers. On the other hand

cooperatives were organized such that dairy farmers voluntarily

associate themselves as members of the cooperative, on the basis of

equality for the promotion of their socio-economic wellbeing, i.e. Milk

Producers Co-operative Society (MPCS). While in the Integrated

contract system there is the association, co-ordination and

amalgamation of companies engaged in various stages of production

of a particular product or related products, so that there will be a

smooth flow of inputs and outputs, from one unit to other, leading to

an overall reduction in the cost of production of the final product. In

this study, integrated contract system means the association of

resources, co-ordination of dairy related activities, and amalgamation

of dairy production at varying levels in various stages of the

production up to marketing by a private firm. This system is also

referred to as "contract farming" and the farmer is referred to as

contract farmer.15

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Marketing Environment:

Marketing services are presently provided by the

Agricultural Marketing Boards, Milk Cooperatives and Federations

which are inefficient and politically oriented.16Many of these

cooperatives are not competent and are outdated. Very often they

end up in losses because of miss-management and ignorance. In this

process, the innocent farmers suffer heavily. Presently, only a few

Farmer’s Organizations are fairly successful because of their

professional approach in operating the business. The strength

of these organizations can be extended to other crops in different

regions. Development of village level farmers organizations which

can directly deal with reliable business houses or trade outlets

should also be encouraged. Private Industries can play a significant

role in strengthening such market oriented village level

organizations. In the district, several farmers groups involved in

milk marketing are able to independently hire the services of

veterinarians to avail of livestock breeding and health care

services, while the farmers in many other states are still dependent

on Government assistance for similar services. Such group activities

are able to sustain the development programme without external

assistance. Thus, motivation and training of the target groups to build

leadership through local organizations can play a vital role in poverty

alleviation and sustainable development in India.

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Shifting from one marketing system to another:

In the study area predominantly three marketing options were

available for the dairy farmers; unorganized private vendors, formal

/ organized dairy cooperatives and integrated contract system. A

majority of dairy farmers had shifted from one marketing option to

another. The rest of dairy farmers remained in the same marketing

option from the day they began commercial milk production. A major

shift from vendors to contract, followed by vendor to co-operative

and co-operative to vendor was noticed. Irregularity in payment and

stoppage of procurement by vendor system made dairy farmers shift

from vendor system to others. After the weakening of vendor- farmer

relationship and initiation of Milk Producer Cooperatives at the

village level, there has been a shift from vendor to co-operative

system.17 When the dairy sector opened for private investment

coupled with poor performance of cooperatives, farmers shifted

towards new marketing option the 'integrated contract system'.

Irregularity in payment, distant location of collection center and

inability to milk the animals were reasons for shifting back to vendor

from other marketing options. Prompt payments, sustainability of

marketing systems in business were major factors responsible for

retaining members and attracting new dairy farmers. Dairy farmers

with the experiences of various marketing options gave more value

to the prompt payment for the milk sold on comparing to milk prices.

Role of Cooperative In Dairy Industry:

Cooperative is an old human society. Cooperation in dairy

sector occupies prominent place in India as well as in Maharashtra.

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Dairy cooperative has completely changed the scenario of dairy

farming despite its complete failure in other sectors. Cooperation is

one of the economic miracles of the last century. In Denmark, the

cooperative movement entered the dairy Industry for the first time.

In 1982, when the Danish dairy farmers founded their first

cooperative dairy. In most parts of Holland, the cooperative

movement is traditionally very strong in the dairy sector. In USA

considerable section of the dairy industry is organized along

cooperative lines. In Norway, practically all dairies are owned by

producer cooperative organization. According to a study, New

Zealand, Sweden, Germany and U.S. where dairying is well advanced,

more than three fourth of the milk produced is sold through

producers cooperative.18

In India – in 1950 our cooperative dairies handled only 17 per

cent of the milk consumed in towns. In our country where majority of

the dairy plants are in the private sector, although our Government of

India as well as Planning Commission have laid down that dairying

should be developed along cooperative lines in preference to all

other systems. In fact, the field of Indian dairying is sufficiently

fertile, for cooperative principles to grow and flourish. The small

scale milk production on hundreds of scattered holdings situated for

from marketing centers, absence of good roads, the presence of a

large number of middlemen in the long chain of marketing, low

purchase price all these factors cry for cooperative movement in the

dairy field. Under the present system of exploitation by middlemen, a

farmer does not develop the financial interest in the whole business

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of production, processing and marketing of milk twice a day and

every day of the year.

Before rural dairy co-operative societies came into existence,

the milk business was being done by private traders only and there

was no money guarantee for the farmers. But after formation of co-

operative societies, when District Milk federation has started the milk

marketing in the cities like Mumbai, Pune, Kolhapur, Ratnagiri, the

farmers got assured of this milk business and have opted it as a

prime business. Today at village level, the milk business is flourishing

through co-operatives. In the districts of Maharashtra, there are

more than two or three dairy co-operatives. In Gujarat there is

one village-one society norm, which is not in Maharashtra. So there

are many small societies have grown up in villages of Maharashtra.

In India, the cooperative movement entered the dairy field in

the latter half of the 19th century with the formation of cattle

breeding cooperative societies. The societies maintained pedigree

bulls and pasture lands and advance loans for the purchase of good

milch animas. In the first half of the 20th century, three types of

cooperative organizations came up in the dairy sector. They were:

• Milk Producers Cooperative Societies.

• Milk distributors Cooperative Societies.

• Milk Consumers Cooperative Societies.

These cooperative are known to render valuable service to the

citizen. They checked pricing and maintained the quality of milk and

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milk products. The progress of Cooperative Dairy Union and

Cooperative Dairy Societies in Maharashtra shows in Table No. 4.01

and 4.02.

Table No. 4.01:

The Maharashtra State Co-operative Dairy Unions. (Rs. In Lakhs)

Sr. Item 1961 1971 1981 1991 2001 2003 2005 2006 2007

1 No. of Unions 19 46 90 71 65 67 85 87 95

2 Members (000) 20 96 161 243 46835 48661 48197 47195 51917

3 Share Capital 1 55 391 1166 4725 5637 8820 9028 9931

of which Govt. - 8 42 159 59 4810 32 37 41

4 Owned Fund 1 123 1150 4272 129980 22132 9833 10065 11072

5 Borrowing O/s 7 121 1007 3868 22709 13326 10018 10254 10254

6 Working Capital 10 345 2103 22663 1028514 133894 68808 70427 77471

7

Milk

Procured(Value 7 784 8541 20175 128578 303862 138020 141268 153395

8

Milk & Milk

Product

Sold (Value) 8 904 8831 35143 131110 207905 59687 65397 71937

9 Union in Profit 6 23 51 36 42 46 45 47 51

10

Amount of

Profit 0 12 29 148 13019 818 1266 1152 1270

(Source: Co-operative Movement at a glance - Co-operation & Registrar of

Co-operative Societies, Maharashtra State Pune.)

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Table No. 4.02:

The Maharashtra State Co-operative Dairy Societies.

(Rs. In Lakhs)

Sr. Item 1971 1981 1991 2001 2002 2005 2006 2007

1 No. of Societies 2021 7819 14284 22466 22782 26499 26881 30913

2 Members (00) 1263 7030 13101 15182 16359 1815861 1842038 2118343

3 Share Capital 62 288 3131 6594 12098 2416 2451 2820

of which Govt. 2 2 8 7 7 - 0.93 1

4 Owned Fund 76 598 6614 116119 15737 2585 2623 2885

5 Borrowing O/s 1 289 1827 13426 3468 3888 3944 3944

6

Working

Capital 314 1992 12950 1241321 127530 24897 25256 27782

7

Milk Procured

(Value 810 8531 35052 3234941 431816 109946 111531 128260

8

Milk & Milk

Product

Sold (Value) 841 9132 29914 3403403 184386 64954 67081 77143

9

Societies in

Profit 833 4091 6762 12267 12679 12617 14432 13710

10

Amount of

Profit 13 197 895 10758 2457 1231 1702 1616

(Source: Co-operative Movement at a glance - 41st Publications of Commissioner

for Co-operation & Registrar of Co-operative Societies, Maharashtra State Pune.)

Milk Trade:

The huge volume of milk produced in India is consumed almost

entirely by the Indian population itself, in a 50-50 division between

urban and non-urban areas. Increasingly, important consumers of the

dairy industry are fast-food chains and food and non-food industries

using dairy ingredients in a wide range of products. In spite of having

largest milk production, India is a very minor player in the world

market. India was primarily an import dependent country till early

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seventies. Most of the demand-supply gaps of liquid milk

requirements for urban consumers were met by importing

anhydrous milk fat / butter and dry milk powders. But with the onset

of Operation Flood Programme, the scenario dramatically changed

and commercial imports of dairy products came to a halt except

occasional imports of very small quantities. In the 1990s, India

started exporting surplus dairy commodities, such as SMP., butter

and ghee. The Agricultural and Processed Food Products Export

Development Authority (APEDA) regulated the export and import of

dairy products till early 1990s. However, in the new EXIM Policy the

Union Government has allowed free import and export of most dairy

products.

The major destinations for Indian dairy products are

Bangladesh (23.1%), UAE (15.4%), US (15.6%) and Philippines

(8.9%). In terms of products, SMP is the most important product

accounting for about 63% of total export volume, followed by ghee

and butter (11.7%) and WMP. Export figures clearly demonstrate

that the Indian dairy export is still in its infancy and the surpluses are

occasional. Indigenous milk products and desserts are becoming

popular with the ethnic population spread all over the world.

Therefore, the export demand for these products will increase and

hence, there is a great potential for export. On the other hand, there

has been a sharp increase in import of dairy products (especially milk

powders) after trade liberalization. India has recently concluded a

tariff rate quota to deal with US, EU and Australia on imposing

custom duty of 15 per cent on imports of SMP and WMP upto 10,000

tonnes and 60 per cent on imports beyond this level.19

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Dairy Technology:

Dairy farmers have achieved quantum jump in raising their

living standards through the use of dairy technologies the world over.

Technology has been a major factor for bringing changes in

agriculture, dairy, communication and other fields. The world is

being reshaped by technologies and telecommunication speed up

communication.20 Therefore day by day the world is shrinking into

global village. Technology is a tool or technique or method of doing

or marketing. As a method of increase the capacity of milch animal to

produce more milk by judicious application of following recognized

techniques of dairying are needed such as:

• Breeding: Mating animals of desired characters and selecting

male and female offspring’s.

• Weeding: Removing uneconomic, unhealthy and unwanted

ones.

• Feeding: In proportion to body requirements and production of

animals.

• Heading: Day to day care and management.

• Exposure: Temperature, relative humidity and precipitation.

To increase the productivity of cattle considerable quantum of work

has been done by the scientists in past two decades. With the

available technical know-how the scientists, Central Government and

various State Governments have sponsored several livestock projects

in the country.

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Dairy Education and Training:

The dairy education is not only to seek or cultivate knowledge,

but has to provide a veterinarian with skills and competence to lead

society towards progress.21 Dairy education is the science of

breeding; feeding and tending domestic animals especially farm

animals, while dairying science deals with the study, prevention and

treatment of diseases in animals. Dairying is yet another area where

biotechnology can make a great impact. In a developing country like

India, improvement in the productivity of the milch animals in terms

of high milk yield as well as production of clean milk and processing

of the milk into dairy products of high quality can influence the

economic status of our farmers, dairymen as well as dairy industry.

The analysis of strength, weakness, opportunities and loopholes of

Dairy Technology, allows the evaluation of the prevailing system with

a aim of developing strengths, overcoming weaknesses and

exploiting opportunities available in the dairy world.

The stock of milk yielding animals such as cattle, buffaloes and

goats in our country are genetically far inferior to those in western

countries. Genetic improvement of these animals by traditional

methods of breeding will take many decades. However, cross

breeding programme will quick results. The recent developments in

animal’s reproductive biology and genetic basis of traits have

fostered new animals breeding technology. In future animal breeding

programme may be augmented to achieve desired changes with great

speed and selection. The use of biotechnology to improve animal feed

and nutrition promises to improve the animal productivity.

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Impact on Rural Environment:

Dairying has been recognized as an instrument for the up-

liftment of socio-economic status at rural level. The impact of Mini

dairy on the sustainability of livelihood, employment and women

empowerment has been widely acknowledged. Dairying has a

prominent role in strengthening India’s rural economy. It has the

potential to act as an instrument to bring about social-economic

transformation at rural level. If the dairy sector is to develop

sustainable practices in the context of changing paradigms of

development in the new millennium, there has to be more emphasis

on HRD to address this need Indian dairy industry must move away

from traditional approach to innovative product formulations and

business practices. It should our prime objective to evolve new

technologies in livestock rearing practices which will really fit with

the existing situation of our dairy products and thereby helping to

maintain them in a productive and sustained condition to sustain the

livelihood of our millions and millions of rural poor and their stock

on a sustainable basis.

An Overview of Beed District:

Beed Zillha DudhUtpadakSangh collects more than one lakh

liters of milk daily through societies and its payment which is almost

lakh of Rs. goes directly to the farmers' bank account. Now the

farmers are earning their livelihood properly and their financial

condition is improving day by day. Apart from collection of milk there

are other welfare activities being taken up by the co- operatives as

farmers' training program, women's training, women's leadership

training program, educational programme and cleanliness program,

176

etc. In the villages where the women are doing mostly milk

concerned job, be it from cattle rearing to milk-supply, it is our

utmost effort that its payment should be got to women so that their

family may meet their needs properly. In the district, newly started

Mahila Bachat Gat (SHGs) in which the national bank gives them

financial support for the cottage industry in milk matter. Thus, Self

Help Groups is performing the role of a facilitator for the social

and economic changes at village level.

Through cooperatives, the women are getting an opportunity of

outdoor activities and thereby enhancing their inner strength

successfully to be a part of the cooperatives.22 Women have got

innate trait of managing skills, so they should be given proper and

due representations in this field and more women dairy cooperatives

should be opened for the up-liftment of the village women for the

improvement of their social and financial status. In this district,

irrigation is possible only for 30 per cent to 40 per cent of agricultural

field, while rest almost 60-70 per cent of land is completely

dependent on monsoon rains. In this situation, farmer is directly

dependent on dairy activity, getting no other option left to earn.

Collective efforts with the farmers from the root levels to grow and

develop in dairy sector. Technologically the dairy sector should also

be subsidized in the form of milk subsidy. The given subsidy will

reach directly to the farmers with the procurement rates. The

innovations & new technologies to be implemented in dairy farming,

should, somehow, reach to the farmers through proper planning at

the central and the state level. The price of fodder is high, nutrition in

animal fodder is lacking, even the basic supplement; clean

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drinking water for the cattle is not easily available. So, emphasis

should be mainly upon fodder's nutrition for the quality milk

production.

References:

1. Ms. Geeta Patel, Role of Women in Dairy Cooperative - Dairy

Industry Conference Chairperson, Udaipur Milk Union.

2. Karmakar K.G. and Dr .D. Banerjee Opportunities And

Challenges in The Indian Dairy Industry.

3. Prabhat, 2005. Animal husbandry and dairying. Kurukshetra.

4. Mr. Ravindra Apte, - Role Of Dairy Co-Operatives In Social

Transformation- Dairy Industry Conference Chairman, Gokul,

Kolhapur, Maharashtra.

5. Sukumar De -–Outlines of Dairy Technology – Oxford

University Press, New Delhi.

6. Tiny Brouwers India report Part 1: dairy giant walking

barefoot -http://www.milkproduction.com.

7. http://www.indiaagronet.com

8. Rana R.B. – Dairies to Eradicate Rural Poverty, Khadi-

gramodyog.

9. Ramana B.L.V.- Indian Dairy Products – Asia Publishing

House, New Delhi.

10. Rao Murlidhar – Economic of Dairy Industry – Kurukshetra.

11. Sukumar De – Outlines of Dairy Technology –Oxford

University Press, New Delhi.

12. Sukumar De – Outlines of Dairy Technology –Oxford

University Press, New Delhi.

178

13. Rao A. R. – Social Cost of Employment in Dairying – Eastern

Economist)

14. (Kurian V. – Rural Modernization Through Dairy

Development, Kurukshetra.

15. Ghose, A.K. and K.L. Maharajan, 2002. Milk Marketing

Channels in Bangladesh: A case study of three villages from 3

districts. J. Int. Develop. Cooperate.

16. Arora, V.P.S., T.S. Bhogal and P.G. Biswas, 1998. Milk

marketing in north-west Uttar Pradesh and the role of

cooperative: A temporal analysis. Indian Cooperative Rev.

17. D Thirunavukkarasu and N K Sudeepkumar -Milk marketing

options for the dairy farmers in open economy and their

choice in Tamil Nadu, India.

18. Shaha M.K. – Planning of Milk Supply for a Dairy Cooperative

– Indian Dairyman.

19. Hegade N.G. -Development of Infrastructure for Rural

Prosperity. National Seminar on Rural Prosperity and

Agriculture: Policies and Strategies. Infrastructure and

Institutional Support held on Nov. 5-6, 1999. National

Institute of Rural Development, Hyderabad.

20. Chakravarty and R. Chand- Impact of Technologies and

Telecommunication on Dairy Industry (2000) – Dairyman.

21. Dharam Pal – Technological Advance in the Manufacture of

Indian Milk Products- An overview – Indian Dairyman.

22. Vijayalakshmi, S. and J. Sitaramaswamy, 1995.

Rationalization of milk procurement, processing and

marketing in Southern India. Agric. Syst., 48: 297-314.

179