COMPFED: Diary Distribution SystemBy Ansh Aggarwal Nivedita Subbaram Varun Balakrishnan

Case Synopsis

• India is the largest milk producing country in the world also known as oyster of global dairy industry.

• The Bihar state milk co-operative federation ltd (COMFED) was established in 1983 as the implementing agency of operational flood programme of dairy development on “Anand pattern” in Bihar and Jharkhand .

• COMFED has been marketing milk and nearly 20 different kinds of milk related product under the brand name SUDHA for over 20 years.

• The marketing manager of COMFED realized that milk procurement has gone down drastically over last two years which has caused and adverse affect on overall profit of the state federation.

• Some of the problems it faced are decline in milk supply , rising penetration of middleman, non state private players , and shift in consumer demand.

• Earlier co-operative system operated on two-tier, after 1974 the three tier co-operative system began to operate on a two tier structure.

• COMFED’S unique services i) artificial insemination ii) animal health program iii) cattle feed iv) socio economic activities v) training and development

Problem Definition

• Why has the procurement of milk gone down?• How does the penetration of middlemen/private

players hinder the profits of COMPFED?• Why cannot COMPFED retain their existing farmers

as members and governance of cooperatives ?• What should COMPFED do to attract new farmers?• The role of infrastructure• The distribution system of COMPFED has to be

looked upon, what can be done?

Case Inferences

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

020406080

100120140160180200

131.5147.4

157.3

127.8

89.6

156.2 162.8173.6

136.9

114.8

VPDR

trihut Shahbad Vikaramsheel0

200

400

600

800

1000

1200

1400

1600 1500

1135

240

67.06 44.67 9.673% 24% 65%

Co-operationsMemebrsCapacity Utilization

How does a typical distribution channel look like?

Urban farmer

s

Village Cooperatives

Unions

Distributors

Retailers

Consumers

Ruralfarmer

s

Village Cooperatives

Unions

Distributors

Retailers

Consumers

Unofficial

Vendors

Co-operative Channel

Private PlayersFarme

rsSmall

AgentsContractors

Private

Dairies

Retailers

Distributors

Recommendations/ Conclusions

• Shelling out initial higher amount for the benefit of the farmers and at the later stage can reduce their bonuses.

• Making consumers aware of the benefits of the packaged Dairy products both in Urban and in Rural areas to increase the per capita consumption.

• Should extensively promote Tetra pak.• Should have more women members at the higher

organizational level in villages.• Should hold annual meetings to retain the farmers

and also to attract new farmers.