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2.1 INTRODUCTION
This chapter deals with the theoretical background of the Micro and Small
scale units in Dairy sector, reviews of existing literatures related to operations of
dairy industry and development of framework of the study. This will enable to get a
clear view about the research gap and how the topic was finalised to fill these gaps.
The Micro Small and Medium Enterprises Development (MSMED) Act was
notified in 2006 to address policy issues affecting MSMEs as well as the coverage
and investment ceiling of the sector. The Act seeks to facilitate the development of
these enterprises as also enhance their competitiveness. It provides the first-ever
legal framework for recognition of the concept of "enterprise" which comprises both
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manufacturing and service entities. It defines medium enterprises for the first time
and seeks to integrate the three tiers of these enterprises, namely, micro, small and
medium. The Act also provides for a statutory consultative mechanism at the
national level with balanced representation of all sections of stakeholders,
particularly the three classes of enterprises; and with a wide range of advisory
functions. Establishment of specific funds for the promotion, development and
enhancing competitiveness of these enterprises, notification of schemes/programmes
for this purpose, progressive credit policies and practices, preference in Government
procurements to products and services of the micro and small enterprises, more
effective mechanisms for mitigating the problems of delayed payments to micro and
small enterprises and assurance of a scheme for easing the closure of business by
these enterprises are some of the other features of the Act.
MSME Definition:
Manufacturing Sector
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Services Sector
Services sector refers to enterprises engaged in providing or rendering of
services. These will include small road & water transport operators (owning a fleet
of vehicles not exceeding ten vehicles), small business (whose original cost price of
the equipment used for the purpose of business does not exceed Rs.20 lakh) and
professional & self employed persons (whose borrowing limits do not exceed Rs.10
lakh of which not more than Rs.2 lakh should be for working capital requirements
except in case of professionally qualified medical practitioners setting up of practice
in semi-urban and rural areas, the borrowing limits should not exceed Rs.15 lakh
with a sub-ceiling of Rs.3 lakh for working capital requirements). The definition of
Micro, Small and Medium Enterprises under the services sector is based on the
enterprise’s investment in equipments.
Since 2006, price index and cost of inputs both have increased manifold. The
criterion was amended in 2014 by the Ministry. Thus it is proposed to increase the
capital limit for the manufacturing sector wherein the capital ceiling for micro
enterprises is expected to go up from Rs 25 lakh to RS 50 lakh, small enterprises
from RS 5 crore to RS 10 crore and medium enterprises from Rs 10 crore to Rs 30
crore. Similarly, for enterprises engaged in the services sector, the ceiling for capital
investment will be increased from Rs 10 lakh to Rs 20 lakh in micro category
followed by an increase of RS 2 crore to RS 5 crore for the small category and from
Rs 5 crore to Rs 15 crore for the medium sector.
The MSME sector and related legal framework has come into limelight
following the “make in India” initiative of the government and rising number of sick
micro, small and medium enterprises in the country at the same time. In order to
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boost the growth of the MSME sector during the 12th Five-Year Plan, an outlay of
Rs 24,124 crore has been allocated for the Ministry of MSME. This 12th plan
allocation represents an increase of 133.53 per cent over the 11th Five-Year Plan
allocation of Rs 10,330 crore.
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Organisational Setup
The M/o MSME is having two Divisions called Small & Medium
Enterprises (SME) Division and Agro & Rural Industry (ARI) Division. The SME
Division is allocated the work, inter- alia, of administration, vigilance and
administrative supervision of the National Small Industries Corporation (NSIC)
Ltd., a public sector enterprise and the three autonomous national level
entrepreneurship development/training originations. The Division is also responsible
for implementation of the schemes relating to Performance and Credit Rating and
Assistance to Training Institution, among others. SME Division is also responsible
for preparation and monitoring of Results- Framework Document (RFD) as
introduced in 2009 by the Cabinet Secretariat under Performance Monitoring and
Evaluation System (PMES).
The ARI Division looks after the administration of two statutory bodies viz.
the Khadi and Village Industries Commission (KVIC), Coir Board and a newly
created organization called Mahatma Gandhi Institute for Rural Industrialization
(MGIRI). It also supervises the implementation of the Prime Minister's Employment
Generation Programme (PMEGP).
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the Government in formulating the policies and programmes for the growth of
MSME.
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2.3 IMPORTANCE AND ROLE OF MSME IN DAIRY SECTOR
Despite being the world’s largest producer, the dairy sector is by and large in
the primitive stage of development and modernization. Though India may boast of a
200 million cattle population, the average output of an Indian cow is only one
seventh of its American counterpart. Indian breeds of cows are considered inferior in
terms of productivity. Moreover, the sector is plagued with various other
impediments like shortage of fodder, its poor quality, dismal transportation facilities
and a poorly developed cold chain infrastructure. As a result, the supply side lacks in
elasticity that is expected of it.
On the demand side, the situation is buoyant. With the sustained growth of
the Indian economy and a consequent rise in the purchasing power during the last
two decades, more and more people today are able to afford milk and various other
dairy products. This trend is expected to continue with the sector experiencing a
robust growth in demand in the short and medium run. If the impediments in the
way of growth and development are left unaddressed, India is likely to face a serious
supply – demand mismatch and it may gradually turn into a substantial importer of
milk and milk products.
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Key Areas of Concern in the Dairy Sector
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oilseeds, pulses, cotton, jute, tobacco, tea, coffee, fruits, vegetables, tubers, spices,
flowers and aromatic and medicinal plants to a wide variety of plantation crops. The
agricultural sector is also the single largest employer, even in 2011 over 65% of the
main work force were engaged in agriculture either as cultivators (110 million) or as
agricultural labourers (74 million). However, at the turn of the century there are
indications of a major shift in employment patterns with burgeoning opportunities
opening up in the services sector. The Indian economy is robust; in 1999–2000 (at
constant prices with 1993–94 as base year), the GDP and the national income both
grew at 5.9% and the per capita income in real terms grew at 4.2% .
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installed processing capacities alone, the co-operative and private sectors have more
or less matching capacities and the government only a small presence (Table 2.2 and
Figure 2.1 ). Together they have the capacity to process about 33% of daily average
milk production in the country, but they actually handle <20%.
Capacity
Sector Number of plants
(106 litres/day)
Co-operative 218 32.47
Private 366 30.26
Government 39 3.87
Total 623 66.60
Much of the processing capacity created by the private sector in the wake of
the liberalisation of the Indian economy remains idle; only about 60% of the
installed capacity of the private sector is operated on a day-to-day basis. In the
government sector, too, most of the primary processing facilities installed in rural
areas (mainly milk chilling centres) are not functional and dairy plants in the smaller
towns and cities are grossly underutilized. In the co-operative sector, all plants are
used to their full capacity and remain under utilised only during the lean production
season. A little over 30% of the milk produced is retained in producer households.
About 50% of milk is traded in through the traditional channels; about half of this is
traded without any processing, whilst the other half, going into traditional product
and sweetmeat manufacture, undergoes some traditional processing (acid
coagulation and/or heat treatment) before it is traded.
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These processing capacities include liquid milk processing and manufacture
of products: milk powders, table butter and white butter, cheese, ghee, condensed
milk and milk sweets. The special infrastructure for the dairy industry mostly
belongs to the co-operative system and the NDDB, while the government and the
private sector have only limited infrastructure, such as road milk tankers and a
limited cold chain. The co-operative infrastructure covers all aspects of the industry
including: milk collection (bulking, chilling and pre-plant transport, through a
network of over 82 thousand DCSs countrywide); processing and value addition
(liquid milk and milk products plants); transport (road, milk tankers and broad gauge
and metre gauge rail milk tankers); and cold chain/storage (cold stores, deep freezes,
refrigeration trucks, warehouses and automatic milk vending units). In addition,
there are thousands of shops selling milk-based sweetmeats, all privately owned,
with their own traditional recipes, processes and products, which are outside the
ambit of the organised dairy industry.
Some 45% of the milk produced is consumed as liquid milk. The bulk of it is
traded in the traditional channels, most of it through several tiers of contractors.
Some 16 million litres is traded as processed packaged milk: 13.5 million litres by
the co-operative sector and 2.5 million litres by over 300 private sector brands. A
very large percentage of these private sector brands is substandard, often
unhygienic, as quality and hygiene standards are seldom enforced. The co-operative
network supplies wholesome milk to some 800 cities, towns and urban
agglomerations daily, mostly as pasteurised, packaged milk but some in modern
automatic bulk vending units in metropolitan cities. Thus these can be further
improved with the help of small and medium scale units involved in the milk
processing.
Milk products from the organised sector are marketed through a vast network
of wholesalers, distributors and tens of thousands of retailers, separate chains of
them for each brand and company. By far the largest manufacturer of milk foods in
the country is the Gujarat Co-operative Milk Marketing Federation (GCMMF), the
apex co-operative body of the Gujarat milk co-operatives, which is also the single
largest food company in India, with both national and global markets. Almost all of
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the milk and milk products produced in India are traded and consumed in India
itself, with export forming a tiny share of the whole. Nevertheless, although the
volumes are small, India now has a presence in the world markets and regularly
exports milk products and long-life milk to countries in West Asia, South-East Asia,
South Asia and North America. The GCMMF is the prime exporter; it exported milk
powder, ghee, table butter, cheese and some other products. This constituted almost
80% of all exports. The total value of the exports for all exporters together was some
Rs 800 million in 2010.
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4. Milk consumption/capita per day 339 grammes
5. Milch animal holding Animals per HH Percentage of animal
(number) holdings
5.1 Landless (15.3%)1 1.82 9.90
5.2 Marginal (38.2%) 1.63 39.80
5.3 Small (21.9%) 2.05 25.90
5.4 Semi-medium (10.3%) 2.45 12.20
5.5 Medium (4.2%) 2.88 3.30
5.6 Large (10.1%) 3.75 8.90
6. Family labour Average time spent on livestock
management: 4.3 hours/day (55%)
7. Share of family labour for Men 60% of their working time; women
livestock care 35% of their working time
1. Milk production in India takes place in millions of small and very small units,
both in terms of land and animals, scattered throughout the country. Reaching
out to such a scattered smallholder population for technology transfer and
extension support is, to say the least, a difficult task.
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end of the smallholder spectrum below the poverty line and making the
government commit increasing amounts of funds, year after year, for poverty
alleviation.
3. Institutional credit at the farm level for dairy production is extremely hard to
access on account of procedural complexities, inordinate delays and high interest
rates, despite the existence of tens of thousands of rural credit institutions
including: rural credit co-operative societies, regional rural banks and rural
branches of commercial banks. Lack of good quality credit circumscribes the
potential of the smallholders for dairy production. Even at the turn of the
century, over 50% of farm level credit for smallholder dairy production in India
comes from traditional moneylenders.
4. Inputs and services for milk production enhancement are exclusively in the
domain of the state governments (some 51 thousand veterinary institutions, 36
thousand graduate veterinarians and over 70 thousand para professionals and a
host of production support institutions). Except in the areas covered by the co-
operatives under Operation Flood, inputs and services are uniformly of
substandard quality and are delivered at stationary centres requiring transport of
animals to the centres for the services to be received. Public funds for the
livestock sector are mostly squandered on services that are largely for generating
private good (i.e. curative veterinary care, not preventive veterinary care).
5. India has many animal epidemics ravaging the cattle and buffalo populations but
control of diseases is lowest among the priorities of the government (<3% of the
government veterinarians engaged in disease control). This has resulted in
enormous losses in terms of lost production (Rs 50–100 billion/year, nearly 10%
of the output value of the livestock sector) and has precluded India from joining
the global markets for dairy products. As smallholders own >70% of milch
animals, they are the ones who bear the brunt of the avoidable production losses
and the investment risks.
6. India has perhaps the largest single AI network in the world (63 frozen semen
production stations, 33 million doses of frozen semen produced/year, 40
thousand AI delivery outlets and an army of AI professionals). However, it is
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also one of the most inefficient and poor quality AI services: <20% of the
breeding cattle and not even 5% of the breeding buffalo are bred by AI; bulls
used for AI are not genetically evaluated and so the AI system does not produce
superior progenies generation after generation; in spite of over 25 million AIs in
a year the system produces <2 million progenies/year (<10% conception); and
the overwhelming presence of the state governments in AI services delivery has
totally prevented the emergence of free markets for AI.
7. There are widening deficits in the supply of feeds and fodder countrywide (dry
fodder such as straws/stover: production = 400 million tonnes, deficit 31%;
green fodder: production = 575 million tonnes, deficit 23%; and feed
concentrates: production = 46 million tonnes, deficit 47%). Demand estimates
are based on nutritional requirements and are unrealistic. Enlarging ruminant
populations compel smallholder producers to practice livelihood strategies
inimical to nature, leading to enormous environmental costs for the burgeoning
dairy production. Lack of adequate fodder and fuel wood supplies have
compelled livestock owners to allow overgrazing on common property resources
and forestlands, leading to denudation of common property resources and
deforestation of forestlands. Nearly 100 million hectares have become
wasteland, nearly a third of the total landmass of the country.
9. Large ruminants account for >90% of the livestock load on land. On a cattle
equivalent basis, their numbers are already beyond the ability of the land to
support and the continuing relentless increase in their population seriously
threatens the sustainability of all animal agriculture.
10. Liberalisation of the Indian economy and the advent of the World Trade
Organization (WTO) regulations opened up global competition in the dairy
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sector, exposing the smallholder producer to unfair and unequal market regimes.
The Indian Government has fallen far short of providing them with the levels of
protection and support measures permissible under WTO; thus, failing to create
for Indian smallholder producers the much talked about level playing field even
in their domestic markets.
11. The legal and regulatory framework of the government too has not kept pace
with changes in the economic regimen and the WTO. The Co-operative Societies
Act continues to be restrictive rather than enabling, even though the Anand
Pattern Milk Producers’ Co-operatives have emerged as the most stunningly
effective institutional model for smallholder dairy production. Even though
processing and value addition is pivotal to smallholder dairy production and only
15% of the milk produced in the country is processed by the organised dairy
industry, the government has not liberalised its regulatory framework to attract
the much needed capital into the processing and value addition sector.
12. After 50 years of planned development, the government still does not have a
unified policy framework for its livestock sector and policies so far have been
mostly ad hoc pronouncements to meet development needs. Policies, therefore,
have only a marginal presence in the livestock sector, have often failed to
galvanise purposeful action, have made extensive use of direct action by
government departments and yet government presence is almost invisible in
areas where it is most direly needed.
2. Improving the quality of farm level credit and access to credit will enable the
lower 30% among the smallholder spectrum to move up from subsistence
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farming to progressively viable crop–livestock farming, adoption of intermediate
technologies (like crossbred cattle) and achievement of progressively higher
outputs and farm incomes. Reorganisation of credit institutions, simplification of
procedures, reduction of interest rates and removal of collateral security
requirements, are all logical steps in the credit reform process.
4. Given the vast AI infrastructure, delivery network and manpower that India
already has, newer institutional models, better delivery systems, better quality AI
sires and more effective AI are all possible. The results would be superior
progeny generations (larger numbers of crossbred cows and improved buffalo),
better dairy stock, reduced costs and higher incomes for smallholders.
5. India has a vast scientific manpower and research infrastructure (13 animal
sciences research institutes, over 900 animal scientists, some 1000 support staff,
17 agricultural universities and 34 veterinary colleges) under the Indian Council
of Agricultural Research (ICAR) system, to provide the dairy sector research
support. However, reorientation of their research priorities, greater user
participation and industry funding of the research establishment will enable the
growing of globalisation of the Indian dairy industry to gain immense cost and
quality advantages.
6. With the waning demand for work animals for farm power, India now has a
tremendous opportunity to reduce the overall cattle numbers through breeding
better draft animals, encouraging sharing of draft animals and promotion of
agro-service centres in major villages for custom hiring of tractors and farm
implements. Reduction in bovine numbers will progressively reduce the adverse
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environmental impact of smallholder dairy production and will render the entire
animal agriculture in India sustainable.
This section therefore tries to bring out the salient findings of earlier studies
which throw light on various concepts in the related field. The reviews consist of
various research work carried out by other Researchers, articles published in
Journals and magazines and newspapers and PhD Thesis of other researchers.
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This section gives a brief account on the review of existing literature in the
field of Dairy sector and the small and medium units in this sector. The review has
been organised under the following headings.
Gopalsamy (1997) 2 in his study recommends that the concerted effort on the
part of manufacturers and marketing men to sell products specifically designed for
rural market were successful. The brand awareness created by these products had
given rise to number of imitation products sold at cheaper price. In addition regional
branded and local unbranded products also thrive in the rural market. The policy
with regard to distribution varies widely from company to company. Several
innovative measures were taken by various companies in rural areas
Dhruv Grewal (1998) 3 in this study reveals that due to increase in the
number of companies price is fixed based on the perceived value. Consumers see the
buyer’s perception of value, not the sellers cost, as the key to pricing. They use the
non-price perceived value in the buyers’ mind. Price is set to capture the perceived
value. In nutshell, perceived value is an evaluation that balances what consumers
receive, in an exchange, versus what they give up.
1
Naghapani, L.(1998), “A study on the marketing aspects with special reference to Coimbatore
district Co-operative Milk producers’ Union limited”, Project Report Madurai Kamaraj
University.
2
Gopalsamy T.P., “Rural Marketing, Environment problems and strategies”, Economic and
political weekly, December 1997, pp.85-86.
3
Dhruv Grewal, et al., “The effect of store name, Brand name and price discounts on consumers’
evaluation and purchase intentions”, Journal of Retailing, Vol.74,No.3 (1998), p.337.
36
Ashish Bhasin (1999) 4 examined and revealed that in rural India, products
sell more via a mix of distributor and dealer push, as opposed to focused campaign
aimed at the village folk. He also opined in his study that advertising mix for rural
India had many pitfalls. Television and radio fare better than the print media.
37
social and economic perceptions, ethnic reshuffles of the stratum of the society and
the democratic pattern of managerial efficiency through managerial shift in the
villages.
9
Patel, S.M., Thakur, D.S and Pandey, M.K. “Impact of the Milk Co-operative in Gujarat” Institute
of Co-operative Management, United Publisher, Allahabad, April, 1975.
10
National Dairy Research Institute, Souvenir, Diamond Jubilee, 1983-84.
11
Chinnaiyan, P. Kandasamy and Rangarajan, G. “Marketing of Milk in Erode Taluk, Tamilnadu”,
Indian Journal of Marketing, Vol.X, No.8, pp.21-26, 1980.
12
Murali Manohar, D. and Sudharshan, G.S. “Dairying as a Household Industry”, Kurukshethra,
Vol.30, No.11, March 1982, p.10.
38
the development of dairy units, employment opportunities and the livelihood of the
weaker sections of the selected sample society in their study area.
Koli (1985) 15, in his study on ‘‘The Functioning of M.P C.S. in Gujarat With
Special Reference to Kaira District’’ viewed that the selected sample societies were
functioning well and collected a good quantum of milk per society - nearly 3,25,000
litres p.a. Further, it is noted that the societies are rendering a good service to the
community development like forming roads in remote villages, hospitals assistance,
drinking water and donation to schools, etc. The study also pointed out that the
members felt that the price of milk was low and needs enhancements.
13
Chakravarthy, T.K. and Reddy, C.O. “Dairy Development Programme; process and impact a
study at village level”, Journal of Rural Development, vol.1, No.4, July, pp.459-512.
14
Rajaram, “The structural Linkages of A crisis in milk co-operatives In Kaira District Gujarat,”
Paper presented at Workship co-operatives and rural Development, Delhi, and March 1983.
15
Koli, “Functioning of Milk Producers Co-operatives in Gujarat with special reference to Kaira
Distirct”, Tamil Nadu Journal of Co-operation, Vol.76, No.12, pp.499-508, 1985.
16
Vithal, C.P. “Factors affecting milk co-operatives in Anathapur District of Andhra Pradesh A
study”, Indian Co-operative Review, Vol.XXIII, No.4, pp.325-337, 1986.
39
Singh and Dhass (1988) 17 focused on the impact of Operation Flood -I at the
village level with the help of simple statistical tools like arithmetic mean, frequency
distribution table and Lorenz curve. Their main findings were the average milk yield
per animal in both the landed and landless households in the co-operative villages
was 12.58% higher than control villages; the milk yield per animal was higher in the
co-operative villages than the control villages. Lastly the study opined that the
average employment in dairying, the average per capital protein intake and
receptivity to various innovations introduced under the programme were higher in
co-operative villages than in villages.
17
Sinha, M.N. and Rama Murthy, H.S. “A study of Impact of membership of Dairy Co-operatives”,
Indian Co-operative Review, Vol.XXVI, No.2, pp.159-166, 1988.
18
Jain, J.P., Saxena, B.C., Aneja, K.G. and Prem Naraian, “Growth of milk producers cooperatives
in Mehsana ”, Dairy man, 30: 1978, pp.549-552.
19
Kulkarni,M.B.,“Collection of Milk: Some Lacunae and Remedies”,Dairy Guide 1(10): 1979,
pp.31-34
40
inconvenient timings of milk collection, spoilage during the rains, and warm seasons
and inadequate extension services were some of the lacunae in milk collection from
the producers.
20
Jain, M.M., “Dairy Development through Cooperatives: A Study of Rajasthan. Indian Dairyman
32 (3):1980, pp.195-204b.
21
Singh, C.B., Patel, R.K., Dhaka, J.P. and Sharma, P., “Management of Milk Procurement At
Village Level By Cooperatives, Private and Public Sector Organizations: A Case Study”, Agric
Marketing, 25(4):1983 pp.11-17.
22
Sambasiva Rao, B., “Factors Affecting Milk Production. A study”, Indian J Agric Econ.,11: 1985,
pp.169-174.
41
fodder and concentrates were the principal factors affecting milk production in all
the size groups of farmers and estimated marginal value products of green fodder
and concentrates were greater than factor cost implying that all the farmers were
underutilizing these two inputs. He concluded that the use of green fodder and
concentrates increased the milk yield and regarding labour, only marginal farmers
were utilizing in an efficient manner.
Baviskar 23 ( 1986) based on data collected during field work in two villages
of Surat district. The report traced the increase in the number of cooperative milk
producer societies and their impact on dairy development in the tribal area of
Gujarat. It focused upon milk cooperatives managed by Jesuit missionaries in the
region presenting a detailed description of their internal organization. The main
reason for the success of the Jesuit seen cooperative was found to lie with the loyalty
of its members and integrity of its leaders. The secretary of dairy cooperative was
found to be key functionary in the success of the project.
Vimal Shah (1986) 24, in his “Study on The Working of Sumul”, highlights
that dairy co-operative movement had not yet succeeded in a significant manner in
the larger goal of including landless weaker sections to take up productions and sale
of milk. He opined that the financial performance in the initial period and capital
output ratio were high due to stagnant output. However, during the later period it
became lower. The overall performance of the dairy was quite positive and wage
policy adopted by the plant was based on productivity.
23
Baviskar, B.S, “Dairy development in a tribal area of Gujarat”, working paper, Institute of Social
Studies, Netherlands, 1986, pp.8- 47.
24
Vimal Shah, “Role of milk co-operatives in Articulating Rural”, Urban Interaction-Experience in
Gujarat, UNESCO study, 1986.
25
Meera Savara, “Organised Dairying in the Tribal Areas of Surat District”, Working paper No.9
ISS/IDDAD 1986.
42
cautioned that the mismanagement of affairs of many societies, the corruption
associated with the bureaucracy at all levels of the programme and over loading of
ecological resources with a large number of imported buffaloes may affect the tribal
economy as a whole.
Dorsten 26 (1986) the study related to the impact of the Kaira district
cooperative milk producers union on milk production in Kheda district, Gujarat.
From the study, an unmistakable trend was towards commercialization of the
livestock by the year 2000 AD. Although India possessed an enormous cattle and
buffalo population, annual milk production was very low. The average annual milk
yield per cow was about 504 kg. One of the major constraints was supply and
quality of feeds and fodder. By the year 2000 AD, There was expected to be a short
fall of concentrates, 19.8 MT of green fodder and 16.2 MT of dry fodder. The
shortage was expected despite the declining trends in the dairy cattle population.
The study proposed a number of suggestions for improving the feed and
fodder situations and also the wealth and breeding of dairy animals.
43
Development Corporation (KDDC) farmers and non-KDDC farmers who were not
availing the facilities of cooperatives. They found that more than 56 percent KDDC
farmers getting only 25 percent of family income from dairy enterprises more than
64 percent of KDDC farmers had repaid 75 to 100 percent of dairy loan, where as
only 10 to 25 percent of non KDDC farmers had repaid 75 to 100 percent of dairy
loan.
29
Jawanram, “Organization and Working of Dairy Cooperatives in Rajasthan: a case study”, Indian
co-op rev. 25(3): 1988, pp.273-282b.
30
Ranade, C.G., Mathur, D.P., Ranagarajan, B. and Gupta, V.K. Performance of Integrated Milk
Co-operatives CMA, Monograph series No.111 Indian Institute of Management Ahmedabad and
Concept Publishing Company, New Delhi, p. 48, 1988.
31
Sinha, M.N. and Rama Murthy, H.S. “A study of Impact of membership of Dairy Co-operatives”,
Indian Co-operative Review, Vol.XXVI, No.2, pp.159-166, 1988.
44
Saroja (1988) 32 studied the satisfaction of members of dairy cooperatives in
Erode district. For analysis 150 respondents from 10 societies were selected at
random. The study revealed that out of 150 samples members, only 14 members
were women. The study concluded that member satisfaction of dairy co-operatives
was not influenced by the sex of the member producers. Statistical analysis revealed
that irrespective of the sex of the members, the satisfaction derived by the members
of the milk producers’ societies was the same.
Mahak Malik (1989)33 studied the milk unions of Ambal, Karnal and Jind of
Haryana. The study was based on the secondary data collected from the milk unions
and the records of head office located at chandigarh. Data analysis included the
tabular analysis and production function analysis. According to the study, milk
procurement was the lifeline of a dairying plant. It also pointed out that proper
utilization of the installed capacities of the dairy plants for processing milk and
manufacturing various milk products were heavily dependent on the total quantity of
milk procured by it. Moreover, the dairy plants found it very difficult to utilize the
given capacity during lean seasons. The study concluded that there was plenty of
scope in all the milk unions covered in the study to increase the volume of milk
collected per society and per member effectively by linking the milk procurement
programme of the union with the volume of milk procured by each member.
32
Saroja T. “Dairy co-operatives in Erode District: A Study on satisfaction of members”,
Unpublished M.Phil Dissertation, Bharathiar university, Coimbatore, 1988, pp.82
33
Mahak Malik, “Economic Evaluation of Organized Milk Procurement Haryana Dairy
Development Co-operative Federation”, Ph.D., thesis unpublished, National Dairy Research
Institute, Karnal, 1989.
34
Kamalaveni, “Milk Producers co-operative union in Erode District”, A study on utilisation by
members Unpublished PhD thesis, Bharathiar University, pp.21, 1990.
45
gets jeopardized. The study stressed the need for the expulsion of member supplying
milk to the traders. But in reality such measures are not taken.
35
Mattigatti, “Strategy for Rural Development-Dairy Co-operatives in India” Sage Publication, New
Delhi, 1989.
36
Mattigatti, R.M., “Performance of Milk Producers Cooperative Societies and Their Impact On
Dairy Farming In Dharwad District, Karnataka”, M.Sc. (Agri) Thesis,Univ. Agric. Sci., Dharwad,
1990.
37
Patil, B.L., “Performance of The KMF and Its Impact On dairy development in Karnataka an
economic analysis”, Ph.D. Thesis, Univ. Agric. Sci., Dharwad, 1991.
46
Another study1 showed that the creation of new market outlet for fluid milk
brought major improvements in the production, marketing and consumption behavior
of smallholder households. The new marketing outlet may also promote involvement
in more intensive dairying.
38
Jithendrakumar, D.S., “Performance of Dairy Cooperatives and Their Impact On Milk Production,
Income and Employment In Chitoor District (A.P.)”, M.Sc. (Agri) Thesis, Univ. Agric. Sci.,
Dharwad,
39
Shiyani R.L. and Rajvir Singh, “Performance of Dairy Co-operative in Saurastra, an Econometric
Analysis”, “Indian Journal of Agricultural Economics”, Vol.49, No.2, pp.238-243, 1992.
47
staff, value of milk procured as well as sold, dividend and bonus paid of animals
treated by veterinary doctors. Further, the study concluded that the introduction of
scientific methods for classification of societies of societies would help in rational
allocation of financial assistance to the societies.
40
Hema Tripathi and Bist (1994) conducted a study in Barely district of Uttar
Pradesh. The study concluded that risks orientation was the most important
psychological attributes of rural women in augmenting the productivity of dairy
animals. The study further concluded that there was also a need for a research system
to develop technologies which are relatively less risky, vis-à-vis the physical and
financial resources available to the rural dairy farmers. The inputs required for the
continued adoption of the dairy technologies available or needed also to be assured to
help the rural women to augment the products only of their rural dairy system.
40
Hema Tripathi, Kunsro, O.W. and Bist, G.S. “Path Analysis of Women on Productivity of Dairy
Animals”, Indian Dairyman,p. 303.
41
Singh R.S. “An Economic Evaluation of milk production in Rajouri District of Jammu and
Kashmir”, Indian Dairyman, Vol.47, No.2,3, pp.43-46, 1994.
42
Sanghu, K.P.S. “Production and Consumption and Marketed Surplus of Milk Western
Uttarpradesh”, Indian Dairyman, Vol.46, No.10, p. 629, 1994.
48
Ranganathan and Singh (1995) 43 observed that the majority of the respondent
household, though both women and men jointly participate in making decisions
regarding farming and dairying, generally men dominated the activities. the study
indicated that rural women as compared to other male counterparts needed relatively
more dairy processing and preparation of dairy products, while their men folk needed
relatively more training than women folk in the areas of breeding , feeding health care,
and management of dairy cattle.
43
Ranganathan, K. and Singh, M.N. “A study of differential participation of Rural Women Of
Southern States in Dairy and Farm Sector, Annual Report 94-95, Southern Regional Station,
National Dairy Research Institute , Bangalore 1995.
44
Gupta and Devarajan, “Consumption and Disposal of Milk in Churu District (Rajasthan)”, Indian
Dairyman, Vol.47, No.6, pp.42-45, 1995.
45
Thakur, D.S., “Impact of Dairy Development Through Milk Cooperatives: A Case Study of
Gujarat”, Indian J Agril Econ 41(3): 1996, pp.83-89.
49
animals and for the purchase of improved agricultural inputs to some extent which
help the farmers in increasing their total income.
46
Prabaharan and Sivaselvam. S.N. “A Study for Milk in Chengalpattu District of Tamil Nadu”,
Indian Journal of Dairy Science, Vol. 39, No.1, pp. 13-16, 1980.
47
Tsehay Redda, “Prospects of Ethiopian dairy development.” Proceeding of the Role of Village
Dairy Cooperatives in Dairy Development: Prospects for Improving Dairy in Ethiopia, Addis
Ababa, April 1998.
48
Biradar, R.D., “Break Even Analysis of Dairy Enterprise”. Agric. Banker., 23(3): 1999, pp.30-32
50
Kale et al 49 ( 2000) studied the financial position working and operational
efficiency of 23 dairy cooperatives in Raigad district of Maharashtra. They studied the
economic efficiency through income expenditure ratio, expenditure income ratio, rate
of return on capital and rate of turn over. They concluded that (i) the societies had low
owned capital and were dependent on borrowing from financial institutions (ii) even
though the working capital of the dairy cooperatives was low, their turnover was high
because dairy cooperative did not make payment to milk producers from their own
funds. Therefore, dairy cooperatives were able to carry on business with limited
capital and (iii) majority of the societies were trading Profit. It is difficult to explain
many aspects of small-scale farmers’ household behaviour in respect to livestock,
purely from an economic and rational point of view. Consequently, treating the
livestock production system as a pure input– output type of economic system often
misrepresents the Indian reality.
The secondary data were collected, and analyzed. They found that mixed
farming created 32 percent of extra work as compared to arable farming. The dairy
farming created 45 percent of extra work as against mixed farming and 92 percent of
extra work as compared to arable farming. They also estimated that an additional
employment for 129 days as compared to mixed farming and 225 days as compared to
arable farming were found by maintaining dairy farm.
49
Kale, N.K., Tilekar, S.N., Borude, S.G. and Hinge, B.J., “ An economic enquiry in to working of
dairy cooperatives in coastal area of Maharashtra”, Indian Coop Rev., 38(4): 2000, pp.426-433.
50
Reddy Y.V.R., “Impact of Dairying On Rural Farmers”, Mysore J Agric Sci, 13:2000, pp.340-
342.
51
Jayachandra Reddy, Reddy, Y.V.Reddy and Ramakrishna, Y.S., “A Comparative Study of Cost of
Milk Production Under Different Agro-Climatic Regions In Semi-Arid Regions”, Indian J Agril
Econ., 59(3): 2004, pp.611.
51
to existing cost structure of milk production, profitability of crossbred dairy cows in
the three states under the changed socioeconomic-political scenario and also suggests
methods to improve the viability and profitability of these enterprises.
Thakur and Singh 52 ( 2004) conducted surveys in the year 2002-03 to assess
the energy and cost requirement for milk production in different commercial dairy
farms in four locations, viz., Maharajpur, Imaliya, Pariyat and Mohaniya, around the
Panagar block of Jabalpur district, representing the more plateau and Satpura hills
zone of Madhya Pradesh. The locations for conducting the survey was selected at
random without following any statistical method as there are enough number of
commercial dairy farms to get a good comprehensive data on the different activities in
milk production. It was inferred that cattle raising was not only an important
occupation for supplying the nutritional diet to the people but also it has greater
concern to uplift the socio-economic status of the people related to agricultural sector.
Likewise raising goats, cows, buffaloes and birds as a supplementary occupation in
the agricultural sector is apparently most economical for the development of socio
economic status of rural people particularly in weaker sections, having small and
marginal holdings or low investment capacity and tribal communities.
52
Thakur, C.L., and Singh, V.C., “Energy and Cost Requirements For Milk Production In Different
Commercial Dairy Farms of Jabalpur, Madhya Pradesh”, Indian J Agril Econ., 59(3): 2004
pp.615-616.
53
Dixit, P.K., Dhaka, J.P., Sajeesh, M.S., and Aravinda Kumar, M.K., “Economics of Milk
Production In Kerala- An Inter-Regional Empirical Study”, Indian J Agril Econ., 59(3): 2004,
pp.646.
52
pertained to the year 2002-03 the results of the analysis indicate that bovine husbandry
forms an important component of the typical homestead-farming situation in Kerala.
The crossbreeding of cattle has resulted in the spectacular performance of dairy sector
in the state.
Singh and Rekha Dayal 54 ( 2004) studied the economics of production and
marketing of milk in the state of Uttar Pradesh. Linear and log-linear functions were
used to work out the estimates of factors affecting marketed surplus of milk both for
the private and cooperative systems. The results of the study indicated that the feed
and fodder cost was the most important item of the total maintenance cost accounting
for 55 to 65 percent of the total cost in zone-I and 51 to 66 percent in zone-II. The net
profit per day of a milch buffalo was very low due to the higher maintenance and low
milk yield of milch buffalo on each herd size group in each zone of the state. The net
profit of milk production per buffalo per day was observed to be higher in the case of
small size group due to higher milk yield of milch buffaloes in this size group as
compared to medium and large herd size groups in both the zones. The establishment
of milk cooperative societies in the rural areas had positive impact on the marketed
surplus of milk. The study further showed that the milk vendor being an important
intermediary in milk marketing made huge profits by adopting various types of
malpractices. Lender utilization of plant capacity was the major factor for incurring
losses by cooperative milk plant in fluid milk marketing.
54
Singh, R.B. and Rekha Dayal., “Economic Analysis of Production and Marketing of Milk In
Central Region of Uttar Pradesh”, Indian J Agril Econ., 59(3): 2004, pp.654.
55
Neeraj Rao, Prasant Kumar, Govind Pal and Chandra Sen., “Economics of Milk Production In
District Khanpur(Dehar), Uttar Pradesh”, Indian J Agril Econ., 59(3):2004, pp.624.
53
production was higher on large farmers because of excess utilization of concentrates
by large farmers. Input output ratio was the highest on small farmers and it was
1:1.31.Elasticity of production for fodder was the highest followed by human labour
and concentrates for all farms.
56
Ramachandran, T., “Rural Employment and Income Generation In Dairy Farming-A Case Study
In Kanyakumari District”, Indian J Agril Econ., 59(3): 2004, pp.643.
57
Sidhu, R.S. and Bhullar, A.S, “Changing Structure of The Farm Economy In Punjab: Impact of
Livestock On Income and Employment”, Indian J Agril Econ., 59(3): 2004, pp.578-587.
54
sector has also helped in generating employment on small, marginal and semi-medium
farms despite fall in employment in crop production.
Sharma et al 58, ( 2004) a study was carried out to estimate the contribution of
dairy and crop enterprises towards income and employment in relation to different
size of holdings in the semiarid region of Rajasthan. For this study data were collected
from 60 farmers in the four adopted villages of Sikar tehsil of Sikar district during the
agricultural year 2003-2004. The farmers were classified in to different size groups,
namely, small (upto 2 ha), medium (2 to 4 ha) and large (4ha and above). From each
village and each size group, 5 cultivators were randomly selected. Dairy enterprise
provided maximum employment of 338 mandays and crop farming provided 219
man-days. Per worker employment from crop and dairy farming were 80 man-days
and 123 man-days, respectively. Thus, dairy farming plays a key role in increasing
employment and income in the semiarid tract of Rajasthan.
55
found to be higher than the disposal through milk vendors and directly to the
consumers mainly due to more marketable surplus. While on small farms the disposal
was found to be almost equal, i.e., 35 percent through milk vendors and directly to the
consumers, and the disposal of milk through cooperative society was less due to lower
marketable surplus owing to smaller heard size.
61
Usha Tuteja and Narinder Singh., 2004, “Employment and Income Generation Through Livestock
Based Milk Procession Units In Rural Hariyana ”, Indian J Agril Econ., 59(3): 2004, pp.658-659.
56
Most of the studies conducted in dairy industry have focused mostly
procurement, pricing and consumer behavior towards dairy products. Only very few
studies on the dairy units of MSME sector milk has been conducted. Similarly, though
much research has been done into the dairy product attributes and dairy cooperatives,
only few studies deal with the small enterprises which process milk and produce milk
products. Its also very much required to find the pattern of milk consumption and the
demand for these products and how to bring innovative products. In order to bridge
this gap the present study titled “A Study on the opportunities for Micro and SSI units
in dairy sector with reference to Salem district” was undertaken.
Based on the reviews the researcher has identified the various opportunities and roles
available for the MSME units in Dairy sector. They are:
All these are the various factors considered to have an impact on the operations
and opportunities available for the MSME units in the dairy sector.
57
Conceptual framework is designed by the researcher to identify the various opportunities and roles available for MSME units in
Dairy sector.
Access to
Involvement of modern
too many management Increase in
intermediaries Practices Productivity
at Low cost
Proper Co-
ordination
and Co- Enhanced
operation Export
Potentials
Opportunities for
Marketing MSME Units in
Efforts-Parks Dairy Sector
and
Exhibitions Modernisation
and
Upgradation
Linkages-
Forward and
Backward Concentration
on Quality and
Support from Hygiene and Standards
Government Food Safety
Standards
58
Increase in productivity at lower cost
Over the span of three decades, India has transformed from a country of
acute milk shortage to the world’s leading milk producer, with production exceeding
200 million tonnes in 2010. This phenomenal success is attributed to a Government
initiative known as Operation Flood (1970–1996) and its intense focus on dairy
development activities. Milk production and productivity were enhanced by
ensuring the availability of veterinary services, artificial insemination (AI), feed and
farmer education. The need to reduce cost is also important. Hence the concentration
should be on providing more quantity at less cost.
59
Concentration on quality and standards
Quality control is a critical issue. An important aspect is decide what are the
concern about quality. The manufacturing and production of vaccines also forms a part
of the Quality control aspect. The standards set for determining the quality aspects also
needs attention, as many of the farmers are not aware about the quality standards.
The quality of animals is critical in determining its milk productivity and hence overall
production. Hygene and food safety standards are also included in this aspect.
The dairy sector in India has traditionally been highly regulated. The
government projects and programmes in place for enhancing dairy development
include subsidies for developing infrastructure for milk processing and testing. The
Clean Milk Production Programme is a centrally sponsored scheme that is being
implemented by the State Department of Animal Husbandry, Dairying and Fisheries
Several other rural development initiatives support dairying, such as through the
District Rural Development Agency and women’s self-help groups.
An area of government support that has not been capitalized on so far is the
investment in promoting the nutritional aspects of milk, particularly pasteurized
milk versus loose milk. Also the training for the staff and farmers can be conducted
to improvise the quality.
60
marketing activities like organising exhibitions and parks will help to create more
marketing and sales.
The firms in the dairy sector should be made aware about the modern
management practices and techniques. This will help them to keep pace with the
technology and other developments.
61
Dairy farming
Co-operative societies
Dairy products
A dairy product or milk product is food produced from the milk of mammals.
Dairy products are usually high energy-yielding food products. A production plant
for the processing of milk is called a dairy or a dairy factory. Apart from breastfed
infants, the human consumption of dairy products is sourced primarily from the milk
of cows, water, buffalos, goats, sheep, horses, yaks, camels, domestic buffaloes, and
other mammals. Dairy products are commonly found in European Middle Eastern,
and Indian Cuisine, whereas aside from Mongolian Cuisine, they are little-known in
traditional East Asian cuisine.
62