Dairy-based Livelihoods
73
The economics of procurement and
sale of milk at a local area was worked out
as part of a livelihood mapping strategy
in Shravasti district of UP for NABARD
by Access Livelihoods Consulting India
(ALC). The workings show that at a small
dairy cooperative level, it is possible to pay
`
24 for a litre of milk to the farmer and sell
at
`
34 to the customer, with all the supply
chain costs factored.
V. Institutions of dairy
farmers
Cooperatives are the key institutions in
a formal dairy sector. Cooperatives have
played a phenomenal role in organising the
disbursed dairy farmers and providing them
inputs for dairying and ensuring marketing
of a highly perishable commodity. Of late,
producer companies of dairy farmers are
also being promoted.
1. Cooperatives
About 15.46 million farmers have been
brought under the ambit of 1,62,600 vil-
lage level dairy corporative societies up till
March, 2014.
28
The cooperatives have a
three-tier structure: (a) primary societies
at the village level (b) unions at the district
level and (c) federations at the state level.
The success of the GCMMF, known
for its Amul brand and its Amul model of
cooperative, is acclaimed. Amul, founded
in1946 in the town of Kheda in Gujarat, has
a three-tiered institutional structure with
village-level dairy cooperatives at the vil-
lage level, federated into a milk union at the
district level and a federation of milk unions
at the state level. More than 15 million milk
producers bring their milk to 144,500 dairy
cooperative societies across the country.
This is processed at 184 district cooperative
unions and marketed by 25 state marketing
federations. Over the last four years, Amul
has ensured 59 per cent increase in the milk
procurement price to its farmer–members
which resulted in 46 per cent growth in its
total milk procurement.
29
Amongst the vari-
ous drivers of its success, the integration of
financial products and services has been an
important factor.
However, there is a perception that coop-
erative organisations have not been equally
successful in many states. Cooperatives in
other states are organised differently than
the GCMMF cooperatives. The GCMMF
cooperatives operate like a true representa-
tive of the farmers and are run by profes-
sionally qualified managers. In most states,
the cooperatives are managed by civil
servants and function more as government
bodies. Also, they are weak representatives
of dairy farmers.
Of the 14 major milk state cooperatives
in the country, 10 have state government
equity, of which six have government equity
in excess of 51 per cent. Twelve of the 14
cooperatives have government officers as
Managing Directors (MDs) appointed by
the state government. It is not uncommon
for these officials to be changed very fre-
quently. Cooperatives are mere parastatals
and do not work in the true spirit of coop-
eratives with elected farmer representatives
Table 4.8:
Economics of dairy across the supply
chain
S.
No Particular
Milk price
1. Procurement from farmer
24
2. Quality testing & transportation
1.2
3. Royalty to milk aggregators
0.6
4. Transportation to BMCU
1
5. Chilling cost
0.4
6. Processing, packaging and admin
3.1
7. Packaged milk distribution
0.45
8. Retailer commission
1.2
9. Marketing
0.2
10. Margins
1.85
11. Consumer price
34
Source:
Livelihood Mapping of Shrawasti District, UP.
Commissioned by GIZ-NABARD, Access Livelihood
Consulting India, Hyderabad, 2012.
28
Annual Report 2014–15, GoI, 2015. Available at:
Husbandry%20English%202014-15%20(1).pdf
29
Annual Report 2014–15, 2015, NABARD,
Mumbai.
