make the study 2 coorperation intitution with view. to compare organization production capacity and output ,market share etc
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Operation Flood and dairy co-operatives emerged in India as the largest rural employment scheme, enabling the
modernization of the dairy sector to a level from where it can take off to meet not only the country’s demand for milk
and milk products but can also exploit global market opportunities. This study reviews the existing status of milk
marketing and dairy co-operatives in India and provides recommendations to meet future challenges. The results of
the study indicate that 80 percent of the milk produced by the rural producer is handled by an unorganized sector and
the remaining 20 percent is handled by an organized sector. It is found that the dairy co-operatives play a vital role
in alleviating rural poverty by augmenting rural milk production and marketing. Involvement of intermediaries; lack
of bargaining power by the producers; and lack of infrastructure facilities for collection, storage, transportation, and
processing are the major constraints which affect the prices received by producers in milk marketing. Milk quality,
product development, infrastructure support development, and global marketing are found to be future challenges of
India’s milk marketing.
Dairying is a centuries-old tradition for millions
of Indian rural households; domesticated animals
have been an integral part of the farming systems
from time immemorial. Milk contributes more to
the national economy than any other farm com-
modity—more than 10.5 billion dollars in 1994-95
(Dairy India 1997). In the context of poverty and
malnutrition, milk has a special role to play for its
many nutritional advantages as well as providing
supplementary income to some 70 million farmers
in over 500,000 remote villages (Dairy India 1997).
More importantly, the farmers earn an average 27.3
percent of their income from dairying, with as high
as 53 percent for landless and as low as 19 percent
for the large farmers (Table 1).
Annual milk production in India has more than
tripled in the last three decades, rising from 21 mil-
lion tons in 1968 to an anticipated 80 million metric
tons in 2001. This rapid growth and modernization
is largely credited to the contribution of dairy co-
operatives under the Operation Flood (OF) Project,
assisted by many multi-lateral agencies including
the European Union, the World Bank, Food and
Agriculture Organization (FAO), and World Food
Program (WFP). Despite the impressive growth in
milk production in the last three decades, produc-
tivity of dairy animals remains very low (Table 2)
and milk-marketing systems primitive. Currently,
more than 80 percent of the milk produced in the
country is marketed by unorganized sectors and
less than 20 percent by the organized sector. The
organized sector involves government and co-op-
eratives; the unorganized sector involves private
organizations.
Marketing of the majority of the milk through
unorganized sectors is likely to dissuade small dairy
farmers from expending production, which is abso-
lutely necessary to keep up with the strong demand
growth. In a recent study, Datta and Ganguly (2002)
estimated Indian milk demand for 2020 under vari-
ous GDP growth rates. The study reported that if the
current growth continues for the next twenty years
(the nation has been growing at a rate between 5 and
7 percent over past five years), milk consumption
is likely to more than double by 2020.
This paper examines the existing status of milk
marketing in India and analyzes the constraints and
opportunities in milk marketing. The first section
reviews background information on milk production
and discusses the existing milk-marketing system
in India. Following this, Operation Flood and its ef-
fects on milk marketing—particularly through dairy
co-operatives—are discussed. Finally, constraints
and the opportunities in the existing milk-marketing
system are discussed and proposed policy implica-
tions are highlighted.
Milk-Marketing System