CHAPTER I INTRODUCTION - Information and Library...

CHAPTER I

INTRODUCTION

1.1 INTRODUCTION

India is a country of villages. Almost 70 per cent of Indians live in villages

and a majority of them are engaged in agriculture and allied activities. Indian

agriculture today is characterised by decreasing farm size, increasing number of

operational holdings, higher degree of fragmentation and declining contribution

of agriculture to Gross Domestic Product (GDP). The Green Revolution in the

early 70s is a milestone in the history of Indian agriculture, due to which India

could produce surplus food grains. Punjab, Haryana, Uttar Pradesh and Rajasthan

have greatly benefited by the Green Revolution. The fruits of the Green

Revolution have been confined to restricted regions. Crop cultivation as a whole

is subjected to a high degree of risk and uncertainty providing only seasonal,

irregular and uncertain income to the farmers. Highly variable income levels from

agricultural enterprise place them entirely under the mercy of nature. With a view

to mitigating the uncertainties of income from agricultural enterprise in the

production programme and to provide a regular and evenly distributed income

throughout the year, supplement enterprise has to be pursued.

Dairying, one of the expanding branches, came out of the Green

Revolution. It is an agro-based industry, expanding fastest throughout the world.

2

A decade ago only 5 per cent of the milk produce came into the dairies, whereas

today it is 10 per cent and it is increasing. Recent reports by the Ministry of

Agriculture reveal that the dairy industry has the potential to offer about 4.2 crore

jobs per year. The demand for milk products would increase as a result of

increase in national GDP. In order to meet the demand, it is essential to have

consistent increase in milk production, which will be possible on successful

implementation of “Operation Flood” and evolution or new animal breed.1

The National Commission on Agriculture (1971) has stressed the

importance of dairy enterprise in the following words: “Dairy enterprise, next to

agriculture, not only provides continuous income and improves dietary standards

of family members but also supplements the income and reduces

underemployment of a large number of the rural poor”.2

India has become the largest producer of milk in the world with an annual

yield of 74 million tonnes. This is mainly due to the successful implementation of

operation flood project. Milk and its products constitute about two thirds of the

value of the total output of the livestock sector, estimated at Rs.1,11,372 crore

1Ashok Shivaje, Madhukar Kasture, Nanda Pandharikar and Mayura Mathankar,

“Milk Production in India”, Current Science, Vol. 86, No. 10, 25th

May 2004, p.1350.2Government of India, National Commission on Agriculture, Milk Production

Through Small and Marginal Farmers and Agricultural Labourers, Interim Report,

New Delhi, 1971, p. 1234.

3

(at 1997-98 prices). It is also the single largest contributor in the agriculture

sector to the national GDP.3

The dairy-sector, generating a revenue of about 68000 crores, accounts for

about 8 per cent of the Gross Domestic Product (GDP) and 25 per cent of the

agricultural GDP. Interestingly, over the years the share of animal husbandry in

GDP is rising, while that of agriculture is on the decline. This amply endorses the

growing importance of dairying in Indian economy.4

Today, if India has emerged as the largest producer of milk in the world, it

is due to the untiring efforts of millions of rural milk producers across the country

who, with their sweat and toil, have earned their living with the support of the

institutional structure provided by 1,00,000 dairy cooperatives throughout the

country. The farmers’ sense of ownership of the cooperative and its brands have

been the single biggest ingredient in their unique success against all odds.

In India milk production continues to be a small farm activity. Most of our

rural milk producers are small marginal farmers and landless labourers and many

of them are women. They have one or two heads of milch animals. The milch

animals are fed with agricultural wastes and crop residues despite its subsistent

nature. India has emerged as the largest producer of milk in the world surpassing

3N. Das, “Planning for Dairy Development after Trade Liberalisation”, Yojana,

Vol. 44, No. 7, July, 2000, pp.34-35. 4P.K. Dixit, ‘Economics of Dairying – An Important Sector of Indian Economy,

Part – I”, Plant Horti-Tech, Vol.1, July-August, 1999, p.32.

4

the US and the European countries. Our rural milk producers have transformed

dairying in India completely. They have proved that given command over the

resources they create, they can and will perform miracles.5

The earliest attempt for dairy development in India can be traced back to

British rule, when the defense department established military dairy farms to

ensure supply of milk and butter to the colonial army. The first of these farms

was set up in Allahabad in 1913; subsequent facilities were established at

Bangalore, Ootacamund and Karnal. Further to some extent the Second World

War gave impetus to private dairies with modernized processing facilities.6

India is the world’s single largest milk producing country accounting for

around 15 per cent of the world milk production. It ranks first in buffalo milk

production (66 per cent of the world’s milk production). This sector has now

emerged as an important income generator and major contributor to the gross

output of the agricultural sector. Dairying is considered as a very important

subsidiary occupation, which provides employment to millions of unemployed

and underemployed villagers. It is very significant to note that the dairy co-

operation and Operation Flood proposed by NDDB restructured milk production

5V.Kurien, “Dairy Coops:Some Issues”, The Cooperator, January 2004, Vol.41,

No.7, p.282.

6Vinay M.R. and Majappa D.H, “Dairy Cooperatives - Vital Role in Rural

Economy”, Kurukshetra, October 2004, Vol.52, No.12, p.57.

5

in India and its growth. Milk production grew at more than double the rate of

growth of the population, thereby increasing the per capital availability of milk

from 112 gms/day in 1970-71 to 226 gms/day in 2001-2002.7

India is predominantly an agrarian economy with more than 75 per cent of

the population in villages, depending on agricultural and allied activities for their

livelihood. Among many livestock enterprise, dairying is the most ancient

occupation established in the rural setting of our country. Dairy sector contributes

significantly to the generation of employment opportunities and supplementing

the income of small and marginal farmers and landless labourers of rural India,

besides providing food security.8

For sheer numbers, India’s dairying has no match in the world. The figures

are simply mind boggling. For example, some 70 million farmers, maintaining a

milch herd of a little under 100 million – 57 million cows and 29 million

buffaloes fed largely on crop residues having the milk yield estimated at 71

million tonnes in 1996. Starting as a trickle of one to two liters per family in

some 5,00,000 remote villages, a unique collection system transforms this feeble

7M. Ayisha Millath, “Constraints and Competitive Measures For Indian Diary

Sector”, Kisan World, September 2004,Vol.31, No.9, p.35.

8R. Kadirvel, “Limited Investment But Consistent Growth”, The Hindu Survey

of Indian Agriculture, 2002, p.147.

6

flow into a veritable flood of 100 million litres for urban Indian consumers every

day.9

1.2 IMPORTANCE OF DAIRYING

The importance of dairying lies not only in production of milk, but in its

capacity to bring about significant changes in the socio-economic structure of

rural economy. Its role in employment-generation is well-recognised. It has

provided numerous small/marginal farmers and agricultural labourers with

supplementary employment and a regular source of income. Dairying and its

related activities create jobs equivalent to 25 million a year. The significant role

played by co-operatives in the stimulation of dairying has also proved to be an

important source of progress.10

1.3 DAIRYING – A HISTORICAL PERSPECTIVE

Milk is the largest enterprise after rice in Indian agriculture. Apart from

the industrial dimensions and the principles governing the functioning of an

9Rajat K. Baisy, “Dairy Industry”, Indian Food Industry, November –

December 2003, Vol.22, No.6, p.20.

10India 1998, A Reference Annual, Publications Division, Ministry of

Information and Broad Casting, Govt. of India, New Deli, pp.320-321.

7

industry, the dairy industry is unique in the technological and social dimensions,

in the changed scenario.11

The dairy industry in India made rapid progress, particularly during the last

two decades. Today, India occupies the first position in milk production in the

world, surpassing the U.S. The credit, no doubt, goes to Operation Flood which

has played a key role in the development of dairying. India is a milk consuming

nation. This, coupled with our large population, ensured steady increase in the

demand for milk.

In India, there are 10.1 million farmers who are members of 77,000 village

dairy cooperatives societies. Everyone is affiliated to 170 district and regional

cooperative unions which, in turn, are part of a state cooperative marketing

federation. There are 22 of these federations which offer dairy and other products

in the market successfully while competing among themselves. At present, dairy

farms are owned by individuals, investors and multinationals.

The cooperative sector has contributed significantly to the success of white

revolution in India. There are more than 97,000 milk cooperatives societies in

264 districts. This sector grows at the rate of 6.5 percent per annum.12

11Tajinder Kaur and P.S. Khattra, “Inventory Management of Cooperative Sector

Milk Plants”, Productivity, April–June 2003, Vol.44, No.1, p.92.

12I. Satya Sundaram, “Dairy Industry – Productivity Holds The Hey”, Facts for

You, January 2000, Vol. 20, No. 4, p.11.

8

India’s 85 million litres of milk everyday comes not from a few pampered

capital intensive farmers, but from millions of producer members who have seen

their livelihoods revolutionized by this movement called cooperation. This has

proved cooperation as the most effective tool for development in our economy.13

1.4 CO-OPERATIVES

“If cooperation fails, India’s hope would fail” – Jawaharlal Nehru.14

The First Cooperative Society in the country was established at Tirur

Village in the year 1904 in Thiruvallur District of Tamil Nadu. Likewise, the

Tripilicane Urban Cooperative Society was first established in Chennai during

1904.15

13V. Kurien, “Cooperation : An Effective Tool for Rural Development”, The

Cooperator, November 2003, Vol. 41, No. 5, p.177.

14Selvaraj and S. Gokila, “Success Story of Salangapalayam Milk Producers’

Cooperative Soceity”, Tamil Nadu Journal of Cooperation, January 2003, Vol. 3, No.

3, p.17.

15“Cooperatives Strive for the Betterment of Poor and Down –Trodden”, Tamil

Nadu Journal of Cooperation, December 2004, Vol. 5, No. 2, p. 5.

9

Co-operatives are autonomous organizations of persons united voluntarily

to meet their common, economic social, and cultural needs / aspirations through

jointly owned and democratically controlled enterprises.16

1.4.1 Principles of Cooperation

The following are the basic principles of cooperation : Open membership,

Democratic, Management, Limited Interest on Capital, Distribution of Surplus

Based on Patronage, Provision of Co-Operative Education and Training,

Co-Operation among Cooperatives for the Promotion of Thrift, Self Help and

Mutual Aid among persons with common socio-economic needs, and concern for

community.

1.4.2 Act, Rules and Bye-Laws of Co-Operative Societies

The functioning of co-operative societies in Tamil Nadu are governed by

the following:

Tamil Nadu Co-operative Societies Act, 1983.

Tamil Nadu Co-operative Societies Rules, 1988.

Bye-laws of the respective institutions.17

16V. M. Rao, “Entrepreneurship Through Cooperatives – An Experience of

Women’s Dairy Projects in India”, Kurukshetra, October 2004, Vol. 52, No. 12, p.50.

17http://www.tncu.tn.gov.in/charter1.htm

10

1.4.3 CO-OPERATIVE WEEK

Clapping with a single hand does not make sound whereas both hands

could produce sound. This is the ideal theme of cooperation. Cooperative Week

is being celebrated every year to project the achievements of cooperatives for

creating favourable public opinion and thereby to enroll more members in

cooperative movement and derive more benefits.

The late Pandit Jawaharlal Nehru had faith in the cooperative movement

and established cooperatives particularly in rural areas, through which greater

economic improvements are possible in the life of the people. In honour of his

service to the cooperative movement, Cooperative Week Celebrations are being

held for a week from November 14th

i.e., on his birthday every year.18

1.4.4. Need for Cooperatives in Rural

A cooperative movement has better intimate knowledge of the local

situation in which it operates.

It is nearer to the people and can hence appreciate their needs.

It is capable of identifying small producers who need help on a priority

basis.

18S. Ramachandran and V. Selvarani, “Growth and Development of

Tiruchirappalli District Milk Producers’ Cooperative Union”, Tamil Nadu Journal of

Cooperation, August 2004, p.21.

11

Cooperative has horizontal and vertical linkages so that it could provide

integrated services to a producer.

Cooperative structure is federal in character to enable the individual

member in a village society to avail services of a federation even at the

national level.19

1.5 THE ANAND PATTERN

The Anand Pattern was adopted in Tamil Nadu dairy in 1986.20

Dairy cooperatives are at crossroads. The NDDB created to replicate Anand

Pattern of dairy cooperatives throughout the country has succeeded in quadrupling

milk production from about 20 million tonnes in the 70’s to about 85 million

tonnes now, through its Operation Flood Programme, practically without any

government subsidy in comparison to so many other countries. This success has

become an eyesore to the countries depending upon export of dairy products for

their survival that view India as a potential threat.

The Anand Pattern Model was the bedrock of this monumental

achievements. The core feature of Anand Pattern Model is farmer control on all

three stages of procurement, processing and marketing.

19“Achievements of Cooperatives in Tamil Nadu”, Tamil Nadu Journal of

Cooperation, 2003, p. 9.

20R. Perumal, “Rural Development and Cooperation”, Tamil Nadu Journal of

Cooperation, January 2005, Vol. 5, No. 3, p.25.

12

The Anand Pattern

State Marketing Federation

[All Dairies in a State – Functions : Marketing]

District Milk Producers’ Union

[Every District in the State – Functions : Processing]

Village Cooperative Society

[All Villages in a District – Functions : Procurement] 21

1.6 NATIONAL COOPERATIVE DAIRY FEDERATION OF INDIA

The National Cooperative Dairy Federation of India (NCDFI), based at

Anand, is an apex organisation for the cooperative dairy industry. Its members

include federal dairy cooperatives of states and union territories.

The NCDFI was registered in 1970 under the Multi State Cooperative

Societies Act, 1984. Its primary objective is to facilitate the working of dairy

cooperatives through coordination, networking and advocacy. Important activities

of the NCDFI are coordinating the sale of different products by its members to the

Ministry of Defence and other institutions, management of Rail Milk Tankers,

coordinating the sale of frozen semen doses and farm produce of the Sabarmati

21V. Kurien, “NDDB Joint Ventures against Disinvestment Policy : Kurien”, The

Cooperator, March 2003, Vol. 40, No. 9, p. 375.

13

Ashram Gaushala, providing support to members and affiliated organisations in

computerising their operations and information systems and offering other need

based services to members. The NCDFI also functions as a representative of its

members on different bodies including the National Cooperative Union of India

and the International Cooperative Alliance.22

1.6.1. Functions of National Cooperative Dairy Federation

! Develop inter dairy cooperative relationship

! Research, Publication and Consultancy on Dairying

! Liaison with NDDB, Government of India, etc.23

1.7 DAIRY CO-OPERATIVES

Dairy Cooperative Societies (DCS) are basic organizational units

functioning at the village level. Democracy is practised at the grass root level in

these societies which are organized on the Co-operative principles.

Milk Co-operatives have successfully helped the dairy development in

India. This development would touch the lives of 80% of India’s population

comprising hard-working, but poor farmers. India also has the largest population

of milch animals in the world. Yet the milk production per animal is far less.24

22http://www.nddb.org/statistics/milkproduction.html

23Indian Cooperative Movement – A Profile 2001, National Resource Centre,

National Cooperative Union India, p.74.24

Milk Procurement and Technical Inputs Manual – A Practical Guide for Milk

Procurement Personnel, Published by the National Dairy Development Board, Anand.

p.3.

14

At the end of March 2009, there were 8012 functional Primary Milk

Producers’ Societies including 1408 Milk Producers Co-operatives exclusively for

women and 61 Primary Milk Consumer Co-operative Societies were newly

registered, including 48 Milk Co-operative Societies exclusively managed by

women. Apart from this, 153 dormant Societies were also revived.25

1.7.1 Formation of Dairy Cooperatives

A minimum of 25 or more individuals competent under section 11 of the

Indian Contract Act 1872 owning milch animals can form a Primary Dairy

Cooperative Society with one or more villages as its area of operation. Such

persons have to approach the circle Deputy Registrar (Dairying) Office

functioning at the District for further guidance. The members of Primary

Cooperative Milk Society have to supply milk to the society which will procure

on quality basis and they will receive milk cost once in 10 days / 15 days from the

Society. Milch animals are provided with free veterinary health cover and

artificial insemination, and the supply of balanced cattle feed, induction of

farmers on modern animal husbandry practices are aimed at by upgrading the

milch animals and thereby improving their productivity in the long run for the

benefit of the members. Milk Cooperative Society has to be registered by the

25Velu Suresh Kumar, “Dairy Sector in Tamil Nadu : An overview”, Kisan

World, September 2010, Vol. 37, no. 9, p.46

15

concerned Deputy Registrar for Dairying under Tamil Nadu Cooperative Societies

Act 1983 and Rule 1988.26

1.7.2 Structure of Milk Co-Operative Societies

The Dairy Co-operative system in Tamil Nadu is a unique set up with

three-tier structure with Primary Milk Producers’ Co-operative Society at the

Village level, District Co-operative Milk Producers’ Union at District level and

the Tamil Nadu Co-operative Milk Producers’ Federation at State Level.27

1.7.3 Members

“Members are our most important resource. Management control is the

ultimate prerogative of the members themselves and any abridgement of that right

amounts to negation of the democratic character and could defeat the very purpose

of the members forming or joining the Cooperatives. Members must therefore

have their own free will in having control over the members, management, money

and manpower”.28

26“Revolutionary Change in the Activities of Dairy Sector in Tamil Nadu, Tamil

Nadu Journal of Cooperation, July 2003, Vol. 3, No. 9, p.5.


World, September 2010, Vol. 37, no. 9, p.45

28R. Pothi Reddi, “Need for Self Reliant Cooperative Act and its Relevance for

Self-Help Groups”, The Cooperator, October 2004, Vol.42, No. 4, p. 138.

16

1.7.4 Objectives of Dairy Co-Operatives

In the first place, providing assured and remunerative market for all the

milk produced by the farmer members.

Secondly, providing hygienic milk to urban consumers.

To build up village level institutions in co-operative sector to manage

the dairy activities.

To ensure provision of milk production inputs processing facilities and

dissemination of know-how.

To facilitate rural development by providing opportunities for self-

employment at village level, preventing migration of villagers to urban

areas, introducing cash economy and opportunity for steady income.

The philosophy of dairy development is to eliminate middlemen and

organize institutions to be owned and managed by the milk producer themselves,

employing professionals. Achieving of economics of scale to ensure maximum

returns to the milk producers, at the same time providing wholesome milk at the

lowest possible price to urban consumers. Ultimately, the complex network of co-

operative organization should build a bridge between masses of rural producers on

the one side and millions of urban consumers on the other and achieve a socio-

economic revolution in the hinterland of the country.

17

1.7.5 Activities of Dairy Co-Operatives

The Dairy Co-Operatives function daily and act as a marketing outlet for

the milk produced in the rural areas. Input facilities are also channelized to the

dairy farmers through these societies and include veterinary first aid, sale of cattle

feed, supply of fodder seeds, seedlings, provision of mobile and emergency

veterinary health care, dissemination of know-how, etc. Payment for the milk

purchased is also arranged through the society. A string of dairy cooperatives is

organized to form a milk procurement route linked to chilling center or a dairy.29

1.7.6 Role of Dairy Co-Operatives

India has had a rich tradition in dairying since the time of Lord Krishna.

Dairying has been inherent in Indian culture for centuries. Milk and milk

products have always been an integral part of our consumption habits.

Dairy cooperatives have provided the farmers a steady source of income,

enhancing their earning and enabling them to improve their standard of living.

Favourable income generation prospects in rural areas are helpful to some extent

in slowing down the migration from rural to urban areas.

29K. Sivachithappa, “ Dairy Co-operative Societies and Rural Prosperity”, Tamil

Nadu Journal of Cooperation, May 2002, Vol. 2, No. 7, p.42.

18

Government should ensure that the management of the cooperatives

remains in the hands of genuine stakeholders-the farmers. Only then can dairy

cooperatives continue to play their vital role of creating a socio-economic

revolution in rural India.30

Production and distribution of milk are carried out by all sectors viz.,

cooperative, private, and public. Cooperatives are doing this job well not only in

our country but also in countries like New Zealand, Ireland, Australia, England,

Denmark, Sweden, Holland, Finland, Germany, etc. The main causes for these

special features of dairy cooperatives are:

(a) Dairy cooperatives link the village producers and the town consumers

by eliminating middlemen.

(b) They give scope for functional specialization and division of

responsibility between primary societies and the federations, since the

former is concentrating on production and the latter is taking care of

marketing.

(c) They give incentives to producers by providing them assured market,

remunerative price, regular payment and annual bonus.

30Khajan Singh, et. al., “Model Dairy Centres for Transferring Location Specific

Dairy Technologies – A Status Paper on Pilot Level Project on Integrated Rural

Development Focused on Dairying”, Souvenir, All India Dairy Husbandry Officer’s

Workshop, NDRI, Karnal, p. 115.

19

(d) They provide scope for leadership development among milk producers

and are less susceptible to government interference.

(e) They ensure involvement of milk producers in the management and

decision-making and provides collective bargaining power to the

producers.

(f) Milk producer members of cooperative can get loans from financial

institutions easily for purchases of milch animals.

(g) Aids from government and other agencies are easily routed through

cooperatives.

(h) Producers can be educated about the latest development on dairy

farming through cooperatives.

(i) All the needs of milk producers such as cattle feed, veterinary aid, and

artificial insemination are met by cooperative themselves at the doors of

the producers and

(j) Payment made to producers on the basis of quality of milk ensuring the

supply of unadulterated good quality milk.31

Dairy cooperatives have revolutionized the production and distribution of

milk, giving tough competition even to internationally acclaimed brands of private

sector and MNCs.32

31K.N. Ramanujam and K. Rajamohan, “Milk Matters”, Cooperative Perspective,

June 2004, Vol. 39, No. 1, p.24. 32

V. Kurien, “Cooperation : An Effective Tool for Rural Development”, The

Cooperator, November 2003, Vol. 41, No. 5, p.177.

20

1.7.7 Impact of Dairy Co-Operatives

The impact of dairy development on the rural economy is very significant

though it varies from state to state. In this way, the dairy cooperatives promote

and encourage income generating activities allied to agriculture that could help

solve the problems of rural unemployment, poverty, malnutrition, and social

injustices simultaneously to a considerable extent. No farmer will commit suicide

for want of income, no youth will get frustrated and disappointed after knocking

the doors of offices of employment exchange, government and other sectors.

Milk gives you not only nutritive value but also hope and shows the way of life.

Thus milk matters have many things. It is upto the people to utilize this

remunerative traditional avocation with modern technological advancement.

Proper propaganda in this direction must be made to educate farmers and youths

to take up Dairying especially in times of droughts. In short, we should create

‘milk mindedness’ among rural masses and youths of our vast country. Being a

valuable source of income, the dairy industry should receive special and urgent

attention for overall well being and dairy cooperatives will help sustainable

economic development and alleviation of poverty.33

Millions of man-hours of work are generated right in the back-yard of

several lakhs of farmer’s households spread over thousands of villages producing

33K.N. Ramanujam and K. Rajamohan, “Milk Matters”, Cooperative

Perspective, June 2004, Vol. 39, No. 1, p.24.

21

a flood of milk and resulting in perennial flow of cash into village economy.

Though the income from dairying forms a small percentage of the gross village

product, it has myriad multiplied effects having far reaching impact on socio-

economic fabric of the village. Interfacing the traditional agrarian economy

where income generation is spread over a longer period related to crop harvesting,

with that of continuous income generating activity results in a vibrant village

economy. The impact also is wide embracing cutting across all sections of the

economic, social, political, sex, age and caste strata of the society and enhances

the credit worthiness of every farmer actively involved in dairying.

Dairying as practised sensitizes the village community to several social

changes such as discipline by way of waiting in queue, either to pour milk or to

receive payment, improves time sense to catch up the milk lorry twice a day and

improves industriousness as there is scope to engage oneself in income generating

activity of milk production. Standing in queue irrespective of the social or

economic status, sex or age has made an impact by developing cracks in the age

old edifice of social structure. Such an impact is also brought about by the system

wherein those who want milk in the village purchase the same from the pooled

milk of the DCS where milk produced from every household is collected.

Dairy development activities are being extended further to touch every

nook and corner of the country ushering in a white revolution and making an

22

impact on the socio-economic front of the rural scene. The economic order is

being transformed by the totally integrated operations.34

1.7.8 Functions of the Primary Milk Producers’ Cooperative Societies

Procure Milk from members both in the morning and evening.

Pay milk cost on the basis of contents of FAT and SNF by testing their

milk.

Pay milk cost once in 10/15 days to the members.

Arrange to inseminate the member’s cattle.

Arrange to extend animal health service to the members’ cattle through

District Cooperative Milk Producers’ Union.

Arrange to supply balanced cattle feed to the animals of members.

Arrange to supply Green Fodder to the members.

Arrange to ensure emergency service to the milch animals of the

members through unions.

Maintenance of the records on the basis of “Anand” Pattern Societies.

Arrange to ensure clean milk production by providing adequate training

to the members.

Supply of milk cans, milko-tester, bulk coolers and vessels to the

members of Dairy Cooperative Societies.



23

Take necessary steps to reduce the administrative cost so as to enable

primary dairy cooperatives to function on profit.35

Sale of milk to milk unions.

Ensure regular and remunerative payment to producers.

Help members increase milk production.36

The successful story of India’s dairy cooperatives is universally acclaimed

today. Owing largely to the contributions made by the dairy cooperatives to the

accelerated growth of the cooperative sector, nay, that of the entire rural economy,

these have been termed as the ‘Golden Era of the Indian Cooperative

Movement’.37

Since their birth in 1904, co-operatives in India have treaded a long and

arduous path. They have performed well in some places and badly in many other

places. But the fact remains that they have survived, albeit with a rather heavy

dose of oxygen, for over 90 years.38




National Cooperative Union India, p.74.

37L. P. Singh, “Cooperative Marketing In India – Status, Constraints and

Correctives ”, Kurukshetra, October 2004, Vol. 52, No. 12, p. 39.

38Katar Singh, “Cooperatives – Emerging Challenges and Coping Strategies”,

Kurukshetra, November 2002, Vol. 51, No. 1, p. 16.

24

At present 8,246 Primary Milk Cooperative Societies are functioning to

ensure dairy development and to fetch reasonable price to the milk producers.

There are 17 District Milk Producers’ Cooperative Unions, 16 Dairy farms and 39

Chilling Centres functioning in the state. There are 18,588 employees working

under Aavin banner.39

Milk Consumer Cooperative Society is normally formed at urban and semi

urban areas for supplying quality milk to the urban consumers at fixed rate. A

minimum of 25 or more individual consumers are eligible to form Milk Consumer

Cooperative Societies.40

1.8 SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY

Any decision in dairy industry has to be backed by an analysis of its

strengths, weaknesses, opportunities and threats (SWOT). A SWOT analysis of

the Indian Dairy Industry is given in Table 1.1.

39Dinamalar, dated 13.01.2011, P. 9.



25

TABLE 1.1

SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY STRENGTHS WEAKNESS

1. Conversion of low or no value residues

to milk.

2. More equitable distribution of value

generated.

3. Almost year round employment.

4. Food and livelihood security for the

poor.

5. Well developed dairy support industry.

6. Veterinary health care infrastructure.

7. Successful model like AMUL Anand

Pattern Dairy co-operatives

underpinning the democratic polity.

1. Numerous producers and small

volumes.

2. High transaction costs.

3. Quality problems.

4. Too many organized players chasing

too small market segments.

5. Political and bureaucratic interference.

6. Weak research and development.

7. Poor cattle management system.

8. Low capital formation.

OPPORTUNITIES THREATS

1. High value addition products.

2. Collaboration and consolidation.

3. Established R & D institutions, for

breed improvement and disease control.

4. Emergency technologies like

biogenetics.

5. Intermediate product market – ghee,

chana, khoa, paneer.

6. Fortification of milk and milk products

with pharma herbal and mineral

medicines.

1. Non tariff barriers to exports.

2. High level subsides to dairy industry in

developed countries.

3. Competition in the market from highly

subsidized dairy products from

developed countries.

4. Short supply to over supply markets.

Source : Gilson John, “Private Sector Dairying in Kerala : A Socio-Economic

Analysis with Special Reference to Ernakulam District”, Ph.D., Thesis, Feb. 2007,

www.mgutheses.org.htm.

1.9 WTO AND INDIAN DAIRY INDUSTRY

Bright prospects are held out for farm exports, including milk products,

subsequent to the approval of a new trade pact finalized after seven years of

negotiations by 117 Nations in Geneva in December 1993. Described as the

“greatest and most comprehensive trade agreement in history”, the General

Agreement of Tariffs and Trade (GATT) will profoundly alter the world trading

26

pattern as nothing else has. What will be its impact on dairying? Will Indian

dairying gain or lose in the world market? Selected views of leading dairymen

and professionals in India and abroad follow:

Kurien V., Ex-Chairman National Dairy Development Board, Anand looks

at GATT agreement as follows “The General Agreement on Tariffs and Trade

(GATT), leading to the World Trade Organisation (WTO), can be a blessing in

disguise for the Indian Dairy Industry as it will offer opportunities to sell surplus

milk products in the global market. The reduction of more than 10 percent in the

producer subsidies will result in an enormous shake-up in the European, North

American and Australian dairy industries. These countries dominate the world

dairy exports today. The price received by a European dairy farmer represents 40

to 60 percent producer subsidy equivalent. Those subsidies have kept tens of

thousands of dairy farmers in business. Without support, would they be

economical producers? There are only two major producing nations in the world

that do not subsidize their dairy farmers; New Zealand and India. This prices

which are already competitive will become increasingly attractive in the world

dairy market. I may, however, caution you that the world is waiting for our milk

or milk products. The advanced dairy nations are also not going to sit idle as we

export. There are already indications that producer subsides will be replaced by

processor subsidies, which would mean that the subsidies will be passed back to

the producers to retain the competitive price edge. The Indian dairy industry will

27

face severe attacks on quality, reliability and integrity. At every forum, we have

argued that strict quality controls must be applied to every gram of dairy product

exported from India. This has met with increased resistance. A single bad

shipment can and will be used to prove that Indian dairy products are

unacceptable”.

Similarly Rajan K., Ex-Secretary, Government of India, Department of

Animal Husbandry and Dairy New Delhi, views WTO negotiation as follows:

“With the new World Trade Agreement, it may be possible for India to

significantly increase the export of milk product. A small beginning has

undoubtedly been made but, given the internal demand scenario, it has not been

possible to sustain export of milk products in a continual manner. We have the

advantages of a large cattle and buffalo population, a strong tradition of dairying,

a fairly established research support in the form of network of research institutes

and a strong entrepreneurial class. There is no reason why the country should not

be able to build on these basic advantages, provided we are in a position to

compete in terms of prices of the products and meeting international quality

standards. One would accept, without many reservations, that in terms of quality

standards, the process has to commence with the production of the milk itself.

There are possibilities of contaminants in food products, including dairy products,

at different stages of processing of milk itself. These quality concerns may entail

28

additional expenditure which stresses the need for efficiency in operations at all

stages to keep the costs down”.41

1.9.1 Nature of Crisis in Indian Dairy Industry

In Dairy Industry Co-operatives, there are generally four kinds of crisis

with varying intensity and combinations. They are:

1] Ideological Crisis

2] Credibility Crisis

3] Management Crisis

4] Capital Crisis

In order to overcome these crises, co-operatives may consider addressing

the following issues to establish their relevance and emerge as potent means at

collective social action:

1.9.2 Imparting Real Co-Operative Values

Two sets of values govern the dairy co-operatives

SET – A SET - B

Self Help

Self Responsibility

Democracy

Equality of Members

Solidarity

Honesty

Openness

Social Responsibilities

Earning for Others



29

Dairy Co-operatives will have to internalize these values reinterpret and re-

state the principles in the light of these values and evolve management and

operational practices governed by these values.

1.9.3. Evolving a New Architecture for Dairy Co-Operatives in the

Millennium

Four planks on which the dairy co-operative system need to develop itself

are:

1. The base consisting of strong, large viable autonomous, self governing

primary dairy co-operatives.

2. The Vertical Federal Structure – Organized developed and sustained by

primary dairy co-operatives with sole purpose of enhancing their

competitiveness in terms of price, quality range and depth of service and

innovative practices.

3. An Apex Co-operative – An umbrella organization of the entire

co-operative system, directly responsible for ideological aspects connected

with government and international organizations and markets.

4. An Integrated Co-operative Organization – Organized, developed and

sustained types of various apex co-operatives with the prime objective of

comprehensive development of all types of co-operative.

30

1.9.4 Fine Tuning the Management of Co-Operative

“What happens if the leaders instead of safeguarding collective interest of

the members begin to seek self-interest?” There are ample examples of such

elected leaders who willingly use co-operative organization for their personal,

political or pecuniary interests.

There is, therefore, a need to tune and apply the principles of democratic

control and professional management also in a manner that leaders seeking self

interest are kept in control and managers and dairy staff are given adequate

freedom of action in order to make dairy co-operatives competitive.

1.9.5 Making Education Central of Dairy Co-Operative Development

Process

The purpose of member education is not merely to explain ideological

values and principles of co-operatives, in abstract to raise their level of awareness

and make them recognize the importance of co-operation. But they would

understand that the values when practised would contribute to their overall social

and economic development and creation of good culture nurturing a spirit of self-

reliance and entrepreneurship.

1.9.6 Meeting Capital Needs

Dairy Co-operatives looking for practical means to meet their current and

future capital needs appear to have the following options:

31

1. Setting an integrated co-operative organization which should then become

a means of capital for dairying.

2. Strengthen, consolidate, and create a solid co-operative banking credit and

insurance business with powerful apex at the national level, which should

then provide capital to dairy industry.

3. Raise non-refundable long-term deposits from members and their business.

4. Raise cost of capital and pay higher rates of interest and capital deposits.

5. Seek strategic alliance with private investor – owned business.

6. Seek possible help from Government.

1.9.7 Redefining the Relations with State

1. Formulating and enunciating a clear public policy on dairy co-operatives

development.

2. Creating an appropriate regulatory framework consistent with the new

paradigm shifts, through a new and appropriate legislation; and

3. Designing, strengthening, and refocusing dairy co-operatives development

and financing institutions, so that these begin to operate on financially

prudent basis and possibly solely in the interests of dairy co-operatives and

co-operative like institutions.42

42B. S. Benni, “World Trade Organisation and India Diary Industry”, The

Maharashtra Co-operative Quarterly, October – December 2002, Vol. LXXXVIII,

No. 3, pp.5-10.

32

1.10 NATIONAL DAIRY DEVELOPMENT BOARD (NDDB)

In 1965, the Ministry of Agriculture and Irrigation constituted National

Dairy Development Board (NDDB) under the Societies Registration Act with the

following major objectives:

To promote project of general public utility relating to dairying, animal

husbandry, food and agriculture, etc.

To make available, on request, the information, skill and technical services

needed to increase production of milk and dairy technical inputs and to

speed up procurement, processing and distribution of milk.

To prepare feasibility studies and to design, plan and to start up of

operations.

To provide manpower development services for dairy and allied projects

by organizing training programmes.

To help in the selection of equipment and undertake bulk procurement

services.

To offer consultation services on Dairy and allied operations in the field of

planning, control, including quality control, organization and marketing,

backed up, wherever necessary, by research within and outside NDDB.

33

To serve as international liaison to other National Dairy Boards and

International Agencies and to facilitate the exchange of information and

personnel as also to assist other countries dairy development and

To conduct research in the field of dairying and animal husbandry.43

NDDB always supports Dairy Co-Operative in the Operation Flood-III

phase. Now NDDB continues to work in close partnership with the 126 different

district milk unions to help achieve their perspective plan goals. Under dairy co-

operative development activities 79 district milk unions have submitted their

proposed perspective plan to NDDB with an outlay of Rs.9,600 million and the

NDDB has sanctioned the plans of 68 district unions with an investment outlay of

Rs.833 crores. NDDB realized Rs.760 million to these unions or activities such as

productivity enhancement, quality assurance co-operative business including milk

marketing and building a national information network. NDDB has been

implementing programme for genetic improvement of cattle and buffaloes in the

country.44

43M. S. Bedi, “Dairy Development, Marketing and Economic Growth”, Deep &

Deep Publishers, New Delhi, p. 10.

44D. S. Bagade, “Dairy Development in the Co-operative Sector”, The

Maharashtra Co-operative Quarterly, October – December 2003, Vol. LXXXII, No.

7, p34.

34

1.11 WORLD’S TOP 10 COW'S MILK PRODUCING COUNTRIES

Table 1.2 shows that world cow's milk production in 2008 stood at over

578 million tonnes, with the top ten milk producing countries accounting for 55.4

per cent of production. The USA is the largest cow's milk producer in the world

accounting for 14.9 per cent of world production, contributing over 86 million

tonnes in 2008, an increase of 2.4 per cent when compared to production in 2007.

TABLE 1.2

WORLD TOP 10 COW'S MILK PRODUCING COUNTRIES IN 2008

(TONNES)

2006 2007 2008

USA 82,463,031 84,189,067 86,178,896

India 41,148,000 43,481,000 44,100,000

China 32,257,300 35,574,326 35,853,665

Russian Federation 31,186,154 31,914,914 32,117,427

Germany 27,995,000 28,402,772 28,656,256

Brazil 26,185,564 26,944,064 27,752,000

France 24,194,707 24,373,700 24,516,320

New Zealand 15,172,464 15,618,288 15,216,840

UK 14,316,000 14,023,000 13,719,000

Poland 11,982,393 12,096,005 12,425,300

World 558,826,488 571,403,458 578,450,488

Source: FAO, World Milk Production, Published 8 January 10.

It is clear from Table 1.2 that India is the second largest cow's milk

producer, accounting for 7.6 per cent of world production and contributing over

44 million tonnes in 2008. The UK is the 9th

largest producer in the world

producing over 13 million tonnes in 2008 and accounting for 2.4 per centof world

cow's milk production.

35

1.12 MILK PRODUCTION IN INDIA

The following Table 1.3 shows milk production and per capita availability

in India.

TABLE 1.3

MILK PRODUCTION IN INDIA

Year Production (Million Tonnes) Per Capita Availability (gms/day)

1991-92 55.7 178

1992-93 58.0 182

1993-94 60.6 187

1994-95 63.8 194

1995-96 66.2 197

1996-97 69.1 202

1997-98 72.1 207

1998-99 75.4 213

1999-2000 78.3 217

2000-01 80.6 220

2001-02 84.4 225

2002-03 86.2 230

2003-04 88.1 231

2004-05 92.5 233

2005-06 97.1 241

2006-07 100.9 246

2007-08 104.8 252

2008-09 108.5 258

Source Department of Animal Husbandry, Dairying & Fisheries, Ministry of

Agriculture, Government of India

36

Table 1.1 shows that the milk production per year is increased from 55.7

MT in the year 1991-1992 to 108.5 MT in the year 2008-2009. It is concluded

that the overall milk production in India has an increasing trend.

1.13 MILK PROCUREMENT BY DAIRY CO-OPERATIVES IN

TAMIL NADU

Tami Nadu is an agricultural state and majority of the farmers own cattle.

It is one of the frontline states of India in milk production. It occupies 4th

place in

milk procurement from co-operatives in the country.

TABLE 1.4

MILK PROCUREMENT BY DAIRY CO-OPERATIVES IN TAMIL NADU

S.No. Year Average Milk Procurement

in lakhs ltr/day

1

2

3

4

5

6

7

8

9

2001 – 02

2002 – 03

2003 – 04

2004 – 05

2005 -06

2006 – 07

2007 – 08

2008 – 09

2009 – 10 (upto June)

17.49

15.79

17.26

20.56

21.59

22.10

21.64

22.00

22.30

Source : Velu Suresh Kumar, “Dairy Sector in Tamil Nadu : An overview”, Kisan

World, September 2010, Vol. 37, No. 9, pp.45

37

It is known from the above table that during 2009-10 (upto June) the

average milk procurement by Dairy Co-operatives was 22.30 lakh litres per day

(llpd).

DAIRY DEVELOPMENT IN TAMIL NADU

Table 1.5 indicates dairy development in Tamilnadu during 2008-2009.

38

TABLE 1.5

DAIRY DEVELOPMENT IN TAMIL NADU 2008 – 09

Sl.No. Description 2008-09

1 Total Number of Functional Milk Producers’ Co-operative

Societies

7833

2 New MPCS organized during the year 364

3 Total number of members in MPCS (in lakh) 22.10

4 Total number of pouring members (in lakh) 4.08

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Milk Production by societies (in litres per day)

Number of District Unions

State Level Federation

Number of Registered Private Dairies

Milk Procurement by Unions (in litres per day)

Milk Procurement by Registered Private Dairies(in litres

per day)

Total Procurement by Registered Dairies(in litres per day)

Milk Marketing in Chennai City (in litres per day)

Milk Marketing in District Unions (in litres per day)

Number of Union Dairies (under district union control)

Number of Federation Dairies (under federation control)

Handling capacity Union Dairies (in litres per day)

Handling capacity Federation Dairies (in litres per day)

Handling capacity of Registered Private Dairies (in litres

per day)

Number of Chilling Centres

Handling capacity of Chilling Centres (in litres per day)

Number of BMC units functioning

Handling capacity of BMC (in litres per day)

Number of Rural Milk collection routes

Number of Milk distribution routes at district level

Number of Milk distribution routes at Chennai Metro

Number of Powder Plants

Capacity for drying milk (in litres per day)

Number of Automatic Vending Machine Units

26.27

17

1

20

21.64

18.60

40.24

10.36

9.85

15

4

19.42

10.00

27.95

36

13.55

42

1.68

487

230

81

4

70

MTs/day

218

Source : The Managing Director, Tamil Nadu Co-operative Milk Producers’

Federation Ltd., Chennai. 2008-09.

39

It is known from the above table that the total number of functional Milk

Producers’ Co-operative Societies are 7833. It is also known that the 17 district

unions and 42 chilling certres are doing commendable job in Tamilnadu.

Dairy farming and agriculture have been an inseparable part of man’s life

in rural Tamil Nadu. Dairying, therefore, as it is practised, supplements

agriculture. The cow or buffalo is fed the low grade surplus by-products of farm,

and milk is produced as a by-product. But the point is that it is no longer a by-

product because 50 per cent of the income of the village is from milk.

Milk Co-operative Societies were organized in Tamil Nadu by State Co-

operative Department in the 1920s itself. India’s first co-operative diary with

processing and marketing facilities was established at Ayyanavaram in Madras

city in 1927. This was followed by the establishment of milk co-operatives at

Tirunelveli, Madurai, Trichy, Tanjore, Ooty, Cuddalore and other parts of Tamil

Nadu.

Hundreds of milk supply societies were formed in the villages and milk

supply unions were started to undertake urban milk distribution. These societies

were given financial assistance for the purchase of milch animals and the unions

were given technical and financial assistance for setting up processing facilities

and organizing transport fleets.

40

In Tamil Nadu, co-operative dairying has also paved the way for the

economic emancipation of women in the villages. Dairies are operated and

managed by women themselves. In Thanneerpandal village in Periyar district the

concept of ‘micro-dairies’ has been introduced to make dairying accessible to

small and marginal farmers. It is a healthy sign that a large number of educated

youths have come forward to take milk production as their primary avocation.

When “The Hindu” special correspondent in Tirunelveli interviewed one youth

leader, he said that for dairying they would have suffered this year as agriculture

failed because of drought. Another young man who is a postgraduate in

commerce and owns a micro-diary said that his occupation was more

remunerative than a job and he felt proud that he was providing employment to a

few others in his village.

Another outcome of dairy development is the improvement of

communication in the villages where the doctor comes to the houses of the farmer

to treat his sick animal because of the provision of telephone in almost all the milk

societies.

Thus the impact of dairy development on the rural economy of Tamil Nadu

is great and wonderful. The dairy co-operatives are the main springs for this rural

development. So the dairy co-operatives should be allowed to function freely

without any interference from all circles especially from politicians. In this

41

context it is very appropriate to quote Dr. V. Kurien, the architect of the White

Revolution and the ex-Chairman of Dairy Development Board who said, “We

should learn to leave co-operatives free of unnecessary interference by politicians.

This could only be done if highly competent professional management is inducted

into the co-operatives and the day-to-day management is left to the professional

managers. The Board should deal with matters of policy and leave the

administration to professionals to run it as a competent body. The Board should

ensure that the managing director or the chief executive functioned in the interests

of the co-operatives or the farmers”.45

The development of dairying depends mainly on two aspects: making

optimum use of the available yield and improving the quality of the livestock to

increase the yield. Dairying is fast becoming a big business with the

technological advancement in modern times. The dairy industry is trying to

bridge the gap between the rural based producer and the urban based consumer by

playing the role of a middle-man. In the words of Dr. V. Kurien, Ex-Chairman of

NDDB, Anand, ‘The dairy industry has now come of age’ and India is now

reckoned as a progressive dairy country in the world.

For a long period dairying in India was characterized by the dominance of

small and marginal farmers, scattered production, inadequate marketing channels,

45K. N. Ramanujam and T. Saroja, “In Tamil Nadu – Dairy Development”, Tamil

Nadu Journal of Cooperation, December 1989, Vol. 81, No. 6, p.344.

42

lack of modern inputs and facilities for product transformation. Dairying was an

auxiliary source of income to the farmers.

The excellent ground work done by the National Dairy Development Board

and the Integrated Cattle Development Programme almost two decades ago to

convince farmers in the dry districts of Tamil Nadu that dairy farming on

scientific lines could provide them with a very handsome supplementary source of

income has started yielding fruits.

In fact, there is enough enthusiasm among milk producers to sustain the

higher production and further improve it, provided they are offered a good market

outlet. The enthusiasm will be chilled and the entire dairy development

movement will get affected if farmers are denied proper marketing outlets. The

cooperative unions need not fear that their business and influence would be

eroded if dairy farms are established in the private sector. Already they had a

very big lead and they are able to offer much better facilities. Since their capacity

to handle had already been exceeded and since there is enough surplus milk, the

private sector could be encouraged to establish more dairy farms.46

46S. Suriyamurthy, “Milk Wave in Tamil Nadu”, Tamil Nadu Journal of

Cooperation, March 2001, Vol. 1, No. 5, p.62.

43

Position of Tamil Nadu Cooperative till Late Seventies

Tamil Nadu was maintaining a prominent and creditable position;

The Cooperative movement in Tamil Nadu was performing very well and

functioning as a model in the whole country;

In the consumer wing, Chinthamani Cooperative Super Market at

Tirunelveli was functioning as an outstanding model for the whole country

and its was famous throughout the world;

Out of 300 cooperative wholesale stores in the country, Chinthamani was

constantly the best cooperative wholesale store in Tamil Nadu and

continuously remained in the top ten positions in the monthly merit

progress list. All the 29 cooperative wholesale stores in our state were

working with very good profit.

In other types of cooperatives also, the cooperatives were performing very

well. For example, there are cooperative sugar factories, cooperative

spinning mills, industrial cooperatives, weavers cooperative, dairy

cooperatives, khadi cooperatives, fisherman cooperatives, etc.47

47R. Pothi Reddi, “Need for Self Reliant Cooperative Act and its Relevance for

Self-Help Groups”, The Cooperator, October 2004, Vol.42, No. 4, p. 138.

44

1.14 DEPARTMENT OF STATE DAIRY DEVELOPMENT

To eliminate the middlemen and to protect the interest of the producers,

Milk Producers’ Co-Operative Societies have been formed. This has assured a

remunerative price and market support to the producers besides catering to the

needs of the consumers.48

The State Dairy Development Department was established in the year 1958

in Tamil Nadu. The administrative control over the primary milk cooperatives

and unions were transferred from the control of Registrar of Cooperative

Societies, Madras to the Dairy Development Department with effect from

1.5.1964. Subsequently the administrative and statutory control over all the milk

cooperatives in the State was transferred to the Dairy Development Department

with effect from 1.8.1965. The Commissioner for Milk Production and Dairy

Development was appointed as the Functional Registrar under the Tamil Nadu

Cooperative Societies Act 1983.49

Major Objectives of the Dairy Development Department

Assure a remunerative price for the milk produced by the milk producers’

societies through a stable, steady and well organized market support.

48 Velu Suresh Kumar, “Dairy Sector in Tamil Nadu : An overview”, Kisan

World, September 2010, Vol. 37, no. 9, p.45. 49

“Revolutionary Change in the Activities of Dairy Sector in Tamil Nadu,

Tamil Nadu Journal of Cooperation, July 2003, Vol. 3, No. 9, p.5.

45

Distribution of milk and milk products at reasonable prices to the

consumers.

With the above objectives in view, the following major activities are

undertaken by the Dairy Development Department.

Provision of free veterinary health cover to animals owned by the members

of milk cooperatives, implementation of Artificial Insemination

Programme, supply of balanced cattle feed and induction of farmers on

modern animal husbandry practices. All these activities are aimed at

upgrading the milch animals and thereby improving their productivity in

the long run.

Provision of necessary infrastructure for undertaking on a large scale

processing and marketing. This will include establishment of chilling

centres, pasteurization plants and modern marketing system take care of the

needs of the consumer.

The main functions of the Dairy Development Department are organization

of societies, registration of societies, supervision and control of Primary Milk

Cooperatives, District Cooperative Milk Producers’ Unions and Tamil Nadu

Cooperative Milk Producers’ Federation.50



46

1.15. TAMIL NADU CO-OPERATIVE MILK PRODUCERS’

FEDERATION

As per the policy decision taken by the Government in 1978 and with a

view to increasing the milk production, to ensure remunerative price to the milk

producers and provide regular supply to consumers a three tier structure of

producers cooperative societies at village level, union of producers societies at

district level and as apex body of the District Producers’ Union at the State level

have been set up on “Anand Pattern” followed in Gujarat State. Accordingly

Tamil Nadu Cooperative Milk Producers’ Federation was registered under

Cooperative Societies Act 53 of 1961 on 15.12.80 and the Federation took over

the activities of the Tamil Nadu Dairy Development Corporation with effect from

1.2.81. The commercial activities of cooperative dairy sector such as milk

procurement, processing, packing and sale of milk to the consumers etc., hitherto

dealt with by the Tamil Nadu Dairy Development Corporation Ltd., was

transferred to Tamil Nadu Cooperative Milk Producers’ Federation Ltd.51

The Federation has four dairy plants in Chennai, one at Ambattur with a

capacity of 4.00 llpd, another at Madhavaram with a capacity of 2.00 llpd and the

third dairy at Sholinganallur with a capacity of 4.00 llpd. The fourth one at

51 “Revolutionary Change in the Activities of Dairy Sector in Tamil Nadu,

Tamil Nadu Journal of Cooperation, July 2003, Vol. 3, No. 9, p.5.

47

Ayanapuram is engaged in the manufacture of value added milk products such as

Yoghurt, Ice cream, Ghova, etc.52

The Integrated Dairy Development based on ‘Anand Pattern’ was initiated

in Tamil Nadu by implementing the Operation Flood schemes which aimed at to

augmenting milk production by channeling of milk through well planned and

established set up on an organized basis to supply quality milk at a reasonable

price to consumers and ensure remunerative price to milk producers’ comprising

small / marginal farmers and landless agricultural labourers through a three-tier

co-operative structure of producers’ societies at the village level, a producer’s

union at the District level and an apex body, viz., a Federation at the State level.

The activities hitherto attended to by the Federation under the Operation

Flood Programme have already been handed over to the concerned district unions,

viz., Salem, Periyar, Tirunelveli and the Nilgiris in 1981, Dharmapurai in 1982,

Chengai-Anna; South Arcot and Madurai in 1983, erstwhile North Arcot in 1984

and Tiruchirappali, Thanjavur and Pudukkottai in 1985 and Dindigul-Quaid-e-

Milleth in 1987.53


World, September 2010, Vol. 37, no. 9, p.46.

53 “A Revolutionary Action in Aavin”, Tamil Nadu Journal of Cooperation,

July 2002, Vol. 2, No. 9, p.27.

48

The Federation supervises and coordinates the activities of the district

unions and provides technical expertise as and when required and also undertakes

planning and erection of dairies and chilling centres of the unions on a turnkey

basis. The Federation helps the unions in marketing their milk products like

skimmed milk powder, ghee, butter and cheese both within and outside the state.54

Functions of State Cooperative Dairy Federations

The main functions of the State Federations are : Production programming,

Marketing of milk products, Coordinating bulk purchases, Assisting the Unions in

input programmes and Training, Consultancy, etc.

Table 1.6 shows the state federations in different states of India, the

number of unions functioning under the federations, the number of dairy plants

working and their capacity. In addition, it shows the brand name of each

federation under which milk is marketed in the respective states. Among all the

federations, the unions in APDDCF are autonomous bodies which are not

affiliated to APDDCF. 55

54 “Tamil Nadu Co-operative Milk Producers’ Federation”, Tamil Nadu Journal

of Cooperation, July 1990, Vol. 82, No. 4, p.237.

55 Gunasekari, N., & Tamilmathi, T., A Bird’s View on Cooperative Dairy

Federation in India, Tamilnadu Journal of Cooperation, May 2010, Vol. 10, No. 7,

pp.67-70.

49

TABLE 1.6

GLIMPSE OF FEDERATION

Sl.

No. Federation

Brand

Name

No. Of

Coop

Unions

No. Of

Dairy

Plants

Capacity

(in tlpd)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

APDDCF -

Andhra Pradesh

COMPFED - Bihar

GCMMF- Gujarat

HDDCF- Haryana

HPSCMPF-

Himachal Pradesh

KMF - Karnataka

KCMMF - Kerala

MRSDMM -

Madhya Pradesh

MILKFED - Punjab

MPCDF - Madhya

Pradesh

OMFED - Orisa

PCDF - UP

RCDF - Rajasthan

TCMPF - Tamil

Nadu

WBCMPF - West

Bengal

Vijaya

Sudha

Amul

Vita

Him

Nandini

Milma

Vikas

Verka

Sneha

Omfed

Parag

Saras

Aavin

Himul

9

5

12

6

3

13

3

23

11

5

5

30

16

17

14

12

10

19

5

3

15

9

29

9

5

5

16

15

16

6

2437

780

6595

470

30

2130

900

3820

1550

1030

135

1680

1425

2700

1272

Source : The Managing Director, Tamil Nadu Co-operative Milk Producers’

Federation Ltd., Chennai. 2009-10.

1.17 AAVIN

Aavin which is one among the major cooperative institutions in Tamil

Nadu, has successfully launched an informative “Web site” with the address as

“www.aavinmilk.com”. Through this site, Aavin proudly interacts with each and

every one of its consumers and fulfills their needs at their doorsteps.

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This Website also facilitate the public anywhere in the world to contact the

officers of the Federation and district unions at any time at local telephone

charges with an added special provision of “Text Chat” facility.56

While many parts of the country especially the capital city of Delhi was

reeling under the shortage of milk, Aavin not only fulfilled the needs and

aspiration of the consumers in Tamil Nadu, but also in many other States of the

country by supplying milk and milk products. Aavin has emerged as an important

player in the Dairy sector at the national level.57

In order to launch a common platform for dairy cooperatives in all over

India, National Dairy Development Board had introduced a common “Mnemonic

Symbol” in Chennai on 12.11.2001. Milk is marketed through cooperatives under

the common mnemonic symbol.58

1.18 MILK PRODUCERS’ COOPERATIVE UNIONS IN TAMIL NADU

Union is the middle tier of the complex co-operative organization network.

Unions are formed by federating the societies in earmarked geographical area.

56 “A Revolutionary Action in Aavin”, Tamil Nadu Journal of Cooperation,

July 2002, Vol. 2, No. 9, p.27.

57 V. Kurien, “Dairying and Rural Development”, Yojana, August 2004, Vol. 48,

p.17.

58“A Revolutionary Action in Aavin”, Tamil Nadu Journal of Cooperation,

July 2002, Vol. 2, No. 9, p.27.

51

The milk unions are organized to make them economically viable and the territory

extends from one district to 3 districts. There are seven milk unions whose

territory covers a single district whereas five unions cover two districts each and

one Union’s Territory extends to the three districts. All unions own their milk

processing facilities.59

Among the 170 Milk Producers’ Cooperative Unions in the country there

are 17 Milk Producers’ Cooperative Unions in Tamil Nadu.60

They are

Kancheepuram-Tiruvallur DCMPU Ltd., Villupuram DCMPU Ltd.,Vellore

DCMPU Ltd., Dharmapuri DCMPU Ltd., Salem DCMPU Ltd., Erode DCMPU

Ltd., Tirunelveli DCMPU Ltd., Nilgiris DCMPU Ltd., Madurai DCMPU Ltd.,

Dindigul DCMPU Ltd., Trichy DCMPU Ltd., Thanjavur DCMPU Ltd.,

Pudukkottai DCMPU Ltd., Sivagangai DCMPU Ltd., Virudhunagar DCMPU

Ltd., Tirunelveli DCMPU Ltd., and Kanyakumari DCMPU Ltd.61

At the end of March 2009, there were 17 functioning District Co-operative

Milk Producers’ Unions covering all the districts of Tamil Nadu with Primary

Milk Co-operatives as affiliated members to the district unions. The district



60http://www.tncu.tn.gov.in/charter1.htm

61 S. Ramachandran and V. Selvarani, “Growth and Development of

Tiruchirappalli District Milk Producers’ Cooperative Union”, Tamil Nadu Journal of

Cooperation, August 2004, p.21.

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collectors are the Special Officers of the Unions. There are also 15 dairies with a

processing capacity of 19.42 llpd. and 36 chilling centers with chilling capacities

of 13.55 llpd.62

The list of District Cooperative Milk Producers’ Unions are

given in the following Table 1.7.

TABLE 1.7

LIST OF DISTRICT COOPERATIVE MILK PRODUCERS’ UNIONS

Sl.No. District Co-operative Milk Producers’ Union Location

1 Annai Sadya Tiruchirapalli District Coop. Milk Producers'

Union Ltd Tiruchirapalli

2 Tirunelveli District Coop. Milk Producers' Union Limited Tirunelveli

3 Dharmapuri District Coop. Milk Producers' Union Limited Krishnagiri

4 Dindigul Anna District Coop. Milk Producers' Union Ltd Dindigul

5 Kamarajar District Coop. Milk Producers' Union Ltd Virudhunagar

6 Kanyakumari District Coop. Milk Producers' Union Ltd Nagercoil

7 Madras Chingleput District Coop. Milk Producers' Union Ltd Chennai

8 Madurai District Coop. Milk Producers' Union Ltd Madurai

9 Nilgiris District Coop. Milk Producers' Union Ltd Udhagamandalam

(Ooty)

10 North Arcot District Coop. Milk Producers' Union Limited Vellore

11 Periyar District t Coop. Milk Producers' Union Limited Erode

12 Pudukkottai District Coop. Milk Producers' Union Ltd Pudukkottai

13Ramanathapuram and Pasumpon Muthuramalinga Thevar

District Coop. Milk Producers' Union Ltd Karaikudi

14 Salem District Coop. Milk Producers' Union Ltd Salem

15 South Arcot District Coop. Milk Producers' Union Limited Villupuram

16 Thanjavur District Coop. Milk Producers' Union Ltd Thanjavur

17 Tirunelveli District Coop. Milk Producers' Union Ltd Tirunelveli

Source : http://business.mapsofindia.com/milk-co-operatives/tamilnadu.html

62 Velu Suresh Kumar, “Dairy Sector in Tamil Nadu : An Overview”, Kisan

World, September 2010, Vol.37, No.9, p.46.

53

Functions of District Cooperative Milk Producers’ Unions

Fixation of procurement price based on quality and selling price.

Supply of inputs to the member societies.

Formation of new milk routes to collect milk from members societies.

Establishment of chilling centres.

Collection of milk from societies, process and pack in modern dairy plants

by maintaining quality standards.

Increase of liquid milk sales by introducing innovative methods.

Pass on inputs service given by the Federation to the societies.

Render Veterinary Health Service and emergency service to the cattle of

members of primaries.

Impart training for first aid and artificial insemination to the animals of the

members.63

Organisation and supervision of primary cooperative societies

Ensure regular payments to DCS

Arrange training of staff, DCS personnel

Educate member farmers and farmer ladies.64




National Cooperative Union India, p.74.

54

Operation Flood – I

The Operation Flood – I scheme was implemented during the period

between July 1972 and March 1981. An amount of Rs.15.64 Crores was released

by NDDB and Rs.15.48 Crores were spent to improve dairy development

activities in nine districts under this project.

Operation Flood – II

In continuation of operation Flood-I Programme, Operation Flood-II was

implemented. In addition to nine districts, Tiruchirapalli, Thanjavur and

Pudukkottai Districts were included under Operation Flood-II.

By end of this programme, the procurement in the 12 Districts was

increased to 10.15 lakhs litres of milk per day during the flush season. 8.19 lakh

farmers were benefited through a well organized 5,170 Milk Producers’ Co-

operative Societies. A sum of Rs.26.26 crores was utilized under the programme.

Operation Flood – III

The Operation Flood-III scheme was implemented in 23 districts through

the funds received from World Bank and routed through NDDB. During the

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period, the essential infrastructure facilities required for Federation and District

Unions were installed and commissioned.65

1.19 SIGIFICANCE OF THE STUDY

India has already achieved the distinction of top position in milk

production in the world and with 4.5 per cent current annual growth rate in milk

production. The Indian Dairy sector represents excellent prospects for

strengthening rural economy particularly for small, marginal farmers and rural

poor. Dairy farming based agricultural systems would lead to organic farming,

which would result in sustainable agricultural systems with better quality products

and more returns under the new global scenario. Dairying needs to receive policy

support from the government as an instrument for bringing about socio-economic

transformations in the rural sector. For integrated rural development focused on

dairying every state / region need to evolve an approach involving farmers and

developmental agencies in a participatory mode.

Dairy development has inbuilt advantage of the ‘environmental friendly’

approach towards rural prosperity. Recycling of crop residues for feeding of

animals ensures returning of soil nutrients. This approach is also synergistic



56

towards the concept of ‘organic farming’. This provides unique opportunities for

the ‘value addition’ to the farm produce.

Keeping in view the present scenario of glut in food grains, expensive

storage, issues of providing support price and pressures of the global market,

diversification of agriculture is crucial for the sustainability of the Indian

agriculture. Diversification in agriculture through Dairying and allied aspects

such as Organic Farming and clean milk production at village level is inevitable

for employment generation and overall rural economic development.66

The present study plans to present the role of the Milk Producer’s

Co-Operative Society to promote economic development in Tirunelveli district.

1.20 STATEMENT OF THE PROBLEM

Milk and milk products are a major source of cheap and nutritious food to

millions of people in India and the only acceptable source of animal protein for a

large vegetarian segment of Indian population. Dairying provides livelihood to

millions of small and marginal farmers. It also provides the main source of

income next to agriculture. Dairy industry is of crucial importance to India. It

generates regular income not only to the rural but also to the urban and semi-

66B. K. Joshi and Avtar Singh, “ Breeding Technologies For Improvement of

Cattle and Buffaloes in India”, 2003, Souvenir, All India Dairy Husbandry Officer’s

Workshop, NDRI, Karnal, p.1.

57

urban population, especially to womenfolk by providing self-employment

opportunity and thereby improving their economic status. In a tropical country

like India, agriculture may fail sometimes, due to monsoon failure but dairying

never fails and it gives regular and steady income.67

Through changes in government policy, the number of privately owned

plants has increased substantially. The effect of these changes upon the

performance of this sector has not been carefully assessed yet. Milk is a

perishable commodity and seasonal production. It cannot be stored in its raw

form. Hence, processing and product transformation are crucial sectors in this

industry. An attempt has been made in the present study to identify the main

reasons affecting the role of the Milk Producers’ Co-Operative Society to promote

economic development.

1.21 SCOPE OF THE STUDY

This study will be helpful to know about the socio-economic conditions of

the members, especially in the areas of income, employment, savings,

indebtedness through dairy co-operatives. This study specially focused on benefit

of cooperative among its co-operative members, members’ knowledge about dairy

co-operatives, problems of beneficiaries and suggestion of dairy co-operative for

67Velu Suresh Kumar, “Dairy Sector in Tamil Nadu : An Overview”, Kisan

World, September 2010, Vol.37, No.9, pp.45

58

good performance and dairy co-operative beneficiaries for better economic status.

This study is mainly confined to the role played by the Dairy Co-operatives in

Tirunelveli district. The performance of the society like membership, share

capital, working capital, milk procurement, union sales, local sales and bonus

were assessed.

1.22 OBJECTIVES OF THE STUDY

The present study has the following as its specific objectives:

1. To examine the operational performance and growth of Milk Producers’

Co-operative Society in Tirunelveli district.

2. To analyse the socio-economic conditions of the members of Milk

Producers’ Co-operative Society in Tirunelveli district in the study area.

3. To discuss the role of Milk Producers’ Co-operative Society on the

economic status of the members.

4. To compare the Rural and Urban Milk Producers’ Society in promoting the

economic development of Tirunelveli district.

5. To study the attitude of the members towards the performance of Milk

Producers’ Co-operative Society in Tirunelveli district.

6. To identify the factors influencing the performance of Milk Producers’

Co-operative Society in Tirunelveli district

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7. To offer suitable suggestion for the development of Dairy Co-operatives

based on the findings of the study.

1.23 HYPOTHESES

The following hypotheses were proved in this study:

1. The members’ contribution towards their family income through

Co-operative Milk Producer’s Society is significant.

2. Age influences from the level of attitude of the members.

3. Sex is independent from the level of attitude of the members.

4. The level of attitude is independent on the marital status.

5. Caste exercises an influence on the level of attitude of the members.

6. Religion influences the level of attitude of the members.

7. There exists a relationship between educational qualification and level of

attitude.

1.24 LIMITATIONS OF THE STUDY

Every research suffers from limitations. Some of these are inherent in the

research design while some others become part of the study during various stages

of operation. The present study is subjected to the following constraints and

limitations. There is always a general limitation on the sample survey. The

conclusion reached from this study, therefore, cannot be applied with certainty to

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all dairy cooperative members and at all times. The performance of dairy

co-operatives itself is very wide and extends not only to the members but also to

consumer and employees of dairy cooperatives. But this study is confined to the

dairy cooperative members alone, which, indeed, is one of the major limitation.

While answering to the schedule many rural illiterate dairy members gave the

information from their memory; they do not have the habit of keeping records of

the dairying activities. This limitation of the study has in no way affected the

accuracy of the data and consequently it has no adverse impact on the validity of

the research findings or conclusions derived therefrom.

1.25 CHAPTER SCHEME

This thesis has seven chapters.

The first chapter is Introduction. It introduces the subject, the

significance of the study, statement of the problem, objectives, scope, limitations

and chapter scheme.

The second chapter is titled, Review of Literature and Methodology. In

this chapter, the past and relevant literature is included. The methodology

adopted and concepts used in the present study are also presented in this chapter.

The third chapter entitled, Profile of the Study Area describes the profile

of the Tirunelveli district.

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The fourth chapter, Operational Performance of the Tirunelveli District

Co-operative Milk Producers’ Union Ltd., deals with different dimensions of

operational performances.

The fifth chapter, Socio-Economic Status of Sample Members and their

Economic Development through Milk Producers’ Co-operative Society, deals

with socio and economic characteristics of selected sample members and their

development through MPCS in Tirunelveli district.

The sixth chapter, Attitude of Members towards the Performance of

Milk Producers’ Co-operative Society in Tirunelveli District includes the

attitude towards the performance of dairy co-operatives.

The seventh and the last chapter, Summary of Findings, Suggestions and

Conclusion gives a consolidated list of the research findings and suggestions for

further research studies.

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