A STUDY ON PROCUREMENT OF MILK BY HERITAGE FOODS (I) LIMITED IN CHITTOOR DISTRICT OF ANDHRA PRADESH MASTER IN AGRIBUSINESS MANAGEMENT

Transcription

1 A STUDY ON PROCUREMENT OF MILK BY HERITAGE FOODS (I) LIMITED IN CHITTOOR DISTRICT OF ANDHRA PRADESH BY M.NAVEEN KUMAR B.Sc.(Ag.) MASTER IN AGRIBUSINESS MANAGEMENT DEPARTMENT OF AGRICULTURAL ECONOMICS AND BUSINESS MANAGEMENT SRI VENKATESWARA AGRICULTURAL COLLEGE ACHARYA N.G.RANGA AGRICULTURAL UNIVERSITY TIRUPATI, CHITTOOR JULY, 2010

2 Certificate This is to certify that Mr. M.NAVEEN KUMAR has satisfactorily prosecuted the course of research and that the project report entitled A STUDY ON PROCUREMENT OF MILK BY HERITAGE FOODS (I) LIMITED IN CHITTOOR DISTRICT OF ANDHRA PRADESH submitted is the result of original research work and is of sufficiently high standard to warrant its presentation to the examination. I also certify that the project or part thereof has not been previously submitted by him for a degree of any University. Place : Tirupati Date : (Dr.P.RAGHURAM) Chairman of the Advisory Committee

3 CERTIFICATE This is to certify that the project entitled A STUDY ON PROCUREMENT OF MILK BY HERITAGE FOODS (I) LIMITED IN CHITTOOR DISTRICT OF ANDHRA PRADESH submitted in partial fulfillment of the requirements for the degree of MASTER IN AGRIBUSINESS MANAGEMENT of the Acharya N.G.Ranga Agricultural University, Hyderabad, is a record of the bonafide project work carried out by Mr.M.NAVEEN KUMAR under our guidance and supervision. The Student Advisory Committee has approved the project report. No part of the project has been submitted by the student for any other degree or diploma. All assistance and help received during the course of the investigations have been duly acknowledged by the author of the project report. (Dr.P.RAGHURAM) Chairman of the Advisory Committee Project report approved by the Student Advisory Committee Chairman : (Dr.P.RAGHU RAM) Professor & Head Department of Agricultural Economics S.V.Agricultural College Tirupati Member : (Dr.T.V.NEELAKANTA SASTRY) Professor Department of Agricultural Economics S.V.Agricultural College Tirupati

4 CONTENTS Chapter Title Page No. ABSTRACT I II III IV INTRODUCTION METHODOLOGY RESULTS AND DISCUSSION SUMMARY, CONCLUSIONS AND SUGGESTIONS BIBLIOGRAPHY ANNEXURES

5 LIST OF TABLES Table Number Title 1.1 Pattern of milk utilization by different sectors Page Number 2.4 List of selected mandals and Villages 3.1 Costs of Procurement per Unit of milk 3.2 Returns from sale of one unit (1000 Liters) of milk

6 LIST OF ILLUSTRATIONS Figure Number Title 2.1 Map of Chittoor district showing the selected Page Number mandals LIST OF ANNEXURES AnnexureNo. Title 1. Farmers Questionnaire Page Number

7 ACKNOWLEDGEMENTS It is by the boundless blessings of the GOD that I have been able to complete this work and present this work for which I am eternally indebted. Behind this work have the encouragement, sustained interest and help of many. May I have the pleasure of wishing a warm thank you note that can show at least in part, many special thoughts I keep in my heart. I sincerely extend my gratitude and sincere thanks to Major Advisor Dr.P.RAGHU RAM, Professor and Head, Department of Agricultural Economics, S.V.Agricultural College, Tirupati for his unstinted attention, generous help, unfailing co-operation and meticulous guidance to accomplish my study. I take this opportunity to express my sincere, humble regards and deep sense of gratitude to my external guide N.VAMSEEDHAR, Asst. General Manager (O), Heritage Foods (INDIA) Limited for extending facilities and giving this opportunity to work for my project. I humbly express my sense of gratitude and sincere thanks to T.V.NEELAKANTHA SASTRY, Professor, Department of Agricultural Economics, S.V.Agricultural College and member of Advisory Committee, for his splendid and constant guidance for the timely and successful accomplishment of my research work. I am at loss of words to express thanks to the Dealers and consumers of Heritage Dairy for the patience and concern they have shown on me. I am in dearth of words to express my unboundful gratitude and love to my beloved family, the inbounding love it has on me, affection, guidance and dedicated efforts to educate me to this level without whose encouragement and invaluable moral support, I would not have been what I am today. I Love my Family. I am thankful to the staff of the library and the Staff at Dairy Technology College for their help during my study. Thanks to Google search and Microsoft for their software which made my project easy and attractive. I am thankful to Acharya N. G. Ranga Agricultural University for providing me the opportunity to pursue my education. Place: Tirupati (M.NAVEEN KUMAR) Date:

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9 Declaration I, Mr. M.NAVEEN KUMAR hereby declare that the project report entitled A STUDY ON PROCUREMENT OF MILK BY HERITAGE FOODS (I) LIMITED IN CHITTOOR DISTRICT OF ANDHRA PRADESH submitted to S.V.Agricultural College, Acharya N.G.Ranga Agricultural University, for the degree of MASTER IN AGRIBUSINESS MANAGEMENT is the result of original research work done by me. Place : Tirupati (M.NAVEEN KUMAR) Date :

10 LIST OF ABBREVIATIONS AND SYMBOLS Lt - Litres Fig - Figure / - - At the rate of % - Per cent No. - Number Rs. - Rupees Viz., - Namely WWW - World Wide Web

11 ABSTRACT Name of the Author : M.NAVEEN KUMAR I.D.No. : TMABM/08-09 Title of the Project : A STUDY ON PROCUREMENT OF MILK BY HERITAGE FOODS (I) LIMITED IN CHITTOOR DISTRICT OF ANDHRA PRADESH Degree :MASTER IN AGRIBUSINESS MANAGEMENT Faculty : AGRICULTURE Department : AGRICULTURAL ECONOMICS Major Advisor : Dr.P.RAGHURAM University :ACHARYAN.G.RANGA AGRICULTURAL UNIVERSITY Year of Submission : 2010 Dariry sector contributes significantly in generating employment opportunities in rural India, besides providing food security. The profitability of dairy enterprise depends upon the cost structure and income generation capacity of the enterprise and good marketing outlets. The present project entitled A Study on Procurement of Milk by Heritage Foods (I) Limited in Chittoor District of Andhra Pradesh was taken up with the following specific objectives. Objectives of the Project: 1. To study and examine the cost and returns of procurement per unit of milk.

12 2. To identify the economic and managerial problems during procurement. 3. To identify and analyse the factors influencing procurement of milk. 4. To suggest remedial measures for efficient procurement of milk. Chittoor District was purposively selected for the study as it is one of the major milk producing districts of Andhra Pradesh. From the selected district 3 mandals supplying milk to Heritage Food (I) Limited were selected purposively. Two villages from each mandal were selected making the total villages to six. Ten dairy farmers from each village were chosen. Randomly. The total sample size of the study was 90. For this study, both primary and secondary data were collected. The primary data ware collected from the milk collection units and the dairy farmers. Secondary data with regard to the factors influencing procurement and quantity of milk supply was collected from the records of the milk collection units, journals website. ect. The data were collected by direct interview method. The collected data were analyzed by using simple statistical tools such as percentages, averages, etc. The total costs are split into operation costs and fixed costs. Of the operational costs cost of raw material (milk) was the highest costing factor. It formed percent of the total costs. Other operational costs were interest on working capital (4.21 percent ), and selling and distribution expenses (1.64 percent). Other working costs like electrical

13 charges (0.72 percent), printing and stationary (0.63 percent), packing charges (0.48 percent), miscellaneous expenses (0.43 percent), wages, salaries, bonus etc (0.33 percent), fuel and lubricant charges, agent costs, storage costs etc. Total operational costs were Rs Among the fixed costs, depreciation on machinery was the highest cost (42.32 percent). Next was the depreciation on buildings which gone to 8.57 percent of the total costs. Others were rents and taxes, repairs and maintenance, insurance etc. Total fixed costs were Rs Total costs worked out for Rs The various factors influencing procurement of milk includes market influence, seasonal variation, compositional variation, spatial variation, pricing according to the cost of milk production, effect of feed, effect of the disease etc. Various measures to be taken at the milk collection Units and while transporting of the raw milk which gives good quality milk and better profits to the Dairy.

14 CHAPTER - I INTRODUCTION India is the largest milk producer in the world. Milk is very important and essential commodity in the daily life of human diet. Milk is known as pays, dugdha and kshira in sanskrit. Antediluvian sages regarded milk as helalth tonic and strength giving nectar of life and compared it to Amritha. Ancient texts have described milk as the best among all the life- giving substances. Milk contains per cent water, 5.02 per cent fat, 3.32 per cent protein, 4.82 per cent lactose and 0.70 per cent ash. Milk provides much needed animal proteins essential to the infant and vegetarian population in India. For centuries, milk from various animals like cow, buffalo and goat has been used in the diets of people throughout the world *. 1.1 Dairy industry in India The diary sector is the predominant component in the overall live stock activity in the country. Milk production has increased from million metric tones in to million metric tones in and now has reached to 110 million metric tones in representing a compound annual growth of 3.37% p.a. Indian dairy industry can be *

15 divided into two types of enterprises, viz: liquid milk and milk products. Dairying as a profession revolves around milk and milk products. Milk production is undertaken by a wide range of producers both in organized and unorganized sectors. Livestock provides regular employment to 11 million in principal status and nine million in subsidiary status. Women constitute 69 per cent of the labour force in livestock sector as against 35 per cent in crop farming. Dairy co-operatives account for the major share of processed liquid milk in the country. Presently, about 1.13 lakh village level cooperative societies spread over 265 districts in the country form part of the National Milk Grid. The Grid links the milk producers throughout India with consumers in over 700 towns and cities smoothing the seasonal and regional variations in the availability of milk and ensuring a remunerative price to the producers and a reasonable price for quality milk and milk products to the consumers. During , Intensive Cattle Development Programme (ICDP) was introduced in the country in which a package of improved animal husbandry was given to cattle owners for promoting white revolution in the country. The milk production in India was 17 million tones in This could meet only 25 per cent of the domestic demand, and the remaining 75 percent of the demand was met by importing the milk solids. The production stagnated for two decades till 1970, with annual growth rate of milk production of one percent. In 1970 National Dairy Development Board launched Operation Flood

16 Programme with an objective of ending milk famine in the country and turning farmers co-operatives into powerful catalyst for transforming India into a major milk producer in the world. Further, for providing milk producers remunerative prices around the year, its production in India touched 74 million tones in By the year 2000, India emerged as the largest milk producer surpassing USA with 86 million tones and it reached 100 million tones in The per capita availability of milk has also increased from 112 grams in 1968 to 230 grams per day in and 254 grams per day in This is the result of India s White Revolution in milk. This first phase of Operation Flood Programme was between 1970 and 1981 and it laid the foundation for modern dairy industry in India. This period witnessed a self-sustaining growth of producers controlled dairy co-operatives. The second phase was in action during 1981 to 1985, which established 136 milk sheds and captured markets in 290 cities and provided 4.9 billion finance. The operation flood has completed third phase on 31 st March, 1994 by capturing 500 cities with population target of 300 million customers and at present fourth phase is in operation. When the third phase was over, the following benefits had reached the small dairy farmers. 1. Sustained increase in production (4-5 per cent growth / annum) raising the per capita availability of milk to nearly 220 grams per day.

17 2. Dependence on commercial imports of milk powder ended. 3. Marketing mechanism improved for providing assured market outlet for milk producers and quality milk for consumers. 4. The quality of milch animals improved. At the end of Operation Flood II, 72,744 dairy co-operative societies in 170 milk sheds of the country having total membership of lakhs have been organized. The Operation Flood programme launched another massive programme called Technology Mission on Dairy Development (TMDD) in June The object of TMDD were same as that of Operation Flood Programme s objectives. * Tab.1.1 Pattern of Milk Utilization by different Sectors. * Organized Sector 26% Dairy Cooperatives 11% Urban Producers 21% Private Sector 3% Consumed by Producers and non producers 46% * * National Institute of Animal Nutrition and Physiology

18 1.2 Importance of dairying Indian dairy farming has experienced a major breakthrough in the last two decades. Farmers now are no more considering dairying as a subsidiary occupation. With the advent of green revolution, the fodder availability for the cattle has increased. Dairying has helped India in phasing its rural development programmes through various schemes. Today the country has almost one diary animal for every eleven human head. Now it has been recognized that cattle provides milk, dung, milch and draught animal s wealth. Dairying is recorded as instruments for reducing inter class disparities in the rural areas. Land and cattle has traditionally been the two basic income yielding assets of Indian farmers. Among food production, demand for milk is income elastic and increases relalatively at higher rate as education makes people conscious of the value of nutritious food. In India milk is the only source of animal protein that is accepted and consumed by majority of the population irrespective of community and caste. * * WWW. Amulinidia.com

19 PROBLEM STATEMENT The livestock plays a significant role in the welfare of rural population in India. Of the total house holds in the rural area, about 73 per cent own livestock. More importantly, small and marginal farmers account for three quarters of these house holds. Income from livestock production accounts for 15 per cent of the total farm household s income in different states. Thus, an increase in demand for livestock products can be the major factor in raising the income and living standards of the rural households. Procurement is a process which involves collection of milk from the farmers to the Dairy. During this process a number of problems arises through out the marketing channel at each stage of the procurement process. Keeping in view of the growing importance of dairy, the present project has been designed to evaluate the problems and the factors influencing the procurement process with the following objectives. 1. To study and examine the cost and returns of procurement per unit of milk. 2. To identify the economic and managerial problems during the procurement. 3. To identify and analyse the factors influencing procurement of milk. 4. To suggest efficient remedial measures for the procurement of milk. LIMITATIONS OF THE PROJECT Any work will always be confronted with various bottlenecks and the present project study was not an exception to these

20 limitations. The study has limitations of time, limited sample size and resources at the disposal of investigator. Furthermore, the information collected and presented depended on the recall memory of sample dairy formers, which have certain inherent limitations. The study is based on primary data collected from the farmers by survey method. Many of the farmers have not maintained proper records. The conclusions drawn from the farmer s data are based on the data collected for the agricultural year , which is undoubtedly a very short period for drawing concrete recommendations. Inspite of all these limitations, utmost care was taken in collection of reliable data. PLAN OF THE PROJECT The present project study is presented in five chapters. The first chapter deals with the importance of dairying, productivity history and development under programmes, plans and profile of the company. The second chapter deals with the materials and methods adopted for the study. The third chapter highlights a critical analysis of results and discussion based on the primary data collected from sample farmers. Finally, the fourth chapter deals with summary and conclusions.

21 Chapter II Methodology This chapter focuses on the selection of the study area, selection of sample dairy farmers, method of data collection and analytical techniques employed in the study. 2.1 Selection of Study Pradesh The present study is under taken in Chittoor District of Andhra Chittoor district is bound on the North by Anantapur and Kadapa districts, on the East by Nellore district and Chengalpattu district of Tamil Nadu, on the South by North Arcot district of Tamil Nadu and

22 Karnataka State. The district has an area of 15,152 sqkms. It is divided into 3 revenue divisions viz., Chittoor, Tirupati and Madanapalli comprising 20, 15 and 31 mandals respectively. It is situated between and of North latitude and from to of the Eastern longitude. The district can be divided into two natural divisions. 1. The mountneous plateau of the west comprising 31 mandals of Madanapalle division. 2. The plains on the East comprising the mandals of Puttur, Narayanavanam,Vadamalpet, R.C Puram, Davertinagaram, Vedurukupam, S.R.Puram, Palasamudram,Nagiri, Nindra, Vijayapuram, Pichatur, Thottembedu, Srikalahasti and Yerepedu The Map of Chittor district comprising of three selected mandals is shown in the fig Period of Study The study was conducted during the period of Selection of Mandals and Villages Chittoor District was be purposively selected for the study as it is one of the major milk producing districts of Andhra Pradesh. From the selected district 3 mandals supplying milk to Heritage Food (I) Limited were selected purposively. Two Villages under each mandal will be selected making be total villages to six

23 2.4 Selection of Sample Dairy Farmers Ten Dairy farmers from each village were chosen. The total sample size of the study stood at 60. Table 2.4. List of Selected Mandals and Villages Mandals Villages 1.Ramachandara Puram A). Gangireddy Palli B). Adapareddypalli 2. Pulicherla A) Ramireddygari Palli B) Mangalampeta 3. Irala A) Nellimandi Palli B) Peravaripalli 2.5 Sources of Data For this study, both primary and secondary data were collected Primary Data The primary data were collected from the milk collection units and the dairy farmers. The information on problems of procurement, price received and expenses incurred by the diary farmers were collected.

24 2.5.2 secondary Data Secondary data with regard to the factors influencing procurement and quantity of milk supply were collected from the records of the milk collection units, statistical abstract, journals, websites.etc. 2.6 Method of Survey: A schedule was designed to elicit the response from the farmers and the management of the company on the problems associated with procurement. That data were collected by direct interview method. 2.7 Method of analysis: The collected data was analyzed by using simple statistical tools such as percentages, averages, etc. so as to make meaningful inferences.

25 COMPANY PROFILE The Heritage Group, founded in 1992 is one of the fastest growing private sector enterprises in India, with three- business divisions viz., dairy, retail and agriculture under its flagship company Heritage Food (I) Limited (HFIL). One infrastructure subsidiary- Heritage Infra Developers Limited and other associate companies viz., Heritage Finlease Limited, Heritage International Limited and Heritage Agro Merine Private Limited. The main dairy plant, Gokul was commissioned in 1996 with a rated capacity of 1.5 lakhs liters per day (LLPD) in The annual turnover of Heritage Foods crossed Rs 347crore in and is aiming for Rs 700 crores during Presently, Heritage s milk products have a market share in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Maharashtra and its retail stores are in Banglore, Chennai and Hyderabad. Integrated agriculture operations are in Chittoor and Medak districts and these are backbone to retail operations. Full cream milk, toned milk, double toned milk, cow milk, cow ghee, buffalo ghee, cooking butter, fresh cream, skim milk powder, curd ( cup and pouch), flavoured milk in bottles and tetra packs, butter milk, lassi panner, doodhpeda, ice cream, bread cookies etc, are the range of products produced.

26 Mission & Vision Mission Bringing prosperity into rural families of India through cooperative efforts and providing customers with hygienic, affordable and convenient supply of Fresh and Healthy food products. Vision To be a progressive billion dollar organization with a pan India foot print by To achieve this by delighting customer with Fresh and Healthy food products, those are a benchmark for quality in the industry. We are committed to enhanced prosperity and the empowerment of the farming community through our unique Relationship Farming Model. To be a preferred employer by nurturing entrepreneurship, managing career aspirations and providing innovative avenues for enhanced employee prosperity.

27 Chapter III RESULTS AND DISCUSSION In this chapter an attempt is made to discuss the results obtained from the study. The important findings are presented and discussed under the following sub-heads. 3.1 Costs and returns of procurement per unit of Milk. 3.2 Problems during procurement of milk. 3.3 Factors influencing procurement of milk. 3.4 Suggestions and measures for efficient procurement of milk. Procurement: A series of steps are involved in the collection of good quality of raw milk from the farmers to the diary industry. Systems of milk Procurement Milk, being a perishable commodity, must be sold immediately after production and for immediate sale at reasonable price a good organized marketing system must be exist.

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29 Table : 3.1. Costs of procurement per unit of milk. Sl. No. A Components Operational Costs Total Costs ( in Rs.) Cost of procurement per unit of milk ( in Rs.) (1000lt) Percentage % 1. Cost of Raw Material, Wages, Salaries, bonus, Allowances to labours Packing charges Electrical Charges Fuel and lubricant Charges Agent Costs Storage Costs Pasteurization Costs Printing & Stationery Selling and Distribution Expenses Miscellaneous Expenses Sub Total Interest on working capital Total Operational Costs B Fixed Costs 1. Depreciation On Vehicles Depreciation on Buildings Depreciation on Machinery Depreciation on Others (Furniture and Spare Parts) Repairs and Maintenance Insurance Electric installation cost (Soft were) Lease hold property Rents and Taxes Sub Total Interest on Fixed Capital Total Fixed Costs Total Costs

30 The costs involved procurement per unit (1000 Lts) of milk are presented in Table No.3.1. The total costs are split into operation costs and fixed costs. Of the operational costs cost of raw material (milk) was the highest costing factor. It formed percent of the total costs. Other operational costs were interest on working capital (4.21 percent ), and selling and distribution expenses (1.64 percent). Other working costs like electrical charges (0.72 percent), printing and stationary (0.63 percent), packing charges (0.48 percent), miscellaneous expenses (0.43 percent), wages, salaries, bonus etc (0.33 percent), fuel and lubricant charges, agent costs, storage costs etc. Total operational costs were Rs Among the fixed costs, depreciation on machinery was the highest cost (42.32 percent). Next was the depreciation on buildings which gone to 8.57 percent of the total costs. Others were rents and taxes, repairs and maintenance, insurance etc. Total fixed costs were Rs Total costs worked out for Rs

31 Calculation of Net Returns per Unit of milk: Table: 3.2 :- Returns from sale of one unit (1000 liters) of milk. Particulars Amount Sale price per liter of milk 24 Total sale price per 1000 liters of milk Total cost of procurement per unit of milk Net returns per unit of milk ( ) = Therefore the net returns per unit of milk including tonned milk and double tonned milk is Rs Problems during procurement of milk: The problems during procurement are majorly seen at the level of milk producers and at the collection centers. The following are the major procurement problems which were noticed during the survey by interviewing the dairy farmers and the management of the company.

32 3.2.1 Problems of the milk Producers: The first and foremost problem of the milk producers is uneconomical and unremmunerative price offered for milk by the dairy. The prices offered by the dairy sector in lean season enabled the milk producers to cover not only their cost of production (including their family labour) but also left a small margin. The price offered to the producers by the dairy sector during the flush season was virtually unremunerative when the cost of feed, labour and miscellaneous expenditure accounted for. The respondents also complain that the dairy sector is imposing a number of penal conditions in case of milk falling short of minimum standards of SNF while procuring milk. The producers getting high yield are turning towards private vendors who offer a little higher price and do not insist upon the quality, fat and SNF tests of milk.

33 3.2.2 Problems at the Collection Centers : The following are some of the problems at the collection centers which were given by the respondents during the survey:- The majority of the respondents feel that injustice was being done to them at the collection centers and also at the dairy dock while testing milk for fat and SNF contents. The collection centers also conduct quality tests and maintain records of each milk producer. But the results of the tests at the collection centre and at the dairy dock generally vary with each other. The producers are only paid on the basis of the tests conducted at the dairy dock. Therefore, the records maintained at the collection center in the very presence of the producers were not useful for them for any claim. The respondents also complain that the commission agents are insisting upon the payment of some fixed amounts from them towards the commission irrespective of the quantity of milk procured at the collection centers.

34 The group leaders and the influential and powerful milk producers were taking advantage from the commission agents through malpractices. The respondents also complained that the commission agents were selling the samples of milk after the quality tests are conducted, instead of adding such milk to their account. The respondents were also facing problems due to delay in payment. Since most of the collection centers were accepting milk only once in a day in the morning, the respondents were finding it difficult to dispose the milk they get in the evening. The dairy officials allege that the producers were mixing milk of the evening with that of the day by preserving the evening milk with the addition of Sodium Bicarbonate ( popularly known as Soda ) and other preservatives the practice of which was illegal. More over, the respondents hade also confessed that they add preservatives, especially during summer, to the evening milk. They also confessed that they mix cow milk with that of buffalo.

35 The respondents expressed yet another problem due to the closure of uneconomical collection centers. Through this may help the dairy in cutting down its loss, the producers at the remote centers were deprived of the market facility Problems at the Extension Service : The respondents also expressed a few problems relating to the quality and supply of feed. They complained that the feed does not include the nutritive contents like maize, cotton, groundnut powder, etc. because of which the yield of the milch animal was affected. The respondents who were in receipt of loans hade also expressed many technical problems involved in disbursement and collection of loans. The funding agencies were only distributing the milch animal to the milk producers on loan basis. But, certain high breed milch cattle which were not suited to this climatic conditions have become a burden on the milk producers. They were eating away the profits and compelling the farmer to sell them in other areas.

36 The respondents felt that the dairy employees who expected to visit the collection centers and meet the milk producers to clarify their doubts and extend help with regard to milk procurement problems were not visiting regularly. Thus these are the major procurement problems faced by both the management and the dairy farmers. 3.3 FACTORS INFLUENCING PROCUREMENT OF MILK. The various factors which influence procurement of milk are shown below: Market influence: Milk is highly perishable and essential food item. The purchasing capacity of consumers is also not encouraging. Therefore, its sale price is either administratively regulated or adulterated milk at affordable price is sold to consumer. This consumer s rupee is shared by producer, processor and distributor. In this rupee, the share of producer is 60 to 65% only remaining goes to other agencies.

37 When production and availability of milk is increasing at a faster pace, any substantial increase in consumer price is ruled out as this will discourage expansion of fluid milk market. In consumer s rupees, share of farmer should be increased by decreasing handling costs. The objective of increasing producer s profit is to help him so that they can adopt improved dairy practices and increase per animal milk yields to bring down per liter cost of milk production Seasonal Variation: This is due to seasonality in calving, availability of green fodders and climatic stress. From the pricing point of view, there are four seasons. 1. Flush- November, December, January and February. 2. Transitory to lean- March and April. 3. Lean- May, June, July and August 4. Transitory to Flush- September and October.

38 3.3.3 Compositional Variation: Fat and SNF are two major constituents of milk which considered for price fixation of milk. The variations in fat and SNF content also majorly influence the process of procurement Spatial Variation : Price of agricultural commodities are vary from region to region. Milk producers near to cities get more price than those located far off. Procurement cost of milk can be minimized by getting more milk from reduced area or getting more milk from existing milk shed area. Maximization of milk quantity from minimized milk collection area increases the procurement efficiency Pricing according to the cost of milk production : The price should be related to the cost of milk production and ensure a fair margin of profit to the producers. It should take into account the seasonal variation in production and demand and should be linked with consumer s price index, taking into account general market trends.

39 3.3.6 Effect of Feed: Both the quantity and quality of milk may be affected by the feed a cow receives. In addition to affecting the quantity of milk, the feed may affect the fat percentage and the character of the fat, and it may add compounds to the milk or fat which may affect both its nutrient value and its flavor Effect of the Disease: Udder diseases (Principally mastits), digestive disturbances, and other diseases are responsible for a decrease in milk yield and affect the quality of the milk in various ways. Mastitis: The composition of the milk may be changed in various degrees by mastitis infection, depending upon the severity of the infection. Digestive disturbances: Any marked digestive disturbance, such as going off feed or diarrhea, is followed by a marked decline in milk yield. The fat percentage of the milk usually increases, but in some cases it may decline. The flavor of the milk is usually affected.

40 3.4 Measures for efficient procurement of Milk: On the basis of findings of the present study and personal observations during investigation of the problem, the following measures and appropriate strategies are recommended to improve the performance of Heritage Dairy. The various measures and suggestions for the efficient procurement of milk were given below: Measures to be taken at the chilling center level: The pipelines, silo s Dip- Saver, dump tank should be cleaned as per the procedures and should be kept for reception. Agitator should run continuously during the time of reception. The raw milk should be drilled to below 5 0 C as early as it reaches the dock. Rechilling should be done from silo to tanker (or) From silo to silo. All cans should have names and numbers of representatives.

41 Explained about procurement software and its application for route supervisors and procurement in charges for enhancing their performance Measures to be taken at the milk Collection Units: Milk collection units should inform farmers regarding importance of quality of milk, hygiene at all stages of milk production, use of clean and proper utensils and fat and price relation. Milk collection units have direct contact with dairy farmers and diary, so milk collection units can act as a messenger and implementer of various dairy schemes among needy dairy farmers. Reliable and clean water and electricity supply to milk collection units for maintaining quality of milk during collection and handling should be ensured. Milk collection units should supply milk to dairy for processing without much delay of time after collection from dairy farmers, which may affect the quality of milk and milk products.

42 3.4.3 Measures to be taken while transporting the Raw Milk: The transport vehicle should have cover on the top Avoid transport of other luggage while transporting the milk diary. The transport vehicle should be in good condition Suggestions to Dairy Farmers: Dairy farmers should sell the milk as early as possible after milking and also make awareness about the price and fat (quality) relation of milk. Dairy farmers should develop the awareness on the quality tests of the milk. Adulteration of milk not only deteriorates quality of milk but is also harmful for health, so the dairy farmers should not adopt this improper, illegal and harmful practice.

43 Buffaloes and crossbreed cows are high milk yielders, so it is suggested to take up cross breeding programmes in local cows and on the other hand, pure breed may be maintained in order to get good quality of draught power for agriculture use. For quality milk production, dairy farmers should take care of feeding requirement of milch animals, they should provide green fodder, dry fodder and concentrate in proper combination, and should follow proper milking time and milking method Measures to be taken by the milk procurement Supervisors: The milk procurement supervisors should educate the milk producers about clean milk production. The supervisors should explain the dairy farmers about various methods of enhancing the milk production. The supervisors should bring awareness among the dairy farmers about the importance of vaccination and dewarming programmes. The supervisors should provide an idea about the role of fed and mineral mixture etc in enhancing milk production.

44 The supervisors should also find out and correct the general problems of milk producers and milk representatives. The supervisors should have to solve the problems of the agents and the dairy farmers during procurement of the milk Measures to be taken by the management: The management should arrange training programmes to give training to dairy farmers on various aspects of quality milk production like daily feeding schedule of milch animals, adoption of proper milking time and milking method, maintaining hygienic condition during milk production in dairy shed, use of clean utensils, etc. The diary management have to arrange the awareness campaign regarding adoption of quality milk production practices, which will be beneficial to dairy farmers and dairy. The management have to use the efficient and effective extension activities for implementation of dairy schemes among dairy farmers such as breeding programmes of milch animals, vaccination programmes, farmer training programmes, etc.

45 The dairy management should also provide awareness programmes to the agents for the efficient procurement of milk from the dairy farmers. To overcome the problem of seasonal variation in milk availability (August to December (flush season) January to July is (lean season)) the management should access more and more small and medium dairy farmers in operating and non operating areas for continuous supply of milk.

46 Chapter IV Summary, Conclusions and Suggestions India is the largest milk producer in the world. Indian dairy industry can be divided into two types of enterprises, Viz; liquid milk and milk products. Procurement involves a series of steps in collection of good quality raw milk from the farmers to the diary industry. During the process of procurement, a number of problems arises at the level of diary farmers and the management. Keeping this in view, this study has been undertaken with the following objectives. a. to study the costs and returns of procurement per unit of milk. b. to identify problems during procurement of milk c. to study the factors influencing procurement of milk d. to offer the suggestions and measures for efficient procurement of milk. Chittoor District was purposively selected for the study as it is one of the major milk producing districts of Andhra Pradesh. From the selected district 3 mandals supplying milk to Heritage Food (I) Limited were selected purposively. Two villages from each mandal were selected making the total villages to six. Ten dairy farmers from each village were chosen. Randomly. The total sample size of the study was 90. For this study, both primary and secondary data were collected. The primary data ware collected from the milk collection units and the dairy farmers.

47 Secondary data with regard to the factors influencing procurement and quantity of milk supply was collected from the records of the milk collection units, journals website. ect. The data were collected by direct interview method. The collected data were analyzed by using simple statistical tools such as percentages, averages, etc. The Major Findings of the Study : The results give an analysis about the total cost of production of milk per unit as well as the cost and returns of procurement per unit milk. The results also reveals that the variable costs varied considerably when compared to fixed costs. The percentage analysis for each cost during the process of procurement was also analyzed during the study. A number of problems were analyzed at the level of milk producers and the collection centers through the direct survey method. The foremost problem of the milk producers were uneconomical and unremmunerative price offered for milk by the dairy. The producers getting high yield were turning towards private vendors who offered a little higher price and did not insist up on the quality, Fat and SNF tests of milk. The collection centers conducted quality tests and maintained records of each milk producer. But the results of the tests at the collection center and at the dairy dock generally varied with each other. The respondents were also facing problems due to delay in payment. The

48 respondents who were in receipt of loans had also expressed many technical problems involved in disbursement and collection of loans. The various factors influencing procurement of milk includes market influence, seasonal variation, compositional variation, spatial variation, pricing according to the cost of milk production, effect of feed, effect of the disease etc. Various measures to be taken at the milk collection Units and while transporting of the raw milk which gives good quality milk and better profits to the Dairy. Suggestions: The dairy farmers should develop the awareness on the quality tests of the milk. The milk procurement supervisors should educate the milk producers about clean milk production. The supervisors should provide an idea about the role of fed and mineral mixer etc in enhancing milk production. The supervisors should have to solve the problems of the agents and the dairy farmers during procurement of the milk.

49 Consum ed by produce rs and Adulteration of milk not only deteriorates quality of milk but is also harmful for health, so the dairy farmers should not adopt this improper, illegal and harmful practice. Dairy Farmers should sell the milk as early as possible after milking and also make awareness about the price and fat (quality) relation of milk. Avoid transport of other luggage while transporting the milk. Milk collection Units should supply milk to dairy for processing without much delay of time after collection from dairy farmers, which may affect the quality of milk and milk products. The dairy management should also provide awareness programmes to the agents for the efficient procurement of milk from the dairy farmers. The management have to use the efficient and effective extension activates for implementation of dairy schemes among dairy farmers such as breeding programmes of milch animals, vaccination programmes, farmer training programmes, etc.