Rationalization of milk procurement, processing and marketing in southern India

Abstract

Abstract Developmental efforts for animal production systems in India started with organized milk procurement, processing and marketing. Most rural areas around Bangalore and Kolar districts of Karnataka state are covered by an organized dairy development program. Parallel to this organized sector, the unorganized (informal) dairy sector also functions with different strategies. This study compared the cost of procurement/distribution of the organized and informal sectors of the dairy industry in Bangalore and Kolar districts. The optimum quantity of milk to procure per collection route in the organized sector was calculated and a saving of Rs. 0·09 kg−1 of milk marketed could be generated using this level, compared to a loss of Rs. 0·13 kg−1 of milk marketed under existing conditions. By contrast, the informal marketing sector, by using differential procurement price, diversified procurement channels and selective selling channels, earned Rs.0·42-0·77 kg−1 of milk marketed. To reduce losses in the organized sector and assist producers who are not able to participate in the formal sector, control points in the existing system were identified and analyzed.