03 chandel small_ruminant_milk_india

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03 chandel small_ruminant_milk_india

  1. 1. B.S.Chandel and Rishikanta Singh National Dairy Research Institute, Karnal (Haryana)-132 001 India
  2. 2.  Introduction  Smallholder milk production system and value chain  Dairy Value chain analysis  Critical issues in the value chain  Conclusions & Policy interventions
  3. 3.  Smallholder milk producers dominate production in developing countries the milk  In India, small and marginal farmers contribute (68 per cent)  Milk production by these households address vital issues of their livelihood, nutrition and employment  The paper looks at mainstreaming of small milk producers • Addressing the issue of livelihood & poverty • Augmenting the milk production at competitiveness
  4. 4.  Typical integrated production • Crop residues-surplus family labor- household activities • Convert waste into high value products • Comparative advantage to produce at lesser cost  Marketed surplus • Individual household (50%) • Aggregated (70%)  Marketed mainly through • Milk vendors (58%) unorganized sector
  5. 5. Figure 1: Dairy Value Chains of Small Milk Producers Consumer (5%) Retailer/ Retail outlets Retailer Wholesaler Private Processing Plants Cooperative union/federation Milk Vendor (58%) DCS (9%) Creameries/ sweet shops (20%) SMPMUs (5%) Contractual /contractor (3%) Small milk Producer Figures in parenthesis indicates percentage of the total marketed surplus DCS: Dairy cooperative Societies; SMPMUs: Small Milk Product Manufacturing Units
  6. 6.  The analysis helps policy maker to • Identify exogenous variables to stimulate the desired changes, • Determine competitiveness and power exercised by different players and • Understand the complexity of inter-linkages in the value chain.  Approach • Institute of Development Studies at University of Sussex, Kaplinsky and Morris (2001), Schmitz (2005)
  7. 7.  Dairy value chain was analyzed for its • Structure, competitiveness, integration, actors, governance and policy questions  Simple tabular analysis and total factor productivity were used to supplement the argument in the results
  8. 8. Average milch Average Cost of Cost of milk Total Factor animals/househ Productivity maintenance production Productivity old or farm (L/animal/da (Rs/animal/d (Rs/L) (TFP) (No.) y) ay) Karnal, Haryana: Subsistence farming (for milch buffalo) 2.27 6.800 186.86 27.07 0.0364 4.90 6.460 178.31 27.16 0.0362 8.29 5.73 168.85 28.77 0.0339 Jabalpur, Madhya Pradesh: for commercial dairy farms (90% buffaloes) 70 6.025 207.20 34.39 0.0266 238 6.200 204.04 32.91 0.0282 598 5.700 178.75 31.36 0.0288 Sources: Compiled from Singh (2013) and Sharma (2013).
  9. 9.  Animal Health Service Providers • Public animal health department, cooperative unions and private veterinarians.  Service Delivery System (Ahuja 1999) • Cooperative and private services- 80% at doorstep • Government units was less than 20 per cent  Smallholder milk producers’ dependence-High  Expansion of veterinary health facilities required35-60%. • From 7000 milch animals to 1000-1500 milch animals per veterinary institute
  10. 10. Herd size Average categories milch animals/ household (No.) Small 2.27 (100.00) Medium Large Average crossbred milch animal/ household (No.) 0.84 (37.00) Proportion of Proportion of households crossbred (%) milch animls (%) 49.00 23.70 4.90 (100.00) 2.14 (43.67) 37.00 45.66 8.29 (100.00) 3.79 (45.72) 14.00 30.63 Source: Compiled from Singh (2013)
  11. 11. Particulars Average milk production/household/day Milk Marketed surplus/household/day Proportion of milk marketed Cooperatives through different channels (%) Direct to consumers Open market (inclusive of milk vendors) Plains 8.4 Hills 4.5 Pooled 6.3 4.8 1.5 3.1 22.8 55.3 33.0 16.4 60.7 10.6 34.1 14.9 53.7 Average price (Rs/L) received Cooperatives 14.5 from different market channels Direct to consumers 17.2 Open market (inclusive 17.6 of milk vendors) 14.5 14.5 14.9 16.4 16.5 17.0 Source: Adopted from Bardhan et al., 2012
  12. 12.  Marketing Channels Marketing through Organized sector (12%) Marketing through Unorganized sector (88%)  Short term advantages of the unorganized sector The flexible payment schedule, even advance payment also possible Flat rate of milk which favours the farmers producing low fat milk like cow milk Higher milk price  Retardy growth of cooperative institutions  Lack of institutional framework for mainstreaming in private sector
  13. 13. Dairy Coop. Societies (No.) 250 160000 140000 Per Cooperative Society 200 120000 150 100000 80000 100 60000 40000 Producer Members (No.) Milk Procurement (KgPD) 50 Liquid Milk Marketing (LPD) 20000 0 0 1980-81 1990-91 2000-01 2008-09 2009-10* 1980-81 1990-91 2000-01 2008-09 2009-10*
  14. 14.  More political representation in management  Large cooperative societies- increased operational cost  Lack of representation of milk producers in federation/union  Out of the market price fixation and government interference  Lack of diversification in product-mix
  15. 15.  High transactions costs  Fresh milk marketing  Clean milk production  Demand specific milk production  Direct communication producer and consumer between the
  16. 16.  Improve veterinary services especially public and up-gradate local breeds to strengthen milk production capacity of smallholders  Strengthen institutional framework to bring small holder under the ambit of organized marketing,  Modernization of informal sector to reduce transactions cost and handling losses of milk,  Encourage fresh milk marketing and clean milk production for quality and demand specific production.

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