DIVINE LIGHT CONSULTANTS, BHUBANESWAR

Milk Processing Unit
Part – II : The Proposed Business Plan
Himansu S M 07-Sep-2009

This is the detailed description of the Business Model or Plan with all the possible ancillary units, on the back-drop of various Subsidy Schemes available from various Statutory / Government Bodies.

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Contents :
Contents :..........................................................................................................................2 Information Tables :........................................................................................................... 4 Table-1 : Units Of Area & Conversion Ratios..................................................................4 Table-2 : Units Of Counting – Cardinal Numbers............................................................4 Table-3 : Abbreviations Used In This Report..................................................................4 STATE AGRICULTURE POLICY – 2008....................................................................................7 Agriculture Department, Government of Orissa................................................................7 INTRODUCTION...............................................................................................................7 AGRICULTURE IN ORISSA................................................................................................7 The State’s Vital Statistics :............................................................................................8 OBJECTIVES....................................................................................................................8 Projects Out-look.............................................................................................................10 Proposed Business Plan................................................................................................10 Main Projects :........................................................................................................... 10 The Ancillary Projects which can utilise the By-products effectively (INEVITABLE) : 10 Also there are a few Projects that can enhance the main Project (RECOMMENDED) : .................................................................................................................................. 11 Approximate Project Cost.............................................................................................11 Land :........................................................................................................................11 Dairy Farm Project :..................................................................................................11 Man Power :............................................................................................................... 11 Detailed Description, Scope & Explanation..................................................................11 Cattle / Dairy Farms :................................................................................................11 Milk Processing / Packaging Unit :.............................................................................12 Fodder Cultivation :...................................................................................................12 Calf Rearing & Trading :............................................................................................13 Cattle Breeding & Artificial Insemination :................................................................14 Fertilisers :................................................................................................................. 14 Farm Mechanisation :................................................................................................15 Rain Water Harvesting & Watershed Development :................................................16 Marketing Network :..................................................................................................16 Bio-Gas Plant :........................................................................................................... 17

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Chilling Plant :...........................................................................................................17 Refrigerated Milk Vans :............................................................................................17 Door-To-Door Delivery/Service Vans :.......................................................................18 Repair & Maintenance Workshop :............................................................................18 Table-4 : Export of Cheese to Other Countries.............................................................18 Explanation :.............................................................................................................19 Export of Cheese to UAE & Other Countries :...........................................................19 Women in Agriculture :.............................................................................................19 Milk Products...................................................................................................................19 Flavoured Milk Drink.................................................................................................. 19 Coagulated Milk Products.............................................................................................20 Chhena...................................................................................................................... 20 Paneer....................................................................................................................... 20 Fermented Milk Products..............................................................................................20 Dahi /Curd.................................................................................................................20 Yoghurt...................................................................................................................... 21 Concentrated Milk Products.........................................................................................21 Khoa.......................................................................................................................... 21 Costing of Milk Products...............................................................................................21 Raw Milk Input Vs. Liquid Milk Output :.....................................................................21 Analysis of Costing & Pricing :...................................................................................22 Sweetened Flavoured Milk (SFM) :............................................................................22 Curd (Plain) :.............................................................................................................23 Sweetened Curd :...................................................................................................... 23 Ghee :........................................................................................................................ 23 Paneer :..................................................................................................................... 24 Cheese :....................................................................................................................24 The Marketing Plan :.................................................................................................24 Table-5 : Average Composition of Milk from Various Sources......................................25 Table-6 : PFA and BIS standards for milk and milk products........................................25 Table-7 : Average Chemical Composition of Milk (Per 100 gm)...................................25 Table-8 : Pattern Of Assistance Under Orissa State Agriculture Policy-2008...............26 A Note on Subsidies :................................................................................................27 Some Additional Facts About Milk Demand & Supply :.............................................27 General Check list for Milk Processing Project :...........................................................27
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Part A : Organisational .............................................................................................27 Part B : Financial ......................................................................................................28 Part C : Technical .....................................................................................................28 Conclusion :............................................................................................................... 29

Information Tables :
TABLE-1 : UNITS OF AREA & CONVERSION RATIOS
METRIC 1 Sq. Km. = 100 Hectares (Ha) 1 Hectare = 100 Ares 1 Are = 100 Sq. Metres 1 Hectare = 2.471 Acres 1 Sq. Km. = 0.3861 Sq. Mile 1 Sq. Metre = 1.196 Sq. Yards 1 Kcal / Cu.M = 0.11249 Btu /Sq.Ft BRITISH 1 sq. Mile = 640 Acres (Ac) 1 Acre = 4,840 Sq. Yards = 43,560 Sq. Ft. 1 Sq. Yard = 9 Sq. Ft. 1 Acre = 0.4047 Hectare 1 Sq. Mile = 2.59 Sq. Km.s 1 Sq. Yard = 0.836 Sq. Metre 1 Btu /Sq.Ft = 8.89 Kcal / Cu.M

TABLE-2 : UNITS OF COUNTING – CARDINAL NUMBERS
Log Scale 100 101 102 103 104 105 106 107 108 109 1010 1011 1012 Arithmetic 1 10 100 1,000 10,000 100,000 1,000,000 10,000,000 100,000,000 1,000,000,000 10,000,000,000 100,000,000,000 1,000,000,000,000 International (USA) Unity Ten One Hundred One Thousand Ten Thousand One Hundred Thousand One Million Ten Million One Hundred Million One Billion Ten Billion One Hundred Billion One Trillion Indian (in General Use) Unity Ten One Hundred One Thousand Ten Thousand One Lakh Ten Lakh One Crore Ten Crore One Hundred Crore One Thousand Crore Ten Thousand Crore One Lakh Crore

TABLE-3 : ABBREVIATIONS USED IN THIS REPORT
Abbreviation AAS AEZ APEDA APICOL ASC ATMA BAP BGJY BIS BKVY Expansion Agro-meteorological Advisory Service Agri Export Zone Agricultural Processed Food Export Development Authority Agricultural Promotion & Investment Corporation Limited Agro Service Centres Agricultural Technology Management Agency Block Action Plan Biju Gram Jyoti Jojana Bureau of Indian Standards Biju Krushak Bikash Jojana
September, 2009

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BPL BRGF BTT CBO CIFA CIG CPM CRRI DAP DFID FFS FIAC FIG FSI GATT GKM GM GSDP HRD ICT IEC IMAGE IMD INM IPM KCC KSK KVK LAMPS LIP MSP NABARD NAIS NGO NHM NREGS NRM OAPM OSSC OSSCA OUAT PACS PERT PFA PIM PMGSY PPP

Below Poverty Line Backward Region Grants Fund Block Technology Team Community Based Organisation Central Institute for Fresh-Water Aquaculture Common Interest group Critical Path Method Central Rice Research Institute District Agricultural Plan Department for International Development Farmers’ Field School Farm Information and Advisory Centre Farmers’ Interest Group Farmers Scientist Interaction Generalised Agreement on Trade & Tariffs Gram Krushak Manch Genetically Modified Gross State Domestic Product Human Resources Development Information & Communication Technology Information, Education & Communication Institute on Management of Agricultural Extension Indian Meteorological Department Integrated Nutrition Management Integrated Pest Management Kissan Credit Card Krushi Sahayak Kendra Krushi Bijnana Kendra Large Area Multi Purpose Co-operative Society Lift Irrigation Point Minimum Support Price National bank of Agricultural & Rural Development National Agriculture Scheme Non-Government Organisation National Horticulture Mission National Rural Employment Guarantee Scheme Natural Resources Management Orissa Agricultural Produce Market Orissa State Seeds Corporation Orissa State Seeds Certification Agency Orissa University of Agriculture & Technology Primary Agriculture Co-operative Societies Programme Evaluation & Research Technique Prevention of Food Adulteration Act, 1954 Participatory Irrigation Management Pradhan Mantri Grama Sadak Jojana Public Private Partnership

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PRI RBI RGGVY RITE RMC SAP SFM SHG SMP SREP SRI SRR TMC WTO

Panchayati Raj Institutions Reserve Bank of India Rajiv Gandhi Grameen Bidyutikaran Jojana Regional Institute on Training & Extension Regulated Market Committee State Agriculture Plan Sweetened Flavoured Milk Self help Group Skimmed Milk Powder Strategic Research Extension Plan System of Rice Intensification Seed Replacement Rate Terminal Market Complex World Trade Organisation

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STATE AGRICULTURE POLICY – 2008
Agriculture Department, Government of Orissa
INTRODUCTION
The Government of Orissa has adopted an Agriculture Policy for the entire state for bringing commercialisation in the field of agriculture amongst other related fields like animal husbandry and fisheries, while improving the overall productivity in the sector. Orissa is an Agrarian State. It is endowed with a wide range of fertile soil along with adequate rainfall and suitable climate for agriculture. But it’s yet to be fully utilised. Nearly 70% population in the state depend on agriculture. But the agriculture sector contributes only 26% of the Gross State Domestic Product (GSDP). Thus it results in low per capita income in the farm sector. Consequently, there’s a large disparity between the per capita incomes in the Farm & Non-Farm sectors. The National Agriculture Policy approved by the Government of India during 2000, aimed to achieve an annual growth of more than 4% in the agriculture sector on a sustainable basis. But the growth rate achieved during the Tenth Five-Year Plan was a mere 2.3%, whereas the non-farm sector grew faster. Considering the high growth of Gross Domestic Product (GDP) in recent past, a major reorientation in the policy is necessary to make this growth more inclusive. The decline in agriculture growth coupled with declining profitability in the agriculture sector in the face of rapid growth of non-farm sector is one of the most critical concerns. The National Policy for Farmers - 2007 has envisaged focusing more on the economic well-being of farmers rather than just on production. The public investment in agriculture has been declining and is one of the main reasons behind the declining productivity & low capital formation in the agriculture sector. Private investment in agriculture has also been slow and must be stimulated & motivated thro’ appropriate policies. The fact that nearly 70% of population live in villages, agricultural growth will continue to be the driving force of the broad-based economic growth and development. This will also have natural resources conservation, food security & poverty alleviation. Thus accelerated investment is needed to facilitate agricultural development. It’s quite distressing that the farmers feel themselves at the lowest rung in the social hierarchy. It will be an important task to bring back the glory & self respect of the farming community. There are no policy tools that can achieve this directly. However, putting agriculture sector on a better path and resurrecting its importance across the sectors will go a long way in making farming a respectable profession.

AGRICULTURE IN ORISSA
In the above backdrop, a wholesome policy framework for the benefit of the farmers of the State is now brought out with a focus more on the economic well-being of the farmers, rather than just on production & growth. Thus the development of agriculture holds key to total development of the state. The Government of Orissa has decided to give agriculture the status of industry. And for this reason, the Government has taken the first historical steps to announce a bold

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agricultural policy in 1996, which sets forth the agenda for growth. This policy is refined & revised from time to time. Meanwhile more than a decade has passed since then. There have been many significant changes in the realm of agriculture development, and more so in the post-WTO (World Trade Organisation). Therefore, this is an appropriate time to take note of the changing situation and bring out a policy to meet the present challenges in the sector.

THE STATE’S VITAL STATISTICS :
1. Total Geographical Area = 155.711 Lakh Hectares, 2. Total Cultivable Area of about 64.09 Lakh Hectares thus accounting for 41.16%, 3. Cultivable Area having acidic Soil = 40.17 Lakh Hectares, 4. Area suffering from Salinity = 4.00 Lakh Hectares, 5. Area suffering from Water Logging = 3.00 Lakh Hectares, 6. Agriculture contributes about 26% in the State Gross Domestic Product, 7. About 65% of the workforce depend on agriculture for their employment, 8. The average size of holding in the State is 1.25 Ha, 9. The small & marginal farmers constitute about 83% of the farming community, 10. The State is divided into 10 Agro-Climatic Zones on the basis of soil structure, humidity, elevation, topography, vegetation, rainfall & other agro-climatic factors, 11. The average rainfall in the state is 1452 mm, of which about 80% is confined to the monsoon months of June-September, 12. The total irrigation potential created is 27.63 Lakh Ha in Kharif and 13.31 Lakh Ha in Rabi, 13. The total food grain production in the State during 2007-08 is estimated to be 92.13 Lakh Tons which is approx. 4.06% of national food grain production, 14. Rice is the main crop of the State, 15. These serious gaps of yield potential & the technology transfer provide an opportunity to the State to increase production & productivity substantially.

OBJECTIVES
Agriculture in the Sate of Orissa continues to be characterised by low productivity on account of : 1. Problematic soil – acidic, saline, waterlogged, 2. Lack of assured irrigation, or / and inadequate irrigation facilities, 3. Low water use efficiency, 4. Low seed replacement rate, 5. Low level of fertiliser consumption – 53 Kg/Ha as against the national average of 113, 6. Traditional agricultural practices, low level of mechanisation, etc. 7. Inadequate capital formation, low investment,
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8. Uneconomic size of holding, 9. People’s apathy towards agriculture because of low returns, etc. In today’s context the agricultural plan has to be holistic, well defined, focused towards overall well-being of the farming community. The Sate Government therefore, has decided to go for a “New Agriculture Policy” which is futuristic, flexible enough to anticipate and address emerging trends, identify potential areas for development and chalk out a clear agenda for agricultural development for at least next 10 years. The following are the main objectives of this Policy : 1. To bring in a shift from the present level of subsistence agriculture to a profitable commercial agriculture so that people would accept agriculture as a vocation, 2. To promote sustainable agricultural development, 3. To enhance productivity of important crops at least to match with the national average : a. Enhancing seed replacement, b. Availability of quality planting materials, c. Integrated Nutrient Management (INM), d. Integrated Pest Management (IPM), e. Water management, f. Farm mechanisation, g. Technology transfer. 4. To encourage crop diversification particularly in uplands and medium lands (e.g., paddy to non-paddy crops), 5. To focus on horticultural cops including dry-land horticulture, 6. To encourage modern farming system approach, 7. To enhance water use efficiency thro’ people’s participation, 8. To facilitate increased long term investment in agricultural sectors (on farm as well as off farm) both by private sector, public sector and private & public partnership (PPP), particularly for post harvest management, marketing, agro processing, and value addition, etc., 9. To encourage contract as well as compact farming, 10. To increase access to credit for small & marginal farmers, 11. To facilitate appropriate market linkages for agricultural produce with respect to which the state gas competitive advantages, 12. To implement watershed development programmes in watershed areas for Natural Resources Management (NRM), increased crop production as well as on farm and off farm income, 13. To create appropriate institutions / facilities to undertake regulatory enforcement and quality assurance activities matching the emergent needs,

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14. To redefine the roles and responsibilities of the agricultural extension machinery by suitably restructuring the field extension set up.

Projects Out-look
PROPOSED BUSINESS PLAN
The actual Project that our client is interested in will not be a singular one, rather it will consist of several elements that are logically related. Thus the entire Project shall be a broad based one. They are given in the following :

Main Projects :
1. Two numbers of Cattle / Dairy Farms each having 100 Milch cows, 2. Two numbers of 10 Acre patch of Land each for Fodder Cultivation & Cattle Grazing, 3. One number of 10-12 KL/day milk packaging unit, with all modern facilities, 4. One number of 2 T/d milk & dairy products processing Units, 5. The project will aim at the following main end Products : a. MILK Category : i. ii. iii. iv. v. Premium Fresh Milk Pouches (Toned, Skimmed, Whole or Full-Cream) Flavoured Milk, Butter Milk, Plain Curd, Sweet Curd.

b. MILK-Products Category : i. ii. iii. iv. v. vi. Butter, Ghee, Khoa, Chhena, Paneer, Cheese.

The Ancillary Projects which can utilise the By-products effectively (INEVITABLE) :
1. Fertilisers, Bio Fertilisers (Vermiculture), Cow-dung processing, 2. Marketing Network & Support for Agricultural Produces, 3. Cattle-feed & Poultry-feed manufacturing, 4. Calf rearing & trading activities, 5. Electricity from Bio-gas plant, 6. Cattle Breeding & Artificial Insemination, 7. Chilling Plant,

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8. Refrigerated Milk-Van.

Also there are a few Projects that can enhance the main Project (RECOMMENDED) :
1. Rain-Water Harvesting, 2. Door-to-Door Service Vans, 3. Farm Mechanisation & Equipment Support, 4. Export of Cheese to Middle-East & African Countries.

APPROXIMATE PROJECT COST
Land :
1. For Dairy farms of 100 X 2 Cattles = Approx 16 X 2 =32 Acres. 2. For one Milk Processing Plant 4 Acre. 3. Total = 36 Acres. Better to start with 40-50 Acres, so that future expansion will be smooth.

Dairy Farm Project :
1. For one dairy farm of 100 Cattles = Approx Rs.72 Lakh less 33% (24 L) = Rs.48 Lakh, in the name of the mother. 2. For the other dairy farm of 100 Cattles = Approx Rs.72 Lakh less 25% (18 L) = Rs.54 Lakh, in the name of the son. 3. For the Milk processing plant = Approx Rs.125 Lakh less 25% (25 L max) = 100 Lakh in the name of the other son or father. 4. So the total is Approx Rs.2 Crores. This cost includes land development expenses, but not the land cost.

Man Power :
1. For each of the 100 Cattle dairy farm = 15 employees. 2. For the milk processing unit = 25 employees. 3. So total man-power needed is = 55 employees.

DETAILED DESCRIPTION, SCOPE & EXPLANATION
Cattle / Dairy Farms :
For the best use of the Orissa Sate subsidy, we have proposed two separate farms to be set up on two different pieces of land. Same land can’t be used for two subsidies. Thus we will have 2 X 100 cattle farms with a bare minimum of 12 Acres of land each. Ideally, the animal husbandry doctors recommend 16 Acres for 100 cattle. If there’s no problem in availability then we should go for 18-20 Acres of land each. This can take care of future expansion or fodder load. The fencing can be a strong 6 ft high compound wall, barbed wire with or without green vegetation, or it can be only a thick green fodder vegetation.

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For the cow shed we need asbestos covered open sheds of approx. 7,500 sq.ft. area plus ancillary area of 500 sq.ft for office, store, Laboratory & milk collection room. Arrangement for other amenities include pump house, electricity, hardware, fodder preparation equipment, etc. have to be made. Procurement of cows of “Cross Breed Jersey” type & species are popular in Orissa, because they can be adapted to Orissa climate & are available in nearby state of Andhra Pradesh. While transporting, and also for the normal lives of cattle, they must be covered by adequate insurance. For uniform milk yield we suggest the cattle be bought in two instalments of 50 each after a gap of six months. Health management of cattle is a must, and the presence of a full time qualified animal husbandry doctor is recommended. He can look after day to day health check-up, disease treatment, medication, vaccination, food, nutrition, breeding, pregnancy, artificial insemination, & maintaining health records, etc Sewerage & slurry of cow-dung & urine are appropriately processed. We suggest reuse of these waste material either in production of fertilisers or energy - for cooking or electricity.

Milk Processing / Packaging Unit :
1. The land requirement for a 10-12 KL/day plant needs 2-2.5 Acres. 2. The Processing plant area ideally be of 50,000 sq.Ft. 3. Raw Milk Reception Dock (RMRD) - consisting of can conveyor, can washer, weighting balance, dump tank etc. 4. Processing Hall - cream separator, chiller, homogeniser, pasteuriser and other related machinery are installed. 5. Storage area- for milk storage tanks. 6. Products manufacturing area-depends upon the type of products and the quantity of milk handled, the required equipment needs to be installed. 7. Packing area-for packing of liquid milk and other products. 8. Cold storage-for keeping the milk and milk products before sending to market. 9. Quality Control Laboratory-for testing the quality of milk and milk products. 10. Utilities area-for installing boiler, generator set, water treatment plant, maintenance and store area for spares. 11. Waste water treatment plant area-for treating the dairy effluents before releasing to the fields. 12. Quarters and office area-for all the essential staff. 13. Vehicle parking area-both for the milk procurement and distribution vehicles. 14. Input supply area- for providing veterinary service, supply of feed, fodder seeds, etc.

Fodder Cultivation :
Normally the cows are not allowed to graze in the open. There are two basic reasons : (1) they may take in harmful insects, or organisms, and (2) idle time chewing of food

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consumes a lot of energy which reduces milk yield. So fodder cultivation is a must. The vast area can be utilised for this. For this farm mechanisation can be effectively used. We recommend various types of fodder : like leguminous, non-leguminous, grass family, quick growing, seasonal, perennial, and other leafy fodder. The dry type like husk & hay can be purchased as per requirement. For cultivation of fodder we require water, which can come from rain water harvesting, bore well, dug well, or a pond inside the campus. We suggest a peripheral canal around the compound which can be used as a rain water reservoir.

Calf Rearing & Trading :
As we know, cattle is a very fertile species in animals. And milk is a by-product of this process of reproduction by nature. So it’s imperative that we encourage this process to be in business. The general observational study about cattle says that all healthy cows procreate once in a year (the incubation period being same as humans, 9 months). If we take out approx. 25% because of certain irregularities on account of fodder, medicine, health & disease & other external factors over which the promoters have no control, than we have an additional 75% more heads to feed every year. Assuming unbiased gender distribution we have approx 35-40% of female calves, who can grow to be milkproductive. Let’s discuss in details. Cows get ready for reproduction at the age of 33/39 months on average. Their milk yield is at the peak between 5/6 years & 12/13 years. After this age another couple of years their yield is reduced. After the age of 15 they become unproductive & they need to be suitably & profitably disposed off. Thus we see that every 12 years we need to replace the whole of our cattle we have started with in the beginning. Also if our business grows annually @ 10-15% (nominal) or 20-25% (healthy) or 30-35% (high) then we have to go for the increase in cattle population @ (1) 10% for cyclic replacement, PLUS (2) the rate of business growth (say 25% for a healthy one). So we must retain at least 35% female calves. Roughly this figure matches with our earlier figure of surviving healthy female calves. Now we can have a few options to gainfully exploit the situation. Remember we can’t keep all the calves for ourselves, because there will be a tremendous pressure on fodder, space, health & infrastructure. In the initial stage of project planning we have to fix a growth rate as target & work out our arithmetic accordingly. Here are a few alternatives : 1. We can sell all the male calves at the market price. 2. We can retain a few healthy male calves (max 5%) for rearing to be helpful in artificial insemination when they grow to adulthood. 3. We can sell some of the female calves at the market price. 4. A better alternative would be to supply some of these female calves as well as some male calves to the regular milk suppliers at a subsidised price (or even none) so that the supplier shall remain motivated & loyal to the company. 5. This is all the more important because the company has a high yield breed of cattle & normally the milk suppliers don’t have or have no resources to buy. Ultimately the company gains. The company can take an assurance from the supplier that he has to sell the milk to the company only, when the calf grows up & be milk-productive.

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Let’s have an Illustration : The given scenario is : 1. A 12 KL/day milk packaging plant 2. A 200 Cattle Dairy Farm with a breed of cow yielding 15 Ltr/day each. 3. So we have 3 KL/day at our command initially. 4. We want to make it 5 KL/day within 2 years. 5. Well, we can’t do that from our own cattle reproduction because a female calf needs 3 yrs to reach the reproductive age. We may procure additional cattle for that. 6. Also, when we start we may not have any pregnant cows. So it will add one more year to that. 7. So the practical suggestion is that – to have a uniform round the year optimum milk yield & reproduction we buy 50 cattle each at one go every 3 months. 8. Say Jan-2010 we buy 50 cows. Apr-2010 the next batch of 50 cows. Jul-2010 the third, & Oct-2010 the forth & final. 9. So by Jan-2011 we expect approx 20 female calves and it goes on in the same cycle. 10. And by Jan-2014 they all will become milk producing in the same cycle. 11. So for the fist 3 years (2011,12,13) the sale of female calves is not recommended. 12. From 2014 onwards, sale of female calves may be done depending on the practical & actual data on mortality, infrastructure, health etc. 13. Thus we see that we can add a little over 100% of the initial no. of cows in 4 th year, with addition of a little less than 100% in milk production in the 6th year. 14. Then onwards it becomes regular. 15. Assuming that the average age of the initially procured cows being 5 year, again by 6th/7th year the yield will start falling & a few of them may become old or diseased. 16. Thus the cycle of replenishment & drop-outs will become stabilised after 6th year and the cycle will go on after that.

Cattle Breeding & Artificial Insemination :
For the reproductive process in cattle to be uniform, we must take care of the mating, breeding, with correct species and time. It’s always better to procure one or two bulls of the same species & variety as the milch cows, at the time of cattle procurement. We have to keep this bull clean, healthy & active so that it can be used for the breeding purpose. Alternatively, sometimes we can go for artificial insemination from a reliable source with the correct species & variety. This has to be conducted in a hygienic environment by a qualified animal husbandry doctor. Also we have to rear a few male calves suitable for breeding purpose, and groom them accordingly. Biologically, it is recommended that there must be 5 bulls for 200 cows. That means we must earmark one male calf every year for growing it to a healthy bull capable of procreation.

Fertilisers :

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To increase agricultural production, it is necessary that chemical fertilisers as well as organic manure are used adequately and also in a balanced manner. Presently (2008) the fertiliser consumption in the state is 53 Kg/Ha only, as compared to the national average of 100 Kg/Ha. Hence there is adequate scope for increasing fertiliser consumption in the state. While suitable measures are to be taken to increase fertiliser consumption, emphasis also shall be laid on the balanced fertilisation. “Balanced Fertilisation” is the accurate fertiliser application equal to the plant need and the nutrient content of the soil. To achieve balanced nutrition for sustainable crop production, Integrated Nutrient Management (INM) is very important. The goal of INM is to integrate the use of all natural & man made sources of plant nutrients required for high agricultural productivity besides ensuring the health of the soil. The state will endeavour to promote INM practices in a big way thro’ suitable programmes & incentives. The effect of prolonged and over use of chemicals on soil results in soil health deterioration, human health hazards and pollution of the environment. Hence it is necessary to switch to an alternate source of nutrient supply to the crops which is ecologically protective of farming. The state will promote the use of bio-fertilisers in a big way thro’ suitable incentives and effective extension.

Farm Mechanisation :
Farm mechanisation brings about a significant improvement in agricultural productivity in a number of ways. The timeliness of various agricultural operations is crucial in obtaining optimal yield, which is possible only thro’ mechanisation. Secondly, the quality & precision of operations are equally significant for realising higher yield. The various operations such as land levelling, irrigation, sowing and planting, use of fertiliser, plant protection, harvesting & threshing need a high degree of precision to increase the efficiency of the inputs and reduce the losses. Farm mechanisation goes a long way in reducing the drudgery of agricultural operations. With mechanisation there are good chances of : 1. Reduction of Cost, Labour, Effort, etc., 2. Increase of Production, Productivity, Profitability, etc. In our State, the current level of mechanisation is very low. Farm mechanisation will be promoted in a big way by ensuring easy availability by appropriate farm machinery at substantially subsidised rate. The Rate of Subsidy on farm mechanisation and equipment is now at 50% level. (See the Table of Subsidies). The following are the salient features of this facility : 1. The farm machinery suitable for different types of soil and operation for important crops shall be developed. 2. Women-friendly farm equipment will be promoted. 3. Technical know-how shall be provided to the farmers with respects of appropriateness of the farm machinery for the situation. 4. The training related to farm machinery & equipment shall be imparted to the farmers and artisans.
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5. Integrated Pest Management (IPM) and use of Bio-Control agents will be encouraged in order to minimise the indiscriminate and injudicious use of chemical pesticides. Subsidy will be provided for plant protection equipment. 6. Agro Service Centres (ASC) will be promoted to provide door-step services for farm mechanisation. In our context of fodder cultivation, we can use the farm mechanisation efficiently in the two pieces of land of 16-18 Acres each. The unutilised time can be utilised for giving the equipment on hire for support of profit margin.

Rain Water Harvesting & Watershed Development :
Watershed development is one of the priority areas for the state. Orissa has been one of the pioneer in demonstrating watershed development programme. The focus of the development programme is to conserve soil & moisture as well as to put the land to the best use according to their capabilities to improve the overall productivity of the catchment in a holistic manner. The process of watershed development involves co-ordinated multi-disciplinary activities of and expertise from several departments. In order to achieve better co-ordination in planning, implementation & supervision in watershed programme, Govt. Of Orissa has set up a separate mission named “Orissa Watershed Development Mission”. Under the DFID assisted Western Orissa Livelihood Project (WORLP), “Watershed Plus” approach has been successfully adopted wherein, in addition to area development, livelihood component has also been implemented. Livelihood component of the watershed plus approach will be extended to all watershed projects in the State under the scheme named “Jeebika”. Community based organisations such as Self-Help Groups (SHG), User Groups (UG) and Common Interest Groups (CIG) evolved under watershed development programmes will be suitably strengthened. Watershed Associations will be entrusted with suitable responsibilities such as distribution of seeds and other inputs in the project area. Farm Ponds will be dug in the farms of individual farmers thro’ the Watershed Associations. The small & marginal farmers will avail the facility free of cost while the other farmers will have to contribute 50% of the cost of such pond to the Watershed association. Similarly, the rain water harvesting can be done in a bigger way for bigger pieces of land owners wherein a trench can be dug around / along the length of boundary wall with the land slope directing to the periphery so that all the rain water get collected in the trench. It can be slowly soaked into the soil increasing the moisture content of the soil.

Marketing Network :
This is the Marketing of the products of Milk Plants. It involves procurement of milk from the villages, chilling, pasteurisation, homogenisation, packing of milk of various brands (whole, standard, toned and double toned milk) and supplying them to the consumers. The surplus fat is converted into ghee or table butter or sold as cream to bakeries. The market for the product (domestic and export), type of arrangements for distribution and sales, commission and additional incentive to be given, the proposed net work and the advertisement plans should be furnished. Detailed market survey report is required to be submitted.
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Bio-Gas Plant :
The impending scarcity of petroleum threatens the world’s fuel supply. Mankind can face this threat successfully with the help of biogenous methane, but the world is yet to take full advantage of this technology, because its practitioners have so far ignored the basic tenet of science – viz. output of work is dependant on the energy available for doing that work. This fact is seen in the current practice of using low calorie inputs like cattle dung, distillery effluent, municipal solid waste or sewerage, in biogas plants, which makes methane generation highly inefficient. To efficiently dispose the waste and recycle it profitably we must have a Bio-Gas plant. Primarily it can be a gobar-gas plant. As of today the technology is also advanced enough to utilise house-hold waste for production of energy. The huge amount of methane gas present in the cow-dung is utilised for generating clean fuel the remaining refuse can be used for manufacture of bio-fertilisers. The fuel thus generated can be used as domestic fuel or alternatively this can be used to produce electricity. The bio-gas / gobar-gas plant will cater to the needs of fuel & lighting for the dairy farm, as well as the families of the workers. The following are some facts about biogas from cow dung : 1. Cow dung gas is 55-65% methane, 30-35% carbon dioxide, with some hydrogen, nitrogen and other traces. Its heating value is around 600 Btu per cubic foot. (1 Btu/Cu.Ft = 8.9 Kcal/Cu.M) 2. Natural gas consists of around 80 % methane, yielding about 1000 Btu per cubic foot. 3. Biogas may be improved by filtering it through limewater to remove carbon dioxide, iron filings to absorb corrosive hydrogen sulphide and calcium chloride to extract water vapour after the other two processes. 4. Cow dung slurry is composed of 1.8-2.4% nitrogen (N2), 1.0-1.2% phosphorus (P2O5), 0.6-0.8% potassium (K2O) and 50-75% organic humus. 5. About one cubic foot of gas may be generated from one pound (=1 Cu.M/16 Kg) of cow manure at around 28°C. This is enough gas to cook a day's meals for 4-6 people in India. 6. About 1.7 cubic metres of biogas equals one litre of petrol. The manure produced by one cow in one year can be converted to methane which is the equivalent of over 200 litres of petrol. That means approx 15 Kg of cow-dung is generated per cow per day. 7. Gas engines require about 0.5 m3 of methane per horsepower per hour. Some care must be taken with the lubrication of engines using solely biogas due to the "dry" nature of the fuel and some residual hydrogen sulphide, otherwise these are a simple conversion of a petrol engine.

Chilling Plant :
These are the Milk Chilling plants. It involves collection of milk from the villages, chilling the milk to 3-4 degree Celsius and transporting to the main dairy for further processing and manufacture of products. This is actually a section of the milk processing plant.

Refrigerated Milk Vans :

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For transport of raw milk or even processed milk refrigerated milk vans are a must. These can be also used for delivery of the milk pouches at the retail points.

Door-To-Door Delivery/Service Vans :
For other type of delivery & transportation we need these vans. The vehicles required for procurement and distribution of milk depends on the quantity of milk to be handled. The number of vehicles required, source of supply, rental charges etc. need to be furnished. Depending upon the need, the requirement of vehicles may be considered in the project cost.

Repair & Maintenance Workshop :
This being a mechanical & processing plant we have several utility services like vehicles, cooling, refrigeration, agricultural equipment, civil works, water supply, steam boilers, electricity, DG sets, etc. So it becomes imperative that we must have a repair & maintenance workshop manned with skilled workers.

TABLE-4 : EXPORT OF CHEESE TO OTHER COUNTRIES
2007-2008 S N 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 TOTAL U.A.E. 2,89,82,1 00 6,50,02,3 2,30,6 59 5,44,4 44. 40 119. 2,34,22,1 70 4,86,28,1 2,31,1 50 4,54,8 SINGAPOR E SRI LANKA 81,17,288 AUSTRALIA BAHRAIN CANADA HONG KONG JAPAN KUWAIT MOROCCO NEPAL OMAN QATAR 29,89,481 26,24,119 54,80,527 45,41,095 42,27,674 27,41 3 20,00 0 31,73 5 49,39 4 43,36 3 75,72 9 4. 58 4. 02 8. 40 6. 96 6. 48 12. 43 74,38,00 5 4,57,088 3,210 74,500 54,10,38 9 27,83,96 5 7,40,700 7,000 23,800 35,240 11. 02 5. 67 1. 51 15. 15 0. 93 47. 70 106. 1,63,89, 992 3,72,11, 1,67,7 52 3,68,6 36,01,2 04 29,96,9 19 14,68,5 22 65,52,2 09 92,606 30,49 0 30,00 0 16,10 0 62,38 0 620 9.6 5 8.0 3 3.9 3 17.5 5 0.2 5 43.9 1 100. 3,29,965 3,213 0. 51 12,24,19 4 22,32,60 4 22,000 10,900 2. 49 4. 55 28,04,1 73 29,00 0 7.5 1 Country Value (Rs.) 50,45,461 26,64,650 Quant ity (Kg.) 36,00 0 26,93 8 Shar e % 7. 73 4. 08 34,87,84 9 14,31,18 5 13,700 2006-2007 Value (Rs.) Quanti ty (Kg.) 33,380 Shar e % 7. 10 2. 91 8,65,48 3 17,84,8 37 6,55,58 6 18,10 0 6,250 2005-2006 Value (Rs.) Quant ity (Kg.) 8,000 2.3 2 4.7 8 1.7 6 Share %

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4

60

44

39

49

80

90

531

92

93

Source : APEDA Website.

Explanation :
1. For the 4 years, UAE has remained as the top-most importer of cheese from India (4448%) followed by Singapore (12-18%), Nepal (8-11%) & Australia (7-8%). 2. The average export price is around Rs.120/Kg (2007-08), 107 (2006-07), 101 (200506). 3. These figures are shown in Bold letters in the last row of the Table.

Export of Cheese to UAE & Other Countries :
Dairy products form one of the fastest growing segments in the livestock product export. The major products exported are malted milk foods, ghee and cheese (to some extent) to the countries like Bangladesh, UAE, Nepal, Sri Lanka, Bahrain and Oman. Bangladesh, United Arab Emirates, Nepal, Sri Lanka and Oman are the potential countries for export of malted milk products, butter and ghee. The export of milk and milk products to currently existing markets would increase to Rs.285 million and to new markets to Rs. 155 million. Thus the exports is likely to touch Rs.440 million (APEDA estimates) by the turn of the century. [See the above Table-4 for Cheese Exports.] The GATT agreement further gave a boost to the dairy industry, as India has a comparative cost advantage in regard to milk production. NABARD has been actively involved in credit disbursement in number of schemes in dairy sector. It also encourages development of new products through its research and development funds besides guiding various entrepreneurs in new areas of business and technology.

Women in Agriculture :
Advocacy for women’s rights and gender sensitisation is at the very core of developmental approaches today. Communications for social mobilisation therefore should incorporate gender as an equity perspective. 1. Women will be important project partners in agricultural developments. So, emphasis will be given to capacity building and empowerment of women to achieve the goals. 2. The creativity, productivity and entrepreneurship of women and their capacity for furthering their skills will be dealt with special focus thro’ gender-analysis and gender sensitisation in all agricultural developmental approaches. 3. Capable women SHGs will be given preference, if they come forward to deal in the agricultural-inputs. 4. Women-friendly farm equipment will be promoted.

Milk Products
Flavoured Milk Drink
It is a good health drinks particularly in summer with all the good qualities of milk.

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Method of preparation : Good quality milk is received and is standardised to the required level of fat and solids not fat. It is followed by pre-heating and homogenization. To this the required colour and matching essence is added together with 7% sugar and 0.2% stabiliser. The mixture is later pasteurised, cooled and bottled.

COAGULATED MILK PRODUCTS
Chhena
Chhena differs from paneer in that no pressure is applied to remove the whey. The coagulum is collected in a cloth and hung on a peg without applying pressure to drain off the whey. Method of preparation : Chhena is usually prepared by mixing old Chhena whey with boiled hot milk. For Chhena production, cow milk is preferred since it yields a soft bodied and smooth textured product. Both these characteristics are suitable for production of high-grade sweets. Chhena from buffalo milk has a slightly hard body, a greasy and coarse texture, and does not produce good quality chhena sweets. Commercial manufacturers generally use sour whey for economic reasons.

Paneer
Mainly consisting of acid coagulated milk solids. Paneer is made from cow, buffalo or mixed milk although buffalo milk is preferred. It can be taken as such or can be used in the manufacture of rassagolla, paneer pickle, curry etc. Method of preparation : Milk is first heated to boil; coagulation is simultaneously effected by adding the required amount of coagulant in a thin stream, with slow stirring. When the whey is clear, it is drained by hanging the curd in a cloth and later by lightly pressing the paneer. Paneer is pressed mechanically into blocks in hoops, by putting weights on them (approx. 2-3 kg/sq.cm) for 15-20 minutes. Thereafter paneer is removed and cut into suitable sizes and immersed in chilled water for 3-4 hours to make it firm. 1% citric acid solution at a temperature of 75 to 800C is commonly used as the coagulant. For coagulating 1 Ltr of milk 200 ml of 1% citric acid solution or one lemon juice dissolved in 200-ml water will be sufficient.

FERMENTED MILK PRODUCTS
The starter cultures used for preparation of fermented dairy products are available from NCDC, Dairy microbiology division, NDRI, Karnal, Haryana.

Dahi /Curd
It is the most important fermented milk product used in India since time immemorial. Method of preparation : The production of dahi is mostly carried out on a small scale, in every household. The household milk is boiled, cooled to room temperature (37 0C), inoculated with 0.5-1% starter which usually is the previous day’s dahi or butter-milk, and then allowed to set overnight. The starter culture used is the Lactic acid bacteria. In cooler weather the dahi setting vessel is usually wrapped in a cloth to maintain warmth. In shops, the method is more or less the same except that milk is concentrated somewhat before inoculation and the dahi is usually set in a shallow circular earthen pot, which helps in the absorption of any whey that may ooze out.

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Yoghurt
Yoghurt is considered as the western counterpart of the Dahi. Scientists attribute many health benefits for consuming yoghurt. Method of preparation : Whole fresh clean milk has to be used in the preparation of yoghurt. To this, required quantity of skim milk powder is added so that the solid not fat is increased to 12%. Sugar may be added at the rate of 5-8%. The mix is heated and later homogenised followed by pasteurisation. The mix is cooled and later inoculated with a 1:1 mixture of Lactobacillus bulgaricus and Streptococcus thermophilus at the rate of 2%. The yoghurt mix is then packed and incubated at 41- 420C for three hours so that the acidity reaches around 0.75% of lactic acid. The container is removed from the incubator and stored at 50C.

CONCENTRATED MILK PRODUCTS
Khoa
It is a product obtained by heat desiccation of cow, buffalo or mixed milk in an open pan to 65-70% solids. Method of preparation : In the traditional method, milk is taken in small lots of about 4-5 litres in an open, shallow iron pan. It is directly heated over a non-smoky vigorous fire. Milk is slowly agitated in the beginning with a continuous light scraping action, with iron scraper on the sides to avoid scorching of milk solids sticking to the sides of the pan. Continuous evaporation takes place and milk thickens rapidly. At certain concentration, usually of 2.5-2.8 times, the heat coagulation of protein begins. Concentration now takes place faster and a change of colour is seen. The heating is turned down to about 82-87 0C and stirring and scraping intensified to avoid browning of milk solids due to scorching. The viscous milk begins to dry up. When the khoa mass begins to leave the sides and bottom of the pan, heating is shut off and khoa forms into pats. The final solids content in khoa ranges between 65 and 70%. Cow milk usually yields 18 percent of khoa. The yield from buffalo milk is usually 20 percent. Buffalo milk is preferred since it yields a whiter product with a soft loose body and a smooth granular texture which makes it suitable for the preparation of khoa based sweets.

COSTING OF MILK PRODUCTS
In the following we have presented the approximate costing of a few of the milk / dairy products. The assumptions are (1) The total cost of procurement of raw input milk @ Rs.15.65/Ltr at the processing plant (OMFED figures), and (2) the composition of raw input milk being 4% Fat and 8% SNF. Pls. Note the following : 1. “Cost” refers to cost of procurement / production. 2. “Price” refers to selling price. 3. In our earlier report the procurement cost was stated to be Rs.15.75/Ltr. This was the figure for the last Financial Year of the OMFED.

Raw Milk Input Vs. Liquid Milk Output :

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Input raw milk is priced on the basis of the Fat content & Solid Non-Fat (SNF) content. These rates are decided on the basis of several factors like, supply, demand, composition of milk and the statutory control. 1. Fat rate is Rs.154/Kg currently. 2. SNF rate is Rs.113/Kg currently. 3. So the buying price of raw milk as input is = ( 154 × 0.04 + 113 × 0.08 ) = Rs.15.20/Kg, which is ( 15.20 × 1.028 ) = Rs.15.65/Ltr. 4. Production cost is Rs.3.35/Ltr. 5. Distribution cost is Re.0.55/Ltr. 6. Retail commission is Re.0.70/Ltr. 7. Hence, the cost of sales is Rs.20.25/Ltr. 8. Sale is at Rs.20.00/Ltr. 9. So there’s is a marginal loss of Re.0.25/Ltr.

Analysis of Costing & Pricing :
1. As a corporate policy, the whole of overhead is apportioned to the liquid milk packaging. Thus a marginal loss is shown. But this “loss” is made-up many times over by the sale of value added products as we had suggested in our earlier report. 2. The net profit is the sale-price of these products less the packaging cost (5%) & the trade margin (20%). This amounts to 75%. 3. If we analyse the costing / pricing from the “Fat-SNF” composition point of view, we get very interesting results : a. The cow milk of OMFED contains 3.5% Fat & 8.5% SNF, the input milk price becomes = (154 × 0.035 + 113 × 0.085 ) × 1.028 = Rs.15.45/Ltr. So we get 20 paise to offset 25 paise of loss. b. The Toned (Low-Fat) milk recently introduced (20-09-2009) has a composition of 0.5% Fat & 8.7% SNF. So the input price becomes = (154 × 0.005 + 113 × 0.087 ) × 1.028 = Rs.10.90/Ltr. c. Assuming that the other costing are the same & the sale price being Rs.17.00/Ltr, the net profit is = ( 15.65 – 10.90 ) – ( 20.25 – 17.00 ) = ( 4.75 – 3.25 ) = Rs.1.50/Ltr. d. Note here that, if the sales & distribution cost is considered proportionately, then the margin becomes Rs.1.75/Ltr. Thus, this has a tremendous potential of profitability, despite the fact that whole of over head cost is apportioned to liquid milk. e. The general public is not bothered about these composition, what they understand is that low-fat milk is thinner than normal cow-milk & yields less curd, butter, chhena etc. And hence the price is less. But they can’t gauge “how low” is the quality and what would be the low price. f. And, this precisely is the trick of the trade.

Sweetened Flavoured Milk (SFM) :
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1. The SFM contains Milk, water, Sugar and Skimmed Milk Powder (SMP). 2. The average proportions are Milk = 49%, Water = 39.25%, Sugar = 7.25% SMP = 4.5%. 3. The average costs (Rs. per Kg.) are Milk @ 15.65, Water @ 0.50, Sugar = 30.00, and SMP = 130.00. 4. So the cost of SFM is = ( 0.49 × 15.65 ) + ( 0.3925 × 0.50 ) + ( 7.25 × 30.00 ) + ( 4.5 × 130.00 ) = 7.67 + 0.20 + 2.18 + 5.85 = 15.90. 15.90. 5. The process yield is about 83% (i.e., the process loss is 17%). 6. So the final cost is = 15.90 ÷ 0.83 = 19.15/Kg = 19.15 × 1.028 = Rs.19.70/Ltr. 7. Bottling costs are approx Rs.5/Ltr (5 × 200 ml disposable bottles) = 24.70/Ltr. 8. Market price is between Rs.10-12/Ltr for 200 ml bottle (Rs.60/Ltr).

Curd (Plain) :
1. For better yield and texture of the curd, SMP is added to the raw milk. 2. Average proportions are : SMP = 7%, Milk = 93%, and yield = 95%. 3. Cost = ( 130 × 0.07 ) + ( 15.65 × 0.93 ) = 9.10 + 14.55 = 23.65 4. With yield = 23.65 ÷ 0.95 = Rs.24.90/Kg. 5. Market price on the average is Rs.60/kg.

Sweetened Curd :
1. Sugar is added to sweeten the curd. 2. The ingredients and proportions are : Milk = 70.5%, SMP = 12% and Sugar = 17.5%. 3. Cost = ( 15.65 × 0.705 ) + ( 130 × 0.12 ) + ( 30 × 0.175 ) = 11.05 + 15.60 + 5.25 = 31.90 4. Average yield is 80%. So the final price is 31.90 ÷ 0.80 = Rs.39.90/Kg. 5. Normal packing is in ice-cream cups (13 × 80gm) & normal cups (7 × 150gm), and the cost is approx Rs.8/Kg. 6. That makes a final cost of R.48.Kg. 7. The average market price is Rs.80/Kg.

Ghee :
1. Let’s say we produce Toned milk at 1.5% of fat. 2. So starting at 4% we are left with 2.5% fat, which is processed into Ghee. 3. At this rate for every Ltr of Ghee we must have 40 Ltrs of input milk. ( 1 ÷ 2.5% = 40 ). 4. Cost of fresh Milk is Rs.20.25/Ltr. (OMFED). 5. Cost of Toned Milk is Rs.16.50/Ltr. (OMFED). 6. So the difference is Rs.3.75/Ltr and for 40 Ltrs it is Rs.150/Ltr.

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7. Hence, this is the cost of Production of 1 Ltr. of Ghee. 8. OMFED price of ghee is Rs.256/Ltr. Other Companies’ prices are from Rs.220-300/Ltr. 9. Note that we have not added any extra cost of ghee processing. It is nominal, and even if added, we have a margin of Rs.75/Ltr. 10. Remember, this profit is out of no extra input. It just adds to the profitability. 11. There’s an alternate method of calculation : Ghee is approx 92-96% fat & rest moisture. 12. So calculating at the Fat rate = ( 154 × 0.94 ) = 144.75, plus separation cost say 5.75 will give the same figure as Rs.150/Ltr 13. Final pricing and positioning of the product need accurate decision.

Paneer :
1. This is the solid suspension of liquid milk. (Milk is chemically a colloidal Solution). 2. Normally, 160 gm of Chhena is obtained from 1 Ltr (1.028 Kg.). 3. So if the raw input milk is Rs.15.20/Ltr, then Chhena is = 15.20 ÷ 0.16 × 1.028 = Rs.97.65/Kg. 4. Chhena is a soft coagulated product having some water content. Paneer is a hard coagulated product and pressed to remove water and bring to a particular shape. 5. Assuming that we have 7.5% water content, the cost can be = 97.65 ÷ 0.925 = 105.55/Kg 6. The Market price is between Rs.130-150/Kg, and OMFED price is Rs.126/Kg. 7. The Chhena-water thus extracted known as WHEY-MILK is very rich in vitamins & minerals and can be sold for Rs.32-40/Ltr. This is out of no extra input again, strengthening the margin. 8. The Paneer is marketed in the name of “Cottage Cheese” because of VAT implications (Panner carries 12.5% & Cottage Cheese none).

Cheese :
Cheese is nothing but paneer, treated with some favourable organisms and stored in controlled conditions for over a period. This is high in demand for the ever increasing urbanisation. Also there is a great demand for exports. The export is controlled and subsidised by APEDA, a central body. For this separate sanction has to be obtained. The costing is similar to paneer plus the controlled storing cost for normally a year. If we take the rate of bank interest for a year, say 15% and storage cost at 35%, then the cost of cheese shall be Rs.160/Kg. The selling price is normally Rs.300-350/Kg.

The Marketing Plan :
The city of Bhubaneswar itself can consist of a niche market for this project. The demand of milk in Bhubaneswar is 170 KL/day.(see the section “Additional Facts” on page 24). OMFED BBSR plant gives about 75, other dairy plants give 40, un-organised sector gives 35, assuming all these are sold in the city. The total is 150 KL/day. And still there’s a gap of 20 KL/day. The following can be some of the strategies for marketing :
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1. We will not go for plain / fresh / cow milk (3.5% fat 8% SNF) at all in the beginning. Instead we will go for skimmed milk (0.5% fat & 8.7% SNF) which has a much better margin as shown above in the cost/price analysis section. (Target price Rs.16/Ltr as against OMFED’s Rs.17) 2. Also, we will market SFM-sweetened flavoured milk @ Rs.10/200gm as against OMFED’s Rs.12. and so on. 3. Similarly, Curd, sweet curd, ghee, paneer will be targeted at a competitive advantage with respect to OMFED. We can do that because the margins are comfortable. 4. Physical distribution system needs more focus. Initially we can have home delivery to niche areas like Forest park, Chandrasekharpur, and posh apartments. For home deliveries we can charge MRP, and for retail purchase Re.0.50 less. This may motivate the buyers. 5. Attractive packaging & better self life. 6. TV advertising, along with print media ads. 7. Watch the buyers’ response all the time and make necessary adjustments & changes.

TABLE-5 : AVERAGE COMPOSITION OF MILK FROM VARIOUS SOURCES
Breed of Cattle Jersey x local Holstein Friesian x local Brown Swiss x local Buffalo Goat Vechur Cattle of Kerala Total Solids% 14.30 12.95 13.74 16.90 13.50 14.75 Fat % 5.11 4.26 4.80 7.40 4.50 5.92 SNF % Protein % Lactose % Ash % 9.19 3.78 4.74 0.67 8.69 3.51 4.50 0.67 8.94 3.71 4.62 0.61 9.50 3.90 4.80 0.80 9.00 3.50 4.70 0.80 8.84 -

Note : “Ash” generally refers to the salts & minerals present in milk.

TABLE-6 : PFA AND BIS STANDARDS FOR MILK AND MILK PRODUCTS
Description Cow milk Buffalo milk Goat milk Standardised milk Recombined milk Toned milk Double toned milk Skimmed milk Full cream milk Fat % (Min) 3.5 5.0 3.5 4.5 3.0 3.0 1.5 (max.) 0.5 (max.) 6.0 SNF%(Min) 8.5 9.0 9.0 8.5 8.5 8.5 9.0 8.7 9.0

TABLE-7 : AVERAGE CHEMICAL COMPOSITION OF MILK (PER 100 GM)
Sr. No. 1 2 3 Constituents Moisture (gm) Protein (gm) Fat (gm) Buffalo 81.00 4.30 6.50 Cow 87.50 3.20 4.10 Goat 86.80 3.30 4.50 Liquid Skimmed Milk 92.10 2.50 0.10
September, 2009

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4 5 6 7 8 9

Minerals (gm) Carbohydrates (gm) Energy calories (kcal) Calcium (mg) Phosphorus (mg) Iron (mg)

0.80 5.00 117.00 210.00 130.00 0.20

0.80 4.40 67.00 120.00 90.00 0.20

0.80 4.60 72.00 170.00 120.00 0.30

0.70 4.60 29.00 120.00 90.00 0.20

TABLE-8 : PATTERN OF ASSISTANCE UNDER ORISSA STATE AGRICULTURE POLICY-2008
SN. 1. SCHEMES Capital Investment Subsidy for Agri-Enterprises DETAILED PATTERN OF ASSISTANCE 25% of the fixed capital (excluding the cost of the land) subject to a limit of Rs.25 Lakh (33% limited to Rs.25 Lakh for SC / ST / Women / Graduates of Agriculture & Allied Disciplines)

2.

3.

Private Lift Irrigation Projects (Jalanidhi) (a) Shallow Tube well (b) Dug Well (c) Bore Well (d) River Lift / Surface Lift Project Farm Mechanisation (a) Tractor (b) Power Tiller

50% 50% 50% 50%

of of of of

the the the the

project project project project

cost cost cost cost

limited limited limited limited

to to to to

Rs.20,000/Rs.50,000/Rs.50,000/Rs.40,000/-

(c) Specialised Power driven Equipment

(d) Manually Operated Tools / Implements (e) Animal Driven Implements (f) Animal Driven Tool Carrier (g) Power Driven Equipment (Tractor / Power Tiller Operated) Intended inclusion of all tractor & power tiller driven conventional equipment / implements (h) Power Threshers (All Types) (i) Diesel / Electric Pump

50% of the cost limited to Rs.90,000/(i) 50% of the cost limited to Rs.60,000/- for Power Tiller of 8 BHP & above (ii) 50% of the cost limited to Rs.30,000/- for light weight Power Tiller of less than 8 BHP for hill regions (i) 50% of the cost limited to Rs.30,000/- for one Category (ii) 50% of the cost limited to Rs.25,000/- for other Category 50% of the cost limited to Rs.4,000/50% of the cost limited to Rs.5,000/50% of the cost limited to Rs.12,000/(i) 50% of the cost limited to Rs.20,000/- for essential tractor driven implements (ii) 50% of the cost limited to Rs.20,000/- for a set of power tiller driven implements

50% of the cost limited to Rs.24,000/50% of the cost limited to Rs.10,000/- for capacity up
September, 2009

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Sets

to 7.5 BHP / 5 KW

A Note on Subsidies :
A single project can have only one subsidy in total from all sources, like state agency or central agency. Even further expansions or phased implementation will have only one time subsidy. For this it is recommended that the projects may be suitably divided into viable divisions having separate land and maximum subsidy in terms of project cost. The cost of land is excluded from the calculation of subsidy. However, the land development cost is taken into consideration.

Some Additional Facts About Milk Demand & Supply :
1. Demand of liquid milk in Bhubaneswar = 170 KL/day. 2. Demand for the whole of Orissa = 1300 KL/day 3. Demand for Pasteurised Milk in Orissa = 800 KL/day 4. Supply for the State = 475 KL/day (OMFED=400, Private=40, Unorganised=35) 5. Demand Gap = 325 KL/day 6. OMFED market share in Orissa = 90%. 7. The Fresh Cow-Milk Price in neighbouring state (Jharkhand) = Rs.22/Ltr (packaged) & Rs.26/Ltr (unpackaged). 8. Amul “Taza” milk (low fat and high SNF content) sells for Rs.34/Ltr 9. The recently introduced Low-Fat Milk Price from OMFED shall be Rs.17/Ltr. (0.5% fat)

GENERAL CHECK LIST FOR MILK PROCESSING PROJECT :
Part A : Organisational
1. Type of beneficiary : Individual/Co-op Society Partnership Firm/Company 2. Address - Plant site Office : 3. Objectives of the organisation : 4. Copy of the by-laws/ Registration Certificate/ Memorandum and Articles of association (as applicable) : 5. Certification of incorporation/commencement of business : 6. Bio-data of directors : 7. Profit and loss account and balance sheet for the last three years : 8. Technology Indigenous/Imported. Name and address of foreign collaborator (If any) : 9. Brief write up on the organisation and collaborators (Giving information on projects implemented, expertise etc.) : 10. Copy of agreement with foreign collaborator : 11. Copy of import license for equipment/plant and machinery : 12. Copy of the RBI clearance regarding Foreign Exchange/Exports, if applicable:
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13. RBI Code Number : 14. Import-export code No. : 15. Approvals / permissions required : a. NO permission from competent authority : b. Pollution Control Board : c. Factory inspector : d. Electricity board : e. Irrigation dept. for water lifting etc : f. Ground water report from competent authority : g. Registration of brand name :

Part B : Financial
1. Financial outlay with phasing (item wise detailed break up of the outlay) : 2. Promoters contribution : 3. Foreign collaborators contribution/equity participation from any organisation. : 4. Public issue, if any : 5. Bank loan (Indian Rupee) : Name and address of the bank branch (letter of consent to be enclosed) : 6. Foreign exchange component loan : 7. Name of the bank providing foreign exchange and letter of consent. : 8. Working capital requirement (Item wise detailed estimates) : 9. Arrangement for the working capital loan : 10. Subsidy component (if any) and name the details regarding the organisation giving subsidy. : 11. Marketing arrangement/buy back arrangements(letter of consent) : 12. Arrangements for insurance of capital goods and the product. : 13. Lending terms - rate of interest, repayment schedule, security. :

Part C : Technical
1. Location(present constraints on procurement, storing, transportation, processing, packaging). : 2. Present market demand/ supply and future projections - domestic and export. : 3. Promoters : 4. Proposed plant capacity : 5. Availability of raw Material : 6. Site location - suitability of site, environmental social Issues. : 7. Project engineering :
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a. Site plan and map along with necessary approval : b. Land, Land Development fencing, drainage, : c. Civil works - detailed drawings, specifications quantities and costs. : d. Machinery - specification and costs, quotations, and layout plan (Section wise). : e. Detailed list and cost of imported items of equipment and license for import. : f. Utilities - water electricity, fuel with detailed specifications. : g. Detailed processing mechanism (process flow Chart) : h. By-product processing : i. Handling, processing, packaging, preservation and marketing of milk including countries to be exported. : j. Effluent treatment : k. Other amenities, transport facilities, etc. : l. R & D, quality control lab and equipment. : m. Office, essential quarters etc. : 8. Man power requirement Technical staff and training needs. : 9. FDA regulations and Export of quality products. : 10. Implementation schedule and PERT Chart. : 11. Steps to involve farmers participation in maintaining milch animals. : 12. Supply of inputs - All, veterinary aid, Feed, fodder, fodder seed, etc.

Conclusion :
This business plan takes into consideration of all the possible aspects of a rural based cattle / dairy farm, and not just a milk processing unit. We have adopted an “integrated” approach in suggesting the plan. This approach has a two-fold advantage : 1. A lone unit of milk packaging unit being an unprofitable proposition, all possible areas for making up the loss and add to the profitability are envisaged. 2. This project is expected to be an integral part of our rural life, helping the society, and in return obtain the power of long-term sustenance out of it. This report is not a Project Report. It’s a Business Plan prepared for a particular group of companies which are already in business for a long time. This is also a long term plan for developing or diversifying the business vertically & horizontally : 1. Vertically by adding other milk and dairy products, like ice-cream, milk-made sweets, etc. Or even cheese export. 2. Horizontally by adding similar agro-based or village-based projects like horticulture, Vermiculture, mushroom farming, fish farming, vegetables, commercial fruits, herbal / ayurbedic medicinal plants, etc. The list is long. 3. Such a scenario is foreseen 8-12 years hence. Poor farmers will cease to be able to sustain themselves and loose the little land they have. And rich farmers /
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businessmen will come to grab the situation and control the agriculture, so that they can sell the produce in their malls. For this long term in view, we suggest that basic infrastructural arrangements which are explained in this report, need to be considered in the preparation of the Project Report. As far as practicable all the figures are obtained from the up-to-date and reliable sources. The costing and pricing figures of the individual products are indicative in the sense that they pertain to a particular set-up. The project may have its own. (Errors & Omissions are expected.)

[ End ]

© Himansu S M / 27-September-2009.
Divine Light ( Dibyajyoti ) Consultants ( DILICONS ), 308, Laxmisagar, P.O.- Budheswari, Bhubaneswar – 751006. Tel : +91 674 2575683, Cell : +91 98611 20207.

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© Himansu S M, Divine Light Consultants, Bhubaneswar.

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