SUPPLY CHAIN MANAGEMENT IN DAIRY PROCESSING UNITS – A COMPARAIVE ANALYSIS OF PRIVATE AND CO-OPERATIVE UNITS

Thesis submitted to the University of Agricultural Sciences, Dharwad in partial fulfillment of the requirement for the Degree of

MASTER OF BUSINESS ADMINISTRATION in AGRIBUSINESS

By NITHIN R.R.

DEPARTMENT OF AGRIBUSINESS MANAGEMENT COLLEGE OF AGRICULTURE, DHARWAD UNIVERSITY OF AGRICUTLRAL SCIENCES, DHARWAD – 580005 JULY, 2008

ADVISORY COMMITTEE

Dharwad
JULY, 2008

(R.A. YELEDHALLI) MAJOR ADVISOR

Approved by: Chairman : ______________________ (R.A. YELEDHALLI) Members : 1.____________________ (BASAVARAJ BANAKAR) 2.____________________ (BALACHANDRA K. NAIK) 3.____________________ (K.A. JAHAGIRDAR) 4.____________________ (Y.N. HAVALDAR)

CONTENTS
Sl. No. CERTIFICATE ACKNOWLEDGEMENT LIST OF ABBREVIATIONS LIST OF TABLES LIST OF FIGURES LIST OF APPENDICES 1 2 INTRODUCTION REVIEW OF LITERATURE 2.1 Procurement management 2.2 Demand management and product management 2.3 Value addition 2.4 Sales management 2.5 Problems faced by the processing units 3 METHODOLOGY 3.1 Brief description of the selected milk processing units 3.2 Selection of the processing units 3.3 Method of analysis 3.4 Concepts and terms referred in the study 3.5 Processing of milk into pasteurized milk and milk products 4 RESULTS 4.1 Procurement management in processing units 4.2 Demand and product management in processing units 4.3 Value addition in the selected units 4.4 Sales management in selected units 4.5 Problems faced by the processing units 5 DISCUSSION 5.1 Procurement management in processing units 5.2 Demand and product management in processing units 5.3 Value addition in the selected units 5.4 Sales management in selected units 5.5 Problems faced by the processing units 5.6 SWOT analysis of the dairy processing units 6 SUMMARY AND POLICY IMPLICATIONS REFERENCES APPENDICES Chapter Particulars Page No.

LIST OF ABBREVIATIONS
SMP MBM Skimmed Milk Powder Masala Butter Milk

LIST OF TABLES

Table No. 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22

Title Quantity of milk procured and cost involved in procurement of milk by the co-operative unit during 2007 Quantity of milk procured and cost involved in procurement of milk by the private large scale sector during 2007 Quantity of milk procured and cost involved in procurement of milk by the private small scale sector during 2007 Quantity and value of raw materials procured by co-operative and different private sector processing units during 2007 Seasonal fluctuations in milk procurement by co-operative and different private sector processing units during 2007 Output and capacity utilization by the co-operative processing unit Output and capacity utilization by the private large scale processing units Output and capacity utilization by the private small scale processing units Cost of carrying inventory of finished products by the co-operative unit Cost of carrying inventory of finished products by the private large scale units Cost of carrying inventory of finished products by the private small scale units Demand management of milk and milk products in different milk processing units Product mix in co-operative and private sector milk processing units during 2007 Cost structure of processing of milk in co-operative and private sector processing units Sales realization in co-operative and private sector units Cost and returns in co-operative and private milk processing units Comparative price at different stages of marketing of processed products by milk processing units Annual cost of marketing of processed products by co-operative sector unit Annual cost of marketing of processed products by private large scale units Annual cost of marketing of processed products by private small scale units Problems faced by co-operative and private sector processing units Ranking of problems

Page No.

1. Sampling design 2. Product mix in co-operative and private sector milk processing units during 2007 4.LIST OF FIGURES Fig. No. Title Page No. Capacity utilization by the dairy processing units 3. Costs in co-operative and private milk processing units .

Title Demand management of Milk in co-operative and private sector processing units Demand management of Curd in co-operative and private sector processing units Demand management of SMP in co-operative and private sector processing units Demand management of Butter in co-operative and private sector processing units Demand management of MBM in co-operative and private sector processing units Demand management of Pedha in co-operative and private sector processing units Demand management of Lassi in co-operative and private sector processing units Demand management of Ghee in co-operative and private sector processing units Demand management of Paneer in co-operative and private sector processing units Demand management of khowa in co-operative and private sector processing units Demand management of Mysore pak in co-operative and private sector processing units Demand management of Cream in co-operative and private sector processing units Demand management of Shrikand in co-operative and private sector processing units Page No. III IV V VI VII VIII IX X XI XII XII . I.LIST OF APPENDICES Appendix No. II.

The supply chain may include growers. The term ‘Supply chain’ was originally associated with classical multinational enterprises that were vertically integrated. In post-independence India. INTRODUCTION The term supply chain management was coined by consultant Keith Oliver. Milk has achieved a unique status in terms of its output value exceeding Rs. information technology and capital from farm to fork and vice versa. The development of supply chain requires knowledge and expertise about the functioning of the complete chain including strategic aspects i. Supply chain management spans all movement and storage of raw materials. to the right locations and at the right time. chain marketing. retailers. extraction. production network and value network. Information and Communication Technology (ICT) and New Generation Cooperatives (NGCs) besides strategic alliances. material flow. importers. In such cases. a commodity chain is a network of labour and production processes whose end result is a finished commodity. business environment. framing strategies pertaining to chain design. value addition.e. chain formulation. . Supply Chain Management is concerned with the efficient integration of the entities involved so that merchandise is produced and distributed in the right quantity. The participants in a value chain can be integrated firms. Various innovations in supply chain management include Efficient Consumer Response (ECR).1 SUPPLY CHAIN MANAGEMENT WITH PERSPECTIVE TO DAIRY INDUSTRY OF INDIA: Our country has a rich tradition in dairying since the time of Lord Krishna. technology and interaction. co-operative dairying has been one of our great successes. turn key suppliers. India stands first in world milk production with a share of about 14 per cent in world milk production. storage and transport facilitators/providers. Dairying has been inherent and non separable in Indian culture. a performance perspective involving performance measurements and consumer behaviour. Alternatively. chain management and partnership and the functioning aspects i. In the vast field of animal husbandry. customer focused and market oriented flow of products. in terms of employment. But. value chain. and consumers for a given commodity. information flow. marketers. A value system is a set of interlinked complete firms. and a process perspective involving process management issues such as costing. It is the series of relations through which a produce passes i. chain logistic. distribution and final use. distributors. exchange. which create more sustainable and profitable partnership in supply chain. implementing and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. quality assurance. Supply Chain Management (SCM) is the process of planning. power and trust. as well as income generation. Supply chain management involves an organizational or institutional perspective involving collaboration.e. A supply chain refers to different players being linked from farm to fork to achieve more effective. processors. exporters. The concept of supply chain has many variants such as commodity chain. of strategy consulting firm Booz Allen Hamilton in 1982. targets and decision making. which have all the business functions. now supply chain management has become relevant in situations where in there are more than one autonomous players. Global value chain or Commodity Chain Analysis (CCA) highlights the levels of integration between suppliers. having a profound impact on socio-economic development of rural areas. transport.e. the contribution of dairying has been most significant. chain organization. value system. Milk and milk products have always been an integral part of our consumption habits. for centuries. there is often a dominant enterprise that uses its power to organize and plan the chain by involving customers and suppliers.1. wholesaler and retailers. organizing supply chain. Managing supply chains requires an integrated approach in which chain partners jointly plan and control the flow of goods. work-in-process inventory and finished goods from point-of-origin to point-of-consumption. producers. and component suppliers. lead firms. conversion. efficient. 1. packers.

The quality of milch animals improved. Dependence on commercial imports of milk powder ended. 3. the remaining 75 per cent of the demand was met by importing the milk solids. with 7000 dairy co-operative societies.22 per cent of the total value of GDP (Gross Domestic Product). Kurien. By the year 2006. around 17000 villages involving 1. Karnataka has always remained in the forefront of all agricultural development initiatives in the country and dairy development is no exception. 200 crores in Operation Flood III. In India.000 crores. No other major development programme all over the world. The second phase was in action during 1981 to 1985. This is as a result of India’s “White Revolution” in milk production. Sustained increase in production (4-5% growth/annum) raising the per capita availability of milk to nearly 220 grams. The first phase of “Operation Flood Programme” was between 1970 and 1981 and it laid the foundation for modern dairy industry in India.14 lakh has been organized. There was a self-sustaining growth of producer’s controlled dairy co-operatives. milk production in India touched 74 million tonnes in 1997. 1994 by capturing 500 cities with a population target of 300 million customers. 2.00.1. Marketing mechanism improved and providing assured market outlet for milk producers and quality milk for consumers. which established 136 milk sheds and captured markets in 290 cities and provided 4. The milk production was around 4124 thousand tonnes during the year 2006-07. The development of dairy industry in India is well known all over the world as one of the most successful development programmes in the globe known as white revolution. with annual growth rate of milk production of one per cent. for an initial investment of Rs. India has emerged as the largest milk producer with a production of 100. Dairy farming in Karnataka.5 million farmers collecting around 20 lakh litres of milk daily. 72. . 24. Thanks to the vision and foresight of Dr. The operation flood had completed third phase on 31 March. 4. When the third phase was over.744 dairy co-operative societies in 170 milk sheds of the country having a total membership of 93. This could meet only 25 per cent of the domestic demand. Karnataka stands eleventh in milk production in the country and it occupies third position with respect to milk production under co-operative sector in the country. Specialized dairy enterprises do exist but not only is their number abysmally low as compared to regular types. the net returns per year to the rural economy had been Rs. next to the main occupation of agriculture. The Operation Flood Programme launched another massive programme called “Technology Mission on Dairy Development (TMDD)” in June 1989. The milk production in India was 17 million tonnes in 1950-51. As per world bank experts report. Further. Livestock sub-sector alone contributed to 4. like in elsewhere in the country. dairying is the important subsidiary occupation in rural areas.9million tonnes. the following benefits had reached the small dairy farmers. by providing milk producers a remunerative price round the year. Dairy farming is visualized by the farmers in the country as part of an integrated agricultural system where dairy and agriculture complement one another. The KMF is covering 27 districts. is largely characterized by the prevalence of dairy enterprises that are mostly subsidiary occupations alongside the main agricultural activity of the farmer. 1. The objective of TMDD was same as that of Operation Flood Programme’s objectives. but also are restricted mostly to urban areas and their surroundings. has matched this input-output ratio. At the end of operation flood-II.000 crores and has made a rapid stride both in terms of number of milk producers and quantity of milk produced. in 1970 NDDB (National Dairy development Board) launched “Operation Flood Programme” with objective of ending milk famine in the country and turning farmer’s cooperatives into a powerful catalyst for transforming India into a major milk producer in the world. The production was stagnant for two decades till 1970.9 billion finance.

A detailed study of business performance of milk processing unit would be of immense use to know whether co-operative or the private sector follows the sound supply chain management practices. distribution channel and sales promotion. The milk products are marketed by both KMF (Karnataka Milk Federation) and Private Milk Units. The Indian supply chain for milk products is affected by abnormal wastage and poor handling. The other important decision in milk procurement is pricing of milk. Given the fragmented nature of the milk supply chain. few companies have access to capital and the ability to invest in supply chain. Seasonal fluctuation is another important aspect which needs adequate attention to ensure regular and sufficient milk throughout the year. high levels of service expectations and competitive pricing. The present study was undertaken in Dharwad milk union jurisdictions and data were collected from the processing units during 2007. processing and distribution networks. The management of dairy enterprise should be very careful in these activities. The wastage occurs because of multiple points of handling. 3) To ascertain the value addition in different products. The specific objectives are.. the supply chain management has become more important. Since. the investigator has confronted with few drawbacks in ascertaining accuracy of data. Milk supply chains are more concerned with controlling of milk quality and supply fluctuations which are unique to this sector.The basic functions of any dairy enterprise are procurement. there will be significant reduction in the wastages of milk and milk products which in turn will benefit both the farmers as well as the consumers by means of increased returns and decrease in price respectively. The procurement of milk includes milk collection centers (dairy societies). pricing policy. This type of operation is known as “Anand pattern of dairying”. the supply chain performance of the processing units is a deciding factor. The marketing includes product mix. . This perishable factor can affect the milk supply chain. it has to be processed (chilling or pasteurizing) immediately after procurement. The processing activity cannot be neglected as it converts the milk in consumable form to more value addition forms.2 LIMITATIONS OF THE STUDY The study pertains to the owners of the private processing units who are generally suspicious of the motives of any investigation because of fear of taxation. 4) To analyze the sales management of milk and its products by the units. Therefore. Keeping in view all these facts. an attempt is being made to assess the management of dairy processing units in Karnataka. 1) To analyze the procurement management in different types of dairy processing units. which was undoubtedly a very short period for generalization of data and extending concrete recommendations either for similar capacity firms or the processing industry in the entire state. milk is a perishable commodity. 5) To analyze the problems faced by the selected units in management of dairy processing. For the success of a dairy industry/firm efficient supply chain management is a prerequisite. By practicing improved supply chain management practices. Shortage of cold storage facilities and refrigerated transport equipment lead to inefficiencies in handling milk products. 1. Hence. Perishable goods like milk require a time efficient supply chain. greater care was taken to collect the data as accurately as possible. Thus. The two axis system of milk pricing is commonly used i.e. based on Fat and SNF (Solid Not Fat) content of milk. Due to pressures from increased competition resulting from globalization of supply. it gets spoiled. 2) To analyze the demand management and product management. There is a compelling requirement for appropriate infrastructure for storage and transportation such as temperature controlled warehouses and vans. otherwise. processing and marketing. Supply chain management has seen as a source of gaining competitive advantage in the business world.

3 PRESENTATION OF THE STUDY The study is presented in six chapters.1. sampling framework. ♦ The sixth and final chapter presents the summary and policy implications. analytical tools and specifies the concepts used in the study. ♦ The first chapter deals with the introduction and objectives. ♦ The fourth chapter presents the results obtained in the study. ♦ The second chapter presents review of literature on the related topics. ♦ The fifth chapter discusses the results of the study. . ♦ The third chapter outlines the features of the study area.

5 per cent and remaining 5 per cent was contributed by costs of power. Malleswari (1996) examined the potential. totapuri. Except a few. respectively. The total cost of procurement per quintal worked out to be higher through inter state imports-processor at Rs. infrastructure and constraints of mango processing in Andhra Pradesh.58 lakhs. Balasubramanian and Prema (1996) in their study on processing and trading of cashew nuts in India observed that the total processing and raw material costs accounted for about 70 per cent. 2277.99 per quintal. 299. Roughly 55 per cent of pulp was made from totapuri. Shobha (1998) in her study on performance of fruit and vegetable processing units in co-operative and private sector in Uttar Kannada district found that the private sector processing unit procured fruits and vegetables to the tune of 187. depreciation and overheads all put together. 81. four factors were important viz.27 per quintal.1 2. 379. an attempt has been made to critically review the literature of the past research work.33 and Rs. high milk utilization. distribution of cattle feed and credit for buying and technical assistance to milk producers through co-operatives. The study showed that mainly three varieties of mango were used for manufacture of pulp viz.841. from time to time to the procurement and support prices of milk and milk products as done for other agricultural commodities. 2. Balappa (1997) in his study production. packing cost 4. alphonso and raspuri. 324. Mohammed Ali (1992) reported that fresh fruits and vegetables accounted for more than 90 per cent of the total quantity of raw materials procured in both the private and public sector processing units.098 metric tonnes values at Rs. the studies conducted on milk processing and other related agricultural commodities were reviewed and presented under the following heads.60 metric tonnes worth Rs.5 Procurement management Demand management and product management Value addition Sales management Problems faced by the processing units 2. Mangoes were purchased both from the markets as well as from the farmers directly. 204. while the same in public sector unit was 575.4 2. In addition. 342. better milk marketing. The procurement of fruits and vegetables by the co-operative sector unit was . REVIEW OF LITERATURE In this chapter. growers processor and international imports processor at Rs. 9. most of the studies were confined to the milk processing.74 lakh.3 2.2. 35 per cent from alphonso and the rest from other varieties of mango in the processing units of Chittoor district.5 per cent. grower small dealer-processor. Rs. labour charges 10.63. 323. purchase taxes per cent.2 2. he reported that for better performance of Dairy Co-operative Societies (DCS)..27 per quintal and the sale price was Rs.04 per quintal of which the cess incurred for purchasing redgram was Rs.. He suggested that Agricultural Price Commission in consultation with Economic Ministries and Planning Commission to recommend.16 per quintal. marketing and processing of redgram in Gulbarga district revealed that the purchase price of redgram by the dal miller was Rs. fuel. However. 434. The annual average purchases of fresh fruits and vegetables by the private sector unit was 12.37 lakhs.1 PROCUREMENT MANAGEMENT Natarajan (1990) observed that the major cost in milk production was cattle feed (20%). in relevance to the present study.45. total cost of cashew nut procurement was Rs. Rs. 1881. Ramandev (1998) in his study on management appraisal of cashew nut processing industries in Uttar Kannada revealed that overall. freight and handling charges 5 per cent.5 metric tonnes worth Rs.41 followed by grower-trader-processor. 8. This accounted for more than 77 per cent of the total value in private sector and 60 per cent in total value of main raw material in public sector.

prices.42 per cent of the total raw material purchased.57 for the Bhogpur sugar mill.67 thousand tonnes of sugarcane and produced 191. Only 13 per cent of the retailers get their requirements on credit and 19 per cent get credit partly from the suppliers. In-flight kitchens are a logistics operation. it was concluded that the current programme measured up well against the options studied. Lindgreen and Hingley (2003) discussed the measures taken by Tesco Food Company in setting up effective guidelines for managing its relationships with neat suppliers. The percentage recovery of sugar for Jargoan mill was 8. From the side of the terms of supply 67 per cent of retailers get their requirements by paying cash. the Jargoan mill crushed 2238. retail value. A pricing system was developed which eliminates product food cost as the basis of pricing and which places new emphasis on actual labour requirements to produce. Although the current programme did not guarantee producers a profit.2 MANAGEMENT DEMAND MANAGEMENT AND PRODUCT Blayney and Weimar (1991) analysed four general alternatives to the current US dairy programme. it provided the market signals individuals need to make decisions and acted as a price floor to stabilize downswings in prices. Ashraf (2000) in his study on business performance of co-operative oil mills observed that the interest on capital locked in carrying the inventory. Fresh fruits and vegetables constituted 87. and distribute the products and menu items selected by each airline. Thus. he found that dealer owned system to be the cheapest and the company owned system to be the costliest facility. add considerably to the caterer's costs and must be reflected in the pricing offered to the airlines. farm receipts.22 lakhs. (3) two-tier pricing. store. Narayana Reddy (2004) in his study reported that most (61%) of the retailers get their requirements from wholesalers. the study also shows that the organized retailers/hyper malls and super marketers get wholesales’ margin plus concession as they buy in bulk and are also the producers. company leased and dealer owned ware-housing facilities. Of these three different facilities. but a small percentage of retailers get some of their requirements from producers. and (4) milk marketing diversion.93 thousand tonnes of sugar. and effective inventory management and detailed product usage controls were essential for overall cost control.161 metric tonnes valued at Rs. the quantity of cane crushed and production of sugar were higher for Jargoan mill compared to the Bhogpur sugar mill. Chandrashekaran (1999) in his estimation of storage costs for a multi crores. These were: (1) a target price/deficiency payment programme.58 per cent of quantity while semi-processed fruits and vegetables accounted for 12. The different requirements of individual airlines. Specific initiatives include different animals. which may have an account with the caterer. The quantity of cane crushed and the quantum of sugar production was higher by the Jargoan mill by 38 and 35 per cent. use. feeds and medicinal policies and schemes have been implemented by both Tesco and the meat suppliers. (2) a reclassification plan. They were most efficiently operated as large production food factories with assembly line production of passenger trays. The procurement pattern of these two sugar mills. Veena and Tajinder (2000) has studied performance analysis of Bhogpur and Jargoan sugar mills in Punjab. store maintenance and storage . Apart from this. The benefits of Tesco’s approach to its suppliers and consumers are considered and included the ability to deliver higher value products. 6. Using a rating system to evaluate each proposed programme's effect on production. package. 15 per cent from the large and other retailers. respectively. These guidelines make it possible for serious food scares and to address consumers concern over animal welfare and environmental issues. commonly called the Class IV plan. 2. each with the objectives of avoiding large milk surpluses were studied by USDA. Over 17 per cent of the selected retailers get their goods from more than one source.38 being lower compared with 8. multi product and multi-location firm found that there existed three different systems of storage namely company owned. and government cost. McCool (1996) study described the challenges that make inventory management a problematic issue for in-flight caterers' financial management practices.

(2002) found that investment in supply chain management technology in US food industry was extensive. and factoring that with the Z score of the service-level probability that management is willing to absorb). therefore.0 programming language and Microsoft Access database. a week. and the economic welfare of consumers or producers. particularly so in the restaurant or food–away-from–home (FAFH) sub sector. managers can use a formula to determine precisely when to reorder. and prices. and their impacts on resource allocation. increasing from 26 to 51. prices. By factoring the lead time (delivery and food-prep). Farsad and LeBruto (2003) reported that the consequences of overstocking items or understocking were undesirable. which was Rs. Singh et al.00 showing that processing was profitable. The managers could.47 and Rs. total market capitalization grew at a compounded annual growth rate of 17 per cent from $ 5 to $53 billion. they found that for every one unit increase in inventory turnover. market capitalization increased by $479 million in the FAFH industry over the analysis period. down from the 14 days supply maintained two decades ago. The system was divided into four modules in terms of inputting basic data.costs and material losses were the major components in the overall cost of the inventory management for both large and medium scale units. when there is sufficient stock to cover typical demand until the next delivery.05. respectively. that is. managers could calculate when to reorder. the environment. Over the same period. consumption. This system was written in Microsoft Visual Basic 6. adopt and implement supply chain technologies. some safety stock must be included (by calculating the standard deviation of each day's use for the past time period. the equity capital market places a premium on the efficient management of inventories in the food system and rewards those firms that develop. Understocks risk disappointing customers with unavailable menu items or add to food costs by requiring emergency runs to the cash and carry. load their ingredients at the right time to avoid wastage and to reduce their ingredient costs. 831. . inventory turns in the restaurant sub sector have effectively doubled. Overstocks absorb money and invite waste.42 tonnes of finished product. This system could be executed on Windows operation system and enable the farmers to consider their livestock growth condition to make it as a calculation tool to formulate animal feeds rapidly. formulation calculation. This means FAFH inventories were entirely replenished once a week. Through analysis of daily item use and an application of risk.3 VALUE ADDITION Subramanyam and Sudha (1992) worked out the costs and returns associated with processing one tonne of finished product of tomato (ketchup). it was observed that the benefit cost ratio was around 2. gram. 2. 823. Nein and Roan (2004) reported that as computers are more and more widely used in livestock production and farmers manufacturing their own feeds were growing more popular in Taiwan. (1994) in a study on economics of marketing and processing of pulses in Banda district (Uttar Pradesh) observed that per quintal cost of processing of arhar. Based on the co-integration model estimated. inventory management. It was shown that storage technology choices affect total output as well as the temporal distribution of supply. and the acceptable probability of a stockout. 93. Lichtenberg and Zilberman (2000) developed a model to examine storage technology choices in the inventory management of commodities that are relatively highly perishables. The model was used to derive the socially optimal level of spoilage reducing input use and to examine the effects of alternative policies for addressing environmental damage on supply. market equilibrium and consumer and producer incomes. Rs. From 1980 to 1995.76 per tonne of raw material (fresh tomatoes) was needed for producing 32. and lentil was Rs. Thus. The inventory management system could facilitate the managers in monitoring the inventory to make the most effective adjustment and usage of the ingredients. Raw material and packing are the two major items accounting for 67 per cent of the total variable cost of processing.67. This study was conducted to design a package which included simple feed formulation and ingredient inventory management to meet the farmers' needs. say. Vickener et al. 752. and to provide them with a more effective management regime of the feed ingredients. To account for unexpected demand. and printing report. the standard deviation of the usage.

the per quintal processing cost of morabba. there is a wide scope for innovative improvements and a sharper focus on vegetable processing. Optimum coating occurs at 100 degrees C for 5 min at 70 per cent concentration for cane sugar and honey.22 per 80 kg of raw nuts. Out of the total cost. The flavour. 124.80. (1996) in their study on the economics of processing of cashewnut in Andhra Pradesh. Subasinghe (2003) studied the different innovations used by food processors to add value to aquaculture products such as shrimps. Some of these innovations were focused on the packaging and presentation of the shrimps. plain dosai. which is calculated by observing the total viable count of the surface of the vegetables before and after washing ranged between 96. Washing is used not only to remove field soil. dhokla. but also the surface microbial load. new niches for vegetable production.Maurya et al. Value added preserved products like pickles. 50. tutti fruity.5-99. honey and salt. The microbiological washing efficiency. Mahesh and Nagaraja (2002) reported that the value addition of cashew (Anacardium occidentale) kernel baby bits (CKBB) was attempted by coating with cane sugar. and production of other shrimp-based products. Santhosh et al. whereas others focused on pre-processing/processing. Cashew apple juice could be coated on the CKBB. (2004) found that vegetable washing is an important primary process unit operation for value addition of the produce at farm level. vadiyams and cheese were prepared using the white portion of watermelon rind. Acceptability of cashew apple juice coated baby bits (BB) improves with the addition of cane sugar at 70 per cent concentration. masal vadai.81 which accounted for Rs.80. Madhuri and Kamini (2003) found that in watermelon.1%) flavoured CKBB are the most preferred.89 per cent and labour cost was Rs. 3233. mysore bonda.Katz and Boland (2000) study revealed that US premium Beef Ltd. phosphorus. respectively.61 per cent of total processing cost. The highest processing cost was for anola chutney and the lowest for anola pickle. De-fatting of CKBB enhances the per cent coating. iron and protein contents were higher in substituted than traditional recipes. 1750. Arora et al. maladu and moong dhal halwa) with whole or defatted soyabean flour on quality and nutritive value. which formed 40. Coating of cashew kernels of different grades with cane sugar at 70 per cent is dependent on the surface area. Permitted colours and cane sugar compete with each other during coating. and the impact of pest management research. dust. potatoes and spinach were washed mechanically in a rotary vegetable washing machine at varying speed and time and then evaluated for their quality. pesticides. Srinivas et al. seeyam. Calcium. Kaveri and Bindhu (2004) showed the effect of substituting 50% of the pulse fraction of 10 Indian recipes (adai. This value added strategy was accomplished through vertical integration and adding a qualitybased pricing structure to more closely link beef producers and consumers. Sweetened (70%) and vanillin (0. and 5 per cent for salt. Rs. value addition and quality control. taste and degree of liking of whole .40 and Rs. indicated that the processors have to bear the processing cost of Rs. kandharappam. Results showed that mean sensory scores for product attributes were high.8 per cent as compared to recommended 80 per cent indicating the adequacy of the vegetable washing machine. pickle and chutney amounted to Rs.77 was raw material cost. (2003) in examined the Indian research efforts in vegetable crops. the rind constituted 33 per cent of the whole fruit weight. Carrots. It was indicated that the ongoing research programmes on vegetables addressing many emerging challenges. 2198. All products were subjected to sensory evaluation test using a panel of 20 judges. The results showed that all recipes substituted with whole soyabean flour had higher carbohydrate and calorie contents than traditional and defatted soyabean flour-substituted recipes. 72. There was no change in mean scores after one month storage. The quality of products in terms of physical parameters was evaluated. pessarattu. in order to survive in a highly competitive market environment. preparation of breaded products. (1995) in their study on marketing of anola and its products in Varanasi district indicated that. a Cooperative partnership between all segments of the beef industry value chain was affording each segment on interest in the key stages of beef production and processing. application of batters. Rs. such as peeling. 58. as well as equal share of the financial risks and rewards.

27 per can. the medium scale units marketed about 70 and 30 per cent of their channel in case of small units. Adoption of this technology by dhal millers in the country would result in the recovery of about 5 lakh tonnes of cotyledon material valued at Rs. The spread is therefore the widest between the processor and wholesale stockiest because branding. Rajesh and Joginder (1996) while studying the marketing pattern of processed fruits and vegetable products observed that Processor – Wholesaler – Retailer – Consumer. Similarly. 18 including the cost of packing. and air classification followed by refining and thermal stabilization of edible material.4 SALES MANAGEMENT Dalvi et al.87%). (1989) in their study on economics of processing cashewnut in Singhadurg district of Maharashtra found that the total marketing cost per tin was Rs. transportation (10. 500. (1995) indicated that in marketing of anola products. The technology consists of de-stoning. Malleswari (1996) reported that heavy promotion and distribution costs mark the domestic retailing of processed mango. The retailer buys from the distributor at Rs.33%). About 30-35 per cent of the cotyledon material was recovered from the by-products from the commercial dhal mills and used in the preparation of traditional pulse based products. Premkumari (1992) studied the distribution of milk and milk products of Shimla milk plant and reported that supply of milk in the suitable channel and with a good container was very complex and expensive matter in existing situation of dairying. 44.63 per cent.67%) were the important cost components. retailers margin (10. they also reported that large scale units marketed about 58 per cent and 6 per cent of their produce through first. A can containing 850 g of pulp is sold at the retail outlets at Rs. It could be substituted in pulse-based products such as vada. They reported that co-operative channel had highest share of producer in consumer rupee Maurya et al. second and third channel.soyabean flour-substituted and traditional recipes were almost similar. It was concluded that whole soyabean flour could be included in the daily diet by incorporating in recipes at 50% level. Processor – Retailer –Consumer and Processor – Consumer were the three main marketing channels.58%). Channel-I Channel-II Channel-III Producer – Wholesaler – Retailer – Consumer Producer – Retailer – Consumer Producer – Consumer Chahal and Gill (1993) identified six channels of milk marketing in Punjab of which one channel was through milk plant and in other channel many intermediaries were operating. the second and third channels and the small-scale units used only the third channel. The authors concluded that producers share in consumer rupee depends upon length of channel and number of intermediaries and form in which finally product sold to consumer. Venkateshaiah (1992) while studying groundnut processing by different categories of traditional oil mills in Cuddapha district of Andhra Pradesh noticed three main channels. highest percentage of consumer’s rupee (62. All the three channels were used for marketing oil while only last two were used for marketing of oil caters. They also noticed that in large-scale units all the three channels in medium sized units. . whereas the processing cost is only Rs. packing and sales promotion are done at this stage. manufacturers margin (8. 38 per can. respectively. the commission charges (50%).25%) was the processing cost followed by the cost of kutch anola (15. which could contribute to the economic upliftment of the industry. all the products are marketed through third channel only. Ramakrishnaiah et al. tax and octri (51. (2004) attempted to study the technology package developed to retrieve the cotyledon material from the dhal mill by-products containing about 50 per cent cotyledon material amounting to one million tonne and also refining the same to an acceptable/desired level.05. size separation.67%) and charges paid by retailer 2.53%) and handling costs (2. 2. labeling. The price spread between processor and consumer is therefore Rs. These channels are. rasam/sambar and papads upto about 50 per cent. 45. Further.

she revealed that the marketing of processed of two processing units. .3 per cent while in case Channel-I.63 per quintal (36%). The commodity through two main channels namely. it could be observed that highest quantity of cashew kernels were marketed through Channel-III (36. Channel-I Channel-II Producer – Commission agent (farm gate) – Consumers Producer – Commission agent (market) – Consumers In Channel-II. Further. 2. The highest cost of marketing was noticed in case of Channel-III (Rs. (2001) studied marketing of mushroom. Channel-I Channel-II Channel-III Channel-IV Channel-V Processor – Consumer Processor – Trader – Consumer Processor – Commission agent – Consumer Processor – Exporter – Consumer Processor-cum-Exporter – Consumer Further. non-availability of skilled labour and high taxes are the few major problems experienced by the processing units. it could be noticed that sales tax and turnover tax.19/tin) and the least was observed in case of ChannelV (Rs. 155. transportation and handling costs. the following alternate channels were. short supply of raw materials.06%) and least was through Channel-IV (3. 70. 89. commission charges and export expenses were the major components of marketing cost.002 (64%) per quintal and at a price of Rs. Total marketing costs amounted to Rs.70 per cent. Sawant et al.5 PROBLEMS FACED BY THE PROCESSING UNITS Nagesh (1990) found that major problems faced by the groundnut processors in Karnataka were high competition among the existing processors. commission agents and consumers including hotels and big consumers. Channel-I Channel-II Channel-III Channel-IV Channel-V Processor – Wholesaler – Retailers – Consumers Processor – Retailer – Consumer Processor – Consumer Processor – Wholesaler – Caterer Processor – Caterer The private sector unit was marketing the produce through the two channels (IV and V) by selling their produce to wholesaler on an average at Rs. Shobha (1998) studied the performance evaluation of co-operative and private of fruit and vegetable processing units at North Karnataka. the commission agent purchased mushroom from producer at their farm gate with 22. Gajanana and Subrahmanyam (2001) studied the marketing and exports of lemon grass oil from Kerala. 3171.5%) sales. the producer directly sold mushroom to the commission agents near big city. nearly 78 per cent of growers (including 22% selling to cooperative society also) sold 59 per cent of the oil to the private traders and 44 per cent of the growers. with 77. frequent price fluctuations. the system of assembling and distribution dried mushrooms consisted of mushroom growers. Lemon grass oil was observed to be marketed mainly through two channels as below.33/tin).Ramandev (1998) in his study on processing of cashewnut in Uttar Kannada district of Karnataka identified the following five main channels for marketing cashew kernels. Channel-I Channel-II Producer – Co-operative society – Processor/Exporter Producer – Private traders – Processor/Exporter Between the two channels. 3360.41 per tin. sold 41 per cent of the oil to the co-operative society in Kavikadava village of Kerala state.

high taxation is major constitute in private sector. efficient technology and professionally trained management personnel at different levels of organizational structure as the main problems and similarly pointed to the firm’s external problems such as governments pricing policies. at an affordable costs as the major problems associated with the groundnut processing. short supply of raw materials. Further. unfavourable government policies and marketing system were major problems as conceived by the industry. other problems are were frequent power cuts during the processing period and wide fluctuation in the prices of cashew kernel. low product recovery and non-adoption of efficient technology. High purchase tax for raw nut at 8 per cent purchased in domestic market and increasing competition from other countries in processing were the constraints faced by more than 60 per cent of the respondents. Constraints reported by the processors. Shobha (1998) studied on performance evaluation of private and co-operative processing units of fruit and vegetable processing units at North Karnataka. Mangala (1995) while studying the strategies for effective management of sugar factories in India found that lack of quality raw material. Brahmaprakash and Dinesh (1997) in their study on infrastructural requirements for establishment of development and operation of agro-processed industries in rural areas opined that lack of market information systems. storage and technology for post-harvest handling. The prevalence of problems in the co-operative sector processing unit was inadequate availability of raw material in terms of quality and quantity. Inadequate transport facility and high flight charges. . He also opined that the lack of integrated network between the producer. Roy (1997) opined that lower capacity utilization of the agro-based industries was reasoned by lack of infrastructural facilities such as lack of transportation. high taxation. are high wage rate.67%) in Kanyakumari district more than 80 per cent of processors felt that the declining trend in imports and inadequacy in supply of raw materials from domestic market were major constitute for them. has identified that stiff competition among the processors for getting the required raw material.Venkateshaiah (1992) in his study on groundnut processing units in Andhra Pradesh. Ramandev (1998) in his study on business performance analysis and appraisal of the cashew nut processing units in Uttar Kannada district of Karnataka has identified that high taxation. Private sector short supply of power. lack of power supply and also problem in lack of modernization of machinery. (2002) reported that the constraints of cashew nut processing units in Tamil Nadu. frequent power shedding. timely and adequate financial support and post-harvest technology as the major problems to realize the rural projects in India. Rachhpal and Darshan (1996) in their study performance of agro-processing units in Punjab revealed that failure of these industries on the market front in terms of brand is the major problem. exporters by most of the processors (86. farmer and the processor as indirect problem of agro-based industries. Saravanan et al. he opined that any such failure ultimately put a question mark on the very survival of the industry or unit under consideration.

The main objective of the unit is to procure milk and process the same into value added output.1 BRIEF DESCRIPTION PROCESSING UNITS OF THE SELECTED MILK The overall objective of the study was to examine the supply chain management in milk processing units. marketing and accounts. are produced and sold under the brand name of “Nandini”.15 lakh litres per year. The unit is well equipped with the latest indigenous machinery. 3. machinery and equipments. Al-Rehman (mote) milk centre. Under Managing Director. The unit was established in 1984 at Lakamanahalli. which are produced by the unit. METHODOLOGY This chapter deals with the methodology followed in the present study. one each for procurement.1.1 Dharwad Milk Union Co-operative Limited Dharwad Milk Union (DMU) processing unit is a part of Operation Flood Project of NDDB. For the purpose of the study the milk processing sectors were considered.5 Brief description of the selected milk processing units Selection of the processing units Method of analysis Concepts and terms referred in the study Processing of milk into pasteurized milk and milk products 3. Ltd. milk powder. Being called as educational cities there is a huge demand for milk and its products and it offers a ready market for processed milk products. A brief description of the selected units is presented below. This is a Government of Karnataka undertaking and an active constituent of Karnataka milk federation (KMF). marketing and accounting. khowa. ghee. under private large scale sector and Shankar milk centre. which includes the selection of the processing units and their description. The processing unit is under the active control of Managing Director. processing. Ram Rahim milk centre.1. 3 crores which includes capital expenditure on building and machinery. Sri Krishna milks Pvt.1 3. lassi. Ltd. one for administration and one for accounts.30 lakh litres per year. plant. 3. The processing unit is under the control of Managing Director. Various processed products like butter. two from private large scale and five from private small scale sectors have been chosen for the study. Waghmode and Mullannanavar milk centre under private small scale sector were selected. who controls procurement. Milk processing units are extensively established in and around Dharwad and Hubli. Yellapur Tq of Uttar Kannada district. 1. 3. The unit was established in the year 1989 near Kiravatti village. curd. The average procurement of milk by the unit is 249. Eight milk processing units representing one from the co-operative sector. The details are presented under the following headings.2 3.3. The Dharwad Milk Union (DMU) processing unit under co-operative sector. sources of data and analytical techniques adopted.4 3. Sri Krishna milks was installed with a project cost of Rs.. paneer. The sampling design is represented in Fig.2 Sri Krishna milks private limited Sri Krishna milks is a private limited company. pedha etc. processing. The average milk procured by the unit is to the tune of 161. there are four managers. The unit has occupied a greater market share in liquid milk and its byproducts.3 3. The unit sells liquid milk under the brand name ‘Sri Krishna & Nature . The main objectives of the unit is to help farmers in realizing better prices by procuring milk and produce value added products. there are two general managers. at a project cost of Rs. All the machines purchased are based on the latest technology. and Vijaykant milk and food products Pvt. 7 crores that includes capital expenditure on building. Under Managing Director.

under the brand name “Aditya”. 3. curd.3 Vijaykant milk and food products private limited Vijaykant milk and food product is a private limited company. lassi. Belgaum district.1. Though the unit was recently established it has acquired a greater market share in terms of liquid milk. Unit has earned a good name for its products like ghee.1500 lts per day. marketing and accounting.1.1. Average milk procured by the unit is to the tune of 900. 4. Since the unit was recently established it has not been utilized to the full capacity possible. processing.4 Shankar Milk Centre Shankar milk centre is a solely owned small scale private unit established in the year 1999. The unit was established in the year 2006 with an investment of Rs. there is one general manager who takes care of procurement. 3. pedha are processed and sold under the brand name ‘Sri Krishna’.50 crores near Neginhal of Bailhongal taluk. with an investment of Rs. khowa. 4 lakh on Haliyal road. 1. lassi and butter. with a project cost of Rs. 2. Under Managing Director. Dharwad.5 Ram Rahim Milk Centre Ram Rahim Milk Centre is a solely owned small scale private unit established in the year 1987. Average milk .68 lakh near bus depot. 3.6 Al-Rehman (mote) Milk Centre Al-Rehman Milk Centre is a solely owned small scale private unit established in the year 1996.1500 lts per day. Average milk procured by the unit is to the tune of 900. with an investment of Rs. Unit has earned a good name for its products like ghee and butter. Sampling design Rich’ and products like butter.28 lakh near Malmaddi. paneer. Dharwad. ghee. 3. The processing unit is under the control of Managing Director.1. Dharwad. 8.Fig.

B. wastage value and seasonal fluctuation in milk procurement were gathered from the ledger accounts and purchase books of respective units.1.650 lts per day.2 Demand pattern Detailed information regarding the quantity of milk processed. Simple tabular analysis was done to study and compare the purchase pattern followed by the processing units by employing elementary statistical tools like averages. procurement price of milk. 3. 1.1000 lts per day.73 lakh near C. Average milk procured by the unit is to the tune of 500.3. khova.28 lakh near Gouli galli.1 Procurement pattern A detailed information regarding the quantity of milk procured. curd and liquid milk.T. with an investment of Rs. curd and liquid milk. transportation cost involved. 3. 3. The cost of processing was broadly categorized into two groups. etc. 3. ratios and averages. product mix and product price and quantity of finished products were obtained for the year 2007 from the balance sheet and the profit and loss account and through discussion with the head of processing section of the processing units. 3. The processing techniques and marketing channels adopted by the processing units to sell their product was studied from the management records and dispatch registers.600 lts per day. Variable costs . value of milk procured. a. processed milk products demand and fluctuation in milk products demand was gathered from the ledger accounts and sales register of respective processing units.3. Hubli. Figures pertaining to the costs and margins have been taken from the profit and loss accounts and the balance sheets in the case of both the private sector and co-operative sector units. Unit has earned a good name for its products like lassi. business and financial aspects of the unit for the study period were collected from the balance sheet and profit and loss accounts. percentages etc. Fixed costs b. The data relating to the procurement of milk for the year 2007 were drawn from the ledger account and purchase books of respective units.procured by the unit is to the tune of 800.7 Waghmode Milk Centre Waghmode Milk Centre is a solely owned small scale private unit established in the year 1995. The cost of processing of all the products was considered together instead of individually. 3.3 METHOD OF ANALYSIS 3. Relevant data pertaining to the organizational. the information on installed capacity and its utilization was also gathered. The data on processing costs. Simple tabular analysis was used to study and compare the variations in demand and processing in the processing units by adopting simple statistical tools like percentages. Unit sells liquid milk and milk products like cream.2 SELECTION OF THE PROCESSING UNITS The present study was undertaken in Dharwad milk union jurisdictions and data were collected mainly from the dairy processing units during 2007.3 Cost analysis The processing cost of the finished products of the eight selected units were analyzed by simple tabular analysis.3.8 Mullannanavar Milk Centre Mullananavar Milk Centre is a solely owned small scale private unit established in the year 1982.1. Unit has earned a good name for its products like lassi. Hubli. The data relating to the pattern of investment was worked out from the management records. In addition to the above mentioned data. 5. Average milk procured by the unit is to the tune of 500. with an investment of Rs.

salaries for permanent employees. Power and fuel Electricity charges.3. Insurance charges The amount paid for insurance premium was considered as insurance charges. buildings. postage service and audit fee were included under this head. v. all other taxes except excise duty paid by the processing units were considered as rent rates and taxes.3. bonus and provident fund contribution to the staff were also included. carton boxes. advertisement and miscellaneous expenses. travelling.3. iii. It was the total value of milk utilized in producing processed milk products.2 Variable costs Variable costs include. Depreciation charges Depreciation at a flat rate of 12 percent per annum on machineries and equipments. Sugar This cost included the price paid to purchase sugar. . iv. as value of milk purchased. stationary articles. packaging costs. Wages It included the wages paid to the labourers who were directly involved in processing activities. closures and labels which were used to pack the processed milk and milk products.3. Advertisement expenses Expenses incurred on popularizing the brands of the company were considered as advertisement charges. interest rates and taxes The amount paid as rent for hired assets. formed the raw material costs. petrol/diesel charges for the vehicles and generators were included as power and fuel charges. repairs . pouches. i. v. It is the value of sugar utilized in producing processed milk products.1 Fixed cost The items included under fixed costs are depreciation on machinery and equipments. Rents. cans. ii. sugar. rent. maintenance and insurance. vii. Repairs and maintenance All costs incurred in the upkeep of factory. buildings. essence. interest rates and taxes. iv. expenses incurred on furnace oil. Miscellaneous expenses The expenses due to the use of colours. cost of raw material (milk). Raw material costs (milk) The price paid by the unit. bottles. 3. Salaries The wages paid to the permanent staff of the factory as salaries were considered here. i. furnitures and fixtures and vehicles. machinery and buildings along with the repair charges were included under this head. interest rates paid on loans. iii.3. ii. vi. Packaging costs This included the costs towards packaging materials like sachets. power and fuel and water charges. In addition. wages for casual workers. furniture and fixtures and vehicles were calculated based on the information available from the management records.

opportunities. but also a heat treatment followed by cooling to increase the self-life of milk. The fixation of rate to the contractor is based on the distance and condition of the road. The activities include conducting programmes on dairy development for the benefit of milk producers.1 CONCEPTS AND TERMS REFERRED IN THE STUDY The following are the terms and concepts referred in the study.3. supply remain less than demand. the procurement is high and more milk is diverted for preparation of milk products. In other words.4 3. . weaknesses.3. 3. The product mix of the union includes milk.5 SWOT Analysis SWOT analysis was carried out to evaluate the strengths.4. iii) Product mix It refers to the combination of different products being manufactured by the units. the milk powder is reconstituted into milk to cater to the demand of liquid milk.3. during which the quantity of milk procured will be less than average for the year. processing refers to conversion of raw milk into pasteurized milk and milk products. 3.4 Pattern of marketing The marketing channels adopted by the processing units for distribution of processed milk and milk products from different processing units were studied. ii) Lean season The period between March to August is referred to as the lean season. and threats involved in the processing units. therefore. lassi etc. ii) Processing of milk Processing does not mean only change in the form of milk. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. During this period.4. Procurement related terms i) Flush season It is defined as the period of six months between September to February during which quantity of milk procured is more than average procurement for the year. The units cost is calculated by dividing the total cost of the route by the quantity procured. butter. pedha. 3. It is the charge paid to the transport contractor. iv) Procurement transportation cost Cost incurred in procuring the milk from collection centers or chilling centers is referred to as procurement transportation cost. to educate them to improve the production and quality of milk and advantage of supplying milk to the collection centers. iii) Procurement promotional activities Various activities carried out by union for increasing milk procurement are referred to as the procurement promotional activities.2 Processing related terms i) Cost of milk processing The cost of processing of milk is calculated by covering all dairy expenses and other costs which are considered as the overheads. During this period. Cost of processing per unit is obtained by dividing the total cost by quantity of milk processed. ghee.

product.5. After chilling. Then homogenization is done to equalize distribution of SNF and fat in complete batch of 0 0 milk.6 depicts the flow chart for processing the milk into milk and milk products.1 Pasteurized milk The milk received from different places is first weighed and then chilled. iii) Distribution cost The cost incurred in distributing milk from the plant to the commission agent. It includes advertising. 3. 3.5. the butter and ghee is obtained. The ghee is then packed in sachets of 200 g and 300 g and stored at room temperature.3. The transportation cost per litre is calculated by dividing the total charges paid to contractor by the quantity of milk distributed.3 Marketing related terms i) Channels of distribution It is defined as the pathway which directs the flow of milk and its products from manufacturer to the ultimate consumers.2 Ghee manufacturing The cream obtained is fed to butter churner. personal selling. heating at 72 C for 15 seconds then chilling to less than 5 C is carried out. The skimmed milk powder is then mixed with whole milk in order to obtain a desired level of fat and SNF. The solid mass is formed which is allowed to cool to room temperature. The Fig. The term distribution is a part of marketing and an important aspect of marketing. The packed milk is stored at cold storage at temperature 5°C.5. The chilled milk is then packed in half litre and one litre sachets. The butter is first melted at 35° to 40°C and then boiled to 115° to 120°C to obtain ghee.3 Pedha manufacturing The whole milk is mixed with sugar at the rate of 7 per cent of milk and heated continuously for 4 to 6 hours with vigorous stirring.4. v) Promotional techniques It is defined as short-term incentive to encourage the consumer to purchase the product. 3.0 per cent then it is sour curd. Followed by pasteurization. This is allowed to settle for approximately 12 hours then ghee is clarified to separate minute particles of ghee residue. 3. then it is moulded into pedha of approximately 50 grams each.4 Curd preparation The whole milk after pasteurization and cooling added with 1 per cent culture (previous day’s curd) is packed in sachets and allowed to settle. If lactic acid is 0. 3.5 PROCESSING OF MILK INTO PASTEURIZED MILK AND MILK PRODUCTS 3.6 per cent then it is sweet curd and if lactic acid is 1. The sachets are stored at room temperature. ii) Commission agent It refers to those functionaries who sell the milk and milk products of the union or units on commission basis. iv) Marketing Marketing is defined as the total system which includes four Ps viz. promotion and place (distribution).5. . price.. The pedha are packed in two sized carton boxes weighing 250 grams and 500 grams. the cream and skim milk is obtained. publicity and sales promotion. the milk will be sent to cream separator.

250 and 300 ml and stored.6 Lassi preparation Lassi is prepared from curd by adding water to get desired acidity based on sourness. . Sugar is added (15 – 20%) and stirred well so as to mix uniformly.3. The lassi thus prepared is packed in sachets of 200.5. curd and consistency.

4.4.2 Quantity of milk procured and cost involved in procurement of milk by the private large scale sector during 2007 Table 4.87 lakhs along with transportation and handling cost of Rs.. 119. RESULTS The overall objective of the study was to evaluate the performance of milk processing units in co-operative and private sectors..68 lakhs per month.00 per month and commission charge accounted for Rs. The private small scale units on an average procured 0.08 per litre of the value Rs. The co-operative unit. 20000. The quantity of milk procured and the value of procured product was highest in the month of November i. 4.5 Procurement management in processing units Demand and product management in processing units Value addition in the selected units Sales management in selected units Problems faced by the processing units 4.1 Quantity of milk procured and cost involved in procurement of milk by the co-operative unit during 2007 Table 4. 13. 4.1 PROCUREMENT MANAGEMENT IN PROCESSING UNITS Success of milk processing units largely depends upon the procurement of raw milk. Transportation and handling cost and wastage value were the highest in the month of December and April.36 lakh litres of raw milk per month at a price of Rs. The .e. 7. 4. Transportation and handling cost and wastage value were highest in January and October. respectively.00 lakhs. The quantity procured and their values were the lowest in the month of June. In this context. a study on the procurement management of processing could focus on its management performance. on an average. respectively. 10.1. 13. 242.77 lakh litres of raw milk per month at a price of Rs. followed by in December and October months.86 per litre of the value Rs. 302. 5000. whereas the price per litre was highest during March. The raw milk forms an important input in milk processing units.00 per month and commission charge was to an extent of Rs.02 lakhs. The quantity procured and their values were the lowest in the month of February.4 4.69 lakh litres per month and Rs. 144. Procurement management has become the main stay of the performance of processing units. The wastage value accounted for Rs.28 lakh.2 4. 11. respectively.e.1 4. respectively. 0. In this chapter. 4.29 lakhs.30 lakh litres of raw milk per month at a price of Rs. The quantity of milk procured and the value of procured product was highest in the month of December i. 15.28 lakhs along with transportation and handling cost of Rs. 25.1 shows the average monthly quantity of milk procured and cost involved in procurement of milk by co-operative unit. The processing units procure raw milk covering more than three districts.65 per litre of the value Rs. procured 20. 4.1.26 lakhs. The wastage value accounted for Rs.3 4.48 lakh litres and Rs. the results of the study are presented under the following heads.08 lakh. The private large scale units on an average procured 9. 15. followed by November and October months and the price per litre was also highest in these months.3 Quantity of milk procured and cost involved in procurement of milk by the private small scale sector during 2007 Table 4.3 shows the average monthly quantity of milk procured and cost involved in the procurement of milk by Private small scale units.1.2 shows the average monthly quantity of milk procured and cost involved in the procurement of milk by Private large scale units.44 lakhs along with transportation and handling cost of Rs.

63 7.41 212.97 11.56 8.91 6.00 Commission (lakh Rs) 7.00 6000.87 11.02 15.06 192.82 6.34 19.65 Total Value (lakh Rs) 266.00 12000.86 11.00 20000.23 15.14 17.00 23000.26 Month .68 302.56 15.48 25.02 20.46 232.68 229.29 8.84 229.00 20000.73 15.70 6.83 24.1: Quantity of milk procured and cost involved in procurement of milk by the co-operative unit during 2007 Total quantity procured (lakh lit) Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Average 22.32 6.78 214.02 6.06 17.63 11.Table 4.21 18.93 11.11 14.31 242.93 20.45 25.60 15.38 14.83 7.18 11.65 15.99 11.92 8.16 11.00 33000.53 15.92 15.00 40000.55 292.21 11.83 18.23 11.85 11.44 Transportation and handling cost (lakh Rs) 15.67 224.00 38000.94 11.00 13000.01 7.28 Wastage value (Rs) 15000.77 Price (Rs/lit) 11.21 20.74 19.40 15.24 6.52 212.29 299.00 12000.00 16000.19 15.00 14000.

29 13.76 15.46 15.Table 4.25 4.00 4000.00 119.80 4.53 13.87 Transportation and handling cost (lakh Rs) 15.00 4000.52 13.30 15.43 10.35 4.56 10.00 4000.00 118.83 4.00 4000.90 111.00 6000.37 12.10 13.00 5000.00 8000.71 7.00 8000.05 4.65 8.46 13.68 Month Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Average Price (Rs/lit) 13.27 4.60 9.08 .06 14.08 Wastage value (Rs) 6000.87 5.06 13.36 3.60 13.79 113.67 12.00 Commission (lakh Rs) 4.18 106.16 119.10 8.00 13.00 13.53 9.84 12.50 15.41 123.28 5.00 5000.10 9.49 131.69 9.79 14.19 15.05 4.22 5.74 10.22 15.00 97.36 Total Value (lakh Rs) 110.50 8.87 5.41 139.36 16.00 4000.73 10.00 4000.62 12.33 14.2: Quantity of milk procured and cost involved in procurement of milk by the private large scale sector during 2007 Total quantity procured (lakh lit) 8.01 144.11 124.88 15.00 9000.

33 0.24 0.23 0.21 3.92 4.36 0.26 0.28 0.37 5.28 4.21 3.02 0.55 14.02 0.92 4.02 0.03 0.33 0.30 Price (Rs/lit) 14.85 13.00 13.42 4.85 13.26 0.55 14.Table 4.00 13.00 13.36 0.55 14.23 0.00 13.02 0.01 0.28 0.24 0.33 0.29 0.28 Transportation and handling cost (lakh Rs) 0.01 0.03 0.36 0.35 0.85 13.34 5.24 0.02 Wastage value ( Rs) 300 400 400 500 500 100 100 200 100 200 200 200 300 Commission (lakh Rs) 0.35 0.33 0.36 0.55 14.01 0.83 4.35 0.86 Total Value (lakh Rs) 4.3: Quantity of milk procured and cost involved in procurement of milk by the private small scale sector during 2007 Total quantity (lakh lit) 0.13 3.29 0.02 0.09 3.24 0.30 Month Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Average .02 0.35 0.55 13.66 4.01 0.

Since the procurement was higher in co-operative unit.5 Seasonal fluctuations in milk procurement by co-operative and different private sector processing units during 2007 The average procurement and wastage per day during the lean season and flush season. with a capacity utilization of 96.22 tonnes). Of these. 4. 0.77 tonnes.4 Quantity and value of raw materials procured by co-operative and different private sector processing units during 2007 The Table 4.. The overall capacity utilization in co-operative is 95.2 Output and capacity utilization by the private large scale processing units The average output and capacity utilization by the large scale private processing units are presented in the table 4. transportation and handling cost during flush and lean season was much higher in co-operative unit when compared with small scale private sector units. In terms of capacity utilization. followed by sugar (4-6%) and other raw materials (5-7%). 1.e. It can be observed from the table that milk was processed in highest quantity i. Transportation and handling cost and wastage value was highest in the month of October.20 tonnes) and private small scale unit (0. The average procurement.1.39 per cent of its installed capacity.e. The quantity procured and their values were the lowest in the month of June.72 tonnes of processing against 20000. it procured sugar to the tune of 64.37 tonnes as against the installed capacity of 11000. The next important product processed was curd with installed capacity of 825 tonnes and utilized capacity of 746.42 per cent. packing materials constituted the highest cost component in all the units (ranging from 85-90 %). November and April.24 in co-operative sector. 4. Of all these raw materials.4 depicts the average quantity and value of raw materials procured annually by co-operative and different private sector processing units. both installed capacity and quantity processed was the highest in the case of milk with 19284.88 per cent each. The quantity procured and the value of procured product was highest in the months of October and November i. the co-operative unit has achieved maximum capacity utilization in lassi and MBM with a value of 99.2 DEMAND AND PRODUCT MANAGEMENT IN PROCESSING UNITS 4.. Khowa was the product of co-operative processing unit which had least installed capacity (2.30 lakhs per month. The price per litre was highest in the months ranging from January to May. The co-operative sector unit procured highest raw materials as compared with private (large and small scale) units. MBM and lassi were the next important products processed in terms of their installed . 300 per month and commission charge was to an extent of Rs. The flush-lean ratio was 1. 9497. 2.00 tonnes of installed capacity. respectively.11 in small scale private sector. 2 reveals the output and capacity utilization by the co-operative processing unit. It is generally recognized that a high level of capacity utilization is imperative for reducing the overhead costs of production. May respectively. 4.00 tonnes with a capacity utilization of 84.01 tonnes/year). Capacity utilization is one of the important indicators of operational efficiency of a processing plant.5 for all the three sectors studied.05 tonnes which was much higher than that compared to the private large scale unit (18.2. The average procurement of milk during both flush and lean season was the highest in co-operative unit.1 Output and capacity utilization by the co-operative processing unit Table 4. the flush-lean ratio and cost of transportation and handling are given in Table 4.34 per cent.92 lakhs.35 lakh litres and Rs. 4.25 tonnes/year) and quantity processed (2. 0. It could be observed from the table that. respectively and so is the average procurement for the year.1.06 in large scale private sector and 1.2. the wastage was also high in co-operative unit. respectively followed by December and January months. 4.wastage value accounted for Rs.6 and Fig. followed by large scale private and small scale private units.7 and Fig.

76 3 Other raw materials (litres/year) 6.00 - 1.22 Value (lakh Rs) Per cent Private sector (large scale) Private sector (small scale) 1 Sugar 9.00 - 85.34 - 77.05 Value (lakh Rs) Per cent Quantity (tonnes per year) 18.46 Total - 152.20 Value (lakh Rs) Per cent Quantity (tonnes per year) 0.76 2 Packing material - 132.005 6.53 11.240 88.79 5.58 0.94 90. Raw materials Quantity (tonnes per year) 64.035 4.Table 4.00 .02 0.37 4.07 3. No.16 3.06 86.28 100.73 - 1.68 0.58 2.28 6.94 100.4: Quantity and value of raw materials procured by co-operative and different private sector processing units during 2007 Co-operative sector Sl.59 7.89 100.

transportation and handling cost during the flush season Average procurement.92 0.21 Sl.49 68.40 69252.96 50280.Table 4.06 50657. No.09 77.96 1022.29 43.96 49902.70 1.68 Private sector (small scale) 1076.86 0.68 31221. transportation and handling cost during lean season Average procurement transportation cost during the year Average wastage during flush season Average wastage during lean season Average wastage for the year Units liters/day liters/day liters/day Ratio Rs/day Co-operative sector 76718.5: Seasonal fluctuations in milk procurement by co-operative and different private sector processing units during 2007 Private sector (large scale) 32114.78 6 Rs/day 50768.44 968.76 * Flush season-September to February * Lean season-March to August .24 1.40 16. 1 2 3 4 5 Particulars Average procurement during flush season Average procurement during lean season Average procurement for the year Flush-lean ratio Average procurement.67 0.63 58.09 13.79 15.24 51108.11 87.87 74.15 1.63 7 8 9 10 Rs/day liters/day liters/day liters/day 50938.61 30327.08 61786.

25 Annual quantity processed (tonnes) 19284.71 99.06 97.01 Sl.00 250.42 99.85 315.01 93.77 439.12 890.00 7.08 222.85 8684.45 410.18 6.91 89.78 5.27 234.52 8767.53 863.6: Output and capacity utilization by the co-operative processing unit Annual installed capacity (tonnes) 20000.00 3200.49 148.16 95.41 684.72 18.00 175.00 140.08 91.85 2.38 1 2 3 4 5 6 7 8 9 10 Milk Curd SMP Butter MBM Pedha Lassi Ghee Paneer Khowa Overall Capacity Utilized% .08 90.72 3169.76 641.18 347. No Products Installed Capacity (kg/day) 54794.56 19.00 225.70 407.00 150.30 610.62 126.44 479.65 97.93 160.51 Capacity Utilized (%) 96.63 99.Table 4.96 383.92 6.00 2.00 325.39 Quantity Processed (kg/day) 52834.93 616.

Fig. Capacity utilization by the dairy processing units . 2.

00 Annual quantity processed (tonnes) 9497.00 407.80 91.10 1116.38 .30 78.20 2045.78 366.93 41.98 405.00 0.30 Capacity Utilized (%) 84.89 547.27 41.37 746.52 99.34 90.57 20.52 88.00 2.00 4.55 1 2 3 4 5 6 7 8 9 10 Milk Curd Butter MBM Pedha Lassi Ghee Paneer Khowa Mysore pak Overall Capacity Utilized% 87.99 2260.00 200.50 1.57 4.96 5.00 400.48 Quantity Processed (kg/day) 26020.27 10.Table 4.57 Sl.77 14.7: Output and capacity utilization by the private large scale processing units Annual installed capacity (tonnes) 11000.07 176.00 825.07 3.00 15. No.76 54.74 1095. Products Installed Capacity (kg/day) 30136.89 99.13 1002.29 91.05 1109.24 87.95 60.59 2.49 1.44 2.99 9.00 22.39 77.93 483.

19 2.88 10.38 89.22 87.16 17.00 86.94 18.74 8.98 49.75 22.12 1.50 4.18 3.88 94.81 5.91 6.74 1.24 4.35 0. No Products Installed Capacity (kg/day) 542.30 3.92 2.70 1.00 1.00 19.77 3.47 52.14 2.80 Capacity Utilized (%) 90.95 9.64 1 2 3 4 5 6 7 8 9 10 Milk Curd Butter MBM Lassi Ghee Paneer Khowa Cream Shrikand Overall Capacity Utilized% .60 Annual quantity processed (tonnes) 179.8: Output and capacity utilization by the private small scale processing units Annual installed capacity (tonnes) 198.65 84.97 89.66 88.82 9.24 88.34 24.02 1.48 16.87 92.Table 4.51 5.22 90.39 Sl.48 4.25 6.58 Quantity Processed (kg/day) 492.50 1.93 5.06 2.10 2.00 6.

88 per cent. (94.09 and highest was in the case of MBM.02/kg/day).capacity.16/kg/day).5 Cost of carrying inventory of finished products by the private large scale units Cost of carrying inventory of finished products by large scale private processing units is presented in Table 4. The same was the lowest in curd (Rs. 4. while butter and khowa were stored for 5 days each on an average basis. It can be observed from the table that in small scale private sector units milk was processed in highest quantity at 179.3 Output and capacity utilization by the private small scale processing units The annual average output and the capacity utilization of the small scale private sector processing units are presented in table 4.02/kg/day).2. These cost were calculated on per kg per day basis and expressed in terms of rupees.5.00 tonnes with a capacity utilization of 90. khowa (Rs 1.2. It is really interesting to see that .0. All other products had very less (less than one rupee/kg/day) cost on carrying inventory.10.23/kg/day). Among the products of co-operative sector ghee was stored for longer duration (45 days). A cursory look at the table suggests that the small scale private processing units were specialized in nine different products. 4.21/kg/day).4.11. followed by butter and SMP which were stored on an average for 30 days each. In all other products the cost was less than one rupee. butter and lassi with annual processing of 18. Pedha was the least important product in terms of installed capacity and utilized capacity. Of all the products.18.0. 3.89 per cent. Next important product processed by the small scale private sector units based on their annual production were curd. The total cost of carrying inventory of finished products was maximum in pedha (Rs 8. the maximum capacity utilization was seen in the case of curd processing i. In large scale private sector units nine different products were produced and stored on an average from one to sixty days. 6. MBM and lassi were stored only for one day.4 Cost of carrying inventory of finished products by the co-operative unit Cost of carrying inventory of finished products by co-operative sector processing unit is presented in Table 4.39/kg/day).9. MBM was processed in least quantity. The products like curd. In terms of capacity utilization.02. SMP (Rs. The overall capacity utilized was 87. khowa. The maximum cost was in the case of panner (Rs 2. The cost of carrying inventory of finished products was maximum in case of paneer (Rs.2.58 per cent.05/kg/day).0.94 tonnes as against the installed capacity of 198.e.0. 4.38 per cent. The interest on carrying inventory ranged from Rs. MBM and lassi were stored only for one day on an average. 2. The total cost of carrying inventory of finished products was by and large very low in all the products compared to the other two sectors studied.04/kg/day) followed by khowa (Rs. ghee.35 and 2.20/kg/day) and butter (Rs. curd. pedha (Rs. pedha (3days).01 to Rs.6 Cost of carrying inventory of finished products by the private small scale units Cost of carrying inventory of finished products by small scale private sector processing unit is presented in Table 4. Next to follow the order were khowa (5 days).8 and Fig.0.0. the product which stood at the top position was butter with 99. Ghee was the one which stored for long period (60 days) while butter and panner were stored on an average for 15 days each. 4. Storage and maintenance cost and the interest on carrying inventory at 14 per cent were the two items of cost in the case of carrying inventory of finished products.00 tonnes respectively. The average capacity utilization was 89.2. mysore pak (4days).22%). paneer was stored for longer duration (6 days). Among the products.

05 Total cost (Rs/ kg/day) Curd SMP Butter MBM Pedha Lassi Ghee Paneer Khowa 4000.84 25.04 4.00 3750.00 1200.07 0.01 0.00 212724.02 0.05 .00 Products Quantity Stored (kg/day) Price (Rs/kg) No.01 0.00 500.00 18.00 177.00 1 30 30 1 7 1 45 2 2 0.00 4.00 250.06 0.01 0.04 0.09 0.00 12500.00 Interest on carrying inventory @ 14% (Rs/ kg/day) 0.08 5.Table 4.00 130.09 0.00 70455.91 151.10 0.00 227685.79 15.00 3450.00 500.04 0.14 5.11 0.08 0.16 0.02 0.00 10.27 115.05 0. of days stored Storage and maintenance cost (Rs/ kg/day) 0.00 57920.00 1300.9: Cost of carrying inventory of finished products by the co-operative unit Value of processed and stored products (Rs) 72000.00 140.00 1500.00 500.21 0.00 30.20 0.16 0.00 115.16 0.

00 30.00 25.92 25.61 1.05 0.00 3000.11 8.19 Interest on carrying inventory @ 14% (Rs/kg/day) 0.10 8.00 10. of days stored Total cost (Rs/ kg/day) Curd Butter MBM Pedha Lassi Ghee Paneer Khowa Mysorepak 19.04 0.10 0.00 250.01 0.00 400.00 330000.00 150.00 Storage and maintenance cost (Rs/ kg/day) 0.20 0.00 125000.11 0.00 100.19 0.00 3750.39 6.00 Price (Rs/kg) No.00 1000.06 0.45 125.00 8650.65 1.35 6.00 115.02 0.00 165.30 117.06 Products Quantity Stored (kg/day) 5500.05 0.00 28750.11 0.01 0.15 0.00 1179.25 .20 10000.00 650.01 0.Table 4.23 0.00 1 15 1 3 1 60 15 5 4 0.00 13.00 2000.04 0.05 0.01 0.10: Cost of carrying inventory of finished products by the private large scale units Value of processed and stored products (Rs) 107000.

97 0.11: Cost of carrying inventory of finished products by the private small scale units Value of processed and stored products (Rs) 300.40 20.00 50.00 5.06 0.03 0.02 0.00 139.00 No.04 0.00 30.03 0.05 0.00 120.00 160.03 Products Quantity Stored (kg/day) 15.08 0.Table 4.04 0. of days stored Total cost (Rs/ kg/day) Curd Butter MBM Lassi Ghee Paneer Khowa Cream Shrikand 1 5 1 1 1 6 5 1 3 0.00 25.09 0.05 Interest on carrying inventory @ 14% (Rs/ kg/day) 0.00 2.08 .05 0.03 0.08 0.00 135.08 0.02 0.00 2.00 Price (Rs/kg) 20.06 0.00 1.00 800.05 0.00 210.00 5.00 4.02 0.08 2.00 270.00 2.05 0.00 1050.07 0.00 Storage and maintenance cost (Rs/ kg/day) 0.02 0.00 160.00 80.00 614.00 2.00 15.06 0.00 2400.

28 18.18 13.42 2.19 0.41 19.50 Processed Value (lakh Rs) 231.39 47.09 12.42 0.93 1.05 Quantity Excess (Tonnes) 141.39 30.71 24.10 18.61 1.18 0.51 0.99 0.55 0.81 8.49 0.36 122.49 8.00 0.44 0.94 261.89 0.04 0.04 0.12: Demand management of milk and milk products in different milk processing units Sl.54 1.55 14.96 0.18 122.16 0.80 1.33 0.96 86.01 Product Milk Unit Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units 2 Curd 3 SMP 4 Butter 5 MBM 6 Pedha 7 Lassi 8 Ghee .05 Quantity Sold (tonnes) 1606.18 13.02 29.58 54.27 19.01 1.25 0.47 0.30 37.36 0.77 18.70 6.02 0.37 0.08 24.28 0.62 56.01 0.82 787.75 24.01 1.42 2.10 12.45 14.48 2.88 2. 1 Quantity Processed (tonnes) 1607.40 10.37 0.10 0.10 8.18 0.37 14.68 0.49 0.79 8.28 18.54 0.30 34.28 0.15 74.44 68.02 1.62 0.06 3.68 1.56 0.17 1.08 0.02 Quantity Deficit (Tonnes) 140.40 3.01 1.46 1.20 14.10 18.01 1.16 0.50 Sold Value (lakh Rs) 230. No.71 74.11 3.91 28.10 7.11 3.19 2.40 10.Table 4.73 0.17 0.52 26.58 14.31 1.99 264.71 0.03 15.05 0.06 791.11 14.51 0.40 47.01 1.51 1.42 32.63 0.00 6.42 1.79 8.03 15.51 24.49 0.28 1.

11 lakhs.71 tonnes of value Rs.12: Contd….29 0.20 0. The total quantity of SMP processed and sold annually in co-operative unit was 26. followed by private large scale units and private small scale units.47 0.15 0. 47.28 tonnes of value Rs.00 tonnes of value Rs. In case of milk and curd. the quantity sold and sold value were also highest in private large scale units with 56.57 1. 47.18 lakhs and 264.05 0.2.11 Quantity Excess (Tonnes) 0.03 0. followed by private large scale units and private small scale units.02 0.54 lakhs.81 0.91 lakhs respectively.06 tonnes.42 lakhs.04 0.17 0. The excess and deficits were also higher in co-operative unit. followed by private large scale units and private small scale units. followed by private large scale units and private small scale units.01 0. the quantity sold and sold value was also highest in co-operative unit with 1606. Similarly.12 reveals the quantity demanded and processed of milk and milk products and their respective values in co-operative and private sector units.27 tonnes. 8.20 0. Similarly. In case of MBM.55 lakhs respectively.11 0.01 Quantity Deficit (Tonnes) 0. 34.01 0.68 0. the quantity sold and sold value in co-operative unit were 24. 230.80 tonnes of value Rs. of value Rs.Table 4.57 1.14 0. Similarly.12 Processed Value (lakh Rs) 0.02 lakhs. followed by private large scale units and private small scale units.22 0. followed by co-operative .05 0.17 0.20 0.82 tonnes of value Rs. In butter.29 0.19 0.01 0.02 0.22 0.77 tonnes and Rs.43 0.67 0.14 0.36 lakhs and 261.01 Paneer 10 Khowa 11 Mysore pak 12 Cream 13 Shrikand Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units Co-operative Private large scale units Private small scale units ghee.61 lakhs. 8.31 0. 231.92 0. followed by private large scale units and private small scale units.. The excess and deficits were also higher in cooperative unit.66 1. 29.15 0. 9 Product Unit Quantity Processed (tonnes) 0.81 0. 28. There was no processing of SMP in private units (either large or small scale).51 tonnes of value Rs.01 0.20 0. of value Rs.03 0. the total quantity processed and sold monthly was highest in co-operative unit with 1607. the total quantity processed and sold monthly were highest in private large scale units with 54. Similarly. No. the quantity sold and sold value were also highest in co-operative unit with 18.68 0. of value Rs.94 0. 4.65 1. the product which was stored for longest duration in other two sectors was stored only for a day on an average here.12 Sold Value (lakh Rs) 0.29 0.7 Demand management of milk and milk products in different milk processing units The Table 4. the total quantity processed and sold monthly were highest in co-operative unit with 19.01 0.02 0.29 0. followed by co-operative unit and private small scale units. Obviously the storage and maintenance cost was maximum in the case of panner.11 Quantity Sold (tonnes) 0.29 0.08 lakhs.69 0.15 tonnes. Sl. 37.

0. 4. while private large scale units faced a deficit of 1. followed by co-operative unit and private small scale units. the quantity sold and sold value were also highest in private large scale units with 32.68 tonnes per month. Although.33 tonnes of value Rs. lassi. followed by co-operative unit and private small scale units. The private large scale units confined to a product line consisting of groups of items such as liquid milk. Similarly. MBM. 8.94 lakhs. In lassi.63 lakhs. followed by co-operative unit and private small scale units. Similarly.51 tonnes of value Rs.3.01 tonnes of finished products produced by the private large scale units and private small scale units prepare only 222. There was no processing of pedha in private small scale units.49 lakhs. They processed milk into Mysore pak at a rate of 0. followed by private small scale units and co-operative unit. the quantity sold and sold value were also highest in private large scale units with 14.47 lakh rupees. During the study period private small scale units handled 0. Cream and shrikand were two other minor products of small scale private units with monthly production of 0.12 tonnes respectively and they were valued at 0.69 tonnes of value Rs. The unit concentrated mainly on the liquid milk.68 tonnes of value Rs.96 per cent of the total processed products manufactured by the co-operative sector unit.26 tonnes of finished products. followed by co-operative and private small scale units. butter. pedha and ghee. 7.17 tonnes of excess quantity over their production.81 lakhs. 0. 1.04 lakhs.44 lakhs. In khowa. paneer. followed by co-operative and private small scale units. ghee.31 tonnes per month with a value of 0. paneer and khowa together represent 0. followed by co-operative unit and private small scale units. MBM.11 lakh rupees.68 tonnes of value Rs. Mysore pak was the minor product of dairy industry.04 percent of total processed products. followed by private large scale units. The excess and deficits were also higher in private large scale units. Per year about 23609. followed by co-operative unit and private small scale units. Similarly. The excess and deficits were also higher in private large scale units. Similarly. the total quantity processed and sold monthly were maximum in private large scale units with 30. The excess and deficits were also higher in private large scale units. followed by co-operative unit and private small scale units. the quantity sold and sold value were also highest in co-operative unit with 13. It is seen that the co-operative handled about 1.04 tonnes of finished products were produced by the co-operative unit.31 lakhs. These items constituted 99.81 lakhs.17 tonnes of value Rs. The Table also represents quantity and proportion of the various processed products by private large scale processing units. the quantity sold and sold value were also highest in private small scale units with 0. pedha and . In case of ghee. followed by curd. the total quantity processed and sold monthly were highest in private large scale units with 14. followed by co-operative unit and private small scale units. gives the details of quantity and proportion of various processed products prepared in the co-operative and private sectors.20 and 0. which accounted for 86.unit and private small scale unit. The excess and deficits were also higher in co-operative unit. the quantity sold and sold value were also highest in private large scale units with 1. SMP. Similarly. MBM. khowa. The total quantity of paneer processed and sold monthly was highest in private large scale units with 1. curd. curd.15 and 0. followed by private large scale units. 24.13 and Fig. The total quantity processed and sold of pedha monthly was highest in co-operative unit with 13. butter.3 VALUE ADDITION IN THE SELECTED UNITS 4. 15. followed by private small scale units and co-operative unit.28 lakhs.71 tonnes of value Rs. 3.67 tonnes of value Rs. it mainly concentrated on seven major items namely liquid milk.92 lakhs. 24.54 per cent of the total processed items. the co-operative sector produced a wide range of products. which was specialized only by private large scale units. 15.04 tonnes monthly. 1. lassi and ghee.1 Product mix in co-operative and private sector milk processing units during 2007 Table 4. the total quantity processed and sold monthly were highest in private small scale units with 0.03 tonnes of excess quantity monthly over processed quantity while private large scale unit faced the problem of deficit at 0. followed by private large scale units.37 tonnes of value Rs.73 tonnes of value Rs. as against 10917.

butter. miscellaneous cost. 1.18.10 per cent). repairs and maintenance. 11239. 15940. It showed that.55 lakhs (91. 13912. 3.14. the cost of raw milk was the highest accounting for more than 80 per cent in all the units followed by packaging materials cost and electricity. 1.77. electricity. salaries for permanent employees formed the major part in the case of both co-operative unit and private small scale processing units. 53. Similarly.3. The Table also reflects the quantity and proportion of the various products processed by the private small scale processing units. etc.mysore pak to an extent of 6.20 per cent). 9448. private large scale and private small scale units was highest in case of ghee at Rs. 5. 1892. rent. lassi.90 per cent) and Rs.85 tonnes of value Rs. resource utilization and product development. 368. milk processed and gross returns per tonne by co-operative unit was much higher Rs.10 lakh. cream. 15292. 0. fuel and water.33 per cent.14 reflects the costs associated with the processing of milk. whereas depreciation cost accounted for major proportion in private large scale units. 2. shrikand and MBM to an extent of 8. The private small scale units confined to a product line consisting of groups of items such as liquid milk. Other items processed from the unit include. These costs directly have an impact on the performance of the unit in terms of efficiency of production.14 in case of private large scale units and 368. 18349.34 lakhs in co-operative unit. curd. 0. insurance.16 lakhs. 2764. respectively in private small scale processing units. Among the fixed costs. 1466. The costs associated with the processing of milk which are broadly categorized into two heads. sugar.66 lakhs in private small scale units. It was also observed that the total quantity of milk processed and cost of processing (per tonne) worked out to be 24930. 4574. variable costs occupy a major share of total costs with more than 90 per cent in all the three kinds of processing units. fuel and water charges. salaries paid to the permanent employees and administrative costs. The total fixed and variable cost of processing per tonne of milk formed Rs.2 Cost structure of processing of milk in co-operative and private sector processing units An establishment of processing unit in milk encompasses various fixed and variable costs.61 tonnes and Rs.82.65.02.65 lakh and Rs.55 per cent).61 tonnes and Rs. 28. 17968. 0.91. The major items under fixed costs consisted of depreciation.3. 145.15.77 lakh.81 tonnes and Rs. ghee and butter. packaging material.87. khowa. namely.59 lakhs. 1. fixed costs and variable costs. Rs. 3.08 in case of co-operative unit. respectively.47 tonnes of value Rs. 66. 2.65 in private small scale units respectively.04 respectively and in the case of private small scale units they were of the order Rs. Table 4. labour cost.87. the variable cost comprised of items like raw milk. the sale of milk amounted maximum in all the units with 19281. respectively.51.15 respectively. respectively. 3159. It could be observed that.17 lakhs (8. In this context it may be quite advisable to study cost structure of processing units which highlights various cost items responsible for indication of performance of the units. 0.45 per cent) and Rs. The detailed components of these two cost items are presented in Table 4. Around 80 per cent of the total processed products were constituted by liquid milk alone. curd. ghee.17 tonnes and Rs. Rs. respectively in cooperative unit. respectively in the private large scale units and Rs. The net returns depended on both variable costs as well as fixed costs of production.78.09. In the case of variable cost. 0.56. 308. 1.06.01 per cent. 24930. The price per tonne in co-operative.80 per cent) and Rs.22 lakhs (8. paneer.27 tonnes of value Rs.81. followed by other products. 0.31 lakhs in private large scale units and 179. the same were Rs.71. 4. 1573.80 lakhs (8. Of the total sales realization. 0. 0.52 lakhs (91. The products which were sold the least in co- . In the case of private large scale units. 16841. 4.01 and 0.50 and 0. A stream of data on fixed and variable cost were examined to realize the objectives. khowa. 11239. 0.3 Sales realization in co-operative and private sector units Sales realization per tonne of milk processed by co-operative and private (large and small scale) milk processing units is represented in Table 4.17 tonnes and Rs.78.81 tonnes and Rs. the gross returns.59 lakhs (91.

26 0.75 0.03 0.11 1.81 0.63 0.78 3.02 0.05 88.66 13.71 0.35 0.18 1.02 1. Products Quantity (tonnes) Milk Curd SMP Butter MBM Pedha Lassi Ghee Paneer Khowa Mysore pak Cream Shrikand 19281.78 0.64 223.73 193.72 10917.74 1.33 0.01 Per cent 86.96 0.13: Product mix in co-operative and private sector milk processing units during 2007 (per annum) Co-operative sector Sl.13 0.51 0.11 222.93 149.26 Per cent 80.87 0.39 6.82 0.01 100.00 Private large scale units Private smallscale units 1 2 3 4 5 6 7 8 9 10 11 12 13 Total quantity (tonnes) .52 0.00 Quantity (tonnes) 179.77 0.85 3140.04 Per cent 81.74 2.50 100.18 3.09 0.83 2.05 23609.65 8.73 8.54 6.65 0.68 0.91 2.00 Quantity (tonnes) 9448.01 1.01 6.Table 4.07 422.13 1.00 122.47 744.50 159.27 18.01 100.29 225.30 1. No.40 10.95 0.55 7.06 3.55 297.

Fig. 3. Product mix in co-operative and private sector milk processing units during 2007 .

30 9.89 1.75 1.60 132 .06 12.70 1573.04 91.68 3.17 15940.00 83.09 2.12 91.62 49.79 0.00 1.45 0.18 0.00 0. 2. 6.80 2909.09 2 .11 0.28 4. lakhs) 0. 2.88 0.45 83.16 0.04 8.08 0.33 3.68 21. 5.48 1.03 5.26 2. fuel and water charges Miscellaneous cost Sub-total (B) Grand total (A+B) Total quantity of milk processed (tonnes) Cost of milk processed (Rs/tonne) 1.90 83.52 58.04 0. 7. 3.49 2 .87 0.14: Cost structure of processing of milk in co-operative and private sector processing units Co-operative sector Amount % to total (Rs. 4.19 0.00 0.64 8. No.00 Private small scale sector Amount % to total (Rs.35 0.14 4.20 100.84 3.50 210.00 3.28 0.41 0.86 0.55 100.Table 4.11 0.00 308.24 0. 1.78 11239.42 0. 6.00 Private large scale sector Amount % to total (Rs. Particulars Fixed costs Depreciation cost Rent of premises Repairs and maintenance Insurance Salary Administration cost Sub-total (A) Variable costs Raw milk Sugar Other raw materials Packaging material Labour cost Electricity.81 13912 . A.69 368.06 0.55 43.05 1.22 1438. .35 2. 4. 1. 3.29 11.81 0.55 0.17 4.70 0.65 0. 5. 2.80 87. lakhs) 69.88 0.30 0.05 1.05 91.00 12.62 0.61 15292 .60 3159.59 3468.22 8.10 100.79 77.53 3.27 0. B.00 0.53 0.04 0.07 53.17 51.39 24930.00 2.00 145.55 1718.07 6.20 0.40 1.94 4.20 0. lakhs) 27.00 - Sl.00 57.70 0.

similarly the B:C ratio were 1.P per litre were highest for ghee at Rs. 10 lakh.73 and Rs. in private small scale units there was no margin. 0. The total cost of marketing was Rs. followed by transportation cost (Rs. respectively.32. 1. 15940. of which transportation cost accounted for maximum with Rs. respectively. Rs.419 lakh). The least marketing cost was observed in case of khowa. respectively. 13912. The total quantity sold was 10917.20. 98. The total marketing cost was . 17.4.operative. Rs.481 lakh.751 lakh) and advertisement expenses (Rs. 1818.R.3 Annual cost of marketing of processed products by private small scale units The cost of marketing of processed products in private small scale processing units is presented in Table 4.4.57. Rs. 195 respectively. 70.812 lakh.14 (93.080 lakh) and advertisement expenses (Rs. The total marketing cost was highest in milk with Rs.02 and 1. The net returns for co-operative. 18349.3. 17968. 25 and Rs.827 lakh and advertisement expenses of Rs. 16149. followed by other products. respectively. 4.4 Cost and returns in co-operative and private milk processing units Table 4.90.23.4.19. The least cost was observed in case of mysore pak. 14963. The total cost of marketing was Rs.99 in co-operative. While. margin and M.15. 181. 4.R. private large scale and private small scale units.17 gives the details of ex-factory price.16 and Fig. It could be observed that of the total costs (per tonne of milk processed).050 lakh). 0. 222. private large scale and private small scale units were Rs.66 and Rs. 177.R. 4. 3385. private large scale and private small scale units. 190 respectively. 15292.18. followed by other products. The net returns depend on both variable costs as well as fixed costs of production. 4 reflects the costs and returns associated with processing of one tonne of milk. 16439.P of various processed products in the co-operative and private (large and small scale) units.66 (98. The total quantity sold was 23609.011 tonnes.02%) and Rs. 4. followed by other products. whereas in private large scale units it was highest in case of ghee at Rs. margin and M. 141. 0. Of all the products.P and it was highest in case of ghee.654 lakh followed by carriage and hamali charges of Rs.3. 76.56 in co-operative. of which carriage and hamali charges accounted for maximum (Rs. The total costs came upto Rs.5 Comparative price at different stages of marketing of processed products by milk processing units Table 4.170 lakh. private large scale and private small scale units was khowa.38 and Rs.P per litre was milk in all the units. followed by carriage and hamali charges (Rs. private large scale and private small scale units. The product with least ex-factory price. 16841. 0. margin and M. Rs.04 and Rs.041 tonnes. 4.704 lakh.4 SALES MANAGEMENT IN SELECTED UNITS 4. 165.230 lakh. The gross returns per tonne were Rs.1 Annual cost of marketing of processed products by co-operative sector unit The cost of marketing of processed products by co-operative processing unit is presented in Table 4.07%) in co-operative. Rs.08 (92. the cost of marketing was highest in milk. respectively.100 lakh). Of all the products.2 Annual cost of marketing of processed products by private large scale units The cost of marketing of processed products in private large scale processing units is presented in Table 4. 401.97%). hence the ex-factory price itself formed the M.25. The least cost was that of cost of carrying inventory.11 for these units in the respective order. 114. the products were directly sold to the consumers. cost of processing amounted to maximum with Rs. The total marketing cost was highest in milk with Rs. 5 lakh). Rs.R. mysore pak and MBM. of which transportation cost accounted for maximum (Rs. the marketing cost was highest in milk. followed by other products. The total cost of marketing was Rs. the ex-factory price.27. In cooperative unit.

00 0.14 2764.50 6.65 1.04 Private small scale sector Price per Quantity Value tonne sold (lakh Rs) (lakh Rs) (tonnes) 179.00 1892.00 0.61 16841.35 2.00 3.77 216.25 48.10 12.41 418.25 8.15 11.00 0.65 145.18 0.55 0.11 0.00 0.52 342.91 225.43 8.40 2.31 744. Particulars 1 Liquid milk 2 Curd 3 SMP 4 Butter 5 MBM 6 Pedha 7 Lassi 8 Ghee 9 Paneer 10 Khowa 11 Mysorepak 12 Cream 13 Shrikand Gross returns (lakh Rs) Milk processed (tonnes) Gross returns per tonne (Rs/tonne) .00 0.16 185.73 1.56 Sl.52 159.01 0.25 122.74 1.00 0.75 1.74 0.00 0.47 0.73 0.05 0.55 0.15 7.15 Private large scale sector Price per Quantity Value tonne sold (lakh Rs) (lakh Rs (tonnes) 9448.00 0.20 9.85 0.35 1.10 0.15 0.00 0.64 0.08 0.86 10.81 18349.92 1.00 0.34 3140.83 1.00 0.00 2. No.35 1.00 0.29 1.Table 4.50 0.00 1.50 1.11 0.00 0.19 145.11 1.66 18.00 0.20 3.17 17968.30 297.07 1.02 2.25 0.30 2.26 88.00 0.13 1.67 0.64 1.97 6.00 0.75 0.26 149.00 0.86 2.27 0.51 223.15 0.15: Sales realization in co-operative and private sector units Co-operative sector Price per Quantity Value tonne sold (lakh Rs) (lakh Rs) (tonnes) 19281.15 33.84 422.13 0.05 1.00 0.15 63.00 0.25 37.64 1.39 1.16 28.87 11239.00 0.59 24930.40 1.00 1.16 368.93 1.73 1.08 0.00 0.52 5.02 66.16 1466.00 7.00 4574.18 0.00 0.72 1.87 193.18 565.

81 (0.57 1.90 1.38 401.23 15292.44 (0.08 (92.36) 16439.04 Private small scale units 17968.Table 4.66 1.66) 103.62) 1045.14 (93.80 (6.66 (98.48 (0.15 13912.36 (6.02) 101.99 1818.25 3385. 1 2 Private large scale units 16841.97) 108.85 (0.16: Cost and returns in co-operative and private milk processing units (Rs/ tonne of milk processed) Sl.73) 942.02 15940.64) 16149.30) 14963.56 Particulars Co-operative unit Gross returns/ton Cost of Processing Carrying inventory Marketing 18349. No.11 3 4 5 Total cost Net returns Benefit cost ratio .70) 105.

4.Co-operative unit Private large scale units Private small scale units 16000 14000 12000 10000 Rs. Costs in co-operative and private milk processing units Fig. 4./tonne 8000 6000 4000 2000 0 Processing Carrying inventory Marketing Fig. Costs in co-operative and private milk processing units .

00 25.00 - 1.00 17.16 30.00 130. No.00 125.00 135.00 10.00 105.00 - 17.00 100.00 80.00 19.45 125.00 139.00 165.R.96 133.00 - 15.Table 4.00 125.00 177.52 19.00 155.00 135.91 151.00 - - 15.84 25.00 115.66 2.00 20.00 25.R.00 150.92 25.00 30.00 .00 115.00 195.00 Margin M.00 Private large scale sector Exfactory price 15.00 25.00 15.00 5.00 12.R.27 115.54 2.P 1 2 3 4 5 6 7 8 9 10 11 12 13 Milk Curd SMP Butter MBM Pedha Lassi Ghee Paneer Khowa Mysore pak Cream Shrikand 0.17: Comparative price at different stages of marketing of processed products by milk processing units (Rs/ Kg) Co-operative sector Sl.00 Private smallscale sector Exfactory price 15.34 18.00 5.00 128.21 5.00 20.00 120.00 15.00 139.00 13.00 170.P Margin M.00 190.00 160.00 140.00 5.00 160.00 143.73 10.00 14.30 117.P Margin M.99 20. Products Exfactory price 14.79 15.09 18.16 5.00 210.00 80.00 120.00 160.51 18.06 22.00 210.00 10.00 15.99 20.00 130.

481 .404 1.153 0.Table 4.068 0.827 Transportation cost (lakh Rs) 115.393 6.126 0.447 0.998 122.691 18.354 1.546 297.041 Carriage and hamali charges (lakh Rs) 57.330 0.704 29.497 159.654 Advertisement expenses (lakh Rs) 8.063 0.064 0.341 0.854 3140.167 1.784 1.106 1.835 2.290 225.021 0.019 222.041 0.929 148.096 0.960 0.001 10.18: Annual cost of marketing of processed products by co-operative sector unit Products Milk Curd SMP Butter MBM Pedha Lassi Ghee Paneer Khowa Total Total quantity sold (tones) 19281.000 Total Marketing Cost (lakh Rs) 181.677 0.670 0.507 1.734 0.006 70.012 141.003 0.480 0.802 2.843 1.422 0.892 0.846 9.052 0.894 0.367 0.095 0.595 2.126 2.054 23609.645 223.

419 Advertisement expenses (lakh Rs) 4.106 0.812 7.266 0.002 0.049 0.049 88.925 0.088 0.212 2.000 5.005 0.021 0.351 0.193 0.000 Total Marketing Cost (lakh Rs) 98.732 0.008 114.000 0.619 0.040 0.955 1.003 0.415 2.018 0.402 10.553 422.341 0.012 0.132 7.030 0.752 0.001 0.579 0.074 0.327 0.787 4.005 0.008 0.170 .005 0.751 Transportation cost (lakh Rs) 66.345 2.139 5.071 0.470 744.265 0.134 193.011 Carriage and hamali charges (lakh Rs) 28.070 1.Table 4.234 1.005 76.718 10917.002 32.19: Annual cost of marketing of processed products by private large scale units Products Milk Curd MBM Lassi Ghee Paneer Butter Khowa Pedha Mysore pak Total Total quantity sold (tones) 9448.019 0.

107 0.180 8.040 0.001 0.353 2.100 Transportation cost (lakh Rs) 0.100 0.080 Advertisement expenses (lakh Rs) 0.Table 4.734 1.263 Carriage and hamali charges (lakh Rs) 0.001 0.002 0.737 222.20: Annual cost of marketing of processed products by private small scale units Products Milk Curd Khowa Ghee Butter Lassi Cream Paneer Shrikand MBM Total Total quantity sold(tones) 179.001 0.012 1.002 0.220 0.230 .080 0.022 3.110 6.050 Total Marketing Cost (lakh Rs) 0.004 0.004 0.269 18.738 1.001 0.

respectively. The units considered for the study faced similar kinds of problems. respectively.highest in milk with Rs. respectively. In the co-operative sector unit. 52 and 45 per cent. sales. The marketing cost was the least in the case of MBM. The problems faced by the units were identified as problems regarding infrastructure facilities. which constituted 60. The private large scale units identified as the first three major problems which finance. The list of various problems faced by the milk processing units. Similarly.220 lakh. procurement of raw milk. 40. infrastructure facility. 54. their respective scores and ranking are given in Table 4. This study revealed that the most striking problem faced by the processors of the co-operative sector as well as private sector (large and small scale) unit was erratic power supply and maintenance of machinery. constituted 55.22. procurement of raw milk and sales were identified as major problems. 4. followed by infrastructural facility and processing to the extent of 42 and 32 per cent.21 and 4. 0. The suggestions and opinions were culled out to ascertain the major problems affecting the units and industry. a set of questionnaire was developed in order to document the problems faced by the units and their suggestions towards stated problems. 53 and 49 per cent. but the extent of severity varied from unit to unit and therefore.5 PROBLEMS FACED BY THE PROCESSING UNITS In order to analyse the problems faced by the processing units. respectively. . procurement of raw material. procurement of raw milk. marketing and finance. 58. followed by other products. the problem regarding processing. processing of raw milk lack of infrastructure facility and sales and which constituted 90. 28 and 23 per cent. 42. the ranking of each problem varied with the unit. the private small scale units identified and ranked the problems namely finance. finance. respectively. processing.

A 1 2 3 4 5 B 1 2 3 4 5 6 C 1 2 3 D 1 2 3 E 1 Problems Infrastructural facility Location Availability of land Availability of Electricity Water Approach roads Total Procurement of milk Availability of raw milk Price of milk Quality Transport facility Transport cost Cold chain Total Processing Cost effective technology Availability of labour Maintenance of machinery Total Sales Availability of transport vehicle Transportation cost Commission/taxes Total Finance Availability of funds Total Co-operative sector 2 2 8 7 2 21 2 3 3 2 5 2 17 7 3 8 18 2 2 3 7 4 4 Private large scale sector 3 3 8 6 2 21 6 8 4 5 6 2 30 4 3 3 10 5 6 6 16 7 7 Private small scale sector 2 7 9 6 2 26 6 8 5 4 2 9 35 7 5 4 16 3 4 7 13 9 9 .Table 4. No.21: Problems faced by co-operative and private sector processing units Sl.

No.Table 4. Description of problem Maximum score points Points scored by problem 21 Percentage of points scored 42 Rank of problem Points scored by problem 21 Private large scale sector Percentage of points scored 42 Rank of problem Points scored by problem 26 Private small scale sector Percentage of points scored 52 Rank of problem A Infrastructural facility Procurement of milk Processing Sales Finance 50 II IV IV B C D E 60 30 30 10 17 18 7 4 28 60 23 40 IV I V III 30 10 16 7 49 32 53 55 III V II I 35 16 13 9 58 54 45 90 II III V I .22: Ranking of problems Co-operative sector Sl.

Since. followed by December. The major portion of procurement during these months was diverted for preparation of milk products.2 revealed the average quantity and cost involved in procurement of milk by the large scale private units. 5. October. Seasonal fluctuation in milk procurement by both sectors are also compared and discussed below.1. The milk producing farmer will be at double disadvantage during these months.1.. These will have direct effect on total supply of milk and thus on the prices. The value of procured milk and price per litre were also highest in the respective month mentioned above. Added to it. supply remains less than demand. the demand being inelastic. The price per litre was highest in summer months i. Since. the demand for milk is more or less constant during these months and demand for value added products would be more due to marriage and festivals. The table highlights the domination of procuring of raw milk in the month of November. Wastage may be due to improper handling or may be due to spoilage of milk due to dry and hot weather conditions. Raw milk procurement was the highest during December month followed by November and October months.1 5.1 reveals the average quantity procured and cost involved in procurement of milk by the co-operative unit. The quantity procured and its value was lowest in the month of June. March and April. are discussed in this chapter under the following headings to arrive at a meaningful interpretation. However this is not a healthy sign for the development of dairy industry.3 5. The supply of milk used to be low owing to lesser productivity of animals during these months due to non availability of sufficient green fodder.e. On one hand the productivity will be low during these months due to non availability of green fodder leading to lower income to the farmer and on the other hand the wastage value. the price of milk was higher also during the peak procurement months. These are the flush season months for milk procurement. since these months come under flush season during which quantity of milk procured was more than the average monthly procurement.5. raw milk by co-operative and private sector processing units are presented. chances of spoilage also would be very high in these months.2 Quantity of milk procured and cost involved in procurement of milk by the private large scale sector during 2007 The Table 4. which were presented previously.1 Quantity of milk procured and cost involved in procurement of milk by the co-operative unit during 2007 Table 4. 5. the milk procured in excess was diverted for preparation of milk products to augment the increased demand for value added products resulted due to marriage and festivals during the season.5 5. The wastage of milk was exorbitant during these months. the processors would derive more benefits by procuring higher quantity of milk and diverting it for preparation of milk products. a comparative account on the pattern of procurement and use of main raw materials. hence. 5.2 5. during which the quantity of milk procured in the hinterlands will be less. namely. whereas the wastage was highest in the month of April. Surprisingly. since this is a lean season month. DISCUSSION The findings of the study. the wastage can be minimized through formal trainings for proper handlings of such raw materials.6 Procurement management in processing units Demand and product management in processing units Value addition in the selected units Sales management in selected units Problems faced by the processing units SWOT analysis of the dairy processing units 5. January and other months. During this period.1 PROCUREMENT MANAGEMENT IN PROCESSING UNITS In this section. In the case of farmer. milk powder is reconstituted into milk to cater to the demand of liquid milk. .4 5.

The milk producing farmer will be at double disadvantage during these months. Raw milk procurement was the highest during October and November months. Therefore. transportation and handling cost and wastage cost was the highest in case of cooperative unit followed by large scale private and small scale private unit.5 Seasonal fluctuations in milk procurement by co-operative and different private sector processing units during 2007 From the results of the study (Table 4.61 litres per day in large scale private sector units and 1076.08 liters per day in co-operative. The average wastage during flush season was also high compared to lean season in co-operative. Further. availability of green fodder and chance of grazing in the field for the animals. 5. It has wide spread network of procurement centres in roots and corners of the villages and operate through milk collection centres and milk collection vans. the next in the order were large scale private followed by small scale private processing units in terms of their volume of raw material procurements. since the procurement and sales was high in co-operative unit.1. obviously its volume of business would be very high. Because of the similar reasons. whereas the commission charges were found to be highest in case of small scale private unit. the demand being inelastic. This was due to the reason that during flush season. 32114. it is quite imperative for all the three sector processing units to invest more on packing materials to make it more appealing to grab major share of the total demand for the product in the market.4 Quantity and value of raw materials procured by co-operative and different private sector processing units during 2007 The quantum of raw materials procured by different sector milk processing units is the indicator of capacity of processing of the units. On one hand the productivity will be low during these months due to non availability of green fodder leading to lower income to the farmer.1. Of the different raw material procured. the milk procured in excess was diverted for preparation of milk products to augment the increased demand for value added products resulted due to marriage and festivals during the season.44 litres per day in small scale private sector units during the months of September to February. the cost of packing materials was the maximum followed by that other raw materials and sugar. It is quite understandable that Karnataka milk federation is the operation flood driven cooperative sector organization established since long time. Hence. it is clear that the average procurement of raw milk was more in flush season in general and co-operative unit in particular. the cooperative sector was found to be the major player in milk processing business. Since. followed by large scale private and co-operative unit.1.5). it can be seen that of all the units. whereas it was reverse in the case of both large and small scale private sector units. 5. followed by February and March months. Packaging provides value addition and in turn induces more demand for the products.3 Quantity of milk procured and cost involved in procurement of milk by the private small scale sector during 2007 The Table 4. which are the flush season months for milk procurement. production of milk was high due to cold climate which was conducive for animals. the wastage can be minimized through formal trainings for proper handlings of such raw materials. 5.3 revealed the average quantity and cost involved in the procurement of milk by the small scale private sector unit. The average procurement were to the tune of 76718. The flush-lean ratio was highest in co-operative unit compared to private large and small scale units.The quantity procured and value was lowest in the month of February due to short supply of milk. The wastage was highest in the months of April and May. the quantity and value of raw milk procured. Hence. to meet the needs of its processing plant the cooperative unit has to procure raw material in large quantities. It has horizontal linkage between different units to meet the demand for finished products. Wastage may be due to improper handling or may be due to spoilage of milk due to dry and hot weather conditions. In the case of small scale units. Of the three different sectors studied. . The value of procured milk was highest in the month of March and the price per litre was also high during this month. followed by December and January months.

followed by small scale private (89. With a well connected network of collection points and refrigerated transport vans they can usher to the needs of processing unit. 5.3 Output and capacity utilization by the private small scale processing units In terms of annual quantity processed. Therefore. The other important products processed by the large scale units in the order of their important were curd.2.58 per cent. Co-operatives have well established hinterland as for as milk is concerned. milk processing utilized 96.34 per cent of its installed capacity. large scale private sector units also concentrated more for processing of milk and utilized 84. Private processing units establish their processing plants based on the demand and availability of raw milk. it was also observed that. Further.38%). they try to reach the full capacity in order to meet atleast the over head expenditure.1 Output and capacity utilization by the co-operative processing unit The co-operative milk processing unit studied has utilized about 95 per cent of cent of its installed capacity. The overall capacity utilized in small scale private unit was 89.89 %) of its installed capacity. may be due to the high demand for the products.2 Output and capacity utilization by the private large scale processing units As that of co-operative milk processing units. The product which was processed in least quantity was MBM. ghee and other products. But these small scale units have much product diversification to meet the local demand.2.58%). which in turn speaks off the success of co-operative movement in the study area. one unit was recently established and may not be utilized to the full capacity. paneer and curd were the next important products in terms of their capacity utilization. The overall capacity utilized was 95. lassi. which was highest. The small scale private sector units also as that of co-operative and large scale private sector units. higher quantity processed and capacity utilization was observed in co-operative sector unit because the efficiency per unit of consumption of raw materials was very high. When one sees the capacity utilization of different products processed. may be due to the reason that of the two units selected under this category. their capacity utilization would largely depend upon the demand in the immediate following market. butter utilized maximum (99. tried to meet that full capacity.39 per cent in co-operative unit. They have set up modern processing technology.5. the highest capacity utilized was in case of curd and the least capacity utilized was in MBM. Curd. In terms of capacity utilization. The other products are processed according to local needs and demands. since they do not afford to waste their investment. Plant has significantly increased the processing over the years in co-operative sector unit.2 DEMAND AND PRODUCT MANAGEMENT IN PROCESSING UNITS 5. they always try to meet the full capacity. The horizontal integration between different milk unions operating throughout the country would provide siphoning effect to meet the installed capacity of the individual unions. products like shrikand and cream were prepared by them. the specialize in those commodities which have local demand. MBM. Hence.2. . milk was processed in highest quantity followed by curd. khowa.42 percent of its installed capacity highest among the products in terms of their capacity utilization. Processing of milk into pedha was in least quantity owing to its fewer quantity of demand in the local market. However. Out of the different products processed. In large scale private units the quantity processed was higher compared to small scale private units but the capacity utilized was lower since the installed capacity was much higher than the actual quantity processed in private large scale units. these product preparations were highly demand initiative the full capacity utilization may not be practically possible. SMP and Butter are next in that order. Hence. The capacity utilized was lowest in large scale private (87. Hence. MBM and lassi. 5. Since.

5.2. The evidence is there in the table itself.12. the cost of storage was maximum in the case of pedha (Rs 8. since it was less perishable compared with other products. butter and pedha since the demand for these products produced under their brand name “Nandini” was high. it was found that.19/kg/day) which was stored only for 3 days on an average. Therefore it had taken more storage and maintenance cost. At the same time they cannot keep their investment locked up in stored product. they specialize in fast moving products in the locality and produce those products depending upon day to day demand. followed by private large scale units and private small scale units. cream and shrikand to meet the local demand.4 Cost of carrying inventory of finished products by the co-operative unit It could be observed from the Table 4. 5. there is a need to reduce the storage and maintenance cost and rate of interest on carrying inventory capital. The total cost of carrying inventory was the least in the case of lassi and MBM since the interest cost was less for this product. obviously its volume of business would be very . Usually ghee is not prepared every now and then. Hence. The commodity which was stored for maximum duration was ghee. The average total cost was found to be highest in the case of paneer Rs.10 that the large scale private processing units on an average stored the finished products upto a maximum of 60 days. The total cost was least in the case of curd since the storage and maintenance cost was less as it was stored maximum of one day. Though ghee was stored for longer duration (60 days). curd. Ghee can be stored even in room temperature and staked in the bottles one over the other. Hence.5 Cost of carrying inventory of finished products by the private large scale units It is observed from the Table 4. the co-operatives had a wide spread and well knit network of procurement as its area of operation was also very large and the excess of milk procured was diverted towards the production of curd. storage space per unit quantity was also more in the case of pedha. as discussed earlier in this chapter. Whenever the excess of butter left out in the processing unit they convert it into ghee and store until it is marketed. The commodity which was stored for maximum duration was paneer. production behaviour of small scale private sector units would largely depend upon the local demand of the product rather than the aggregate demand in the market The difference in the cost incurred on carrying inventory by co-operative and private sector processing units was due to differences in per tonne price of different finished products and the number of days it was stored.5.11 that the small scale private processing units on an average stored the finished products upto a maximum of 6 days. but pedha has to be stored in particular temperature and cannot be heaped or staked in large quantities. The total cost of carrying inventory was considered as necessary evil with respect to most of the agro-processing units.9 that. 2.02 per kg per day since the storage and maintenance cost was high as compared to other products. since it was less perishable compared with other products.7 Demand management of milk and milk products in different milk processing units From the Table 4. The total cost was least in case of curd since the storage and maintenance cost and the interest cost was very less for this product. Hence. 5. Hence. that they produced more quantity of curd and khowa and produced two new products. because the storage and maintenance cost was high.6 Cost of carrying inventory of finished products by the private small scale units It is observed from the Table 4. the co-operative processing unit on an average stored the finished products upto a maximum of 45 days. Small scale private sector units had been established with very little investment and hence they did not have proper infrastructure to store the commodities for long. The commodity which was stored for maximum duration was ghee. as these reflect in the pricing of finished products while marketing.04 per kg per day. the total quantity processed and demanded and the value of milk. 5. Hence.2.2. butter and pedha was highest in case of co-operative unit. The interest on carrying inventory was also less in the case of curd.2. The average total cost was found to be highest in case of paneer with Rs.

each unit whether it is private or co-operative go for the product mix. only the co-operatives were found producing SMP. since the quantity processed was highest in this unit compared to all the units. namely. 5. In khowa. Thus. and Cream and shrikand were processed only in private small scale units.77 and 0. liquid milk constituted major share accounting for 80.high.1 Product mix in co-operative and private sector milk processing units during 2007 The co-operative sector unit produced a wide range of products (Table 4. Hence.90 per cent of the total cost in the co-operative sector (Table 4. during flush season they prepare skimmed milk powder (SMP) and store them to use during lean season to offset the demand. Private units. and ghee to an extent of 6. and repairs and maintenance.71. In private large scale units. depreciation. 3. The large units cannot take up production of these products as these products are demanded in small quantities and that too only by a small section of the community.96 per cent) followed by paneer (0. ghee and paneer. SMP. supporting the assumption that the production of a given preparation is demand driven. either small or large scale units solely depend on fresh milk only to meet consumer demand. 3. ghee. 5. Mysore pak was processed only in private large scale units. followed by co-operative unit and private small scale units.3 VALUE ADDITION IN THE SELECTED UNITS 5. pedha.87.51 per cent respectively.03 per cent) and Khowa (0. curd.82. Depending upon the type of product demanded by the customers. it was found that. lassi. Hence. They are very large scale producing units and have to balance the supply of milk regularly to the regular customers. These small units produce these products in small quantities to meet 1ocal demand. It is already discussed in the previous sections that production of certain products were highly demand specific. The major cost components under fixed costs were salaries. the total quantity processed and demanded and the value of the processed product was highest in case of private small scale units. there used to be a regular demand for a product of particular brand. marketability of many of the dairy products goes with their brand name. khowa. butter. Hence. MBM. followed by private large scale units and co-operative unit. the large and small scale private units mainly concentrated on liquid milk. Higher depreciation and maintenance costs in the co-operative sector unit reflected the state of technology used in processing implying that . MBM. and usually the customers are brand loyal.45 per cent of total cost whereas in private small scale sector they accounted for 8. and 1. respectively. The costs associated with the processing of milk were broadly categorized in to two heads.3. where as the co-operative sector on many product lines such as curd. 2.65.18. it was found that. The excess and deficits were also higher in private large scale units. ghee and butter to an extent of 8. These costs together constituted 8. administrative cost. butter. Similarly the quantity sold and the sold value of these products was highest in cooperative unit. the total quantity processed and demanded and the value of the processed product was highest in case of private large scale units. In private small scale units.01 per cent).65 per cent of the total product line followed by curd.80 per cent of total cost. In case of MBM. followed by co-operative unit and private small scale units. liquid milk constituted major share accounting for 86.54 per cent of the total product line followed by curd. pedha and ghee formed bulk of product line (99. lassi. MBM.13) which include the product groups like liquid milk. In the private large scale sector the same costs accounted for 8. by reconstituting SMP into milk. SMP. SMP was processed only in co-operative unit.14). The product mix of a unit largely depends on the quantum of demand in the market.2 Cost structure of processing of milk in co-operative and private sector processing units The cost of processing for all the products together was considered and the results presented in the previous chapter are discussed below.3. paneer and khowa. Similarly the quantity sold and the sold values were highest in these unit.81 per cent. The excess and deficit were also highest in co-operative unit. 1. fixed costs and variable costs.

The least margin was observed in case of milk. Among the different products processed in both the sectors. As the raw milk is the basic raw material for processing units it accounted for highest in the total cost of processing per tonne of processed products in both co-operative and private sector units. 16841. Among the two private sector large scale units.16 showed that the average cost per tonne incurred on milk processing.P was also highest in ghee. which constituted the variable costs in processing of milk were raw milk. Obviously the cost of marketing per unit would be more in private large scale units.23). Rs.66. it was observed during the investigation that the cooperative unit uses the old technology and old machinery and equipments..08 when compared to private large scale units and private small scale units which were Rs. Rs. 5.14 and Rs.P.20 per cent private small scale units. equipped with own transport and distribution equipments and personnel.15) was Rs. Sales realization was more in co-operative sector unit.3 Sales realization in co-operative and private sector units Gross returns from one tonne of milk (Table 4. The total cost was low in co-operative unit compared to private (large and small scale) units. 13912. Since there were no huge transportation and handling cost in the case of products processed in private small scale units.55 per cent of the total cost in private large scale and 91. The returns per unit also being lesser as compared to co-operative unit the B:C ratio in private large scale sector was low. the unit cost would escalate leading to higher cost of processing. one was established very recently and has not utilized its full capacity. while the private large scale unit had to depend upon other agencies to do these works.3. 25. packing. The M. The co-operative units process large quantity of milk. 5.04 and Rs.88 per cent of total cost in co-operative sector. pedha.3. pedha. Hence. Rs. The cost of marketing was also high in private (large and small scale) units compared to co-operative sector unit. which were established recently. the benefit cost ratio was high in co-operative sector (1. The efficiency of these machinery and equipment are low as compared to sophisticated equipments used in private (large and small) units. 5. Subramanyan and Sudha (1992) also observed that raw material and packing were the two major items of total cost of processing. SMP. In private large scale units the margin was highest in ghee i. the cost of marketing was very less in these units. S. followed by ghee.21.17) revealed that. The economy of large scale operation operates here.70 per cent in private large scale and 87. In all the units. These costs accounted for 91.. 15292. The major items. It accounted for 83. pedha and margin was also very high in these products. followed by butter. in co-operative unit the margin was highest in case of butter i.e.10 per cent of total cost in the co-operative sector unit and 91. where as in private large scale units it was only 1. In case of co-operative unit it was less i. brand name and the prices associated with them. paneer and other products. electricity and other raw materials. Therefore. 17968. which resulted in higher net returns in co-operative unit.4 Cost and returns in co-operative and private milk processing units Table 4.M. while the same accounted for 83.11 in private sector small scale units. Still. respectively.3. private large scale sector and private small scale sector unit respectively. cooperatives could reduce their cost of processing still more if they replace their old machinery. Co-operative units had their own distribution unit. which has resulted in lower benefit cost ratio. followed butter. the processing cost per unit was lower in cooperative units.e.5 Comparative price at different stages of marketing of processed products by milk processing units The comparative prices of processed products at different stages (Table 4.02 and 1.the unit has no modern sophisticated machines. 15940.R. main product which constituted in sales realization was liquid milk followed by other products. because quantity sold was more.. Hence. Rs. in order to earn more reasonable profits has to make effects of reduce cost per tonne of processed product. paneer and other products. due to relatively high transportation costs by the private large scale units.56 in co-operative. The private (large and small scale) sector units. 18349.e. The least . equipments and technology with the modern ones. In small scale private sector units the quantity handled were less. Other things being the same due to non-operation economy of scale thus units had to incur more costs.62 in private small scale sector unit. 18.15.

their marketing costs were lower. it was found that transportation cost accounted for maximum by private large scale units also as that of co-operative units. since their area of operation was very large. paneer. hence the ex-factory price itself formed the M.4 SALES MANAGEMENT IN SELECTED UNITS 5. pedha and Mysorepak had least cost of marketing as these commodities were transported in milk carrying vans along with milk and their sales were also concentrated in near by cities and towns only. respectively. respectively. 5. Among all the products. All these would add up to the marketing cost to budge. cream and other products.18). 5. This was not the case in private small scale sector. followed by transportation cost and advertisement expenses. The opinions of sample processors on different problems are discussed. the main problem of the milk processors was processing. 5.R. obviously the transportation cost has to be higher in these large scale units.4. 5.1 Annual cost of marketing of processed products by co-operative sector unit It was found that the transportation cost by co-operative unit accounted for maximum in the case of marketing of finished products (Table 4. because of difficulty in maintenance of machinery. Khowa. All the units complained about the problem of high taxation of the products which constituted major share in total cost. Some times the milk was lifted to other union to balance the demand. . the main problem was finance leading to under utilization of plant which affected their processing capacities. followed by carriage and hamali charges and advertisement expenses. The various studies conducted by Government of India showed that the processed food products have been subjected to high tax incidence at various stages of processing.2 Annual cost of marketing of processed products by private large scale units From the Table 4. In case of private (large and small scale) units. The M.P was high in ghee. The M. respectively. Hence.4. It can be seen that the total cost involved in marketing of processed products was highest in co-operative unit. The distance to be travelled was also very long.20). In private small scale units. followed by other products. Hence.3 Annual cost of marketing of processed products by private small scale units It was found that carriage and hamali charges accounted for maximum by private small scale units in the case of marketing of processed products (Table 4.4.5 PROBLEMS FACED BY THE PROCESSING UNITS The prevalence of problems in the processing units is somewhat different and these are no exception.19. butter. pedha. In case of co-operative unit. The co-operative units had large area of operation and they had well established brand loyalty to induce demand for the products of co-operative units.margin was observed in case of milk. High risk was also associated with long distance transportation like to spoilage and other calamities. In co-operative unit processing was the most acute problem whereas in st case of private (large and small scale) finance occupied the 1 rank. followed by private large scale and private small scale units.R. Similar problems were also reported by Venkatasheshaiah (1992) while studying the processing units. followed by mysore pak. Among all these products the cost under all the categories was highest for milk followed by other products. The problems of infrastructural facility and sales was the second major problem in cooperative and private large scale processing units. the marketing cost was highest for milk.R. there was no margin for any of the products.P. followed by butter. These private units had to depend on private truck or van owners to transport milk and processed products to the sales counters.P was high in ghee. cost effective technology and also moderate availability of skilled labour. paneer and other products.

2 SWOT analysis of large scale processing units Strength • • • Professional and scientific management Efficient distribution channels Use of modern equipments and technology which helps in efficient production .6 Strength • • • • • • • • • SWOT ANALYSIS OF THE DAIRY PROCESSING UNITS 5. The major constraints observed in milk processing units were the lack of cost effective technology. These could be overcome by proper planning of processing technologies. The government policies also need to be changed to regulate regular power supply and appropriate tax policies for processed products. 5.The problem of finance was the third major problem in co-operative unit. The units should create some more channels in order to reduce the commission and the competition. higher taxes for processed products. complaining about the high rate of interest.6. because of moderate availability of funds and high rate of interest where as in case of private sector (large and small scale) units the same problem was considered as the most acute. ability to meet the demand and withstand competitiveness even during varied procurement is possible Well established brand name Weakness • • • • Seasonal fluctuation in supply of raw milk Due to institutional management losses during handling is higher Obsolete equipment and technologies Chronic lack of technical and management skills Opportunities • • • Threats • • • High raw material cost Strong competition from private companies Extremely challenging climatic condition Increased demand for milk and milk products Diversification of products Scope for modernization of the unit 5.6.1 SWOT analysis of co-operative processing unit Regular and guaranteed supply of raw milk from the milk co-operative societies As it is located in between Dharwad and Hubli it has a spatial advantage Large area of operation Maximum capacity utilization Economy of large scale operation Lesser commission and procurement charges Largest network of artificial insemination centers help to get quality milk from the farmer through societies Due to horizontal integration. irregular power supply.

financial insecurity. processing and marketing technologies . quality assurance.. price regulation. shrikhand. which are not produced in other units Intimate relationship with the consumers Production of those products and quantity as per the demand hence wastage is minimized Weakness • • • • • • Inadequate institutional and infrastructure facilities like no cold storage non existence of modernized processing equipments Inefficient supply chain Lack of organized marketing of milk Lack of scientific and profession management Lack of capital investment The small scale dairy units are faced with daunting challenges in the area of infrastructure.6. etc. untrained man power and seasonality Opportunities • • • Potential demand for milk and milk products Scope for better marketing network and advertisements Substantial scope for adoption of modern production.• • • Spatial advantage Established brand name Economy of large scale operation Weakness • • • • Seasonal fluctuation in supply of raw milk High investment Lower margins More number of intermediaries in procurement of milk Opportunities • • Threats • • • High raw material cost Strong Competition from local milk vendors and co-operative unit Extremely challenging climatic condition Increased demand for milk and milk products Diversification of products 5.3 SWOT analysis of small scale processing units Strength • • • • • Use of less labour keeping the production cost relatively low Marketing cost is minimized through localized sales and non-use of any sophisticated equipments Higher demands for products like cream.

• Key issues for promoting small scale dairy units would be organize farmers. integrate production with marketing. collective marketing by small processors can result in increased revenue To ensure product quality. upgrade milk marketing chains and through adoption of modern technology On the other hand. proper transportation of milk should have interconnected cold chains • • Threats • • • • • Inability of processors to collect milk required due to transport and cold chain problems Lack of affordable milk collection and processing equipment of appropriate capacity and employing appropriate technologies Extremely challenging climatic conditions Very high interest rates for loans Existence of competition from big units with strong marketing channel and huge advertising budget .

based on Fat and SNF content of milk. high levels of service expectations and competitive pricing. the supply chain management has become more important in recent years. with annual growth rate of milk production of one per cent. The KMF is covering 27 districts. The procurement of milk includes milk collection centers (dairy societies). otherwise. This could meet only 25 per cent of the domestic demand. Due to pressures from increased competition resulting from globalization of supply. it gets spoiled. Kurien. The other important decision in milk procurement is pricing of milk. Milk has achieved a unique status in terms of its output value exceeding Rs. By the year 2006. The basic functions of any dairy enterprise are procurement. use of local resources. Karnataka stands eleventh in milk production in the country and it occupies third position with respect to milk production under co-operative sector in the country.6.e. by providing milk producers a remunerative price round the year. For the success of a dairy industry/firm efficient supply chain management is a pre-requisite. This is as a result of India’s “White Revolution” in milk production. processing and distribution networks. Specialized dairy enterprises do exist but not only is their number abysmally low as compared to regular types. around 17000 villages involving 1. The Indian supply chain for milk products is affected by abnormal wastage and poor handling. Supply chain management has seen as a source of gaining competitive advantage in the business world. Perishable goods like milk require a time efficient supply chain. The two axis system of milk pricing is commonly used i. With a share of about 14 per cent in world milk production. with 7000 dairy co-operative societies. milk production in India touched 74 million tonnes in 1997. but also are restricted mostly to urban areas and their surroundings. The milk production was around 4124 thousand tonnes during the year 2006-07. processing and marketing. 1. Thus. the supply chain performance of the processing units is a deciding factor for the success of the unit. in 1970 NDDB launched “Operation Flood Programme” with the objective of ending milk famine in the country and turning farmer’s co-operatives into a powerful catalyst for transforming India into a major milk producer in the world. This type of operation is known as “Anand pattern of dairying”. The processing activity cannot be neglected as it converts the milk in consumable form to more value addition forms.000 crores and has made a rapid stride both in terms of number of milk producers and quantity of milk produced. Thanks to the vision and foresight of Dr. Seasonal fluctuation is another important aspect which needs adequate attention to ensure regular and sufficient milk throughout the year. The management of dairy enterprise should be very careful in these activities. Since. The milk production in India was 17 million tonnes in 1950-51.. it has to be processed (chilling or pasteurizing) immediately after procurement. Shortage of cold storage facilities and refrigerated transport equipment lead to inefficiencies in handling milk . The production was stagnant for two decades till 1970. Further. the remaining 75 per cent of the demand was met by importing the milk solids. The wastage occurs because of multiple points of handling. Karnataka has always remained in the forefront of all agricultural development initiatives in the country and dairy development is no exception.1 Supply chain management with perspective to dairy industry of India: Milk supply chains are more concerned with controlling of milk quality and supply fluctuations which are unique to this sector. possibilities for forward and backward linkages and its scope for earning more output.9million tonnes. 6. This perishable factor can affect the milk supply chain. like in elsewhere in the country. Dairy farming in Karnataka.00. India has emerged as the largest milk producer with a production of 100. is largely characterized by the prevalence of dairy enterprises that are mostly subsidiary occupations alongside the main agricultural activity of the farmer.5 million farmers collecting around 20 lakh litres of milk daily. milk is a perishable commodity. SUMMARY AND POLICY IMPLICATIONS Milk processing industry in India derives its significance from its high potential for employment at low capital cost.

1. followed by private large scale and private small scale units. sales management and value addition were obtained from the relevant records maintained by the three sectors during the period 2007. Ltd. Tabular analysis was used to workout averages and percentages for the procurement management. A brief description of the selected units is presented below. Milk processing units are extensively established in and around Dharwad milk union jurisdictions. . The data collected were presented in tabular form to facilitate easy comparisons.77 lakh litres/month).06 in large scale private sector and 1. 2) To analyze the demand management and product management. demand management. The data relating to procurement management. few companies have access to capital and the ability to invest in supply chain.39%).products. there will be significant reduction in the wastages of milk and milk products which in turn will benefit both the farmers as well as the consumers by means of increased returns and decrease in price respectively. the procurement of milk during both flush and lean season was highest in co-operative unit. By practicing improved supply chain management practices. Keeping in view all these facts. 2. followed by private small scale units (89. Ltd. and Vijaykant milk and food products Pvt. Eight milk processing units representing one from the co-operative sector. under private large scale and Shankar milk centre. packing materials accounted for maximum cost.58%) and private large scale units (87. Ram Rahim milk centre. Sri Krishna milks Pvt. demand management. For the purpose of the study the milk processing sectors were considered. A detailed study of business performance of milk processing unit would be of immense use to know whether co-operative or the private sector follows the sound supply chain management practices. an attempt is being made to assess the management of dairy processing units in Karnataka. 6. Given the fragmented nature of the milk supply chain. 5) To analyze the problems faced by the selected units in management of dairy processing. the transportation and handling cost accounted for maximum for all the units. followed by private large scale and private small scale units. The quantity and cost of milk procurement indicated that co-operative unit procured the highest quantity (20. 4) To analyze the sales management of milk and its products by the units.. the top place was occupied by co-operative unit (95. There is a compelling requirement for appropriate infrastructure for storage and transportation such as temperature controlled warehouses and vans. The specific objectives are. The seasonal fluctuation in milk procurement revealed that. In case of cost involved in procurement of milk. Waghmode and Mullannanavar milk centre under private small scale were selected. The flush-lean ratio was 1.2 Findings of the study 1. Being called as educational cities there is a huge demand for milk and its products and it offers a ready market for processed milk products. 3) To ascertain the value addition in different products.24 in co-operative sector. respectively. Al-Rehman (mote) milk centre. sales management and value addition. followed by sugar and other raw materials by all the sectors.38%).11 in small scale private sector. The Dharwad Milk Union (DMU) processing unit under co-operative. The overall objective of the study was to examine the supply chain management in milk processing units. two from private large scale and five from private small scale sectors have been chosen for the study. The Procurement pattern of prime raw materials shows that. In terms of capacity utilization. 3. respectively. 1)To analyze the procurement management in different types of dairy processing units. The views of processors about the milk processing as well as constraints faced there on were also obtained. 4.

18 lakh. 6. The cost of carrying inventory of finished products indicated that. The demand management of processing units depicted that. The analysis of costs and returns of processing indicated that on an average. butter. which formed bulk of product line (99. pedha and ghee. SMP. in order to earn more reasonable profits has to make effects of reduce cost per unit of processed product. butter and pedha was highest in co-operative unit.11) and private large scale units (1. private large scale and private small scale units. 7. 0. there was no margin for any of the products. paneer and other products. In all the units.54 per cent and 80. curd. whereas in private large scale and private small scale units. followed by Mysorepak. pedha since the margin was also very high in these products. liquid milk constituted major share accounting for 86. In terms of comparative prices of processed products.R. respectively.55 per cent and 91.65 per cent. carriage and hamali charges and advertisement expenses. .23). SMP. respectively and the rest was made up by fixed costs. 17968. Thus. power and other raw materials.R. 12. private large scale sector and private small scale sector unit respectively. 8. the M. followed by other costs like transportation cost. were raw milk. The B:C ratio was also highest in co-operative unit (1. respectively. The quantity stored in private small scale units was very negligible when compared with other units. pedha. co-operative unit stored the maximum quantity followed by private large scale units. the average gross returns per tonne of milk processed was highest in co-operative unit with Rs. 0. The private small scale units had the highest demand for khowa.M. ghee. 0.10 per cent. The major items.04). Products like SMP. 16149. mysore pak. followed by private small scale units (1.P. hence the billing itself formed the M.P. paneer and khowa.17 lakh and Rs. the total cost amounted to Rs. 14963. the large and small scale private units mainly concentrated on liquid milk. In private small scale units. Rs. Further it can be seen that the total cost of marketing of processed products was highest in co-operative unit. private small scale and private large scale units. followed by private large scale and private small scale units. This was because of more commission charges by both co-operative and private large scale sector and also accompanied by high transportation costs incurred by both the units. respectively. which constituted the variable costs in processing of milk.38 and Rs. commission charges accounted for maximum in the case of co-operative and private large scale units. MBM.20 per cent in the case of co-operative. followed by butter. the margin was high in ghee. followed by private small scale units (Rs.P was highest in ghee. MBM. which was not the case in private small scale sector. followed by other products. whereas private large scale units had the highest demand for MBM.02). 9. packing. where as the cooperative sector on many product lines such as curd. Gross returns from one tonne of milk was Rs.15. 16841. in co-operative unit. In private large scale units. 10. pedha. The least margin was observed in case of milk in all the sectors. respectively. The marketing costs of private small scale units was very less compared to that of co-operative and private large scale units.99 per tonne of milk processed in co-operative. The co-operative sector unit produced a wide range of products which include the product groups like liquid milk.25. The total cost incurred on storing the products was found to be high in private large scale units followed by co-operative unit. 11. which accounted for 91.5. Rs.18 lakh in co-operative. The major cost components were variable costs.56) and private large scale units (Rs. lassi. ghee and paneer.96 per cent). 18349. In case of cost of marketing of processed products. 91. curd. Further. 16439. S. the demand for milk. butter. but the private large scale units stored the products for a maximum duration of 60 days. The private (large and small scale) sector units. cream and shrikand were demanded and processed only in some sectors. main product which constituted in sales realization was liquid milk. butter.

The constraints observed in milk processing in case of co-operative unit was processing. The private small scale units are producing certain products of local demand and thus increasing their sales realization and inturn net profit. The co-operatives as well as private large scale units can think of establishing sub units exclusively for producing the locally demanded products like Shrikand and cream which will not only add up to their revenue but also bring product competitiveness in the local market. whereas in case of private (large and small scale) units. The results indicated that the investment in private processing units was quite high compared to the co-operative sector unit. the private sector units should evolve a system by reducing the number of intermediaries organizing by farmers producer groups for better procurement. Inorder to maintain the tempo of operation flood and white revolution encouragement from the side of the policy is highly imperative. The installed capacity of private sector unit is higher than the co-operative sector unit but the percentage capacity utilization is less in the private sector unit.13. it can be concluded that among the three sectors studied the performance efficiency of the co-operative sector unit was superior than that of the private (large and small scale) units. The procurement pattern of raw milk by the private sector unit involved many intermediaries like contractors and sub-contractors. 6. adequate planning and increased market sales.3 POLICY IMPLICATIONS 1. the subsidy facilities can be extended to the private dairy units also to augment the flow of dairy industry in right direction. the private sector unit should accelerate their capacity utilization by increasing procurement of raw milk. The units may be provided with additional funds to produce more processed products to meet the future demands. The co-operative sector unit should update the production technologies through additional investment and modern equipments and improve efficiency of production. 5. Policy makers think in these like to sustain the growth of dairy industry. 8. The performance with respect to economies of scale can be realized through additional investment. 4. The number of by products produced in the private sector unit is comparatively less than co-operative sector unit. So. the private unit should increase product mix through product diversification to increase their sales realization. 6. The sector itself being of prime in nature. So. . the main problem was finance which affected their processing capacities. Finance has become a serious bottleneck in development of dairy industry. From the above analysis. The results of the study have revealed that private small scale units are realizing higher returns for their products due to high demand from the customers due to high quality and good services. 3. So. 7. 2. High sales tax has become a serious impediment for promotion of sale of some of the products.

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67 1.95 1648.42 12.66 108.18 131.47 221.54 1.53 742.03 83.51 147.18 0.06 859.39 1811.05 0.44 78.02 2.36 119.68 218. Unit Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average 1 Cooperative 2 Private large scale units 3 Private small scale units Quantity Processed (tonnes) 1825.61 1642.00 93.52 0.43 119.97 750.74 116.96 1526.65 1606.10 1624.42 230.77 1607.45 105.29 0.42 1406.17 1.67 231.63 1593.78 19.65 219.64 690.65 2.11 57.38 248.75 95.90 226.47 19.13 18.00 122.35 695.10 0.71 3.42 93.18 770.09 13.99 1028.05 160.45 263.71 Quantity Deficit (Tonnes) 34.93 787.60 1.60 10.83 1575.27 1617.99 Processed Value (lakh Rs) 272.16 261.96 0.70 18.13 2.87 119.24 1746.69 102.09 122.72 3.15 120.25 278.41 .38 182.12 141.12 720.82 2.57 791.54 119.16 3.65 95.16 665.12 1790.05 2.11 194.68 103.44 15.50 719.72 2.73 1269.12 757.69 231.26 10.68 14.45 18.56 1.58 122.49 9.33 3.98 1548.31 879.94 Sold Value (lakh Rs) 247.87 139.59 32.99 935.32 611.08 31.79 246.43 110.40 Quantity Sold (tonnes) 1659.19 2.03 17.50 140.80 1654.82 112.03 3.36 14.72 832.07 3.82 781.06 9.04 115.42 1559.75 755.67 0.33 1607.66 117.40 703.05 2.58 1563.95 598.41 256.40 14.47 1.35 755.24 230.93 14.44 169. No.94 2.03 1715.12 255.85 35.87 1497.63 68.15 235.81 132.66 271.41 19.44 996.96 60.97 80.72 0.31 10.27 1407.88 2.24 778.25 0.07 9.31 156.82 187.98 1116.84 10.27 113.05 1.11 1681.APPENDIX APPENDIX I Demand management of Milk in co-operative and private sector processing units Sl.32 19.12 252.57 118.99 228.82 19.41 86.89 110.05 0.44 196.66 1.78 228.35 9.67 0.69 0.50 245.03 15.54 1.80 162.41 3.04 145.42 195.34 799.87 2.03 19.22 128.37 16.43 0.30 19.52 1592.56 166.39 Quantity Excess (Tonnes) 166.47 223.

31 0.74 56.08 0.43 119.05 0.36 314.63 6.02 8.04 0.60 1.33 0.66 14.30 0.31 0.00 62.51 Quantity Excess (Tonnes) 27.16 58.07 220.04 .64 6.46 1.57 261.36 212.02 58.61 67.15 122.02 126.56 37.14 31.27 0.45 1. No.52 15.29 0.32 0.01 45.53 1.04 4.46 1.23 14.97 291.37 55.24 120.10 0.57 1.31 0.94 431.99 0.57 88.61 1.56 1.71 111.97 33.50 1.01 0.20 53.45 50.83 77.33 51.67 24.07 2.79 80.29 0.31 0.55 24.07 270.30 0.78 208.59 177.37 10.95 11.19 14.18 41.28 0.30 Sl.63 1.99 38.74 46.28 0.51 10.31 0.31 0.28 8.46 1.05 0.90 22.11 8.26 80.23 22.27 53.46 1.12 43.89 189.03 9.73 216.03 15.16 24.89 8.29 0.51 0.53 1.78 0.58 10.39 280.45 48.35 109.03 39.74 37.41 38.29 89.36 0.07 21.09 0.96 74.20 12.52 Processed Value (lakh Rs) 55.55 1.98 76.16 142.24 74.15 9.32 74.13 111.06 1 Cooperative 2 Private large scale units 3 Private small scale units Quantity Deficit (Tonnes) 8.78 8.30 34.77 173.89 44.50 47.80 25.81 0 0 9.70 11.87 255.41 1.24 264.50 111.02 0.38 54. Unit Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Quantity Processed (tonnes) 307.65 1.54 52.77 52.03 213.59 310.92 1.05 0.68 1.57 1.14 10.29 0.06 47.56 47.59 250.APPENDIX II Demand management of Curd in co-operative and private sector processing units Sold Value (lakh Rs) 50.50 1.06 0.31 0.62 31.29 0.32 0.35 326.29 23.55 1.96 23.30 Quantity Sold (tonnes) 279.05 0.29 0.31 0.13 73.33 16.94 38.37 25.62 287.42 1.61 55.33 0.35 15.35 14.30 11.42 19.34 4.31 0.55 0.56 1.39 34.89 17.01 0.64 25.15 13.45 24.43 1.45 1.36 1.67 31.34 10.57 1.24 230.29 11.23 295.11 22.98 423.

13 0.77 41.75 73.54 16.51 6.74 0.07 26.06 34.19 50.49 49.83 37.13 17.49 - .08 0.98 0.45 35.54 29.75 45.76 11.30 72.70 51.95 5.47 31.91 - Quantity Excess (Tonnes) 4.72 46.38 29.06 1.35 0.22 0.32 2.27 21.92 0.82 0.98 0.77 - 1 Cooperative 2 Private large scale units 3 Private small scale units Sold Value (lakh Rs) 70.13 16.86 40.29 1.15 64.46 58.69 0.04 1.49 35.22 3.71 0.87 0.73 12.33 22.APPENDIX III Demand management of SMP in co-operative and private sector processing units Sl. No.58 0.02 - Quantity Sold (tonnes) 49.74 0.04 0.13 32.19 28. Unit Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Quantity Processed (tonnes) 54.18 50.28 1.48 - Quantity Deficit (Tonnes) 0.15 1.22 23.04 22.27 - Processed Value (lakh Rs) 77.85 24.41 34.11 16.95 51.52 81.

03 0.56 0.71 27.29 0.32 1.30 0.45 0.39 0.26 0.51 0.89 4.26 0.96 0.39 0.02 0.42 Quantity Sold (tonnes) 26.46 0.44 0.43 0.28 Quantity Excess (Tonnes) 2.71 3.37 0. Unit Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Quantity Processed (tonnes) 28.64 0.72 4.22 19.70 0.19 30.49 0.15 1.44 16.70 0.53 0.81 28.49 0.54 0.APPENDIX IV Demand management of Butter in co-operative and private sector processing units Sold Value (lakh Rs) 39.29 0.70 2.31 0.26 0.64 0.98 3.04 15.29 0.40 0.42 2.56 0.31 0.00 32.01 0.01 0.18 0.35 1.95 0.26 0.67 30.10 0.44 33.56 0.07 0.68 0.62 20.29 0.44 0.42 0.88 3.46 12.43 0.16 0.39 0.28 0.19 6.01 0.29 0.26 0.36 13.39 0.25 0.43 0.25 0.43 0.42 0.24 21.26 0.39 0.29 0.27 6.80 0.38 4.27 0.44 0.01 27.18 0.37 0.86 10.39 1.72 1.46 0.41 0.93 13.38 0.51 0.43 33.45 0.48 21.65 1.25 0.39 0.65 0.52 1.68 3.02 0.43 1.29 0.02 0.45 0.31 0.77 3.01 0.29 0.30 0.91 0.02 0.40 0.10 12.27 3.44 0.03 0.25 17.51 0.11 26.05 0.65 8.55 0.62 3.01 .79 21.42 Sl.61 29.61 0.28 Processed Value (lakh Rs) 43.44 19.43 44.47 8.48 41.40 0.47 0.21 0.47 29.46 0.01 0.82 46.81 34.40 0.44 0.01 1 Cooperative 2 Private large scale units 3 Private small scale units Quantity Deficit (Tonnes) 0.01 0.54 19.51 0.60 2.58 18.26 0.28 0.54 51.17 10.85 3.74 32.05 0.28 0.05 0.43 29. No.30 0.85 45.32 52.98 17.01 0.01 0.29 0.26 0.27 0.84 18.18 0.11 2.66 4.85 1.52 0.13 13.41 0.87 1.43 0.36 0.71 3.90 13.96 0.29 21.74 4.

42 14.64 0.01 1.23 0.36 2.46 1.40 1.46 9.71 12.12 2.21 2.63 2.47 11.03 0.01 0.02 1.56 1. No.18 4.42 1.19 59.81 67.18 Sold Value (lakh Rs) 2.03 0.93 28.12 0.42 0.07 9.80 0.16 2.83 2.03 0.01 34.80 0.95 47.56 0.03 0.09 116.85 5.21 0.47 14.79 1.08 0.49 3.28 1.21 1.51 0.86 1.19 0.20 14.33 5.58 13.41 14.05 10.63 2.08 164.95 0.72 10.01 1 Cooperative 2 Private large scale units 3 Private small scale units Quantity Deficit (Tonnes) 1.70 8.60 126.74 3.01 0.27 3.57 3.88 2.04 18.48 4.43 0.87 18.99 24.19 0.44 0.12 13.18 0.21 27.03 0.56 17.01 0.48 1.38 12.42 0.78 2.01 0.35 54.09 11.03 0.70 3.17 187.11 3.40 25.03 Quantity Excess (Tonnes) 1.22 2.70 0.28 0.03 0.28 79.22 10.18 0.APPENDIX V Demand management of MBM in co-operative and private sector processing units Sl.03 0.05 1.15 0.42 2.90 3.18 0.73 2.49 10.18 18.78 56.18 23.54 2.01 .79 1.91 0.21 3.33 1.41 24.84 3.53 4.49 0.30 1.13 9.00 0.85 293.17 0.03 0.66 1.48 0.43 5.78 0.94 0.51 0.18 Processed Value (lakh Rs) 2.28 31.06 8.09 22.21 1.59 4.19 0.52 0.49 0.19 0.03 317.65 61.37 2.00 3.18 0.95 0.03 0.32 11.49 11.75 9.18 0.89 0.42 3.53 0.62 11.07 0. Unit Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Quantity Processed (tonnes) 19.66 21.79 8.03 Quantity Sold (tonnes) 17.78 44.41 10.01 0.

22 0.32 1.27 1.89 18.25 0.01 - . Unit Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Quantity Processed (tonnes) 15.05 0.03 0.08 0.56 16.01 15.93 15.79 13.38 0.26 0.05 0.03 0.02 0.01 13.11 - Sl.59 17.03 0.04 0.27 1.37 0.01 0.11 - Quantity Sold (tonnes) 13.44 16.94 14.88 15.50 13.07 0.08 0.37 16.24 0.04 0.86 13.07 0.70 16.09 0.17 1.03 0.07 0.29 0.69 11.01 0.78 11.92 12.10 12. No.04 0.39 1.08 15.77 0.69 13.07 0.06 0.06 0.15 12.22 0.04 0.96 19.66 12.49 0.07 0.55 12.07 0.27 0.02 0.95 2.21 15.06 0.05 0.10 0.05 0.88 14.53 13.02 0.03 0.APPENDIX VI Demand management of Pedha in co-operative and private sector processing units Sold Value (lakh Rs) 15.02 0.49 12.02 14.06 0.05 15.98 12.46 18.01 0.52 1.04 0.28 0.93 12.67 1.91 15.03 13.09 0.49 11.33 0.09 - Quantity Excess (Tonnes) 1.12 13.57 18.04 9.06 0.05 0.02 0.04 0.44 0.07 0.10 - Processed Value (lakh Rs) 17.89 0.02 0.19 0.82 15.42 10.76 11.01 - 1 Cooperative 2 Private large scale units 3 Private small scale units Quantity Deficit (Tonnes) 0.50 15.88 13.03 0.02 0.18 0.55 13.02 0.13 12.04 14.72 16.06 0.

11 0.25 12.10 0.25 8.10 0.03 3.51 0.41 2.50 15.58 19.61 9.41 0.42 9.35 2.64 19.10 Quantity Excess (Tonnes) 1.APPENDIX VII Demand management of Lassi in co-operative and private sector processing units Sl.70 10 4.75 8.88 4.11 3.21 8.02 0.28 1.10 5.58 29. No.19 0.63 0.10 0.53 1.37 7.85 2.39 0.10 40.40 1 Cooperative 2 Private large scale units 3 Private small scale units Sold Value (lakh Rs) 2. Unit Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Quantity Processed (tonnes) 12.49 21.60 3.87 0.85 2.41 0.10 Quantity Sold (tonnes) 11.15 1.39 0.01 0.10 0.37 5.25 1.84 5.01 0.09 10.77 11.93 2.35 2.40 14.67 89.41 10.17 0.00 7.17 5.57 0.40 2.10 14.62 0.45 2.10 6.12 12.81 0.01 0.10 0.44 19.22 0.41 0.34 21.79 39.35 2.57 78.99 32.76 1.82 1.74 16.03 0.64 9.53 4.66 0.15 6.66 1.31 7.02 .54 18.88 0.00 5.63 0.39 0.65 7.04 0.40 0.03 1.52 21.87 0.02 Quantity Deficit (Tonnes) 0.20 4.81 3.28 1.72 3.69 0.10 0.81 8.53 0.81 18.89 2.09 0.60 11.60 9.78 4.99 63.71 0.99 16.67 22.40 0.10 0.28 10.38 0.59 0.65 7.39 24.12 18.32 7.74 78.14 0.10 0.92 22.28 0.60 17.13 19.44 14.14 1.26 16.43 0.54 0.41 9.40 2.47 2.27 30.95 2.97 66.57 4.42 22.40 Processed Value (lakh Rs) 3.84 1.88 5.89 3.56 9.58 1.83 2.19 0.40 4.84 32.06 2.40 2.40 0.65 4.26 2.39 58.

96 0.65 6.95 1.98 20.05 Quantity Sold (tonnes) 12.21 17.16 1.38 3.42 21.33 20.26 11.01 0.28 1.09 1.80 19.35 14.51 0.88 12.01 37.13 1.10 10.73 0.02 0.23 0.08 22.46 0.28 1.55 24.56 12.53 6.80 2.10 22.93 0.14 0.75 24.85 21.17 1.55 0.96 17.36 26.98 1.72 19.50 1 Cooperative 2 Private large scale units 3 Private small scale units Sold Value (lakh Rs) 21.52 16.88 25.90 18.75 3.15 1.71 0.28 24.93 0.09 1.71 17.99 1.38 24.00 1.48 0.95 0.54 0.16 0.57 10.02 14.50 0.77 23.03 0.01 15.55 0.54 0.45 0.99 14.47 1.47 0.12 32.37 0.52 0.28 18.73 23.73 27.50 Processed Value (lakh Rs) 24.87 15.02 0.55 19.49 0.08 2.27 9.11 33.84 20.53 0.51 0.62 25.42 20.02 0.62 3.03 0.93 28.12 1.47 0.82 24.58 14.05 17.08 3.12 3.57 16.31 1.45 21.93 12.47 0.58 19.93 14.44 0.73 3.45 0.25 10.80 13.01 .03 0.54 0.03 12.49 0.10 0.55 0.24 1.70 31.42 26.83 14. No.22 10.52 0.65 0.45 20.48 21.98 16.76 22.57 0.62 12.94 2.23 1.02 0.02 12.14 24.42 1.07 1.38 0.48 1.02 0.99 5.20 13.99 1. Unit Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Quantity Processed (tonnes) 13.02 Quantity Deficit (Tonnes) 0.36 1.74 3.95 1.03 22.35 1.34 1.75 11.22 13.13 19.72 10.12 1.15 1.54 2.24 43.83 11.07 2.46 0.14 1.92 28.91 26.07 1.20 1.69 11.05 Quantity Excess (Tonnes) 1.APPENDIX VIII Demand management of Ghee in co-operative and private sector processing units Sl.11 22.11 0.03 0.32 11.52 0.33 18.25 0.59 44.01 0.04 0.64 5.25 17.23 12.91 18.76 1.79 12.12 1.59 1.68 0.97 0.53 0.02 0.75 12.03 0.

APPENDIX IX Demand management of Paneer in co-operative and private sector processing units Sold Value (lakh Rs) 0.67 0.60 0.69 0.57 0.68 0.66 0.54 0.63 0.70 0.74 0.67 0.70 0.65 1.00 1.56 1.47 2.25 1.58 2.24 2.10 3.35 3.95 1.24 1.41 1.17 1.94 0.21 0.20 0.21 0.22 0.20 0.18 0.18 0.18 0.19 0.21 0.21 0.21 0.20

Sl. No.

Unit

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average

Quantity Processed (tonnes) 0.64 0.57 0.59 0.44 0.51 0.47 0.44 0.54 0.62 0.70 0.65 0.69 0.57 0.95 1.47 1.18 1.72 1.17 1.56 1.79 2.97 3.61 1.19 1.35 1.14 1.67 0.16 0.15 0.15 0.15 0.14 0.12 0.12 0.13 0.14 0.16 0.16 0.16 0.14

Processed Value (lakh Rs) 0.74 0.65 0.68 0.51 0.58 0.54 0.51 0.62 0.72 0.80 0.75 0.79 0.66 1.10 1.69 1.35 1.98 1.34 1.79 2.06 3.41 4.15 1.36 1.55 1.31 1.92 0.23 0.21 0.21 0.21 0.19 0.17 0.17 0.18 0.19 0.22 0.22 0.23 0.20

Quantity Sold (tonnes) 0.58 0.53 0.60 0.49 0.60 0.57 0.47 0.55 0.61 0.64 0.58 0.61 0.57 0.87 1.36 1.28 1.95 1.37 1.94 1.82 2.91 3.44 1.08 1.22 1.01 1.69 0.15 0.14 0.15 0.15 0.15 0.13 0.13 0.13 0.14 0.15 0.15 0.15 0.14

Quantity Excess (Tonnes) 0.06 0.04 0.01 0.06 0.07 0.07 0.05 0.09 0.11 0.06 0.17 0.11 0.12 0.12 0.11 0.01 0.01 0.01 0.01 0.01

1

Cooperative

2

Private large scale units

3

Private small scale units

Quantity Deficit (Tonnes) 0.01 0.05 0.09 0.10 0.03 0.01 0.05 0.10 0.23 0.21 0.39 0.04 0.19 0.01 0.01 0.01 0.01 0.01

APPENDIX X Demand management of khowa in co-operative and private sector processing units Sold Value (lakh Rs) 0.22 0.31 0.16 0.20 0.68 0.21 0.10 0.11 0.10 0.08 0.32 0.18 0.22 0.20 0.18 0.33 0.29 0.30 0.32 0.30 0.28 0.27 0.50 0.22 0.31 0.29 0.83 0.79 0.84 0.86 0.79 0.75 0.72 0.72 0.83 0.86 0.88 0.85 0.81

Sl. No.

Unit

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average

Quantity Processed (tonnes) 0.18 0.26 0.12 0.14 0.44 0.13 0.07 0.09 0.08 0.07 0.28 0.16 0.17 0.22 0.20 0.31 0.26 0.25 0.26 0.29 0.28 0.29 0.55 0.24 0.35 0.29 0.73 0.68 0.68 0.69 0.62 0.60 0.59 0.60 0.69 0.73 0.76 0.75 0.68

Processed Value (lakh Rs) 0.24 0.33 0.16 0.18 0.58 0.17 0.09 0.11 0.10 0.08 0.36 0.20 0.22 0.22 0.20 0.31 0.26 0.25 0.26 0.29 0.28 0.29 0.55 0.24 0.35 0.29 0.88 0.81 0.82 0.83 0.75 0.72 0.70 0.72 0.83 0.87 0.91 0.90 0.81

Quantity Sold (tonnes) 0.17 0.24 0.12 0.16 0.52 0.16 0.08 0.09 0.08 0.06 0.25 0.14 0.17 0.20 0.18 0.33 0.29 0.30 0.32 0.30 0.28 0.27 0.50 0.22 0.31 0.29 0.69 0.65 0.70 0.72 0.66 0.63 0.60 0.60 0.69 0.72 0.73 0.71 0.68

Quantity Excess (Tonnes) 0.02 0.02 0.01 0.03 0.02 0.01 0.02 0.01 0.01 0.01 0.05 0.02 0.04 0.02 0.04 0.02 0.01 0.03 0.04 0.03

1

Cooperative

2

Private large scale units

3

Private small scale units

Quantity Deficit (Tonnes) 0.02 0.08 0.03 0.01 0.02 0.03 0.04 0.05 0.06 0.01 0.04 0.02 0.03 0.04 0.03 0.02 0.02

APPENDIX XI Demand management of Mysore pak in co-operative and private sector processing units Sold Value (lakh Rs) 0.13 0.20 0.70 0.80 0.33 0.43 -

Sl. No.

Unit

Month

Quantity Processed (tonnes) 0.09 0.14 0.51 0.59 0.24 0.31 -

Processed Value (lakh Rs) 0.13 0.21 0.76 0.88 0.36 0.47 -

Quantity Sold (tonnes) 0.08 0.13 0.46 0.53 0.22 0.29 -

Quantity Excess (Tonnes) 0.01 0.05 0.05 0.03 0.03 -

Quantity Deficit (Tonnes) -

1

Cooperative

2

Private unit (large scale)

3

Private unit (small scale)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average

APPENDIX XII Demand management of Cream in co-operative and private sector processing units Sold Value (lakh Rs) 0.21 0.19 0.21 0.20 0.19 0.17 0.18 0.17 0.20 0.21 0.20 0.21 0.20

Sl. No.

Unit

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average

Quantity Processed (tonnes) 0.16 0.15 0.15 0.15 0.13 0.12 0.13 0.12 0.15 0.16 0.16 0.16 0.15

Processed Value (lakh Rs) 0.22 0.20 0.20 0.20 0.18 0.17 0.17 0.17 0.20 0.21 0.21 0.22 0.20

Quantity Sold (tonnes) 0.15 0.14 0.15 0.15 0.14 0.13 0.13 0.13 0.15 0.15 0.15 0.15 0.15

Quantity Excess (Tonnes) 0.01 0.01 0.01

Quantity Deficit (Tonnes) 0.01 0.01 0.01 0.01 0.01

1

Cooperative

2

Private unit (large scale)

3

Private unit (small scale)

09 0.11 Quantity Excess (Tonnes) 0.12 0.08 0.10 0.11 0.12 0.12 0.11 0.12 0.12 0.12 0.11 0.09 0.11 0.12 0.12 0.01 1 Cooperative 2 Private unit (large scale) 3 Private unit (small scale) .09 0.12 0.12 0.12 0.12 0.12 0.11 0.11 0. No.12 0.12 0.APPENDIX XIII Demand management of Shrikand in co-operative and private sector processing units Sl.13 0.12 0.11 0.11 0.12 0.11 0.13 0.09 0.10 0.12 0.12 0.01 0.11 0.12 0.10 0.13 0.12 Sold Value (lakh Rs) 0.10 0.01 Quantity Deficit (Tonnes) 0.10 0.11 0.09 0.11 Quantity Sold (tonnes) 0.01 0. Unit Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Quantity Processed (tonnes) 0.09 0.12 Processed Value (lakh Rs) 0.10 0.01 0.11 0.

In cooperative unit processing was the most acute problem whereas in case of private (large and small scale) units. The study revealed that both co-operative and private sector units procured highest quantity of raw milk during flush season. an effort was made to assess the management of dairy processing units in co-operative and private sectors. . A. R. butter. Sales realization was more in cooperative sector unit compared to other units. since co-operative unit had large area of operation and well established brand loyalty. finance was the major problem. because quantity sold was more. where as the co-operative sector concentrated on many product lines such as curd. Milk supply chains are more concerned with controlling of milk quality and supply fluctuations. The variable costs were the major cost component in processing of milk in all the three sectors.SUPPLY CHAIN MANAGEMENT IN DAIRY PROCESSING UNITS . The large and small scale private units mainly concentrated on liquid milk. Of all the three sectors. Hence. followed by private small scale and private large scale units. YELEDHALLI MAJOR ADVISOR ABSTRACT Supply Chain Management (SCM) is the process of planning. the co-operative unit utilized maximum installed capacity compared to other sectors. For the success of a dairy industry. ghee. The total cost of marketing of processed products was highest in co-operative unit. The benefit cost ratio was also high in co-operative sector. R.A COMPARATIVE ANALYSIS OF PRIVATE AND CO-OPERATIVE UNITS NITHIN R. paneer and khowa. due to high production. efficient supply chain management is a pre-requisite. 2008 Dr. followed by private large scale and private small scale units. followed by private large scale and private small scale units. The major constraints observed in milk processing units were the lack of cost effective technology. irregular power supply and higher taxes for processed products. pedha. implementing and controlling the operations of the supply chain as efficiently as possible. The total quantity of milk processed and demanded was highest in cooperative unit.

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