The Impact of Distribution Channel on Organization:

A Case study on DDC

Business Research Project Proposal

Submitted to

Kathmandu College of Management

In partial fulfillment of the requirements of

Bachelor of Business Information System

By

Harman Singh

A011930-10

Under the supervision of

Mr Madhu Sudan

Gautam

Faculty of Economics and Research

Kathmandu College of

Management
June, 2014
 Declaration

I, the undersigned declare that this research project entitled is a result of my study

carried out in the year 2014. It has not been previously submitted to any other

university or any other examination(s).

Signature

Harman Singh

BBIS 2010-2014

A01193-10

Kathmandu College of Management

 Acknowledgement

First of all I would like to express my sincere gratitude to Kathmandu University

(KU) for providing an opportunity to be involved in such an academic endeavor and

to my College Kathmandu College of Management (KCM) for providing the platform

and opportunity to conduct the research.

Also, I am very much grateful to Mr. Vickrant Gurung and Mr. Madhu Sudan

Gautam, my Research Advisors for their unwavering guidance and support

throughout the research project.

I am also indebted to the respondents who gave their valuable time for the collection

of information through questionnaire.

I would like to thank all my family members for their advice and inspiring confidence

in me to go along with positive frame of mind.

Finally, I would like to thank all my friends for their encouragement and support

while preparing the report.

 Executive Summary
Channel management is study of channel operations and its impact to improvise and

derive efficiency and effectiveness. Proper channel management not only creates

operational efficiency but also generates considerable amount of equity for the firm

along with consistent growth.

This research aims to identify those prospects of channel management in an

organization, which is DDC (Dairy Development Committee) a

government organization catering dairy services to Nepal.

Established under corporation Act2021 BS. DDC is a fully state owned corporation,

initiated for the economic advancement of the poor farming communities, that has

flourished into a nationwide movement with an annual collection over 60 million

liters of milk from more than 75 thousand milk producers through 888

milk cooperatives spread out in 33 district. With the sate-of-art infrastructure

comprising of fully modern dairy plants, manufacturing units, chilling plants and

highly qualified dairy specialists, DDC is a precious asset in the economic

development and growth of our nation. At DDC, they are uncompromising about the

quality of milk and milk products, hygiene and sanitation of the plants is given

upmost focus.

The study includes substantial secondary data on DDC both from reports of

freelance researchers and from the database of DDC itself. Aspects of channel

management that were covered in relation to channel management were:

● Distribution base of each channel

 ● Collection schemes of each channel

● Production capacity of branches

● Sales outlets

● Production vs. sales analysis

Each of the aspect’s performance measure was interpreted for concerned channels.

Impact of the performance measure was noted and discussed to meet research

objective. The channels were measured on the basis of its:

● Effectiveness

● Equity

● Efficiency

Comparison between these channel management heads such as production vs. sales,

production capacity vs. distribution is conducted in the paper to better measure the

channel efficiency and effectiveness. On the basis these measures were calculated and

analyzed to prepare the research paper.

At the end significant impact of channels and its management was observed on the

operation and sustainability of organization. Branches with better channel

management were seen benefiting and contributing to the DDC and its status in terms

of both equity and task accomplishment. Presence of such branches was duly noted

and commented upon to identify key strengths and weaknesses.

 Table of Contents

Table of Contents
Declaration

Acknowledgement

Executive Summary

Table of Contents

List of Tables

List of Figures

List of Acronyms

Chapter I: Introduction

1.1 Background the project

1.2 Problem statement

1.3 Objectives of the

project Chapter II: Literature

Review Chapter III:

Methodology Chapter IV:

Results

Kathmandu Milk Supply Scheme (KMSS)

 Biratnagar Milk Supply Scheme (BMSS)

Major Production : Standard and Full Cream Milk, Butter, Cream, Ghee, SMP

(Skim Milk Powder) Plant Capacity : 5000 Liter per hour

Milk Product Supply Scheme (MPSS)

Major Production: Yak Cheese, Kanchan Cheese, Spread Cheese, Mozeralla

Cheese, Paneer, Ghee, Yoghurt,Ice-Cream, Rasbari, Jeera Mohi, Gundpak

Lumbini Milk Supply Scheme (LMSS)

Janakpur Milk Supply Scheme

Nepaljung Milk Supply Scheme (NMSS):

Dhangadi Milk Supply Scheme

Balaju branch (KMCC) plays a major role in distributing dairy products in case

of production.

Chapter V: Summary, Discussions, and Implications

References

Annexes
 List of Tables

Table 1: Total Production and contribution of DDC

Table 2: Milk collection scheme for year 2068/69

Table 3: Production Capacity

Table 4: Collection Network

Table 5: Marketing Network

Table 6: Production trend of dairy products for 5 years

Table 7: Production contribution of dairy products

Table 8: Distribution of dairy products from various centers

Table 9: DDC Sales Outlets

Table 10: Fiscal Achievement of KMSS

Table 11: Fiscal Achievement of HMSS

Table 12: Fiscal Achievement of LMSS

Table 13: Fiscal Achievement of JMSS

Table 14: Fiscal Achievement of NMSS

Table 15: Fiscal Achievement of DMSS

 List of Figures

Figure 1: Measuring Channel Performance

Figure 2: Milk collection from various centers

 List of Acronyms

BMSS : Biratnagar Milk Supply Scheme

CC : Chilling Center

DDC : Dairy Development Corporation, Nepal

DDP and DS : Dairy Products Production and

Distribution Scheme

HMSS : Hetauda Milk Supply Scheme

KMSS : Katmandu Milk supply Scheme

LMSS : Lumbini Milk supply Scheme

Ltr : Liter

MPA : Milk Product Association

MPCS : Milk Products Cooperative Societies

MWMSS : Madhya Western Milk Supply Scheme

PMSS : Pokhara Milk Supply Scheme

Rs : Rupees

Pro : Production

Sal : Sales
 Chapter I: Introduction

1.1 Background the project

Nepal is one of the developing countries, where 75% of people depend on agriculture.

Livestock farming has been the traditional occupation of Nepalese farmers. The

importance of milk and milk products is realized in very ancient time in the Hindu

culture and religion. Production of dairy products is increasing day by day and it will

keep on increasing in coming days as well. The demand of milk and dairy product

will be increasing due to population growth. Furthermore, the process of urbanization

is in increasing trend which may be caused by the want of people to reach the modern

facilities of such as education, health, etc. This urbanization made a demand of milk

and milk product high. The farmers, who lived near the city, supplied milk and milk

product without any consideration of nutrition and hygienic value, could fulfill all the

demand of the city area. Necessity of little knowledge should be given to those

farmers who supplied milk or who engaged in animal farming firm and corporation

for milk, so that they can change their living standard as well as the economic

condition from which whole economic condition can grow up in short period.

Organized dairy industry was required to control the rising market and to control

water mixing practice. There is no substitution of fresh and hygienic milk as non

pasteurized milk can carry various types of diseases. Therefore government realized

the fact and established various programmes. Thus history of modern dairy was stated

in the year 2009BS {1952A.D.} in Nepal.

In order to develop further, Dairy Development section was established in 2010/11

B.S (1953 A.D). Again, it was felt necessary to improve Dairy Development section.

As a result, DDC was established at Bhotahity in the urban in the same year. This

center started to distribute the collected milk to the urban people in Katmandu. As the

demand of dairy products increased day by day, separate dairy plant became

necessary due to inadequacy of space, this center was shifted to Lainchaur in

2013BS.The Development Corporation Commission was constituted to guide the

Dairy Development Section in 2013BS.At the time, dairy export were provided by

Swiss association for Technical Assistance. To develop the dairy business in the

institutional basis Dairy Development commission was converted in to Dairy

Development Board in 2019BS (1962 AD).

Dairy Development Corporation

In accordance with the corporation Act of BS 2021, dairy Development Corporation

was established in the year 2026 BS.

The corporation is governed by a Board of Directors formed by Government of

Nepal. Under the board of directors, the corporation has been revising its

organizational structure according to the changing need, at the central level as well as

at the regional level. The recent management structure of DDC at central level is as

follows:

a. Department of Administration

b. Department of Technical management

c. Department of financial Administration

 d. Department of training and operation

e. Department of planning, monitoring and Evaluation

f. Department of internal Audit

g .Department of Quality control and technology development

h. Department of marketing management

The main objective of DDC is to provide a guaranteed market for milk to the rural

farmers with fair price and also supplying hygienic pasteurized milk and other

standard dairy products to the urban consumers. Not only is that, the specific

objectives are to bring improvement in production, collection processing,

preservation, sale and distribution of milk products in a modern and scientific way.

Prior to establishment of the corporation, a separate Dairy Department board was

constituted to carry out the task of dairy Department in Nepal at wider scale. The

activities in Nepal started at Tusal, a village of Kavre district in BS 2009(1952) on

experimental basis with a small scale milk processing plant under the Department of

agriculture. From the year BS 2041, it started milk collection, processing and

marketing activities.

For continued and organized development of corporation it has co-pirated other

branches and distribution projects in other part of country. They are:-

1. Kathmandu Dairy Distribution project.

2. Biratnagar Dairy Distribution project.

3. Hetauda Dairy Distribution project.

4. Pokhara Dairy Distribution project.

5. Lumbini Dairy Distribution project.

6. Dairy production sale and Distribution project.

7. Madhya Paschimanchal Dairy Distribution project.

DDC is serving as middle man in between the milk farmers and final consumer of

milk and milk products.

1.2 Problem statement

Nowadays, people generally look for alternative to the traditional food grains. The

improvement in education, media exposure, transportation and contact with outsider

have helped people towards consciousness and consequently to modernization

process. People are increasingly aware of the importance of nutritious food and

awareness on the problem for nutrition is equally increasing. So, the production of

nutritious food is essential.

Milk and milk product are such type of product that they have vitamins and other

ingredients which are fundamental to life. The farmers have started to give emphasis

on milk production .As the milk products are profitable products due to high demand

in the market, the private and public sector have started to participate in the

production, processing and marketing of milk products.

Though, it has a good scope in present and future, it has to face many problems. It

can't produce as per desire in limited time due to storing and supplying issues.

The major problem faced by DDC is that the Kathmandu Milk Supply Scheme of

DDC had lack of sufficient raw milk. It was because there was no proper organization

due to rapid urbanization. There was wide gap between demand and supply. The milk

collection centers were not reliable sources of milk for DDC, as the farmers had no

obligation to provide the milk to DDC.

The farmers had fewer resources so that they could not process and supply milk and

milk products as the demand of milk are increased. There is problems of insufficiency

in the production and supply of milk products. So it was felt necessary to study the

production or the role of DDC.

Research Question

1. Is the operational management of DDC efficiently organized and managed?

1.3 Objectives of the project

The main objective of this study is to analyze the production planning of DDC.

The specific objectives are as follows:

● To acknowledge milk collection and chilling process.

● To know production processes.

● To investigate financial position of DDC.

● To recognize employment prospective in DDC.

● To recognize the production inclination of dairy products.

● To propose suggestions on the basis of this study.

● To investigate the efficiency of distribution channels of DDC.

●
 Chapter II: Literature Review

Conceptual Framework

The selection of distribution channels will impinge upon decisions about every other

element of the marketing mix. Pricing decisions will be greatly affected by whether

the company attempts to mass market through as many wholesale and/or retail outlets

as possible, or purposively target a relatively small number of outlets offering its

customers high service levels. The amount of promotional effort required of an

organization will be a function of how much, or little, of the selling effort is

undertaken by the channels of distribution it uses. The product and/or its packaging

may have to be designed to suit the storage and physical handling systems of the

distributor. (Channel Mangement and Physical Distribution)

Figure 1: Measuring Channel Performance

Source: Channel Management and Physical Distribution

Production quantity matters less as first DDC tries its products to sell it in nearer

market instead of dairy co-operative because they get better price from local

consumers as compared to dairy co-operatives and it also saves transportation cost.

DDC has 40 franchises, where the shops are only allowed to sell the products of
DDC. Further it has 4 distributers who bring out the milk from dairy and sell them to

the various shops. There are two distributers inside the valley and two outside the

valley.

The processing of milk has primary objective of extending its commercial life and

sustaining quality. This is achieved through a number of food conversion and

preservation techniques. Milk can be heat treated or can be prepared in a dehydrated

form like butter and milk powder or by freezing and finally by fermentation into

forms such as yoghurt, cheese, ghee and others.

Table 1: Total Production and contribution of DDC

Fiscal year 2064/65 2065/66 2066/67 2067/68 2068/69

Milk 72433 71535 70874 72678 70059

supply(0000)lite
r

Total milk 1012163 1048040 1097023 1124132 1158780

production

7.2% 6.8% 3.9% 6.5% 6%

percentage of
DDC out of
Total

Source: Statistical Year book of Nepal, 2068/69

Above table shows total milk production and contribution of DDC in it. Total milk

supply by DDC has decreased from 2064/65 to 2068/69. After 2065/66, the total milk

production has also increased gradually. The contribution of DDC in total milk

production was found to be less than 7.5 %.

This data shows the current status of DDC in dairy product market of Nepal.

Establishment of private dairy firms has increased the competition and challenge for

DDC.
 Chapter III: Methodology

Sources of Data/Data Collection

The necessary data of the study has been collected from various published and

unpublished documents prepared by DDC and other organizations. The main

documents received from study sources were:

● Reports of DDC

● Dissertations and books related to DDC.

● Financial statement of DDC and its branches

● Internet profiles

● Newspaper and Magazines.

Analytical Tools Used

For the presentation of data and its interpretation, some tools are used such as profit

and loss accounts, comparative production and distribution data, and employment

analysis are used.

Given the nature of research design the branches or supply schemes of DDC were

observed and studied to conclude with findings that could have impact for the

organization.
 Chapter IV: Results

This study is centralized in production situation of DDC. For this purpose the

presentation of data is main and important factor. As it is the main part without it

proper analysis is not possible. The deep study of projects depends on its data

presentation.

4.1 Data Presentation and Analysis

4.1.1 Milk collection

Ahead of producing the milk products, it is necessary to know about the collection
status of milk from different branches, only after that feasibility of milk can be
forecasted.

The collection of milk for the recent year is given in table:

Table 2: Milk collection scheme for year 2068/69

Milk collection scheme Year 2068/69 Percentage

KMSS 35250 54.828 or 55

BMSS 1272 1.9780 or 2

HMSS 9278 14.615 or 15

PMSS 4373 6.8023 or 7

LMSS 6735 10.474 or 10

MWMSS 3475 5.4045 or 5

DPP& DS 3912 6.0678 or 6

TOTAL 64295 99.998 or 100%

Source: Annual Report DDC/2068/69 “Unit metric ton”

Figure 2: Milk collection from various centers

Source: DDC (2068/69)

The table and figure above shows that DDC collects its milk from various sectors

which have been enlisted above.DDC has collected its highest milk from KMSSK

which can be regarded as its main collection center as it contributes for 55%. DDC

collects from BMSS, HMSS, PMSS, LMSS, MWMSS and DPP&DS, which is 2%,

15%, 7%, 10%, 5% and 6% respectively. After collection from various centers then

only DDC is ready to produce various dairy products. The production of dairy

products from different branches is given in the following table below:

Table 3: Production Capacity

MILK SUPPLY SCHEME DISTRICT PRODUCTION CAPACITY

Kathmandu Kathmandu 75000 Liter

Biratnagar Morang 25000 Liter

Hetauda Makwanpur 15000 Liter

Pokhara Kaski 10000 Liter

Lumbni Rupandehi 2500 Liter

TOTAL 127500 Liter
Source: DDC

Milk Supply Scheme shows KMSS with highest production capacity and major

contribution in milk collection for DDC. There is a mini processing plant recently

established under the Lumbini Milk Supply Scheme. Thus the scheme has just started

selling pasteurize milk in the local market. Since the sales volume is small, the

scheme is transporting the raw milk to KMSS and PMSS to cater demand of those

areas.

4.1.2 Collection Network

DDC at Lainchaur has various milk collection and chilling centers at different parts of

the country. They are operating in Kathmandu, Biratnagar, Hetauda, Pokhara,

Lumbini and is involved in other Dairy Production Sales and Distribution projects.

Milk is collected through the farmer owned organizations which are milk product

associations and milk product Co-operative Societies. Total of 63 Chilling Center are

established under the milk supply scheme which are in operation across the country

for chilling the milk collected from MPASs\MPCSs.The collection network under

different Milk Supply Schemes is presented below. Chilling Centers (CC) established

under the Milk Supply Schemes is in operation across the country for chilling the

milk collected from the MPCCs:

Table 4: Collection Network

Schemes MPCCs Chilling Centers Districts Covered

KMCC 281 30 7

BMCC 126 11 4
HMCC 167 8 8

LMCC 63 6 4

NMCC 40 3 4

MPCC 49 14 8

JMCC 25 7 6

DMCC 24 5 2

Total 791 63 34
Source: DDC

The tabular data shows the collection network of milk supply schemes of DDC. Milk

is collected from various co-operative societies and chilling centers. It also shows the

districts covered by the milk supply schemes of DDC. KMCC can be seen with a

broader network with 7 districts being covered by it.

4.1.3 Marketing Network

DDC follows these channels to distribute their milk and milk products.

Table 5: Marketing Network

PROJECT FRANCHIS MILK SALES DEALE DISTRIBUTO

S E SALES CENTER R R
BOOTH

KMSS - 1309 - - -

BMSS 12 131 4 - 3

HMSS 8 185 2 - 1

LMSS 9 81 2 - -

MPSS 25 - 3 - 5

JMSS - 78 1 - 4

NMSS - 30 - - 1
DMSS - - - - -

TOTAL 54 1702 10 - 13

Source: DDC

4.1.4 Production Trend of Dairy Products for 5 years

Production Trend of Dairy Products

The production trend of dairy products of six years is given in the table below:

Table 6: Production trend of dairy products for 5 years

Years Volume Volume

Volume Volume Volume Volume Volume Volume
of ice of total
of milk of butter of of of of
cream income
produce produce cheese Ghee Paneer Curd
produce in milk
d d produce produce Produce Produce
d (kg) & milk
(Liter) (kg) d d (kg) d d (kg)
product
(kg) (kg)
s in

'000'

2063/6 72678 126294 167824 536775 31560 101383 27411 148477

4 5 6 2

2065/6 70059 135330 167900 102110 49000 944900 31086 154824

6 0 0 0

2066/6 72910 135400 168000 843000 55000 998000 37096 162334

7 0 0
2067/6 78259 137845 168974 108988 61340 104230 42987 171277

8 7 0 9

2068/6 82200 139451 169000 112842 68078 109128 49074 179956

9 9 4 0 4

Source: DDC (2065-69)

The production trend of dairy products shows the increasing demand of dairy

products which has been increasing continuously in Nepal .It also presents the fact

that DDC has a larger and a growing scope in dairy business service.

4.1.5 Production Contribution of dairy products by DDC branches

Table 7: Production contribution of dairy products

(IN % for 2069)

X*Y BMSS HMSS PMSS LMSS DPP & DS

Paneer 7 5 8 4 76

Curd 25 14 15 3 43

Ice-cream 2 5 7 - 86

Ghee 43 16 18 1 22

Butter 29 12 7 - 3
Source: DDC (2065-69)

The matrix illustrates the production contribution share of the branches of DDC in

terms of percentage for the year 2069, where X is denoted as dairy products and Y as

percentage of the product produced by the branch.

DPP and DS has the major contributions in production of dairy products among other

branches as it accounts for major production shares in paneer, curd, ice-cream and

ghee.

4.1.6 Distribution of Dairy Product

There are 1495 booths for selling milk and 7 selling centers in fiscal year

2068/69.From those centers milk and dairy products reach to consumers. The

distribution of dairy products from various centers is given below:

Table 8: Distribution of dairy products from various

centers
In [000]

Product Unit KMMS BMMS HMMS PMMS LMMS DPP

and
DS

Milk Lakh 50585 12092 7733 5999 335 -

liter

Butter Kg 725 384 149 88 5 22

Curd Liter - 269 163 206 29 410

Ghee Kg - 342 122 156 9 201

Paneer Kg - 4 2 6 2 50

Cheese Kg - - - - - 174

Cream Liter - 3 2 3 - 35

Source: Annual report (2068-69)

 Table 9: DDC Sales Outlets

Schemes Milk Franchise DDC’s Own Distributors

Booths Shops Sales Shops

KMSS 1258 - - -

BMSS 137 12 2 3

HMSS 200 8 2 1

LMSS 60 9 2 -

MPPSS - 25 3 5

JMSS 20 - 1 4

Total 1702 54 10 13

Source: Nations (2010)

Above tables shows the distribution quantity of dairy products by various branches or

the supply schemes of DDC and the number of sales outlets every supply scheme has,

to distribute and sell its products into the market.

KMCC distribution seems to be concentrated in the milk and butter sector with

highest distribution of 50585(lakh liter) for milk and 72500 kg for butter.DDP and DS

shows uniform distribution of all dairy products unlike KMCC which is concentrated

in milk and butter.

4.1.7 Supply Schemes

Kathmandu Milk Supply Scheme (KMSS)

 Major Production : pasteurized Milk, Butter, Ghee, Flavored Milk

Plant Capacity : 15,000 Liter per hour (75,000 Liter Per

shift)

Table 10: Fiscal Achievement of KMSS

S.N PARTICULAR
F.Y 2065/066 F.Y 2066/067 F.Y 2067/068
o S

PRO SAL PRO SAL PRO SAL

1. Milk Collection 30367 - 29711 - 26986 4805

2. Milk Sale 49973 45739 50966 49163 48058 4805

3. Butter 471 - 381 - 455 4700

4. Ghee 216 13 902 - 228 1011

5. DDC Fresh 471 310 481 111 25787 6243

7 0
 Source: www.dairydev.com.np

Distributing System of Milk and Milk Products

Total no. of booths: 1100

Biratnagar Milk Supply Scheme (BMSS)

Major Production : Standard and Full Cream Milk, Butter, Cream, Ghee,

SMP (Skim Milk Powder)

Plant Capacity : 5000 Liter per hour

Table 11: Fiscal Achievement of BMSS

S.N PARTICULAR
F.Y 2065/066 F.Y 2066/067 F.Y 2067/068
o S

PRO SAL PRO SAL PRO SAL

1. Milk Collection 1006 11759 12427

 2. Milk Sale 4731
10627 44917 13303 4411 13537
5

3. Butter 212 73.5 287 6 234 578

4. Ghee 176 92 243 85 237 957

5. DDC Fresh - 3600 - 37 - 481

6. Skim Milk
343 - 506 - 453 -
Powder
Source: www.dairydev.com.np

Distributing System of Milk and Milk Products:

Total no. of boot 231

No. of dealer (places) 58

No. of sales booth 2

No. of Distributors 4

Milk Product Supply Scheme (MPSS)

Major Production: Yak Cheese, Kanchan Cheese, Spread Cheese, Mozeralla

Cheese, Paneer, Ghee, Yoghurt,Ice-Cream, Rasbari, Jeera Mohi, Gundpak

Table 12: Fiscal Achievement of MPSS

S.N PARTICULAR
F.Y 2065/066 F.Y 2066/067 F.Y 2067/068
o S

PRO SAL PRO SAL PRO SAL

1. Milk Collection 2800 - 3283 - 1738 -

2. Milk Sale - - - - - -

3. Butter 28 115 27 108 230 124

 4. Ghee 21 284 - 326 - 364

5. DDC Fresh - 60 - 345 - 230

6. Ice-Cream 52 54 72 73 65 67
Source: www.dairydev.com.np

Distributing System of Milk and Milk Products:

Total no. of booth 31

No. of dealer (places) 8

No. of sales booth 3

No. of Distributors 5

Hetauda Milk Supply Scheme (HMSS):

Major Production Standard and Full Cream Milk, Butter, Cream, Ghee, Ice-Cream

Plant Capacity: 5000 Liter per hour

Table 11: Fiscal Achievement of HMSS

S.N PARTICULAR
F.Y 2065/066 F.Y 2066/067 F.Y 2067/068
o S

PRO SAL PRO SAL PRO SAL

1. Milk Collection 4646 - 4674 - 63057 -

2. Milk Sale 5800 4285 5600 3049 6782 2744

3. Butter 63 3.6 55 3 71 261

4. Ghee 56 46 51 47 58 442

5. DDC Fresh 19.5 15 145 014 24 13

6. Ice Cream 7.3 7.3 1 1 12 12

 Source: www.dairydev.com.np

Distributing System of Milk and Milk Products:

Total no. of booth 185

No. of dealer (places) 7

No. of sales booth 2

No. of Distributors 2

Lumbini Milk Supply Scheme (LMSS)

Major Production : Standard and Full Cream Milk, Ghee, Yoghurt,

Rasbari Plant Capacity : 1000 Liter per hour

Table 12: Fiscal Achievement of LMSS

S.No PARTICULARS F.Y 2065/066 F.Y 2066/067 F.Y 2067/068

PRO SAL PRO SAL PRO SAL

1. Milk Collection 4975 - 5409 - 4786 -

2. Milk Sale 174 434 556 535 665 4310

3. Butter 8 5.3 10 6 9 7

4. Ghee 8 2.3 10 29 91 33
5. DDC Fresh - 2.1 - 11 - 15
Source: www.dairydev.com.np

Distributing System of Milk and Milk Products:

Total no. of booth 81

No. of dealer (places) 10

No. of sales booth 1

No. of Distributors 2

Janakpur Milk Supply Scheme

Table 13: Fiscal Achievement of JMSS

S.No PARTICULARS F.Y 2065/066 F.Y 2066/067 F.Y 2067/068

PRO SAL PRO SAL PRO SAL

1. Milk Collection 3 - 395 - 610 -

2. Milk Sale 529 296 1222 718 834 1126

3. Butter - - 2 - - 11

4. Ghee - 2 - 4 - 4
5. DDC Fresh - 1 - 14 - 77
Source: www.dairydev.com.np

Distributing System of Milk and Milk Products:

Total no. of booth 78

No. of dealer (places) 1

No. of sales booth 1

No. of Distributors 4

Nepaljung Milk Supply Scheme (NMSS):

Table 14: Fiscal Achievement of NMSS

S.No PARTICULARS F.Y 2065/066 F.Y 2066/067 F.Y 2067/068

PRO SAL PRO SAL PRO SAL

1. Milk Collection 1216 - 1187 - 1428 -

2. Milk Sale - - - - 541 204

3. Butter - - - - 79 95

4. Ghee - - - - 44 47
5. DDC Fresh - - - - - 27
Source: www.dairydev.com.np

Distributing System of Milk and Milk Products:

Total no. of booth: 30

No. of dealer (places): 0

No. of sales booth: 0

No. of Distributors: 1

Dhangadi Milk Supply Scheme

Table 15: Fiscal Achievement of DMSS

S.No PARTICULARS F.Y 2065/066 F.Y 2066/067 F.Y 2067/068

PRO SAL PRO SAL PRO SAL

1. Milk Collection - - - - 207 206
Source: www.dairydev.com.np

Distributing System of Milk and Milk Products:

No. of Distributors 1

4.2 Major Findings and Observations:

● Significant impact of distribution channel was seen on various supply

schemes. Supply schemes such as KMCC which have wide area of marketing

network and collection centers were seen producing and delivering un-

negotiable amount of dairy products for DDC.

● Although KMCC delivered large quantity of products but it remained

concentrated mostly in milk and butter. Apart from KMCC, BMSS was seen

uniform in its sales network and also in delivery and distribution of dairy

products

▪ The production trend of DDC shows that there is increasing annual demand of

dairy products in Nepalese market and that the dairy sector has a greater scope

to cater, which can be achieved through efficiency of channel management.

The increased demand of dairy products shows potential future for

corporations such as DDC.

● Investment in supply schemes seems to be useful where there are negligible

numbers of staffs or absence of experienced technical staffs. Investment in

such supply schemes would boost up the production capacity of the scheme

getting staffs more acknowledged to work requirements.

 ● Balaju branch (KMCC) plays a major role in distributing dairy products in

case of production.

Chapter V: Summary, Discussions, and Implications

5.1 Discussions

Milk and milk products are such types of products that are fundamental to human life.

Recent trend shows that farmers have started giving importance to dairy farming

which could be from the drive of consciousness or could be from the equity it brings.

Current status predicts the profitability of milk products due to its rising demand and

therefore, both private and public sector have started participating in production,

processing and marketing of milk products.

Dairy industry is a potential industry but what it requires is an effective channel

management and operations to get the reward. The report illustrates the internal

channel management of a government organization DDC which is a major player in

dairy sector. Even though limitations existed, still appropriate data regarding various

aspects such as collection, distribution, human resource distribution, current status

and trend have been enlisted in a tabular form to assist the analysis of the report.

Furthermore, it is seen that branches of DDC with negotiable amount of technical

staff and wider distribution network have been successful in generating a vital amount

of equity for the organization. Some branches also have been seen specialized in

delivering only certain milk products. One of such was Kathmandu Milk Supply
Scheme which due to its wider collection network is able to deliver large amount of

milk and butter for urban population. In a way specialization of branches is also a

better way to increase the efficiency and effectiveness of distribution channels.

The constraints of this sector in Nepal are that milk is produced by rural farmers and

the consumption exists in urban areas such as Kathmandu. Absence of assured market

restricts the producers to invest in dairy sector. Absence of equity makes it difficult to

raise profit and productivity.

Low purchasing power of population living in rural area is also of concern as it

removes the incentive of investing in dairy due to low effective demand.

Transportation of dairy products to urban area also is a problem for the rural farmers

producing dairy products.

5.2 Implications

Dairy sector being a potential industry in an agricultural country like Nepal has great

implications on the current state of nation. Implications of this research should

encourage private sector to invest in dairy sector which would increase the household

income of low level and middle class population in Nepal.

Some the implications of the dairy sector and its research on current national status

are enlisted below:

● Expansion of employment opportunities for rural population

● Encouragement for private sector to invest in dairy industry

● Export of dairy products allowing foreign income

 ● Acknowledgement of proper channel management for staff in dairy industry

● Recognition of aspects of channel management

● Prediction of demand for dairy products Nepalese industry

5.3 Summary

The basic objective of this study is to analyze the production and distribution aspect

of DDC. The specific objective is to analyze the production trend of dairy products, to

investigate the financial position of DDC and also to evaluate of employment aspect.

The study is mainly based on secondary data. The study focuses on three years' time

Period from 2064/65 to 2068/69.

This study emphasized on the introduction of DDC. Operating efficiency is necessary

for the sustainability of each corporation. Actual production of DDC cannot be

depicted without its analysis of production planning. This study also tries to show the

financial condition of DDC which is essential for policy making and efficiency

management.

Importance of milk, its wider business possibility is self widely revealed in present

contest and as like in agriculture based country. Dairy business may be established as

one of the main income source of country's economy. By exporting dairy products,

foreign currency could be earned. Provision of employment opportunities to skilled,

under skilled and semi skilled people as per their capabilities can be provided and can

help to decrease unemployment problem to some extent. Some creative hands are

trying to involve in dairy business but are in lack of capital and some left behind due

to lack of good market. Even though, these day Agriculture Development Bank and

other Commercial Banks are providing soft loan to animal farming and related dairy
products business, but lack of appropriate knowledge and heavy rate of interest on

bank loan, business is unable to extend its diameter. Not having the bank service in

all sectors, dairy business is in lack of proper support in spite of good prospectus.
 References

(2068-2069). Annual Report. DDC.

Channel Mangement and Physical Distribution. (n.d.). Retrieved from

http://www.fao.org

Corporation, D. D. (2007/2008). Nepal Dairy Development Corporation: Annual

report. DDC.

corporations industry: Agricultural Information and Communication Center. (n.d.).

Retrieved from Agricultural Information and Communication Center:

http://www.aicc.gov.np

DDC. (2065-2069). Annual Report. DDC.

DDC. (n.d.). Collection. Retrieved from Dairy developement Committe:

http://www.dairydev.com.np

Nations, F. a. ( 2010). Dairy Sector Study of Nepal. Kathmandu.

(2068/69). Statistical Year book of Nepal.

 Annexes

PARTICULARS NO.

TECHNICAL 248

ADMINISTRATION 113
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PARTICULARS NO.

TECHNICAL 3

ADMINISTRATION 4
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PARTICULARS NO.

TECHNICAL 20

ADMINISTRATION 4
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PARTICULARS NO.

TECHNICAL 35

ADMINISTRATION 16
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PARTICULARS NO.

TECHNICAL 9

ADMINISTRATION 4

PARTICULARS NO.

TECHNICAL 132

ADMINISTRATION 44
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www.dairydev.com.np

Source:

www.dairydev.com.np

PARTICULARS NO.

TECHNICAL 116

ADMINISTRATION 42
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PARTICULARS NO.

TECHNICAL 91

ADMINISTRATION 36
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