economics of milk and milk products supply chains in prakasam district of ap

141 Pages·2017·3.48 MB·English

ECONOMICS OF MILK AND MILK
PRODUCTS SUPPLY CHAINS IN
PRAKASAM DISTRICT OF A.P. - A
COMPARITIVE ANALYSIS

KOYI VYKHANESWARI
B.Sc. (Ag.)

MASTER OF SCIENCE IN AGRICULTURE
(AGRICULTURAL ECONOMICS)

2016
ECONOMICS OF MILK AND MILK PRODUCTS
SUPPLY CHAINS IN PRAKASAM DISTRICT OF
A.P. - A COMPARITIVE ANALYSIS

BY
KOYI VYKHANESWARI
B.Sc. (Ag.)

THESIS SUBMITTED TO THE
ACHARYA N. G. RANGA AGRICULTURAL UNIVERSITY
IN PARTIAL FULFILMENT OF THE REQUIREMENTS
FOR THE AWARD OF THE DEGREE OF

MASTER OF SCIENCE IN AGRICULTURE
(AGRICULTURAL ECONOMICS)

CHAIRPERSON: Dr. K. UMA DEVI

DEPARTMENT OF AGRICULTURAL ECONOMICS
AGRICULTURAL COLLEGE, BAPATLA-522101
ACHARYA N.G. RANGA AGRICULTURAL UNIVERSITY
GUNTUR, ANDHRA PRADESH
2016
CERTIFICATE

Ms. KOYI VYKHANESWARI has satisfactorily prosecuted the course of
research and that thesis entitled “ECONOMICS OF MILK AND MILK
PRODUCTS SUPPLY CHAINS IN PRAKASAM DISTRICT OF A.P. -
A COMPARITIVE ANALYSIS” submitted is the result of original research work
and is of sufficiently high standard to warrant its presentation to the examination. I
also certify that neither the thesis nor its part thereof has been previously submitted by
her for a degree of any University.

Date: (K. UMA DEVI)
Chairperson
Assistant Professor
Department of Agricultural Economics
Agricultural College, Bapatla - 522101
CERTIFICATE

This is to certify that the thesis entitled “ECONOMICS OF MILK AND
MILK PRODUCTS SUPPLY CHAINS IN PRAKASAM DISTRICT OF A.P. - A
COMPARITIVE ANALYSIS” submitted in partial fulfilment of the requirements
for the degree of ‘Master of Science in Agriculture’ of the Acharya N. G. Ranga
Agricultural University, Guntur is a record of the bonafide original research work
carried out by Ms. KOYI VYKHANESWARI under our guidance and supervision.
No part of the thesis has been submitted by the student for any other degree or
diploma. The published part and all assistance received during the course of the
investigations have been duly acknowledged by the author of the thesis.

Thesis approved by the Student Advisory Committee

Chairman: Dr. K. UMA DEVI
Assistant Professor
Department of Agricultural Economics
Agricultural College, Bapatla

Member: Dr. G. RAGHUNADHA REDDY
Senior Scientist,
RARS, Lam
Guntur.

Member: Dr. SHAIK NAFEEZ UMAR
Assistant professor
Department of Statistics & Mathematics

Agricultural College, Bapatla

Date of Final Viva-Voce:
DECLARATION
I, KOYI VYKHANESWARI, hereby declare that the thesis entitled
“ECONOMICS OF MILK AND MILK PRODUCTS SUPPLY CHAINS IN
PRAKASAM DISTRICT OF A.P. - A COMPARITIVE ANALYSIS” submitted to
Acharya N.G. Ranga Agricultural University for the degree of Master of Science in
Agriculture is the result of original research work done by me. I also declare that no
material contained in the thesis has been published earlier in any manner.

Place: Bapatla (KOYI VYKHANESWARI)
I.D. No. BAM-14-40
Date:
ACKNOWLEDGEMENTS

In everyone’s life, the day arises when one has to shape ones feelings in words. Though only my
name appears on the cover of this thesis, a great many people have contributed to its production. I owe
my gratitude to all those people who have made this thesis possible and because of whom my post
graduate experience has been one that I will cherish forever.
I humbly place on record my respect and profound sense of gratitude to the esteemed Chairman
of my advisory committee, Dr. K. Uma Devi, Assistant Professor, Department of Agricultural
Economics, Agricultural College, Bapatla for her keen interest, scholarly counsel, constructive
suggestions, boundless help and indefatigable guidance which provided me commendable encouragement
and shaped my efforts into a successful research work. Her indefatigable patience, outspent efforts, hand
and cuff approach and consistent efforts during the thick and thin of my work deserve high extolment.
I express my hearty gratitude to the member of my advisory committee, Dr. G. Raghunadha
Reddy, Senior Scientist, RARS, Lam, Guntur for his precious advice and suggestions during my research
work.
I express my deep sense of gratitude to Dr. Shaik Nafeez Umar, Assistant Professor, Department
of Statistics and Mathematics, member of my advisory committee for sparing his precious time and giving
pragmatic suggestions during the course of my research work, which helped a lot in bringing the thesis to
the present format.
I deem it a great privilege to express my gratitude to Dr. Y. Radha, Professor & Head,
Department of Agricultural Economics, Agricultural College, Bapatla for her unstinted attention,
constant encouragement, valuable suggestions and generous help during my post-graduation study and
research work.
I sincerely owe my deep sense of gratitude to Dr. K. S. R. Paul, Assistant Research Officer, Cost
of Cultivation Scheme, Dept. of Agricultural. Economics, Agricultural College, Bapatla for his suggestions
& co-operation extended to me during the course of my study.
I highly express my gratitude and thanks to Dr. V. Srinivasarao, Professor & University Head and
Sri Venkata krishna Teaching Associate, Department of Statistics & Mathematics, Agricultural College,
Bapatla for their valuable suggestions and constant guidance during my course of investigation
I have dearth of words to express my heartful feelings to my beloved father Sri Lakshmi
Narasaiah and my mother Smt. Suvarna for their love, affection and their unceasing support which
elevated me to the present position. Their parenting brings every time the best in every effort of my
venture.It is the time to express my warm love on my sisters Brindavani and Sreelekha to meet it as a
means of reciprocating their unmatched fondness and for being my moral support to build up my academic
career.
I take this opportunity to acknowledge Vinaya lakshmi for providing the timely help to carry
out my research work successfully.
Heartful thanks to my seniors friends Malathi, Sirisha, Varalakshmi, Priyanka, Sanyasi Naidu,
Lavanya, Jhansi, Preethi, Manju, and Saidhar, for the much needed moral support and help during the
course of my study.
I place my sincere thanks to my colleagues Vinaya Lakshmi, Deepthi, Ganapathy, Indhushree,
Sekhar, Shailaja, Vasavi, Jogamba and Deepak and junior friends Almaszabeen Badekhan, Jyothirmai,
Sarath, and Sathish for always being beside me in difficult times during my course of study and giving
constant motivation.
I would like to surface my affectionate thanks to Ranga Rao, Seshamma, Ashok for their
affection, blessings and support given to me in times of need.
I am very much thankful to record assistant, Smt. Saraswathi & attenders Sri Nagireddy and
Smt. Venkateswaramma for their help during my PG programme in the department.
I am thankful to our College Librarian and other Library Staff for providing necessary facilities.
I humbly thank the authorities of Acharya N.G. Ranga Agricultural University and
Government of Andhra Pradesh for availing me the opportunity to do my PG in this prestigious
institution.
I am thankful to Eswar Digitals and Computers for the neat typing and execution of my thesis.
While travelling on this part of education, many hands pushed me forth, learned hearts
put me on the right track. I ever rest THANKS to all of them.
Last but not the least, I thank Almighty for blessing, protecting and guiding me
throughout this period.
Any omission in these brief acknowledgements doesn’t mean lack of gratitude.

Place: Bapatla
Date: (KOYI VYKHANESWARI)
Chapter I
INTRODUCTION
India ranks first among the world’s milk producing nations since 1998 in
the world. Milk production in India, during the period 1950-51 to 2014-15, has
increased from 17 Mt to 146.3 Mt recording a growth of 6.26 per cent. The per
capita availability of milk in the country which was 130 g/day during 1950-51 has
increased to 322 g/day in 2014-15 as against the world average of 293.7 g/day
during 2013. This represents sustained growth in the availability of milk and milk
products for our growing population. Dairying has become an important
secondary source of income for millions of rural families and has assumed the
most important role in providing employment and income generating
opportunities particularly for marginal and women farmers. Most of the milk is
produced by animals reared by small farmers, marginal farmers and landless
labourers (http://dahd.nic.in/ - Department of animal husbandry, dairying and
fisheries).
India is the world’s largest producer and consumer of dairy products. Dairy
activities have traditionally been integral to India's rural economy and have been
emerging as one of the fast growing sectors of the country. Operation Flood
launched in 1970 with the objectives of increasing milk production, rural income
and providing reasonable prices for consumers has helped dairy farmers direct
their own development. The dairy cooperative movement helped to provide a
safety net to the most vulnerable and marginalised sections of the society. The
dairy sub-sector occupies an important place in the agricultural economy of India
as milk is the second largest agricultural commodity in contributing to GDP, next
only to rice (Patel, 1994).
Modern sectors are the most prominent and plays a very important role in
milk marketing of the dairy industry. Transformation of this dairy sector is being
induced by so many positive factors which are of interest on the part of the
organized sector, new markets, easy credit facilities, dairy friendly policies by the
government, etc. The government and other stakeholders are coming forward
positively and increasingly to help the growth of the sector and make it a more
livelihood occupation for farmers.
Modern marketing channels have strived to provide better returns to milk
producers from milk production, through their efforts in reducing costs and
improving efficiencies along the supply chain. Yet, about 80 per cent of marketed
milk still passes through the traditional channels of handling raw milk and
traditionally produced milk products (Kumar and Staal, 2010). Traditional
marketing channels are restricted to their village surroundings only, whereas
modern channels are helpful to almost all types of milk traders which provide
consumers a better quality milk. Dairy farmers are mostly restricted to traditional
marketing channels due to which they are not getting sufficient income and more
over consumer’s preferences are changing day by day with respect to quality.
Pawar and Sawant (1979) have confirmed that the private dairy plants use their
resources efficiently and reduce their total operational costs as compared to those
by the co-operative dairy plants. Datta and Ganguly (2002) estimated Indian milk
demand for 2020 under various GDP growth rates. The study reported that if the
current growth continues for the next twenty years (the nation has been growing at
a rate between 4 and 7 percent over past five years), milk consumption is likely to
be more than double by 2020. Increasing milk production is critical to meet
growing domestic demand; however, it is constrained by genetics, animal
diseases, insufficient animal feed and fodder, lack of adequate veterinary and
breeding services, a declining water table, less land due to urban sprawl, and poor
farm management. The National Dairy Development Board (NDDB) is
implementing the National Dairy Plan (NDP) to help address some of these
challenges, and in the process hopes to increase milk production from 200 to 210
MMT by fiscal year (April to March) 2021-22. Yet, these and other government
efforts are primarily focused on assisting state-supported dairy cooperatives and
processors, and not the private sector (Logos and Intodia, 2015).
Andhra Pradesh is one of the agriculturally most advanced states in India.
Total milk production in Andhra Pradesh is 9.65 Mt and it occupies sixth place
next to Uttar Pradesh (25.19 Mt), Rajasthan (16.93 Mt), Gujarat (11.69 Mt),
Madhya Pradesh (10.77 Mt) and Punjab (10.35 Mt). The per-capita availability of
milk in Andhra Pradesh during 2013-14 was 413 g/day. (Department of animal
husbandry, dairying and fisheries, Ministry of Agriculture, GOI). The Andhra
Pradesh Dairy Development Cooperative Federation (APDDCF) has been the
major force in increasing milk production, organizing milk marketing and
ensuring sustainable livelihoods and rural prosperity through dairy farming.
Drought conditions and rising scarcity of fodder in A.P. during 2015-16 affected
milk production, forcing both state owned as well as private dairies look at
alternatives to meet shortages. With the rise in fuel and freight costs and the
pressure on profit margins, the dairies are increasing their selling prices of liquid
milk to help farmers cover total costs. Most of the scientific and modern methods,
proper training and proper counselling is being provided by the cooperative
sectors under various development programs to farmers to avoid losses and
provide a helping hand to develop in their business by purchasing the milk at
correct prices according to fat content.
Prakasam (0.873 Mt) is the highest milk producing district in A.P. which
is followed by Krishna (0.872 Mt) and Guntur (0.705 Mt) (A.P. socio-economic
survey, 2014-15). Milk produced in the district is known for its high fat content,
better keeping quality and unrivalled taste. Prakasam district milk producer’s
cooperative union has ambitious plans to improve cattle breed and keep up its
supplies, increase its milk procurement and pay remunerative prices to dairy
farmers.
1.1. PROBLEM STATEMENT
Even though higher production was observed in Prakasam district, dairy
farmers are facing constraints in marketing of milk. The farmers in general could
not satisfy the consumers with the quality of milk they are providing and hence
could not get remunerative prices. Very few studies have been made in this aspect
which is very important for farmers and all stakeholders in the chain to earn