PERFORMANCE OF DAIRY CO-OPERATIVES IN

HAVERI DISTRICT – AN ECONOMIC ANALYSIS

Thesis submitted to the

University of Agricultural Sciences, Dharwad
in partial fulfillment of the requirements for the
Degree of

MASTER OF SCIENCES (AGRICULTURE)

IN

AGRICULTURAL ECONOMICS

By

NAVEEN N.

DEPARTMENT OF AGRICULTURAL ECONOMICS

COLLEGE OF AGRICULTURE, DHARWAD
UNIVERSITY OF AGRICULTURAL SCIENCES,
DHARWAD – 580 005

DECEMBER, 2012
 ADVISORY COMMITTEE

DHARWAD (N. R. MAMLE DESAI)

DECEMBER, 2012 CHAIRMAN

Approved by :

Chairman : ____________________________
(N. R. MAMLE DESAI)
Members : 1. __________________________
(B. L. PATIL)

2. __________________________
(S. B. HOSAMANI)

3. __________________________
(S. V. HOSAMANI)

4. __________________________
(Y. N. HAVALDAR)
 CONTENTS
Sl. No. Chapter Particulars
CERTIFICATE
ACKNOWLEDGEMENT

LIST OF TABLES

LIST OF FIGURES

1. INTRODUCTION

1.1 Operation flood

1.2 Three phases of development
1.3 The cooperative structure
1.4 History of dairy co-operatives in Karnataka
2. REVIEW OF LITERATURE
2.1 Performance of diary co-operatives
2.2 Cost and returns structure in milk production
2.3 Impact of dairy co-operatives on income and employment generation
2.4 Constraints in production and marketing of milk

3. METHODOLOGY
3.1 Description of the study area
3.2 Sampling design
3.3 Nature and sources of data
3.4 Analytical tools and techniques employed
3.5 Terms and concepts used

4. RESULTS
4.1 Performance of dairy co-operatives in Haveri district.
4.2 Cost and returns structure of milk production.
4.3 Milk production, income and employment of farmer beneficiaries
4.4 Perception for member farmer regarding functioning of MPCS
5. DISCUSSION

5.1 Performance of dairy co-operatives in Haveri district.

5.2 Analysis of cost and returns structure of milk production.
5.3 Extent of milk production, income and employment of farmer
beneficiaries
5.4 Opinions of the respondents on the performance of Milk producer’s
cooperative societies and various problems of dairy farming

Contd…
Sl. No. Chapter Particulars

6. SUMMARY AND POLICY IMPLICATIONS

6.1 Objectives
6.2 Sampling design
6.3 Nature and source of data
6.4 Tools and Techniques Employed For Analysis
6.5 Findings of the study
6.6 Policy Implications

REFERENCES
 LIST OF TABLES

Table
Title
No.

3.1 General features of study area

3.2 Land use pattern in study area

3.3 Cropping pattern in study area

3.4 Taluk wise number of Dairy Cooperative Societies (DCS) in Haveri district
(2010)

3.5 Taluk wise quantity of milk procurement by Dairy Cooperative Societies in

Haveri district during 2010-11

3.6 List of Milk Producer’s Cooperative Societies (MPCS) selected in the study
area

4.1 Socio-economic profile of sample farmers in the study area

4.2 Livestock situation and MPCS’s wise distribution of sample farmers

4.3 Compound growth rate of selected physical and financial indicators of MPCS
operating in Byadgi Taluk during 1997-98 to 2009-10

4.4 Compound growth rate of selected physical and financial indicators of MPCS
operating in Ranebennur taluk during 1997-98 to 2009-10

4.5 Financial ratio analysis of MPCS’s operating under Byadagi I

4.6 Financial ratio analysis of MPCS’s operating under Byadagi II

4.7 Financial ratio analysis of MPCS’s operating under Ranebennur I

4.8 Financial ratio analysis of MPCS’s operating under Ranebennur II

4.9 Financial ratio analysis of MPCS’s operating under Byadagi (Overall)

4.10 Financial ratio analysis of MPCS’s operating under Ranebennur (Overall)

4.11 Input utilization pattern in Byadagi (Per animal/annum)

4.12 Cost and Returns structure for milk production in Byadagi (Per animal/annum)

4.13 Input utilization pattern in Ranebennur (Per animal/annum)

4.14 Cost and Returns structure for milk production in Ranebennur (Per
animal/annum)

4.15 Comparison of annual income and employment generated through dairy

enterprises in Byadagi and Ranebennur during 2010

4.16 Constraints in milk production in study area

4.17 Opinion of sample farmers regarding services extended by MPCS in study

area

4.18 Opinion of sample farmers regarding performance of the MPCS in study area
 LIST OF FIGURES

Figure
Title
No.

1 Map showing the study taluks in Haveri District

2 Flow chart of sample selection

3 Socio-economic profile of sample farmers in the study area

4 Livestock situation and MPCS’s wise distribution of sample farmers

5 Cost and Returns structure for milk production in Byadagi (Per

animal/annum)

6 Cost and Returns structure for milk production in Ranebennur (Per

animal/annum)

7 Comparison of annual income and employment generated through

dairy enterprises in Byadagi and Ranebennur
 1. INTRODUCTION
As India enters into an era of economic reforms, the agricultural sector in general and
the livestock sector in particular, have been considered as major growing areas of the
country. Hence, in future or years to come dairying could play a more constructive role in
promoting rural welfare and reducing poverty and increasingly attracting the attention of the
rural community. As a result, milk production activity alone involve more than expected 70
million producers, each raising one or two cows or buffaloes. Further, the cow dung is an
important byproduct of dairy farming and being used as organic manure in all crop production
activities to improve the productivity level of the soil. Thus, the dairy animals constitute an
important component of the farming system for sustaining the agricultural economy of the
country.
Realizing the importance of dairy farming and the milk requirement, the demand
signals transmitted through the marketing system are stringently influencing the attitude of the
farmers in evolving suitable action plans to continue dairy as an important allied activity with
regular farming. Such actions initiated by the farmers have tinkled the spark to organize
suitable interventions to develop dairy enterprises through backward and forward linkages for
development of efficient supply chain system of milk production. In this regard, the dairy co-
operatives have played an important role in transmitting the message of urban market
demand to the farming community.
India is the world’s largest producer of bovine milk. Buffaloes contribute around 57
percent to total milk production and are increasingly preferred as dairy animals over cows.
Buffaloes can be used for milk production, meat and also as a work animal for small farmers.
Additionally, buffalo milk has a higher fat content than cow’s milk resulting in higher prices per
litre. Dairy farming and its related activities form an important direct and supplementary
source of income for around 70 million small farmers and landless laborers (17 percent of
which are grouped into milk marketing co-operatives at the village level). More than 90
percent of India’s milk production is sourced from 14 states (with the top five states being
Uttar Pradesh, Punjab, Rajasthan andhra Pradesh and Maharashtra) accounting for 80 per
cent of the country’s villages (GAIN Report, 2010-11).
India produced 112.5 million tons of milk in 2010-11. Dairy farming is practiced by
13.90 million farmers in villages, registered as milk producers under 1,33,349 dairy co-
operative societies. India’s milk production grows more than 4 per cent annually as against
expected growth of 5.5 per cent to meet estimated domestic demand. Uttar Pradesh,
Haryana, Punjab, Rajasthan, Gujarat, Maharashtra andhra Pradesh, Karnataka and Tamil
Nadu are milk surplus states in India and accounted for 80 per cent of the milk produced.
India processes less than 20 per cent of the total milk produced into tradable products while
Australia, New Zealand, EU process more than 50 per cent of the milk produced into tradable
products indicating greater opportunity for investment and growth in the Indian dairy
processing industry.
The dairy industry in India is wide spread over the entire country in innumerable small
units in a much dis-organized form. In recent years, the Indian dairy industry is on the
threshold of a good many changes that would totally transform the dairy scenario and give the
needed thrust to its rapid growth to meet the challenges ahead. Greater emphasis are to be
needed on the areas of milk production, processing and marketing research. In this task of
development of dairy industry, co-operatives have been recognized as an effective institution
to improve the milk production potential and there by ameliorate the socio-economic
conditions of millions of small, marginal and land less dairy entrepreneurs scattered over
large areas of the country.
In India, as on March 2010, the dairy cooperative network comprises 170 milk unions,
spread across 346 districts, covering around 1,17,575 village level societies with a
membership of 12.4 million, of which 3.2 million were women. India’s 3.9 per cent annual
growth of milk production between 1995-96 and 2008-09 surpassed the two per cent growth
of population; the net increase in availability was around two per cent per year. With regard to
milk marketing, in 2008-09, dairy co-operatives handled on an average 168.06 lakh litres of
milk everyday, its annual compound growth rate was 5.8 per cent over the last five years.
Dairy co-operatives extended marketing of milk in all metros and major cities.
 Since a decade, the daily milk supply to each 1000 urban consumers has increased
from 17.5 to 58.8 per cent (NDDB report, 2009-10).

1.1 Operation flood

A recent World Bank audit shows that, of the ` 200 crores invested in Operation
Flood, the net return into the rural economy has been a whopping ` 24,000 crores per
year over a period of ten years, or a total of ` 240,000 crores in all. No other major
development program has matched this input-output ratio.
Operation Flood has been instrumental in helping the farmers to mould their own
development, thus helping to reach milk to the final consumers in 700 cities through a
National Milk Grid. It also helped to eradicate the need for middlemen thereby reducing the
seasonal price variations. As a result of the cooperative structure, the whole exercise of
production and distribution of milk and milk products has become economically viable for
farmers to undertake on their own. In this manner, the farmer himself can enjoy the fruits of
his own labour, instead of surrendering a major portion of the profit to the middlemen involved
between them and consumers.

1.2 Three phases of development

The scheme sought to establish milk producer’s co-operatives in the villages and
make modern technology available to them. The broad objectives are to increase milk
production, augment rural incomes and transfer it to milk producers, the three phases of
development in dairy sector is briefed as under.
Phase I of Operation Flood was financed by the sale within India of skimmed milk powder and
butter oil gifted by the EC countries via the World Food Programme. As a founder-chairman of
the National Dairy Development Board (NDDB) of India, Late Dr. Varghese Kurien finalized
the plans and negotiated the details of EEC assistance. He looked after the administration of
the scheme as founder-chairman of the erstwhile Indian Dairy Corporation, the project
authority for Operation Flood. During its first phase, the project aimed at linking India's 18
best milk sheds with the milk markets of the four metropolitan cities of Delhi, Mumbai,
Calcutta and Madras.
Phase II of the project, implemented during 1981-85 raised this to 136 milk sheds linked to all
over 290 urban markets. Milk powder production went up from 22,000 tonnes in the pre
project year to 1,40,000 tonnes in 1989, thanks to dairies set up under Operation Flood. The
EEC gifts thus helped to promote self-reliance. Direct marketing of milk by producers' co-
operatives resulting in the transfer of profits from milk contracts --increased by several million
litres per day.
Phase III of Operation Flood (1985-1996) enabled dairy co-operatives to rapidly build up the
basic infrastructure required to procure and market more and more milk daily. Facilities were
created by the co-operatives to provide better veterinary first-aid health care services to their
producer members.
Milk co-operatives are an integral part of the milk production, processing and
marketing in India, which is popularly known as “Operation Flood” launched by the
Government of India in collaboration with the world food programme of the United Nations in
July 1970. One of the world’s largest rural development programmes ever undertaken, the
operation flood aims at setting up of modern dairy industry to meet the India’s rapidly
increasing need for milk and milk products and making capable and self sustaining growth.
Operation flood helped the dairy farmers to direct their own development, placing control of
the resources. A national milk grid links milk producers through out India with consumers in
over 700 towns and cities, reducing seasonal and regional price variations.

1.3 The cooperative structure

AMUL or Anand type of cooperative is a three-tire structure namely, (i) The Village
Milk Producer’s Cooperative Society (ii) The District Milk Producer Co-operatives Union and
(iii) The State Milk Marketing Federation.
 Primary Cooperative Society consists of members within the village jurisdiction who
own cattle and thus supply milk to the co-operatives on a regular basis. Milk is collected twice
daily; the sample of each producer is tested individually for fixing prices. The payment for milk
supplied is also made daily to enable them to buy inputs like feed, fodder, etc.
An elected management committee of nine members manages the primary
cooperative society for a term of three years, of which one will be the chairman. The
management committee appoints a secretary, a treasurer and other staff. The staff is trained
in first aid and artificial insemination to meet the local emergency needs.
The District Milk Producers’ Cooperative Union represents all the Primary Milk
Producers’ Cooperative Societies, which are members of the union and is managed by an
elected management committee of 19 directors, which elects its own chairman. The union has
a large professional staff led by the Managing Director. The union is responsible for
procurement, processing and marketing of milk and providing technical and input services like
veterinary services, supply of feed, fodder, seeds and equipments besides training the staff.
In the cooperative structure, the marketing federation forms the third tier for
centralized marketing and purchase of milk. Its purpose is to maximize the returns to the
primary producers in their unions through centralized marketing, purchase and quality control.
Industry sources confirm that a milk producer retains around 34 percent of farm milk
production and the rest 66 per cent, is sold. Out of the 66 percent of milk sold by producers,
around 16 percent is procured by co-operatives and the remaining 50 percent is procured by
the unorganized sector (GAIN Report, 2010-11).

1.4 History of dairy co-operatives in Karnataka

During the year 1964, when late Prime Minister Shri. Lal Bahadur Shastri spent a
night at Ajarpur, during his visit to Gujarat, was impressed with working of the Village Milk Co-
operative Society. He requested Mr. Verghese Kurien, the General Manager of AMUL, to
extend Anand type of dairy co-operatives to other parts of the country. He also wrote to the
Chief Ministers of different states to take the initiatives to set up Anand type of milk co-
operative societies. This led to the establishment of National Dairy Development Board
(NDDB) in 1965 and its sister organization called Indian Dairy Corporation in 1970 to
implement a well-known programme known as Operation Flood, which essentially entails the
setting up of Anand type of dairy co-operatives through out the country.
In the year 1973, the government of Karnataka prepared a dairy development project
and submitted to the World Bank for funding. The total project cost of Rs 509.9 million was to
be met by the Government of Karnataka and the World Bank. The project report stipulated
that the project should adopt Anand type of dairy cooperative societies and NDDB should act
as consultant to the project. The actual fieldwork was taken up in 1975. The project under
Operation Flood-I organized the Karnataka Dairy Development Corporation (KDDC) which
covered eight districts under four milk unions, namely Bangalore (Bangalore and Kolar),
Mysore (Mysore, Mandya and part of Kodagu), Hassan (Hassan, Chikmagalur and part of
Kodagu) and Tumkur (Tumkur and part of Mandya). Later during the year 1983 under
Operational Flood-II, all the districts of the State were covered.
th th
Karnataka is the 11 largest milk producer in India and possesses 9 largest bovine
population in India. The milk procured during the year 2010-11 was 4.8 million tonnes, while
the per capita milk availability was found to be 216 gm/day. The number of farmers engaged
in the dairy farming was 20.38 lakhs. On the contrary, the number of dairy co-operatives was
found to be 10,087. The number of dairy plants were found to be 22 with a processing
capacity of 32.25 lakh litres. The number of chilling plants were 42 having capacity of 15.15
lakh litres. The milk production in Karnataka has increased at the rate of 4.6 per cent per
annum during the period from 2005-06 to 2010-11 (Karnataka Global Agri-business and Food
Processing Summit, 2011).
Karnataka Milk Federation (KMF) constitutes 13 milk unions, 10,876 dairy co-
operatives. The cattle feed plants, sperm station, pouch film plant and a distribution channel
with 616 retail centres. KMF procures 38 lakh kilo per day of milk. It produces milk, butter,
ghee, curd, yoghurt, lassi, dairy whitener, solid milk powder, ice creams, desserts, traditional
milk sweets etc.
 In Haveri district, about 412 Dairy Co-operative Societies (DCS) were functioning.
Looking to the progress of DCS, the present study has made an attempt to analyse the
performance of dairy co-operatives in Haveri district of the State.

Objectives
1. To study the physical and financial performance of dairy co-operatives in Haveri
district.
2. To analyze the cost and returns structure in milk production.
3. To analyse the extent of milk production, income and employment generation to farm
households.
4. To identify constraints in production and marketing of milk by member producers.

Hypotheses
1. Dairy co-operatives are functioning satisfactorily.
2. Dairy farming is a profitable enterprise.
3. Milk production activity generates substantial employment and income to dairy farm
households.
4. Members of dairy co-operatives are facing many constraints in production and
marketing of milk.

Presentation of thesis
The study is presented in six chapters.
The first chapter covers importance of dairy sector in India, structure of dairy co-
operatives, role of operation flood and objectives of the study. The relevant review of literature
is presented in chapter II. The third chapter of the study is devoted to the methodology used
in the investigation and analytical procedures followed in arriving at the findings. This is
followed by the presentation of the results in the same order in which the objectives are listed
as in chapter one are presented in chapter IV. The findings of the study have been discussed
thoroughly in chapter V in the sixth chapter; the summary and conclusions of the study are
given along with policy implications. Reference and appendices are included at the end.
 2. REVIEW OF LITERATURE
In this chapter, the past studies relating to the present study have been reviewed and
are presented under the following sub-heads
2.1 Performance of diary co-operatives
2.2 Cost and returns structure in milk production
2.3 Impact of dairy co-operatives on income and employment generation
2.4 Constraints in production and marketing of milk

2.1 Performance of diary co-operatives

Jain et al. (1978) studied the growth of milk producers co-operatives in Mehasana
district of Gujarat. The sample villages in the milk shed area were selected and were studied
for the growth of cooperative societies, membership, share capital, volume of milk handled
and price paid by different agencies. The data was scored under the benchmark and repeated
surveys carried out by the Indian Agricultural Statistical Research Institute during 1968-69
and 1973-74 respectively. It was observed that, there was a sizeable increase in the number
of village level milk producer’s co-operatives viz., from 230 to 380 between the two periods,
the membership of co-operatives also increased from an average of 157 members per co-
operatives on the first occasion to 240 on the second occasion and the share capital of their
co-operatives increased from an average of Rs 3448 per milk cooperative on the first
occasion to Rs 18842 on the second occasion. They also noticed that, there was an overall
increase in the number of persons employed by the milk co-operatives and the daily milk
collection of milk co-operatives increased in second occasion during all three seasons.
Baviskar (1986) collected the data during field work in two villages of Surat district.
The report traced the increase in the number of cooperative milk producer societies and their
impact on dairy development in the tribal area of Gujarat. It has focussed upon milk co-
operatives managed by Jesuit missionaries in the region presenting a detailed description of
their internal organization. The main reason for the success of the Jesuit seen cooperative
was found to lie with the loyalty of its members and integrity of its leaders. The secretary of
dairy cooperative was found to be key functionary in the success of the project.
Hirevenkanagoudar et al. (1988) studied the impact of dairy development on the
weaker sections of Bangalore North and Doddaballapur taluk of Karnataka. The small,
marginal farmers and agricultural laborers were selected from the villages having SFDA
programmes. They were classified as Karnataka Dairy Development Corporation (KDDC)
farmers and non-KDDC farmers who were not availing the facilities of co-operatives. They
found that more than 56 per cent KDDC farmers getting only 25 per cent of family income
from dairy enterprises while more than 64 per cent of KDDC farmers had repaid 75 to 100 per
cent of dairy loan; where as only 10 to 25 per cent of non KDDC farmers had repaid 75 to 100
per cent of dairy loan.
Jawan Ram (1988) made an attempt to analyze the organization and working of
Jaipur district milk producers cooperative union limited, Jaipur. The study was conducted
through personal interview method with management and other employees of the union. It
was found that, the organizational structure and functions performed were (i) milk collection
(ii) supply of technical inputs (iii) farmers induction programmes and (iv) supervision etc.,
were analyzed.
Jithendra Kumar (1990) studied the performance of dairy co-operatives and their
impact on milk production, income and employment in Chitoor district of Andhra Pradesh. The
study revealed that, the societies which were above the average level have shown better
performance with an increase in the membership and milk procurement and profits of
societies showed an increasing rate except the society-II.
Mattigatti (1990) studied the performance of milk producer’s cooperative societies
and their impact on dairy farming in Dharwad district. The secondary data required for the
study was collected from the various annual reports of milk producer’s cooperative societies
for the period from 1986-88.
 He opined that, both the physical and financial indicators of the societies showed
significant growth in their values. The above average societies have already progressed with
higher values for the indicators as compared to below average societies, while below average
societies showed a greater rate of growth, hence, he concluded that over the period of time all
these societies would contribute to the overall development of the societies.
Mishra (1990) studied the working capital management in the Orissa state
cooperative Milk Producer’s Federation Ltd. (OM FED). He reported that the investment in
working capital in relation to the total investment was considerably very low. The federation
relied heavily on long term funds during the first half of the period under study. Whereas it has
not relied much on long term funds during the later part of the period under study. The
federation has experienced either shortage of working capital or had the problem of excess
working capital during the entire period of study. The federation did not follow any uniform
policy with regard to the determination of working capital investment.
Sharma (1997) studied the milk industry through co-operative unions – A study of
Godavari cooperative dairy. He concluded that it is highly essential to improve the financial
viability and self-financing ability. Otherwise, the very purpose and spirit of the cooperative
movement is defeated. The successful operation of the Godavari cooperative dairy depends
largely on the ability to serve the consumers in the best possible manner by reducing fixed
cost burden. It should adopt a most flexible policy to accommodate the suggestions made
from time to time by the researcher and also by the local consumer council.
Ray (1997) conducted study on performance of dairy cooperatives in Tripura – A
case study. In his study he concluded that the primary societies are on the norms of dilemma.
The picture will be discernible if attention is concentrated on the number of societies with no
profit and no loss. Incessant growth of these societies is a cause of concern to the whole milk
cooperative setup as well as the milk movement in the state because available information
indicates that bulk of these societies are dormant in nature and percentage of such dormancy
is going high over the time.
Kale et al. (2000) studied the financial position, working and operational efficiency of
23 dairy co-operatives in Raigad district of Maharashtra. They studied the economic efficiency
through income expenditure ratio, expenditure income ratio, rate of return on capital and rate
of turnover ratios. They concluded that (i) the societies had low owned capital and were
dependent on borrowing from financial institutions (ii) even though the working capital of the
dairy co-operatives was low, their turnover was high because dairy cooperative did not make
payment to milk producers from their own funds.
Rajage (2009) conducted the study on an economic analysis of cooperative milk
union in Sangli district. The study revealed that as union being at the block levels, it has
remained out of the Operation Flood scheme. So the present development is without any
external financial and technical help. Though, the union is headed by the state minister, yet it
is totally devoid from politics and sound principles of management are evident in its
functioning. But, in the global and private economy the present milk union is in profit and is
therefore a successful cooperative union in the state.
Sarkar and Ghosh (2010) conducted the study on constraints of milk production in
cooperative and non-cooperative dairy farms at West Bengal. They reported that, the
constraints that co-operative and non-cooperative dairy farms face in expanding milk
production have been reported based on the field study on some cooperative and non-
cooperative dairy farms in West Bengal. The study showed that, the non-cooperative farms
face major constraints and high severity as compared with cooperative farms in expanding
milk production. The study has suggested that for expanding milk production and the
expansion of cooperative dairy farms other than non-cooperative dairy farms may overcome
most of these constraints.

2.2 Cost and returns structure in milk production

Kumar and Rout (1974) studied the economic response of feed on milk production for
different types of feeds of dairy cows in Haryana. They found that feed was the most
significant factor influencing the milk yield. Feed cost accounted for 60-70 per cent of the total
cost of milk production.
 Chhikara et al. (1975) studied the relative efficiency of different types of milch animals
in Jind milk plant of Gujarat. They fitted Cobb-Douglas production function to estimate
marginal value productivities and milk production (input output details of milch animals). They
concluded that, the use of green fodder, dry fodder, concentrates and human labour had
explained about 45.93 and 90 per cent of variation in the milk output of cow, murrah buffalo
and cross bred cow respectively. The net return over the variable cost was highest for
crossbred cow, followed by murrah buffalo and cow. The total cost of milk production in
lactation was Rs 1795, Rs 3340 and Rs 2687 for the cow, murrah buffalo and crossbred cow
respectively.
Parthasarathy (1975) studied the economics of milk production and trade selecting
hundred dairy farmers supplying milk to the Integrated Milk Project (I.M.P), Vijayawada,
Krishna district of Andhra Pradesh. The input-output ratios and cost components were
analyzed. The study revealed that the average input-output ratio was 1.31 per animal and the
average yield was 2024 litres per lactation. The total cost of maintenance was Rs 3112 and
85 per cent of its cost was mainly on feeds. Most of the milk trading was with private agencies
and only one fourth was with I.M.P.
Madhava Swamy (1982) studied the comparative economics of production of local
and graded research buffaloes in Kurnool district of Andhra Pradesh. He estimated the
relative share of crop and livestock production in total gross farm income of small and
marginal farmers. Costs and returns of crops besides the cost of dairying, feed, concentrates
and milk yield pertaining to animal maintained were gathered. The study revealed that, the
graded murrah buffaloes yielded higher net returns by Rs 258 than the local breed. The cost
of production per litre of milk of local buffalo was Rs 1.50 as against Rs 1.30 in graded murrah
buffalo. It was revealed that out of the total gross farm income, nearly 48 per cent of higher
net returns were contributed due to livestock production as compared to crop production.
Sambasiva Rao (1985) studied the factors affecting milk production in Nagarajuna
sagar project command area of Andhra Pradesh. The Cobb-Douglas type of production
function was used to express the relationship between the average milk yield per day and
value of dry fodder, green fodder, concentrates per animal per day, number of lactations
completed, labour hours used per animal per day, value of animal (in rupees) and age of
animal. He observed that the inputs like green fodder and concentrates were the principal
factors affecting the milk production in all the size groups of farmers and estimated marginal
value products of green fodder and concentrates were greater than factor cost implying that
all the farmers were under utilizing these two inputs. He concluded that, the use of green
fodder and concentrates increased the milk yield and regarding labour, only marginal farmers
were utilizing in an efficient manner.
Sharma and Singh (1993) conducted study on resource productivity and allocation
efficiency in milk production in Himachal Pradesh. The study revealed that the concentrate is
the most important input affecting milk production. The regression coefficients of this input
were positive and statistically significant in all the equations fitted indicating that the farmers
can increase their milk output by feeding more concentrates to the animals on both the
groups of households. The regression coefficients of green fodder and dry fodder were also
positive and significant in most of the equations fitted. The coefficient of stage of lactation was
significantly negative for all the breeds of animals. The analysis indicated that milk yield was
higher in the winter season than in the summer and rainy season. The optimization of
resources with the existing capital indicated the possibility of increasing the milk output in
cross-breed cows and buffaloes by diverting a part of funds from green fodder, dry fodder and
labour to concentrates. The final analysis suggested a significant scope for raising milk
production by readjustment of feed inputs in all the seasons on both the beneficiary and non-
beneficiary households.
Bijai Kumar et al. (1997) conducted study on economic feasibility of dairy financing
under IRDP for weaker section of Azamgarh district (Uttar Pradesh). They revealed that most
of the borrower households were found to be defaulters. It was also reported that gross
income generated by non-defaultes group in both category was higher compared with
defaults group of some category. Average return was found favourable. Repaying capacity
was favourable for non-defaulter as compared with defaulter group of some category.
 The borrower households did not have adequate risk bearing ability. It was even
negative in case of defaulter group of marginal farmers. Net present value showed to be
positive in all cases, thus showing favourable situation for dairy enterprises. Benefit cost ratio
was also more than this. Thus indicating favourable, situation for dairy investment. Pay back
period was showing favourable situation for non-defaulters of both category where repayment
was scheduled for 3 years.
Biradar (1999) employed break even analysis technique in dairy enterprise in Udyir
taluk, Lathur district of Maharashtra. He observed that, the break even milk production among
beneficiaries was 1291 litres at the given price of milk i.e., Rs 7.23 further, the average BEP
price per litre of milk was Rs 7.55. He concluded that, either milk producers should able to
procure 1291 litres for BEP level or the price should be raised from Rs 7.23 to Rs 7.55. The
prices paid to milk producers were not remunerative.
Sudheer et al. (1999) studied comparative economics of milk production in organized
and unorganized sectors. They concluded that dairy co-operatives have been considered as
viable institutions for rural development which have the capacity for generating employment
and income among rural livestock owners. The present study was carried out to analyse the
average cost of production of milk based on different cost concepts and to workout the
economics of milk production in an organized sector (members of milk co-operative societies)
and an unorganized sector (non-members and co-operative societies).
Prasad (2003) studied the buffalo milk production function for the semi-arid tract
(Ranga Reddy district) of Andhra Pradesh. In his study he revealed that the estimated milk
production function incorporating breed dumming for the overall situation suggested that the
lactation number, quantities of green fodder and dry fodder as well as labour used should be
kept at a higher level than that of the local buffalo, if the milk yield of graded and murrah
buffaloes are to be increased.
Dixit et al. (2004) studied the economics of milk production in five agro climatic zones
of Kerala. The study indicated that bovine husbandry forms an important component of the
typical homestead-farming situation in Kerala. The crossbreeding of cattle has resulted in the
spectacular performance of dairy sector in the State.
Jayachandra Reddy et al. (2004) conducted a comparative study of economics of
milk production in three States, viz., Chitoor district of Andhra Pradesh, Erode district of Tamil
Nadu and Kolar district of Karnataka. The study covered aspects relating to the existing cost
structure of milk production, profitability of crossbred dairy cows in the three States under the
changed socio-economic-political scenario and also suggested methods to improve the
viability and profitability of these enterprises. The net profitability varied from 43 per cent in
Tamil Nadu, 70 per cent in Andhra Pradesh and 83 per cent in Karnataka. The study
highlighted the fact that higher fat content provides higher prices, as milk is priced based on
fat and Solid-Not-Fat (SNF) content by dairies. Hence, proper scientific breeding procedure
needs to be followed to improve the fat content in the milk as well as milk production per
animal.
Neeraj Rao et al. (2004) studied the economics of milk production in Kanpur (dehat)
district of Uttar Pradesh. The study revealed that the total maintenance cost of a milch animal
per lactation has increased as farm size has increased. On an average, the maintenance cost
of milch animal during a lactation period came to Rs 10278. Amongst all costs incurred, the
labour charges accounted for the highest share followed by fodder and concentrates. The
gross income from milk production was higher on large farmers because of excess utilization
of concentrates by large farmers. The input output ratio was highest on small farmers and it
was 1:1.31. The elasticity of production for fodder was highest followed by human labour and
concentrates for all farms.
Singh and Rekha Dayal (2004) studied the economics of production and marketing of
milk in Uttar Pradesh. The results of the study indicated that the feed and fodder cost was the
most important item of the total maintenance cost accounting for 55 to 65 per cent of the total
cost in zone-I and 51 to 66 per cent in zone-II. The net profit per day of a milch buffalo was
very low due to the higher maintenance and low milk yield of milch buffalo. The net profit of
milk production per buffalo per day was observed to be higher in the case of small size group
due to higher milk yield of milch buffaloes in this size group as compared to medium and large
herd size groups in both the zones.
 The establishment of milk cooperative societies in the rural areas has positive impact
on the marketed surplus of milk. The study further showed that the milk vendor being an
important intermediary in milk marketing has made huge profits by adopting various types of
malpractices. Lender utilization of plant capacity was the major factor for incurring losses by
co-operative milk plant in fluid milk marketing.
Thakur and Singh (2004) conducted surveys in the year 2002-03 to assess the
energy and cost requirement for milk production in different commercial dairy farms in four
locations, viz., Maharajpur, Imaliya, Pariyat and Mohaniya, around the Panagar block of
Jabalpur district, representing the Kymore plateau and Satpura hills zone of Madhya Pradesh.
It was inferred that cattle raising was not only an important occupation for supplying the
nutritional diet to the people but it has also greater concern to uplift the socio-economic status
of the people related to agricultural sector. Likewise raising goats, cows, buffaloes and birds
as a supplementary occupation in the agricultural sector is apparently most economical for
the development of socio economic status of rural people particularly in weaker sections,
having small and marginal holdings or low investment capacity and tribal communities.
Srikanth (2007) studied the performance of dairy co-operatives and their impact on
milk production, income and employment in Kolar district. He observed that, the overall
physical indicators have an increasing trend except the number of employees working in the
societies and the profits of societies showed an increasing trend in both the areas. The share
capital, total sales value of milk also increased along with the increase in the members. The
societies of area-I dominated in all aspects. In the study area, the income generated from
non-members was less when compared to the members of the co-operative societies. Finally,
the employment generation of member respondents was more in both the areas when
compared with the employment created out of non-member respondents i.e. on an average
282.53 employment days from area-I as against 246.79 employment days from area-II.
Kumar and Singh (2008) studied the economics of milk production in cattle and
buffalo farming in Andaman and Nicobar Islands, from local cows, crossbred cows and
buffaloes maintained by different categories of farmers during 2005-06. The study showed
that, the total cost per day per animal was found to be ` 48.16, 64.98 and 58.60 for local
cows, crossbred cows and buffaloes respectively. Among the variable cost components, feed
cost accounted for about 83.56, 75.15 and 88.69 per cent, for the three species respectively.
Cost of milk production was found to be ` 18.49, ` 13.51 and ` 12.29 per litre respectively.
Negative relationship was observed between the total cost and cost of milk production and
the farm size in all the species. The average net income, family labour income and farm
business income were also computed for all the categories of farmers. It was observed that,
the crossbred cows and buffaloes were found more income remunerative than local cows in
the study area, mainly on account of better milk yield and better productive traits. The farmers
of Andaman and Nicobar Islands could get an additional source of income in their farms by
keeping few dairy animals, as it was found to be a profitable enterprise.
Wani and Wani (2010) studied the marketing of milk in various Agro-climatic zones of
Jammu and Kashmir. The study indicated that the crossbred cows were found to give higher
productivity than buffaloes and indigenous cows. Marketed surplus as percentage of total
production varied from 68 per cent in intermediate zone to 73 per cent in sub-tropics zone.
Overall, the sale price of milk has shown a highly erratic trend, irrespective of the zone. Per
capita milk consumption varied from 338 g/day in intermediate zone to 569 g/day in sub-
tropical zone and is higher in each zone than minimum quantity recommended by the Indian
Council of Medical Research (ICMR). The study of milk processing has revealed that, the
profit per litre in packaged milk was encouraging.

2.3 Impact of diary co-operatives on income and employment

generation
Singh et al. (1983) compared and analyzed monthly fluctuations in the prices of cow
and buffalo milk offered and quantity of milk procured by co-operatives, private and public
sector organizations, operated in three villages adopted under operation flood of Karnal. They
observed that, the private milk plant paid the lowest price per litre of milk during July to March
and the highest during April to May.
 Public sector paid higher price during July. Co-operatives price remained constant
and higher than public sector and equal to private plants during July 1980-1981. They
concluded that, the public and private sector organization could attract only about 17 per cent
of the total milk sellers and co-operatives, procured milk from about 45 per cent and the
remaining milk sellers sold to milk vendors, tea shops etc.
Dorsten (1986) conducted a study on the impact of the Kaira district cooperative milk
producers union on milk production in Kheda district of Gujarat. The study reported that,
although India possessed an enormous cattle and buffalo population, annual milk production
was found to be very low. The average annual milk yield per cow was about 504 kg. One of the
major constraints was supply and quality of feeds and fodder. By the year 2000 it was expected
that there would be short fall of concentrates, 19.8 MT of green fodder and 16.2 MT of dry
fodder. The shortage was expected despite the declining trends in the dairy cattle population.
Bhanja and Dubey (1987) examined the critical factors in organization of dairy co-
operatives by selecting twenty one primary milk producers cooperative societies covering
three milk production zones in Mehasana district of Gujarat. They observed that, the societies
were successful in the cases of members who joined a society besides economic reasons
and realization of social benefits. Milk producers who were selling through milk vendors had
came to know some malpractices made by vendors.
Patil (1991) studied the performance of the KMF (Karnataka Milk Federation) and its
impact on dairy development in Karnataka. He observed that, the milk procured (in tones)
increased by 2695 per cent during KDDC (Karnataka Dairy Development Cooperation) period
and 190.41 per cent during KMF. However, the overall per cent increase was around 80.18
per cent. Possible reason for such high increase in milk procurement were, viz. the
considerable rise in registration and Dairy Co-operative Societies (DCS) commissioned as
well as the number of milk routes made operational, which has increased the Dairy Co-
operative Societies (DCS) commissioned and milk routes operational by 25.45 and 7.21 per
cent respectively.
Thakur (1996) studied the impact of dairy development through milk co-operatives in
Gujarat. It was observed that, the landless people earn as much as 65-70 per cent and small
farmers earn more than 25-30 per cent of the total income from dairying. The cash income
obtained continuously from the sale of milk can be used for better management of milch
animals and for the purchase of improved agricultural inputs to some extent which helped the
farmers in increasing their total income.
Ranjitkumar and Sharma (1999) studied the impact of dairy co-operatives on the rural
economy in Nalanda district. The study revealed that, the higher productivity of milch animals
(local cows and buffaloes) for households within the co-operative programme. The dairy
enterprise contribution to total family income was 28 and 20 per cent for beneficiary and non-
beneficiary households respectively. The dairy enterprise provided an employment of about
217 and 210 days per year for family members of beneficiary and non-beneficiary
households, respectively. It was concluded that the rural dairy co-operative society has been
successful in improving the socio-economic conditions of milk producer households,
especially the weaker households.
Rupendrakumar et al. (1999) conducted a study on socio-economic characteristics of
dairy farmers associated with village dairy co-operatives in Western parts of Uttar Pradesh.
Dairying was the secondary occupation for all, but 5 per cent of the respondents had primary
occupation as ‘farming’. The main dairy animals recorded were buffaloes, although some of
them also possessed a few crossbreed cattle. Types of farming implements and equipment
used were also identified. In terms of land holdings, most of the respondents were either
small (33.33%) or medium (33.33%) farmers (the other categories being land less, marginal
or large). All but 22.22 per cent of the respondents had studied upto high school level or
above and none were illiterate.
Reddy (2000) studied the employment opportunities and the standard of living among
the rural folk and compared between arable farming, mixed farming and dairy farming
laborers in milk shed area of Vijayawada and the dry land area of Chitoor. They found that,
the mixed farming created 32 per cent of extra work as compared to arable farming. The dairy
farming created 45 per cent of extra work as against mixed farming and 92 per cent of extra
work as compared to arable farming.
 They also estimated that an additional employment for 129 days as compared to
mixed farming and 225 days as compared to arable farming for maintaining dairy farm.
Ramachandran (2004) studied the income and employment potential of dairy farming
in different stages in Kanyakumari district of Tamil Nadu. The study revealed that, the dairy
farming is an activity with great potential and has offered considerable scope for employment
and income generation in Kanyakumari district. The dairy farming gives employment
opportunities in the form of collecting dung, cleaning shed, watering and feeding animals,
grazing and cutting grass, milking, sale of milk, processing of milk and milk products. It was
found that the dairy constituted the major proportion of the cattle population in the sample
households. Cattle rearing occupied a pivotal place among women folk of the rural areas.
Thus, dairy farming plays the main source of employment and income generation in the study
area.
Sharma and Sharma (2004) carried out a study to estimate the contribution of dairy
and crop enterprises towards income and employment in relation to different size of holdings
in the semiarid region of Rajasthan. Dairy enterprise provided maximum employment of 338
man-days and crop farming provided 219 man-days. Per worker employment from crop and
dairy farming were 80 man-days and 123 man-days, respectively. Thus, dairy farming plays a
key role in increasing the employment and income in the semi arid tract of Rajasthan.
Sidhu and Bhullar (2004) studied the impact of dairy on income and employment in
Punjab. The study revealed that, the livestock economy especially dairy is considered to be
an economically viable alternative for increasing the income and employment in the farm
sector of Punjab. It was clear that, the contribution of livestock economy to the farm sector
has increased over time whereas the contribution of crop sub-sector to the agricultural growth
as well as NSDP has declined due to stagnation/fall in productivity of important crops, rise in
fixed cost and degradation of soil and water resources. The importance of dairy especially on
small and marginal farms has increased and the proportion of dairy to the total farm business
income on these farms has also increased. The economic sustenance of these farmers is
primarily dependent on dairy enterprise as it helps in utilizing their surplus family labour,
requires less land and water resources and provides cash income to meet their daily
consumption needs. The dairy sector has also helped in generating employment on small,
marginal and semi-medium farms despite fall in employment in crop production.
Sujatha et al. (2004) studied the market structure, price spread, marketing costs and
marketing efficiency for milk in the cooperative and private sectors of Andhra Pradesh. It was
found that, the price spread was less in private sector and hence the consumer price was
found to be less. The major constraints identified in milk marketing were high feed cost,
inadequate price for milk, poor credit facilities, disease outbreak, etc. Because of delay in the
payment of fee for the milk sold to the cooperative society, the farmers approached the
private firms. For enhancing the marketing efficiency of milk, infrastructure facilities like
chilling plant, pasteurization and dairy products processing plants have to be developed.
Usha and Narinder (2004) conducted a study on employment and income generation
through livestock based milk processing units in rural Haryana. The study revealed that, the
production of milk grew at the rate of 4.07 per cent per annum during 1980-1981 to 2000-
2001. Therefore, milk processing on commercial scale has a great potential in terms of
enhancing the income of the farmers by selling milk products in the expanding domestic and
international markets. The milk processing units on an average generated employment of
8.40 persons in Gurgaon and 5.86 persons in Jind district. The factories generated the
highest employment of about 14 persons in the former and 11 persons in the latter district.
The study highlighted that, the marketing of local products faced severe competetion from the
multinationals.
Vinod et al. (2004) conducted a study with reference to 120 respondents scattered in
six villages of two blocks in Rewari district of Haryana to analyze the nature of markets and
role of co-operatives in marketing of milk. It was observed that, on medium and large category
of farms the milk sold through cooperative society was found to be higher than the disposal
through milk vendors and directly to the consumers mainly due to more marketable surplus.
While on small farms the disposal was found to be almost equal, i.e., 35 per cent through milk
vendors and directly to the consumers and the disposal of milk through cooperative society
was less due to lower marketable surplus owing to smaller herd size.
 Deepti and Yadav (2007) studied the economic and nutritional impact of dairy co-
operatives in Haryana. The study was conducted to determine the economic and nutritional
impacts of women dairy co-operatives (WDC) scheme in 100 women involved in the dairy co-
operatives from Haryana. The direct and indirect impacts were assessed by a set of
Statements prepared on a three point continuum, increase and decrease with allotted scores
of 3, 2 and 1. The study revealed that under the direct economic impact 100, 51 and 60 per
cent of the respondents reported that their income has increased, while 79 per cent of women
beneficiaries reported that their investment level remained the same. Indirect economic
impact showed that women had increased control over their income and availability of money
to meet emergency needs and decreased their borrowing. It was observed that, the
expenditures on purchasing ghee and health care products for family members has
increased, but the amount of milk consumed by the female family members has decreased.
Khan and Jagatap (2007) conducted the study on dairying in Karnataka : A case
study of Gudagop milk producers cooperative society. They concluded that the dairying in
India has been very good sources of daily income for the farmers as well as the villagers.
Most of the villagers have been capable to improve their economic besides agriculture. The
schemes of the society have enabled the down trodden and weaker sections of the society to
meet out their minimum and daily expenditures, how they are leading comfortable and
respectful life. Modern or an advanced type of technique in dairying is cultivated in the village
in terms of purchasing and feeding the animals. The villagers are trained through the KMF
(Karnataka Milk Federation) in respective schemes and facilities especially in Dharwad.
Despite certain advantages some inconveniences are faced by the villagers. The price for
supply of milk is not reasonable as against the prices in market.
Anujkumar et al. (2008) studied the impact of Institute Village Linkage Programme
(IVLP) on dairying in Karnal, Haryana. They concluded that, dairying is an important
component of India’s rural economy contributing significantly towards the employment and
income generation. The overall impact of IVLP on herd size in both the systems had shown
23.38 per cent increase. The herd size increased from 6.194 to 7.642. There was 15.90,
26.72 and 33.87 per cent increase in milk yield of crossbred cows, nondescript cows and
buffaloes, respectively. The overall increase in average milk production and milk sale was
5.62 and 5.15 litres/day, respectively.
Padmakumar (2008) conducted a study on ‘turn’ around livestock revolution to meet
food security and safeguard natural resource in Varanasi. He discussed the growing livestock
production as a means of poverty alleviation in meeting food security and the harmonization
of production systems with the environment and ecology in India.
Subodhkumar et al. (2008) conducted a study on income and employment status
among self help group members in dairy husbandry at Faizabad. They observed that, the land
size, material possession, family education status and employment status were positively and
significantly correlated with the annual income. The employment status of SHG members was
positive and significantly correlated with the land size. The dynamic interplay of income and
employment generation has the potential for the socio-economic transformation of the rural
people irrespective of their age for sustainable dairy development.
Ramananda and Mahendra Kumar (2010) conducted the study on dairy cooperatives
: A stimulant for rural women. They reported that dairy cooperatives play significant role in
providing economic benefits to members. Women dairy cooperatives have forgotten the
concept of loyalty amongst the members in VMPWCS and major weakness of dairy
cooperatives is that they function, merely as milk vendor, purchasing milk from their members
and selling it to dairy plants in cooperative or other public sector organizations.
Shah and Dave (2010) studied the regional trends and drivers for future growth in
Gujarat State. They observed that, the State of Gujarat has historically been the front runner
in milk production activities. The State’s share in country’s milk production as well as per
capita availability of milk has been increasing consistently, ensuring not only food security but
also employment and livelihood sustenance in the rural areas. A phenomenal growth in milk
production of crossbred cows has been witnessed in the recent years, especially in the
Southern and Northern regions of the State. Historically, among the various factors
contributing to growth in milk production, incremental dairy animal population has been the
important factor.
2.4 Constraints in production and marketing of milk
Kulkarni (1979) opined that, the lack of sufficient milk collection of co-operatives in
the rural areas, malpractices in weighment and quality testing, inconvenient timings of milk
collection, spoilage during the rains and warm seasons and inadequate extension services
were some of the lacunae in milk collection from the producers.
Gopala Krishnaiah and Maroty (1988) studied the impact of primary milk producer’s
cooperative societies on beneficiaries in Nalgonda district of Andhra Pradesh. They reported
that primary milk producer’s cooperative society has not created much impact on its members
though expectation was on the positive side. However, awareness has been made among the
dairy farmers for improvement of their socio-economic conditions through group actions.
Singh and Prasad (1998) studied the dairy cooperatives in Bihar. They reported that
dairy cooperatives have mainly been engaged in milk trading and failed to create supporting
services like animal health, artificial insemination and feed supply in the project area on the
basis of detailed analysis, it may be concluded that the gain of dairy cooperatives are being
accrued by the economically and politically powerful rural elites and landless households of
lower costs are again left out of the net of the dairy cooperative system.
Subashchand et al. (1999) conducted a study on marketed surplus of milk in
Kurukshetra district of Haryana State. They observed that, the percentage of marketed
surplus in case of small farmers was marginally higher than the large farmers and that of the
summer season had a higher percentage of marketed surplus compared to the other
seasons. The marketed surplus was approximately 56 per cent of the total milk produced in
the region and the majority of the marketed surplus was procured by dairy co-operatives and
milk vendors. Among the factors influencing the marketed surplus of milk, both milk
production and seasonal dummies have a positive influence, while family size, land holding
and education level of the head of the household exerted a negative influence on marketed
surplus. It was seen that promoting dairy co-operatives and measures to augment milk
production might result in enhanced marketed surplus of milk in the region as well as in the
State.
Tiwari and Arya (2002) studied the critical factors in the functioning of successful and
unsuccessful milk producer’s cooperative societies in Bareilly district of UP. They reported
that the milk cooperative societies, were observed to be successful in the cases where
sincere polite and honest leadership with welfare attitude towards community was visible.
This study also indicates that the milk cooperative societies were more successful in remote
areas as compared to those near town or city where there is no better alternative to provide
market infrastructure for milk marketing. It was also observed that members of the society
should have been trained in the rules and regulations of the society as this would helped in
checking the malpractices and corruption which led the society to become defunct. Thus, it
can be concluded from the findings of this comparative study that cooperative movement is
more successful where there is a lack of infrastructural facilities available to the villagers and
where there is a lack of diversities in occupations as alternative avenues for income
generation are limited.
Sulaiman and Pillai (2006) conducted the study on an assessment of quality of
services of dairy co-operative in Kerala with special reference to Thiruvananthapuram district.
They reported that even though the dairy cooperatives are rendering services to member
farmers, the working of the societies is not up to the expectation. Majority of the member
farmers are not satisfied with the various efforts of the societies in improving the efficiency in
the marketing of milk produced by the farmer. The farmers still having problems in the area
are low procurement price of milk, partial collection of milk, indifferent attitude of the staff, lack
of transparency in the quality inspection of delay in getting sales products.
Tiwari et al. (2007) conducted a study on major problem of small holder buffalo
production farms in India. Their study aimed at determining the major problems of buffalo
production in the small farm holding and proposing appropriate, specific and target oriented
tension strategies to solve these problems. Buffaloes are the main pillars of Indian diary
industry, contributing over 54 per cent of the total milk produced in the country. Milk is mainly
produced in the unorganized sector, where in small and marginal farmers keep few buffaloes
and produce milk for self-consumption and sell the excess milk.
 The potential of such buffaloes is not fully harnessed. The major problems of these
farmers are high half mortality during the first 2 months, high incidence of diseases, delayed
maturity in helpers, shortage of green fodder, prevalence of non-descriptive breeds with low
milk productivity and low price remuneration of milk.
Satyanarayana (2008) in his paper on policy initiatives in micro finance for dairy
development from Lucknow described the policy initiatives in microfinance for dairy
development in India. It was established that promotion of dairy development under micro
finance should invariably ensure capacity building and imparting skills to rural women and
dairy producers regarding scientific management of milk animals i.e. selection of milk animals
and good breeds, proper housing, balanced feeding, disease prevention and vaccination,
timely and regular breeding, adoption of clean milk production and proper marketing of milk.
Paul and Chandel (2010) conducted a study on improving milk yield performance of
crossbred cattle in North-Eastern States of India. They observed that, the crossbreds hold the
solution to the milk-deficit problem of North-Eastern States of India. The proportion of
crossbred cattle in the regions was 13.33 per cent for the country as a whole. However, the
productivity of crossbred cattle, has been found considerably low (4.8 litre/day) in the region
as against the all India average of 6.4 litre/day of milk yield. It was found that the major factors
affecting the milk yield of cross bred animals in the N-E States are the technological and
socio-economic constraints, which could be addressed by adopting improved management
practices, better feeding practice, controlling of diseases and amelioration of the socio-
economic conditions of the farmers through training, education and enhancing access to the
funds. Addresser of these constraints will increase actual milk yield by about 66 per cent,
sufficient enough to meet the deficit of milk requirement in the region.
Thirunavukarasu et al. (2010) conducted a study on quantifying the economic losses
due to milk fever in dairy farms in Tamil Nadu. They revealed that, the milk fever affects dairy
animals usually within one or two days after calving, resulting in a huge reduction in milk
production and thus becomes economically most important. The study estimated the
economic losses arising from milk fever, based on the data collected from a random sample
of 557 milk fever affected bovines (516 cows and 41 she buffaloes) during 2005-08. For
assessing economic losses caused by milk fever, cost of medicines, veterinarian’s fee, cost of
additional labour utilized, loss due to reduction in milk output, cost of animals dead and culled
have been considered. The prevalence of milk fever has been found 13.67 per cent in cows
and 11.99 per cent in buffaloes across the study districts. The total loss was found to be `
1,068 per affected cow and ` 665 per buffalo. Looking to the prevalence of milk fever, the
population of milch cows and buffaloes and the per animal loss due to milk fever has been
estimated to be ` 40.62 crore in the State, which is a substantial damage to the dairy farming
community.
 3. METHODOLOGY
This chapter covers description of the study area, sampling procedure adopted,
nature and source of data collection, analytical techniques employed and concepts used in
the study.
3.1 Description of the study area
3.2 Sampling design
3.3 Nature and sources of data
3.4 Analytical tools and techniques employed
3.5 Terms and concepts used

3.1 Description of the study area

Haveri district is exactly in the center of Karnataka with equal distance from Bidar in
the far north to Kollegal in the far south. It is also known as the gateway district to the
Northern districts of Karnataka. It falls under the Northern Transitional Zone (Zone 8) of
Karnataka State. It is geographically lying within the interior of Deccan peninsular between
14°19' and 14°48' North latitude and between 70°15' and 75°50' East longitude. It is bound on
the North by Dharwad and Gadag districts, on the South by Shimoga and Davanagere
districts, on the East by Bellary district and on the West by Uttar Kannada district.
The geographical area of the district is 4,85,156 ha spread across 7 taluks, 19 hoblies
and 698 villages. The population of the district according to 2001 census was 14,39,116 with
1000:943 male to female ratio. Out of the total population of the district, 11,40,096 were in
rural area and the rest were in urban and semi urban areas. The overall population density of
the district is 298 per sq.km and the growth rate of population in the district was 13.40 per
cent during the past decade (1991-2001). The average annual rainfall (mm) is 752.80 and
average number of rainy days is only 61.
The general features of the study area for the year 2010-11 are presented in Table
3.1. The total geographical area of the Byadagi is 43656 hectares while Ranebennur taluk
has 90475 hectares. The number of households were found to be more in Ranebennur taluk
(54232) as compared to Byadagi taluk (23005). Total population of Byadagi taluk is 127944
while population density per square kilometer is 293.00. On the contrary, the population of
Ranebennur taluk was found to be 304990 and population density per square kilometer was
337. Literacy rate was found to be highest in Byadagi taluk (71.10%) as compared to
Ranebennur taluk (69.80%). The agricultural cultivators were found to be more in
Ranebennur taluk (30927) as compared to Byadagi taluk (21542). Actual rainfall of Byadagi
taluk (666 mm) was found to be marginally highesr when compared to Ranebennur taluk (611
mm). Normal rainfall in Byadagi and Ranebennur taluks were expected to 860.40 mm and
887.40 mm respectively. The number of commercial banks in Ranebennur taluk was 14 while,
in Byadagi taluk was 8. The number of co-operative societies in Ranebennur taluk were 196
as compared to Byadagi taluk (85). The number of regulated markets in both the taluks were
found to be same. The total cropped area in Ranebennur taluk (75975 ha) was highest when
compared to Byaagi taluk (37571 ha).
3.1.1 Land use pattern of study area
The land use pattern of study area is presented in Table 3.2. It can be observed that
net area sown accounted for 33169 ha in Byadagi and 64449 ha in Ranebennur taluk of total
geographical area. Around 3849 ha and 10614 ha area is allocated for forest land in Byadagi
and Ranebennur taluks respectively. Land put to non- agricultural uses occupied 2112 ha and
5771 ha of total geographical area in Byadagi and Ranebennur taluks respectively. Current
fallow, fallow other than current fallow and cultivable waste accounted for 762 ha, 885 ha and
190 ha in Byadagi taluk while, 3969 ha, 1311 ha and 552 ha in Ranebennur taluk
respectively. Barren and uncultivable land occupied around 501 ha in Byadagi taluk and 834
ha in Ranebennur taluk while, the permanent pastures formed 1109 ha in Byadagi taluk and
2417 ha respectively. Out of total geographical area, nearly 37571 ha of the area in Byadagi
taluk and 75975 ha in Ranebennur taluk was brought under cultivation.
Fig 1. Map showing the study taluks in Haveri District
 However area sown more than once accounted for 4402 ha in Byadagi taluk and
11526 ha in Ranebennur taluk respectively.
3.1.2 Cropping pattern of study area
The cropping pattern of study area is presented in Table 3.3. The total cropped area
of Byadagi taluk was found to be 37571 ha and 75975 ha in Ranebennur taluk respectively. In
Bydagi taluk, out of total cropped area, maize occupied major portion (16570 ha) followed by
cotton (11803 ha) and jowar (2992 ha). Similarly, maize (24436 ha) was found to be the major
crop grown in Ranebennur taluk followed by cotton (18437 ha), jowar (9184 ha) and paddy
(8982 ha). The other major crops grown in the study area were wheat, bengalgram, redgram,
groundnut, sunflower and sugarcane.
The soils of the district are predominantly red loamy soils, which are shallow in depth
and also some patches of black soils are also found.

3.2 Sampling design

3.2.1 Selection of milk union
The Haveri milk union was selected purposively to evaluate the performance of Milk
Producers’ Co-operative Societies (MPCS) in terms of milk production, income and
employment of farmer beneficiaries in irrigated and dry land areas of Haveri district.
3.2.2 Selection of study area
Haveri milk union has seven taluk headquarters under its jurisdiction. Of the seven
taluks in Haveri district, two taluks were identified for detailed study one based on highest
number of MPCS in irrigated area and another taluk based on highest number of MPCS in dry
land area. Accordingly, Byadagi and Ranebennur taluks were selected respectively for dry
land and irrigated areas.
From the selected taluks, the list of milk cooperative societies was prepared taking
into consideration of the average milk procurement were classified into two groups, based on
their average milk procurement as I) above average milk procurement societies and II) below
average milk procurement societies of Byadagi and Ranebennur.
Ten societies (MPCS) were selected from each selected taluk. In all, twenty societies
were selected from two taluks. From Byadgi taluk, out of ten societies (MPCS) selected, five
were above average milk procurement societies which were indicated as Byadagi I and
another five societies selected were below average milk procurement societies which were
indicated as Byadagi II. Similarly, from Ranebennur taluk, out of ten MPCS societies five were
above average milk procurement societies which were indicated as Ranebennur I and
another five societies were below average milk procurement societies which were indicated
as Ranebennur II. The list of MPCS selected for the study is shown in Table 3.6.
3.2.3 Selection of respondents
A list of dairy farmers who are members of the selected Milk Producer’s Cooperative
Societies was prepared with the help of secretaries of the MPCS. Among the members in the
list, 60 dairy farmers from each taluk, of which 30 each from above and below average milk
procurement societies were selected. Similarly, from Ranebennur taluk, 60 dairy farmers were
selected following the above criteria. In all, 120 dairy farmers were selected in the study area
for detailed investigation. The details of selection of respondents is given in sample tree
(Fig. 2).

3.3 Nature and source of data

3.3.1 Primary data
For evaluating the objectives of the study, both primary and secondary data were
collected. The primary data were collected from the respondents through pre-tested schedule
prepared for the purpose.
Table 3.1. General features of study area

Sl.
Particulars Byadagi Ranebennur
No.

1. Total geographical area (ha) 43656 90475

2. Number of households 23005 54232

3. Total population (No.) 127944 304990

4. Population density (persons/sq. km) 293 337

5. Literacy rate (%) 71.10 69.80

6. Agricultural cultivators 21542 30927

7 Actual rainfall (mm) 666 611

8. Normal rainfall (mm) 860.40 887.40

9 Commercial banks (No.) 8 14

10 Number of co-operative societies 85 196

11. Number of regulated markets 3 3

12. Total cropped area ( ha) 37571 75975

Source : District at a Glance of Haveri, 2010-11

Table 3.2. Land use pattern in study area

(ha)

Sl.
Land use category Byadgi Ranebennur
No

1 Forest 3849 10614

2 Land put to non-agriculture use 2112 5771

3 Barren and uncultivable land 501 834

4 Cultivable waste 190 552

5 Permanent pastures and other grazing land 1109 2417

6 Land under miscellaneous tree crops and groves 9 100

7 Current fallow 762 3969

8 Fallow other than current fallow 885 1311

9 Net area sown 33169 64449

10 Area sown more than once 4402 11526

11 Gross cropped area 37571 75975

Source : District at a Glance of Haveri, 2010-11

Table 3.3. Cropping pattern in study area

(Area in ha)

Sl.
Crops Byadagi Ranebennur
No.

1 Paddy 775 8982

2 Wheat 5 47

3 Jowar 2992 9184

4 Maize 16570 24436

5 Bengal gram 32 211

6 Red gram 144 1145

7 Groundnut 262 1070

8 Sunflower 397 1080

9 Cotton 11803 18437

10 Sugarcane 117 542

11 Others 4474 10841

12 Total cropped area 37571 75975

Source : District at a Glance of Haveri, 2010-11

Table 3.4. Taluk wise number of Dairy Cooperative Societies (DCS) in Haveri district
(2010)

Sl. Taluk DCS (Nos)

No.

1 Haveri 68 (16.50%)

2 Byadgi 48 (11.65%)

3 Ranebennur 51 (12.38%)

4 Savanur 59 (14.32%)

5 Hirekerur 111 (26.84%)

6 Shiggaon 42 (10.19%)

7 Hangal 33 (8.01%)

Total 412 (100.00%)

Source: Karnataka Milk Federation (KMF), Dharwad (2009-10)

Table 3.5. Taluk wise quantity of milk procurement by Dairy Cooperative Societies in
Haveri district during 2010-11

Sl. Taluk Quantity of milk procured %

No. (Litres)

1 Haveri 18,04,925 14.05

2 Byadgi 16,61,845 12.94

3 Ranebennur 11,20,915 8.73

4 Savanur 1,108,505 8.63

5 Hirekerur 58,81,975 45.81

6 Shiggaon 7,75,990 6.04

7 Hangal 4,83,260 3.80

Total 1,28,37,415 100.00

Note: Figures in the parentheses indicate percentage to the total

Table 3.6. List of Milk Producer’s Cooperative Societies (MPCS) selected in the study
area

Name of the
Sl. No. of
Particulars society & its
No. farmers
location
1 Byadgi I a) Situation – Dry area
b) Taluk – Byadgi
c) Above average milk 30
procurement MPCS
MPCS – I Hireanaji 6
MPCS – II Kummur 6
MPCS – III Masanagi 6
MPCS – IV Sudambi 6
MPCS – V Kerawadi 6
Byadgi II (d) Below average milk 30
procurement MPCS
MPCS – I Kadarmandalagi 6
MPCS – II Anoor 6
MPCS – III Angaraghatti 6
MPCS – IV Shidenoor 6
MPCS – V Kollapur 6
2 Ranebennur I a) Situation – Irrigated area
b) Taluk – Ranebennur
c) Above average milk 30
procurement MPCS
MPCS – I Halageri 6
MPCS – II Benakana Konda 6
MPCS – III Sunakal Bidari 6
MPCS – IV Hediyala 6
MPCS – V Guddada 6
Hosahalli
Ranebennur II (d) Below average milk 30
procurement MPCS
MPCS – I Billahalli 6
MPCS – II Nittur 6
MPCS – III Guddada 6
Bevinahalli
MPCS – IV Chikkamaaganur 6
MPCS – V Kuppelur 6
Overall 120
Fig 2. Flow chart of samples selection
 The information relating to the input output data on milk production, age of milch
animal, number of hours spent on grazing, cost of dry fodder, green fodder, concentrates,
labour, veterinary and medicine charges and maintenance charges, total annual milk yield,
income from other sources, etc., was collected by personal interview method for the year
2010.
3.3.2 Secondary data
The secondary data on various activities of the MPCS selected for the study were
collected from different sources for a period of thirteen years from 1997-98 to 2009-10.
The data relating to the financial aspects of the societies such as balance sheets,
profit and loss account, receipts and payments statements and trading accounts were
abstracted from the annual reports and audit reports of societies.

3.4 Analytical tools and techniques employed

3.4.1 Tabular analysis
The technique of tabular analysis was employed to study the performance of selected
Milk Producer’s Cooperative Societies, income and employment of farmers beneficiaries and
to study the cost and return structure of milk production of dairy farmers.
Averages and percentages were worked out using both primary and secondary data
to draw meaningful inferences.
3.4.2 Compound growth rate analysis
Growth of any variable indicates its past performance. The analysis of growth is
usually used in economic studies to find out the trend of a particular variable over a period of
time. It clearly indicates the performance of the variable under consideration and hence it can
be very well used for making policy decisions. The growth performance of the selected MPCS
in terms of physical and financial indicators were analyzed using the exponential growth
function of the form:
Yt= abt ut………………………. (1)
Where,
Yt = Physical and financial indicators
a = Intercept
bt = Regression coefficients
t = Time period in years which takes values (1, 2, …, n)
ut = Disturbance term for the year t
The equation was transformed into log linear form for estimation purpose and was
estimated using Ordinary Least Square (OLS) technique. The compound growth rate (g) in
percentage was then computed from the relationship.
g = {Antilog of ln (b-1)} x 100.
The significance of the regression coefficient was tested using the ‘t’ statistic.
3.4.3 Financial ratio analysis
The financial ratio analysis was considered useful in evaluating the financial
performance of the dairy co-operatives. The ratio analysis technique was employed to study
the solvency, liquidity, profitability, turn over and efficiency of the dairy co-operatives. The
ratios used in the analysis are described below.
1. Tests of solvency

Long term loans

Debt-Equity ratio = ——————————————
(Share capital) + (Reserves)
 2. Tests of liquidity

Current assets
a) Current ratio = ——————————————
Current liabilities

(Current assets) – (Inventory)

b) Quick/Acid test ratio = ————————————
Current liabilities

3. Tests of profitability

Net profits
Net profits to total assets ratio = ——————————
Total assets

4. Tests of Turnover

Total sales
a) Working capital turnover ratio = ——————————
Total working capital

Annual sales
b) Inventory turnover ratio = ——————————
Average inventory

Average inventory is the sum total of opening stock and closing stock.
5. Tests of efficiency

Operating expenses
Operating ratio = —————————— x 100
Sales

3.5 Important terms and concepts used in the study

The various concepts used in the study are as follows.
Dry fodder: Jowar, ragi and paddy straw were the main dry fodder fed to milch animals in the
study area. The data with regard to the actual quantities fed to animals over the year were
collected from the respondents and their market values were calculated.
Green fodder: The quantity and value of green fodder supplied to each animal annually was
collected from the sample respondents in the study area. Green fodder included green grass,
jowar straw, burmuda grass, elephant grass etc. The prevailing market value for the different
green fodders was used to calculate the cost of green fodder.
Concentrates: Concentrates are the feeds, which have a comparatively high digestibility.
Concentrates provide protein for the growth of animal besides influencing the fat content in
milk. In the study area, mixtures of groundnut cake, rice brans, feed mix supplied by the
society and which is sold in market were mainly fed to milch animals. Data regarding the
actual quantities of each item of concentrates fed over the years were collected and value
was computed at market prices.
Labour : In the study area, the respondents employed all kinds of workers men, women and
children for grazing their animals and also for cleaning the animals, cattle yard and milking.
 The labour cost, which prevails in the study area, was considered to calculate the
cost of the labour. The total cost of labour for each heard was divided by the number of milch
animals to get the labour charges per animal.
Milk yield: In order to estimate the annual milk yield for each animal, the following procedure
was followed.
The average daily milk yield during the initial, peak and the last phase of lactation
period were obtained. The total annual milk yield was obtained by adding the total milk
produced in each of these three phases and the average price received per litre was
multiplied by total yield to get the value of milk yield per lactation.
Cost and return structure: The information relating to costs incurred on various items of
expenditure such as green fodder, dry fodder, concentrates, veterinary charges, maintenance
charges, total milk produced, price obtained were collected to determine the costs and returns
from milk production.
Member
A member of the society is one who is having dairy unit and marketed milk thorough
Milk Producers Cooperative Society by becoming member of the society.
Above average milk procurement societies (Byadgi)
The societies with milk procurement above the average quantity of milk procured
(34621.77 lts/year) in the study area.
Below average milk procurement societies (Byadgi)
The societies with milk procurement below the average quantity of milk procured
(34621.77 lts/year) in the study area.
Above average milk procurement societies (Ranebennur)
The societies with milk procurement above the average quantity of milk procured
(21978.72 lts/year) in the study area.
Below average milk procurement societies (Ranebennur)
The societies with milk procurement below the average quantity of milk procured
(21978.72 lts/year) in the study area.
DCS
Dairy co-operative societies.
 4. RESULTS
This chapter presents the results of the study in accordance with the specific
objectives of the study and are covered under the following sub-headings.
4.1 Performance of dairy co-operatives in Haveri district.
4.2 Cost and returns structure of milk production.
4.3 Milk production, income and employment of farmer beneficiaries.
4.4 Perception of member farmer regarding functioning of MPCS

4.1 Performance of dairy co-operatives in Haveri district

4.1.1 Socio-economic characteristics of the sample farmers
The socio-economic profile of the respondents with respect to age, family size,
education level and land holdings are p
resented in Table 4.1 and Fig. 3. The study area was categorized into Byadagi and
Ranebennur. The average age of the farmers of Byadagi was 45.20 years while, that of
Ranebennur was 48.20 years. In case of Byadagi taluk, it was observed that about 38.33 per
cent of sample respondents were found to be illiterates while, in Ranebennur nearly 36.67 per
cent of respondents were found to be illiterates. The education level of respondents were
classified into primary, secondary and college level. It was observed that in Byadagi, majority
of the respondents were having education up to primary (37.00%) followed by secondary
(20.00%) and college (6.67%) while, in Ranebennur also majority were having education up
to primary (40.00%) followed by secondary (13.33%) and college (10.00%) level respectively.
The average family size of the sample respondents in Byadagi was 7.33 members
and it was relatively less in Ranebennur (6.02 members). The average size of the land
holding of the respondents in Byadagi was 3.37 ha and in Ranebennur it was 3.02 ha.
Majority of the sample farmers in Byadagi dependent on dryland farming (70.33%) as
compared to the sample farmers in Ranebennur (59.27%). On the contrary, nearly 29.67 per
cent of land holding in Byadagi was found to have irrigation facility where as in Ranebennur,
about 40.73 per cent of the land holdings are having irrigation facility.
4.1.2 Livestock Situation and MPCS’s wise distribution of sample farmers
with live stock type
The sample farmers were divided into two groups as farmers of Byadagi (I and II) and
Ranebennur (I and II) respectively. The distribution is presented in Table 4.2 and Fig. 4.
The total sample comprised of 120 farmers out of which 60 farmers were from
Byadagi (I and II) and 60 farmers were from Ranebennur (I and II) respectively.
In Byadagi I, the selected farmers of milk procurement societies possessed totally 99
milch animals of which 54 were buffaloes and 45 were cows, accounting for 53.55 per cent
and 45.45 per cent respectively, whereas farmers of Byadagi II possessed 95 milch animals
of which 49 were buffaloes and 46 were cows accounting for 51.58 per cent and 48.42 per
cent respectively. Totally, 194 milch animals were considered for data collection in Byadagi (I
& II). In Byadagi area, out of 194 milch animals, the buffaloes found to be 103 and cows found
to be 91. In case of Byadagi I, the average number of buffaloes were found to be 1.80 and
cows (1.50). Totally in Byadagi I, the sample households have possessed on an average 3.30
animals. Similarly, in Byadagi II, the average number of animals were 3.17, of which 1.63
were buffaloes and 1.53 were cows.
In Ranebennur area, the sample respondents possessed 176 milch animals of which
109 were buffaloes and 67 were cows. Among Ranebennur I and II, the sample respondents
of Ranebennur I (92) possessed more animals as compared to Ranebennur II (84). In
Ranebennur I, about 70.65 per cent of milch animals were found to be buffaloes while, 29.35
per cent were cows of the totally possessed 92 milch animals.
Table 4.1. Socio-economic profile of sample farmers in the study area

Sl. Byadagi (Overall) Ranebennur (Overall)

Particulars
No. (n=60) (n=60)
1 Average age 45.20 48.20
2 Average family size (No)
(i) Male 2.5 2.28
(34.11) (37.87)
(ii) Female 2.43 2.12
(33.15) (35.21)
(iii) Children 2.4 1.65
(32.74) (26.92)
Total 7.33 6.02
(100.00) (100.00)
3 Education level (No)
(a) Illiterate 23 22
(38.33) (36.67)
(b) Primary 21 24
(37.00) (40.00)
(c) Secondary 12 8
(20.00) (13.33)
(d) College 4 6
(6.67) (10.00)
Total 60 60
(100.00) (100.00)
4 Land holding (ha)
(a) Dry area 2.37 1.79
(70.33) (59.27)
(b) Irrigated area 1.00 1.23
(29.67) (40.73)
Avg. size of land holding 3.37 3.02
(100.00) (100.00)
Note: Figures in the parentheses indicate percentage to the total
 Ranebennur (Irrigated area) (n=60)
Byadagi (Dry area) (n=60)

Male Female Children

Male Female Children

32.74% 34.11%

26.92% 37.87%

33.15%

35.21%
Average family size (No)

Average family size (No)

Fig. 3. Socio-economic profile of sample farmers in the study area

Average family size(No)

Ranebennur (Irrigated area) (n=60)

Byadagi (Dry area) (n=60)

Illiterate Primary
Illiterate Primary
Secondary College
Secondary College

6.67%
10%
38.33% 36.67%
20%
13.33%

37%
40%
Education level (No) Education level (No)

Education level (No)

Ranebennur (Irrigated area) (n=60)

Byadagi (Dry area) (n=60)

Dry area Irrigated area

Dry area Irrigated area

29.67%
40.73%

59.27%
70.33%

Land holding (ha) Land holding (ha)

Land holing (ha)

Fig 3. Socio-Economic profile of sample farmers in the study area

Table 4.2. Livestock situation and MPCS’s wise distribution of sample farmers

Livestock types
Sl. Number of
N Taluk MPCS sample Total
o. households Buffaloes Cows
(No.) (No.)

1 Byadgi Byadagi I 54 45 99
30
(Overall) (54.55) (45.45) (100.00)

Avg. no. of
1.80 1.50 3.30
dairy animals
49 46 95
Byadagi II 30
(51.58) (48.42) (100.00)
Avg. no. of
1.63 1.53 3.17
dairy animals
103 91 194
Sub total 60
(53.09) (46.91) (100.00)
Ranebennur I
2 Ranebennur 65 27 92
30
(Overall) (70.65) (29.35) (100.00)

Avg. no. of
2.17 0.90 3.07
dairy animals
Ranebennur 44 40 84
30
II (52.38) (47.62) (100.00)
Avg. no. of
1.47 1.33 2.80
dairy animals
109 67 176
Subtotal 60
(61.93) (38.07) (100.00)
Grand total 212 158 370
120
(57.30) (42.70) (100.00)
Note: Figures in the parentheses indicate percentage to the group total
 Below average milk procurement societies
Byadgi (Dry area)
Byadagi II
Byadagi I Buffaloes
Buffaloes
Cows
Above average milk procurement societies Cows

45.45%
48.42%

54.55% 51.58%

Fig. 4. Livestock situation and MPCS’s wise distribution of sample farmers

Ranebennur (lrrigated area)

Ranebennur II
Ranebennur (Irrigated area) Buffaloes
Ranebennur I Cows
Buffaloes
Cows

29.35%

47.62%

52.38%

70.65%

Fig 4. Livestock situation and MPCS’ s wise distribution of sample farmers

 On the contrary, the sample respondents in Ranebennur II possessed totally 84
animals of which 44 were buffaloes and 40 were cows respectively. The average number of
animals in Ranebennur I were found to be 3.07 of which 2.17 were buffaloes and 0.90 were
cows. On the other hand, in Ranebennur II, sample households have possessed on an
average 1.47 buffaloes and 1.33 cows comprising 2.80 animals.
From both the study area, 370 milch animals were considered for the study, out of
which the respondents possessed 212 buffaloes and 158 cows accounting for 57.30 per cent
and 42.70 per cent, respectively. In all, the farmers in the study area possessed more number
of buffaloes (212) as compared to cows (158).
4.1.3 Performance of selected Milk Producer’s Co-operative Societies.
4.1.3.1 Compound growth rate of selected physical and financial indicators of MPCS
operating under Byadagi
Physical indicators
The compound growth rate of different physical indicators of Byadagi is presented in
Table 4.3. In Byadagi I, the growth rate of membership was 1.44 per cent and it was highly
significant. The growth rate of total number of employees found to grow annually 1.52 per
cent. The growth rate with respect to total milk procured showed negative growth of (-0.34%).
Where as in case of Byadagi II, the growth rate of membership was 1.52 per cent per annum
and it was highly significant. The total number of employees also noticed a growth rate of 0.25
per cent. The growth rate with respect to total milk procured showed negative growth rate of -
12.88 per cent.
In over all Byadagi, the growth rate of membership was 1.48 per cent per annum and
it was highly significant and the total number of employees also noticed the growth rate of
0.79 per cent and it was highly significant. The growth rate with respect to total milk procured
by Byadagi showed negative growth rate of -6.67 per cent.
Financial indicators
The results of compound growth rate analysis of different financial indicators of
Byadagi are presented in Table 4.3. In case of Byadagi I, the growth of share capital was 4.60
per cent and it was significant. With regard to the growth rate of total sales value of milk, total
liabilities and fixed assets were 5.31 per cent, 15.61 per cent and 12.57 per cent respectively
and were highly significant. The growth rate with respect to net profit and net worth showed
negative growth of 0.58 per cent and -6.81 per cent respectively. Where as in below average
milk procurement societies of Byadagi II, the growth of share capital had positive trend of 2.36
per cent, with regard to the growth of total sales value of milk, total assets, total liabilities and
net profit were found negative growth rate of -2.96 per cent, -0.85 per cent, -1.72 per cent and
-10.39 per cent respectively. The growth rate with respect to net worth and fixed assets
showed growth of 1.15 per cent and 7.38 per cent respectively.
In over all Byadagi, the growth of share capital was 3.18 per cent per annum and it
was significant. With regard to the growth of total sales value of milk, total liabilities and fixed
assets were 5.27 per cent, 5.68 per cent and 10.56 per cent respectively and were significant.
The growth rate with respect to net profit and net worth showed negative growth of -2.14 per
cent and -2.80 per cent respectively.
4.1.3.2 Compound growth rate of selected physical and financial indicators for MPCS
operating under Ranebennur
Physical indicators
The compound growth rate of different physical indicators of Ranebennur were
presented in Table 4.4. In case of Ranebennur I, the growth of membership was 2.27 per cent
per annum and it was highly significant and the total number of employees also noticed a high
significant growth of 1.39 per cent per annum. The growth with respect to total milk procured
showed negative growth of -0.90 per cent per annum. Where as in Ranebennur II, the growth
of membership was 1.85 per cent per annum and was significant and the total number of
employees also noticed positive growth of 0.60 per cent per annum. The growth with respect
to total milk procured showed negative growth of -0.96 per cent per annum.
Table 4.3. Compound growth rate of selected physical and financial indicators of MPCS
operating in Byadgi Taluk during 1997-98 to 2009-10

Milk Producers Co-operative Societies

Sl. Byadagi
Indicators
No. (Overall)
Byadagi I Byadagi II

I. Physical indicators

1 Total number 1.44** 1.52** 1.48**

members(No.s) (2.54) (4.51) (3.55)

2 Total number of 1.52** 0.25 0.79**

employees(No.s) (3.56) (0.51) (3.56)

3 Total quantity of -0.34 -12.88** -6.67**

milk procured (-0.30) (-5.50) (-3.61)
(litres)

II. Financial indicators

1 Share capital 4.60** 2.36 3.18*

(4.57) (1.38) (2.65)

2 Total sales value 5.31** -2.96 5.27**

of milk (3.49) (-1.50) (3.52)

3 Total assets 1.62 -0.85 1.05

(1.01) (-0.39) (0.96)

4 Total liabilities 15.61** -1.72 5.68**

(9.66) (-0.72) (5.22)

5 Net worth -6.81 1.15 -2.80

(-2.04) (0.25) (-0.94)

6 Fixed assets 12.57** 7.38 10.56**

(4.49) (1.56) (4.28)

7 Net profit 0.58 -10.39 -2.14

(0.18) (1.59) (-0.64)
Note : Figures in the parentheses indicate ‘t’ value
** Significance at 1 percent level
* Significance at 5 percent level
Table 4.4. Compound growth rate of selected physical and financial indicators of MPCS
operating in Ranebennur taluk during 1997-98 to 2009-10

Milk Producers Co-operative Societies

Sl. Ranebennur
Indicators
No. (Overall)
Ranebennur I Ranebennur II

I. Physical indicators

1 Total number 2.27** 1.85** 2.01**

members(No.s) (16.52) (5.30) (10.96)

2 Total number of 1.39** 0.60 0.81**

employees(No.s) (5.66) (1.29) (5.64)

3 Total quantity of
milk procured -0.90 -0.96 -0.88
(litres) (-0.36) (-0.35) (-0.37)

II. Financial indicators

1 Share capital 6.64** 1.53** 4.09**

(11.19) (11.69) (10.66)

2 Total sales value 9.13** 0.41 5.03**

of milk (5.23) (0.20) (4.50)

3 Total assets 9.80** 5.40** 8.14**

(4.88) (4.08) (6.36)

4 Total liabilities 7.55* 4.58* 6.52*

(2.77) (2.11) (2.86)

5 Net worth 15.50** 5.19* 9.94**

(4.49) (2.70) (5.76)

6 Fixed assets 16.81** 5.40** 12.46**

(4.51) (8.93) (5.55)

7 Net profit 10.03** -4.83 5.90*

(3.30) (-1.24) (2.55)
Note : Figures in the parentheses indicate ‘t’ value
** Significance at 1 percent level
* Significance at 5 percent level
 In over all Ranebennur, the growth of membership was 2.01 per cent per annum and
it was highly significant. The total members of employees also noticed growth of 0.81 per cent
per annum and it was found to be highly significant. The growth with respect to total milk
procured by Ranebennur showed negative growth of -0.88 per cent per annum.
Financial indicators
The results of compound growth rate analysis of different financial indicators of
Ranebennur were presented in Table 4.4. In case of Ranebennur I, the growth of share
capital was significant (6.64 per cent/annum), with regard to the growth of total sales value of
milk, total assets, total liabilities, net worth, fixed assets and net profit were 9.13 per
cent/annum, 9.80 per cent/annum, 7.55 per cent/annum, 15.50 per cent/annum, 16.81 per
cent/annum and 10.03 per cent/annum respectively and were significant. Where as in case of
Ranebennur II, the growth of share capital was 1.53 per cent per annum and was significant,
with regard to the growth of total sales value of milk, total assets, total liabilities, net worth and
fixed assets were 0.41 per cent/annum, 5.40 per cent/annum, 4.58 per cent/annum, 5.19 per
cent/annum and 5.40 per cent/annum respectively and were significant. The growth with
respect to net profit showed negative growth of -4.83 per cent/annum.
In over all Ranebennur, the growth of share capital was 4.09 per cent per annum and
it was significant. With regard to the growth of total sales value of milk, total assets, total
liabilities, net worth, fixed assets and net profit were 5.03 per cent/annum, 8.14 per
cent/annum, 6.52 per cent/annum, 9.94 per cent/annum, 12.46 per cent/annum and 5.90 per
cent/annum respectively and were highly significant.
4.1.4 Financial ratio analysis of MPCS’s
4.1.4.1 Financial ratio analysis of MPCS’s operating under Byadagi
The financial ratios computed in respect of Byadagi I and Byadagi II were presented
in Table 4.5 and 4.6. The test solvency included debt-equity ratio. The debt-equity ratio of
Byadagi I (4.48) was less as compared to Byadagi II (6.46) during the year 1997-98. On the
contrary, during the year 2009-10 the ratio was found to be more in Byadagi I (2.71) as
compared to Byadagi II (3.51). The test of liquidity included current ratio and quick ratio. The
current ratio and quick ratio was found to be more in Byadagi I as compared to Byadagi II
across different years. The test profitability included net profit to total asset ratio. The ratio
was ranging from 0.05 to 0.14 in Byadagi II while in Byadagi I from 0.01 to 0.10. The test of
turnover included working capital to turn over and inventory turn over ratio. It was observed
that, working capital to turn over ratio was found to be highest (1.52) during the year 1997-98
in Byadagi I, while in Byadagi II it was 2.28 during the year 2005-06. Similarly, the inventory
turn over ratio was more in Byadagi I (3.85) during 1997-98 as compared to Byadagi II (3.63)
during the year 2007-08. The operating ratio was found to be less than one in both Byadagi I
and Byadagi II.
4.1.4.2 Financial ratio analysis of MPCS’s operating under Ranebennur
The financial ratios computed in respect of Ranebennur I and Ranebennur II were
presented in Table 4.7 and 4.8. The test solvency included debt-equity ratio. The debt-equity
ratio of Ranebennur I (7.66) was less as compared to Ranebennur II (14.65) during the year
1997-98. On the contrary, during the year 2009-10 the ratio was found to be more in
Ranebennur I (20.39) as compared to Ranebennur II (10.26) during the year 1997-98. The
test of liquidity included current ratio and quick ratio. The current ratio and quick ratio was
found to be more in Ranebennur I as compared to Ranebennur II across different years. The
test profitability included net profit to total asset ratio. The ratio was ranging from 0.03 to 0.10
in Ranebennur I while in Ranebennur II from 0.02 to 0.10 over the years. The test of turnover
included working capital to turn over and inventory turn over ratio. It was observed that,
working capital to turn over ratio was found to be highest (4.83) during the year 2005-06 in
Ranebennur I, while in Ranebennur II it was 2.42 during the same year. Similarly, the
inventory turn over ratio was more in Ranebennur I (3.49) as compared to Ranebennur II
(4.73) during the year 2005-06. The operating ratio was found to be less than one in both
Ranebennur I and Ranebennur II during the year 1997-98 to 2009-10.
Table 4.5. Financial ratio analysis of MPCS’s operating under Byadagi I

Sl. 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009-
Particulars
No. 98 99 00 01 02 03 04 05 06 07 08 09 10

1 Test of solvency
Debt equity ratio 4.48 2.86 2.94 2.48 3.72 3.04 4.24 4.25 4.21 4.11 4.18 7.64 2.71

2 Test of Liquidity
a) Current ratio 5.40 6.77 4.81 4.24 3.16 3.20 2.56 3.05 4.02 3.86 3.63 2.24 4.65

b) Quick/ Acid test

ratio 3.24 4.06 2.89 2.55 1.90 1.92 1.54 1.83 2.41 2.32 2.18 1.34 2.79

3 Test of
Profitability
Net profit / total
asset ratio 0.07 0.10 0.07 0.07 0.03 0.05 0.03 0.04 0.08 0.04 0.05 0.04 0.01

4 Test of turnover
a) Working capital
turn over ratio 1.52 1.22 0.89 0.66 0.74 0.61 0.68 0.81 1.06 1.00 0.95 1.07 0.79

b) Inventory
turnover ratio 3.85 3.08 2.27 1.70 1.91 1.62 1.82 2.18 2.90 2.79 2.80 3.18 2.39

5 Tests of
efficiency
Operating ratio 0.98 0.97 0.97 0.97 0.99 0.97 0.98 0.98 0.97 0.98 0.98 0.98 1.00
Table 4.6. Financial ratio analysis of MPCS’s operating under Byadagi II

Sl. 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009-
Particulars
No. 98 99 00 01 02 03 04 05 06 07 08 09 10

1 Test of solvency
Debt equity ratio 6.46 8.22 7.21 9.87 10.80 10.78 8.65 8.61 12.39 12.81 14.28 11.54 3.51

2 Test of Liquidity
a) Current ratio 2.06 3.20 4.34 2.29 3.34 2.67 2.90 3.44 2.93 2.41 2.23 2.27 6.50

b) Quick/ Acid test

ratio 1.24 1.92 2.60 1.37 2.00 1.60 1.74 2.07 1.76 1.45 1.34 1.36 3.90

3 Test of
Profitability
Net profit / total
asset ratio 0.05 0.13 0.11 0.11 0.08 0.10 0.08 0.10 0.14 0.11 0.06 0.08 0.10

4 Test of turnover
a) Working capital
turn over ratio 0.84 1.65 1.97 1.42 2.27 1.81 1.57 1.86 2.28 1.94 1.99 1.64 1.43

b) Inventory
turnover ratio 0.84 1.80 2.18 1.65 2.64 2.14 2.02 2.52 3.24 3.16 3.63 3.48 3.20

5 Tests of efficiency
Operating ratio 0.97 0.95 0.97 0.94 0.96 0.94 0.96 0.95 0.93 0.95 0.96 0.95 0.97
4.1.4.3 Financial ratio analysis of MPCS’s operating under Byadagi and Ranebennur
It was observed from Table 4.9 and 4.10 that in Byadagi, the debt equity ratio ranged
from 3.11 to 9.59 during the period from 1997-98 to 2009-10. However, in Ranebennur the
ratio ranged from 8.01 to 17.24 during the same period. In Byadagi, the current ratio was
found highest (5.58) during the year 2009-10, while in Ranebennur the ratio found highest
(5.68) during the year 2005-06. The quick ratio was found more in Ranebennur as compared
to Byadagi over the years. The net profit to total asset ratio ranged between 0.05 to 0.11 in
the Byadagi, while in Ranebennur the ratio ranged between 0.02 to 0.08. The working capital
to turn over ratio was found to be more in Ranebennur as compared to Byadagi during the
period from 1997-98 to 2009-10. The inventory turnover ratio also revealed the same pattern.
The operating ratio was found to be less than one in both Byadagi and Ranebennur over the
years.

4.2 Cost and returns structure of milk production

4.2.1 Input utilization pattern in Byadagi (Per animal/annum)
The input utilization pattern in Byadagi is presented in Table 4.11. It can be observed
from the table that, in case of Byadagi I, the inputs used in milk production were namely dry
fodder, green fodder, concentrates and human labour. The maximum input utilization was
incurred in case of human labour. The human labour quantity utilization was to the extent of
195.38 man days of which men labour accounted for 44.96 man days and women labour
accounted for 150.42 man days. It was followed by the use of concentrates (2.67 qtl), green
fodder (2.50 ton) and dry fodder (0.82 ton). Similar pattern was observed in case of Byadagi
II, where in the use of human labour was 205.30 man days followed by concentrates (3.85
qtl), green fodder (3.30 ton) and dry fodder (1.34 ton). The value of inputs incurred in milk
production was found to be highest in Byadagi II followed by Byadagi I. In case of Byadagi the
cost incurred on human labour utilization was ` 15590.25 while in byadagi II it was ` 14860.85.
It was then followed by the use of green fodder, concentrates and dry fodder.
In overall Byadagi taluk, the utilization of dry fodder was to the tune of 1.08 ton
accounting for ~ 2729.03 followed by green fodder (2.90 ton) accounting for
~ 6689.57, concentrates (3.26 qtl) accounting for ` 3343.90 and human labour (200.34 man
days) accounting for ~ 15225.56. Among human labour, the utilization was maximum in case
of women labour (154.72 man days) accounting for ` 10830.40 followed by men labor (45.62
man days) accounting for ` 4395.16.
4.2.2 Cost and returns structure for milk production in Byadagi
The cost incurred on various inputs in milk production were namely dry fodder
followed by green fodder, concentrates, human labour and miscellaneous cost and are
presented in Table 4.12 and Fig. 5. In case of Byadagi I, the total cost incurred in milk
production was ` 28089.64. The total cost included total variable cost and total fixed cost. Of
the total cost, the share of total variable cost was found to be 97.21 per cent while, the share
of fixed cost was found to be 2.79 per cent. Among the total variable cost, the maximum cost
was incurred on human labour (52.91%) followed by green fodder (20.53%), concentrates
(9.75%), dry fodder (7.38%), interest on working capital (5.50%) and miscellaneous cost
(1.14%). Among the fixed costs, the cost incurred was mainly on depreciation (2.23%)
followed by interest on fixed capital (0.21%). The gross returns obtained in milk production
was ` 43684.78. The gross returns was obtained from two stages, one from milk production
and other from dung collection. The returns obtained from milk production (95.86%) was
maximum when compared to dung collection (4.06%). The net returns realized in milk
production was ` 13207.05 while, the B:C ratio was found to be 1.47.
When compared to Byadagi I, the cost and returns structure was relatively higher in
case of Byadagi II. The total variable cost was found to be ` 32776.66 accounting for 97.56
per cent in total cost. On the contrary, the fixed cost incurred in milk production was ` 821.15
accounting for 2.44 per cent in total cost. The total cost incurred in milk production was found
to be ` 33597.81. In the total cost, the share of human labour (46.40%) was maximum
followed by green fodder (22.66%), concentrates (11.75%), dry fodder (10.08%), interest on
working capital (5.52%), depreciation (2.23%), miscellaneous cost (1.14%) and interest on
fixed capital (0.21%). The returns realized were namely gross returns and net returns.
Table 4.7. Financial ratio analysis of MPCS’s operating under Ranebennur I

Sl. 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009-
Particulars
No. 98 99 00 01 02 03 04 05 06 07 08 09 10

1 Test of solvency
Debt equity ratio 7.66 4.26 7.72 9.21 13.85 11.91 12.54 13.98 19.68 20.03 17.90 13.72 20.39

2 Test of Liquidity
a) Current ratio 5.17 8.63 8.98 4.19 3.08 4.16 4.99 4.67 3.89 2.55 2.38 2.42 2.48

b) Quick / Acid test

ratio 3.10 5.18 5.39 2.51 1.85 2.50 2.99 2.80 2.34 1.53 1.43 1.45 1.49

3 Test of Profitability
Net profit / total
asset ratio 0.05 0.04 0.05 0.03 0.03 0.06 0.10 0.05 0.08 0.06 0.05 0.03 0.03

4 Test of turnover
a) Working capital
turn over ratio 2.50 2.32 4.37 2.43 2.69 3.13 3.95 4.12 4.83 3.22 2.68 2.09 3.18

b) Inventory
turnover ratio 1.68 1.58 2.81 1.69 1.90 2.23 2.83 2.97 3.49 2.70 2.25 2.75 3.62

5 Tests of efficiency
Operating ratio 0.95 0.96 0.98 0.98 0.98 0.97 0.95 0.98 0.97 0.97 0.97 0.98 0.99
Table 4.8. Financial ratio analysis of MPCS’s operating under Ranebennur II

Sl. 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009-
Particulars
No. 98 99 00 01 02 03 04 05 06 07 08 09 10

1 Test of solvency
Debt equity ratio 14.65 15.40 9.04 6.81 7.22 6.96 12.06 9.05 5.15 14.45 10.58 3.28 10.26

2 Test of Liquidity
a) Current ratio 1.97 2.05 1.64 3.02 1.54 2.01 1.56 1.10 7.46 1.01 1.41 2.79 1.29

b) Quick / Acid test

ratio 1.18 1.23 0.99 1.81 0.92 1.20 0.94 0.66 4.48 0.61 0.85 1.68 0.77

3 Test of Profitability
Net profit / total
asset ratio 0.06 0.08 0.04 0.02 0.04 0.05 0.03 0.03 0.00 0.10 0.02 0.02 0.02

4 Test of turnover
a) Working capital
turn over ratio 1.81 1.98 0.93 1.29 0.70 0.88 1.18 0.62 2.42 0.92 0.94 0.58 0.83

b) Inventory turnover
ratio 2.83 3.10 2.28 3.26 1.95 2.48 2.30 1.87 4.73 1.80 2.12 1.90 1.88

5 Tests of efficiency
Operating ratio 0.97 0.96 0.97 0.99 0.97 0.97 0.97 0.97 1.00 0.85 0.99 0.99 0.98
Table 4.9. Financial ratio analysis of MPCS’s operating under Byadagi (Overall)

Sl. 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009-
Particulars
No. 98 99 00 01 02 03 04 05 06 07 08 09 10

1 Test of solvency
Debt equity ratio 5.47 5.54 5.08 6.17 7.26 6.91 6.45 6.43 8.30 8.46 9.23 9.59 3.11

2 Test of Liquidity
a) Current ratio 3.73 4.98 4.57 3.27 3.25 2.93 2.73 3.25 3.47 3.13 2.93 2.25 5.58

b) Quick /Acid test

ratio 2.24 2.99 2.74 1.96 1.95 1.76 1.64 1.95 2.08 1.88 1.76 1.35 3.35

3 Test of Profitability
Net profit / total
asset ratio 0.06 0.11 0.09 0.09 0.05 0.08 0.05 0.07 0.11 0.07 0.06 0.06 0.05

4 Test of turnover
a) Working capital
turn over ratio 1.18 1.44 1.43 1.04 1.50 1.21 1.13 1.34 1.67 1.47 1.47 1.36 1.11

b) Inventory turnover
ratio 2.34 2.44 2.23 1.68 2.28 1.88 1.92 2.35 3.07 2.98 3.21 3.33 2.80

5 Tests of efficiency
Operating ratio 0.98 0.96 0.97 0.95 0.97 0.96 0.97 0.97 0.95 0.97 0.97 0.97 0.98
Table 4.10. Financial ratio analysis of MPCS’s operating under Ranebennur (Overall)

Sl. 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009-
Particulars
No. 98 99 00 01 02 03 04 05 06 07 08 09 10
1 Test of solvency
Debt equity ratio 11.16 9.83 8.38 8.01 10.54 9.44 12.30 11.51 12.42 17.24 14.24 8.50 15.33
2 Test of Liquidity
a) Current ratio 3.57 5.34 5.31 3.60 2.31 3.08 3.28 2.88 5.68 1.78 1.90 2.61 1.88
b) Quick /Acid test
ratio 2.14 3.20 3.19 2.16 1.39 1.85 1.97 1.73 3.41 1.07 1.14 1.56 1.13
3 Test of
Profitability
Net profit / total
asset ratio 0.06 0.06 0.05 0.03 0.04 0.05 0.07 0.04 0.04 0.08 0.03 0.02 0.02
4 Test of turnover
a) Working capital
turn over ratio 2.16 2.15 2.65 1.86 1.69 2.00 2.57 2.37 3.62 2.07 1.81 1.33 2.00
b) Inventory
turnover ratio 2.26 2.34 2.54 2.47 1.92 2.36 2.56 2.42 4.11 2.25 2.19 2.33 2.75
5 Tests of
efficiency
Operating ratio 0.96 0.96 0.97 0.99 0.97 0.97 0.96 0.97 0.98 0.91 0.98 0.99 0.98
Table 4.11 Input utilization pattern in Byadagi (Per animal/annum)

Byadagi I (n=30) Byadagi II (n=30) Byadagi (n=60)

Sl.
Particulars Units
No.
Quantity Value (`) Quantity Value (`) Quantity Value (`)

a Dry fodder Ton 0.82 2072.03 1.34 3386.02 1.08 2729.03

b Green fodder Ton 2.50 5766.87 3.30 7612.27 2.90 6689.57

c Concentrates Qtl 2.67 2738.70 3.85 3949.09 3.26 3343.90

d Men Mds 44.96 4331.45 46.28 4458.87 45.62 4395.16

Women Mds 150.42 10529.40 159.02 11131.40 154.72 10830.40

Human Labour Mds 195.38 14860.85 205.30 15590.25 200.34 15225.56

Table 4.12 Cost and Returns structure for milk production in Byadagi (Per animal/annum)

Byadagi I (n=30) Byadagi II (n=30) Byadagi (n=60)

Sl. No. Particulars % to total
Value (`) % to total cost Value (`) Value (`) % to total cost
cost
a Dry fodder 2072.03 7.38 3386.02 10.08 2729.03 8.85
b Green fodder 5766.87 20.53 7612.27 22.66 6689.57 21.69
c Concentrates 2738.70 9.75 3949.09 11.75 3343.90 10.84
d Human Labour 14860.85 52.91 15590.25 46.40 15225.56 49.36
e Miscellaneous 320.79 1.14 383.75 1.14 352.27 1.14
f Interest on working capital (6%) 1545.55 5.50 1855.28 5.52 1700.42 5.51
I Total variable cost 27304.79 97.21 32776.66 97.56 30040.75 97.40
g Depreciation 716.75 2.55 749.91 2.23 733.33 2.38
h Interest on fixed capital (9.5%) 68.09 0.24 71.24 0.21 69.67 0.23
II Total fixed cost 784.84 2.79 821.15 2.44 803.00 2.60
III Total cost (I+II) 28089.64 100.00 33597.81 100.00 30843.75 100.00
IV Gross returns 41296.69 100.00 43684.78 100.00 42490.72 100.00
a Milk production 39682.68 96.09 41876.05 95.86 40779.36 95.97
b Dung collection 1614.00 3.91 1808.73 4.06 1711.36 4.03
V Net returns 13207.05 - 10086.97 - 11646.97 -
VI B: C ratio 1.47 - 1.30 - 1.38 -
 Byadagi I
45000
Byadagi II
Byadagi (Overall)
40000

35000

30000

25000
Value (Rs.)

20000

15000

10000

5000

0
Total variable cost Total fixed cost Total cost Gross returns Net returns

Fig. 5. Cost and Returns structure for milk production in Byadagi (Per animal/annum)

Fig. 5. Cost and Returns structure for milk production in Byadagi (Per animal/annum)
 The gross returns obtained was ` 43684.78 while, the net returns was ` 10086.97.
The gross return was mainly obtained from milk production (` 41876.05). The B:C ratio was
found to be 1.30.
In all Byadagi taluk, the variable cost incurred was mainly on human labour (49.36%)
followed by green fodder (21.69%), concentrates (10.84%), dry fodder (8.85%), interest on
working capital (5.51%) and miscellaneous cost (1.14%). The share of variable cost in total
cost was 97.40 per cent while, the share of fixed cost was 2.60 per cent. The fixed cost
incurred on depreciation was ` 733.33. The total cost incurred in milk production was `
30843.75. The gross returns obtained from milk production was ` 40779.36 while the net
reurns realized was ` 11646.97. The benefit to cost ratio was found to be 1.38.
4.2.3 Input utilization pattern in Ranebennur (Per animal/annum)
The inputs used in milk production at Ranebennur taluk was mainly dry fodder, green
fodder, concentrates and human labour (Table 4.13). The input utilization in Ranebennur taluk
was highest in case of human labour (173.65 man days) accounting for ` 13725.51 followed
by green fodder (3.18 ton) accounting for 9170.25, concentrates (2.60 qtl) accounting for `
2605.86 and dry fodder (1.19 ton) accounting for ` 3056.10. The maximum cost incurred in
human labour was mainly from women labour (95.15 man days) followed by men labour
(78.50 man days).
When compared to Ranebennur (I&II), the input utilization was maximum in
Ranebennur II. The extent of human labour utilized in Ranebennur II was 179.82 man days
while, in Ranebennur I, it was 167.57 man days. Similarly, green fodder used in Ranebennur
II was 3.36 ton followed by concentrates (2.81 qtl) and dry fodder (1.24 ton). While, the
utilization of dry fodder in Ranebennur I was 1.14 ton followed by green fodder (3.00 ton) and
concentrates (2.39 qtl). In both the areas, the human labour cost was mainly incurred from
women labour when compared to men labour.
4.2.4 Cost and returns structure for milk production in Ranebennur
The total cost incurred in milk production at Ranebenuur taluk was ` 31609.61 (Table
4.14 and Fig. 6). Of the total cost, the total variable cost encountered ` 30671.63 while, fixed
cost was ` 938.58. The share of total variable cost (97.03%) in total cost was highest followed
by fixed cost (2.97%). Among various costs incurred in milk production, maximum cost
incurred was on human labour (43.42%) followed by green fodder (29.01%), dry fodder
(9.67%), concentrates (8,24%), interest on working capital (5.49%), depreciation (2.71 %),
miscellaneous cost (1.19%) and interest on fixed capital (0.26%). The B:C ratio was 1.26
where as, the gross returns was ` 30887.95 and net returns was ` 8278.34.
When compared to Ranebennur (I&II), the total cost incurred in milk production was
highest in Ranebennur II. Of the total cost, the total variable cost was found to be maximum in
Ranebennur II (` 32090.74) while, the total fixed cost was found to be maximum in
Ranebennur I (` 966.66). The cost incurred on inputs namely dry fodder, green fodder,
concentrates and human labour were apparently maximum in Ranebennur II. But, the gross
returns obtained was maximum in Ranebennur II
(` 40656.83) while the net returns realized was highest in case of Ranebennur I
(` 8901.14). However, B:C ratio was found to be highest in Ranebennur I (1.29) when
compared to Ranebennur II (1.23).

4.3 Extent of milk production, income and employment of farmer

beneficiaries
The net income from respondents of Byadagi and Ranebennur taluks was calculated
and presented in the Table 4.15 and Fig. 7.
Byadagi taluk
The farmers of Byadagi I earn ` 13,207.05 as net income and employment generated
was 195.38 days annually, out of which men labour contributes 44.96 mandays (23.01 %) and
women labour contributes 150.42 mandays (76.99%).
Table 4.13 Input utilization pattern in Ranebennur (Per animal/annum)

Ranebennur I (n=30) Ranebennur II (n=30) Ranebennur (n=60)

Sl.
Particulars Units
No.
Quantity Value (`) Quantity Value (`) Quantity Value (`)

a Dry fodder Ton 1.14 2927.69 1.24 3184.50 1.19 3056.10

b Green fodder Ton 3.00 8650.71 3.36 9689.80 3.18 9170.25

c Concentrates Qtl 2.39 2395.38 2.81 2816.32 2.60 2605.86

d Men Mds 76.99 6929.10 80.01 7200.90 78.50 7065.01

Women Mds 90.58 6340.60 99.72 6980.40 95.15 6660.50

Human Labour Mds 167.57 13269.70 179.82 14181.30 173.65 13725.51

Table 4.14 Cost and Returns structure for milk production in Ranebennur (Per animal/annum)
(n=60)
Ranebennur I (n=30) Ranebennur II (n=30) Ranebennur (n=60)
Sl. No. Particulars % to total
Value (`) % to total cost Value (`) Value (`) % to total cost
cost
a Dry fodder 2927.69 9.69 3184.50 9.65 3056.10 9.67
b Green fodder 8650.71 28.63 9689.80 29.36 9170.25 29.01
c Concentrates 2395.38 7.93 2816.32 8.53 2605.86 8.24
d Human Labour 13269.70 43.91 14181.30 42.97 13725.51 43.42
e Miscellaneous 352.06 1.17 402.36 1.22 377.21 1.19
f Interest on working capital (6%) 1655.73 5.48 1816.46 5.50 1736.10 5.49
I Total variable cost 29251.27 96.80 32090.74 97.24 30671.63 97.03
g Depreciation 882.79 2.92 831.51 2.52 857.15 2.71
h Interest on fixed capital (9.5%) 83.87 0.28 78.99 0.24 81.43 0.26
II Total fixed cost 966.66 3.20 910.50 2.76 938.58 2.97
III Total cost (I+II) 30217.93 100.00 33001.24 100.00 31609.61 100.00
IV Gross returns 39119.07 100.00 40656.83 100.00 39887.95 100.00
a Milk production 37815.85 96.67 39160.06 96.32 38487.95 96.50
b Dung collection 1303.22 3.33 1496.77 3.68 1400 3.50
V Net returns 8901.14 - 7655.59 - 8278.34 -
VI B: C ratio 1.29 - 1.23 - 1.26 -
 Ranebennur I
45000 Ranebennur II
Ranebennur (Overall)
40000

35000

30000

25000
Value (Rs.)

20000

15000

10000

5000

0
Total variable cost Total fixed cost Total cost Gross returns Net returns

Fig. 6. Cost and Returns structure for milk production in Ranebennur (Per animal/annum)

Fig. 6. Cost and Returns structure for milk production in Ranebennur (Per animal/annum)
 Table 4.15. Comparison of annual income and employment generated through dairy
enterprises in Byadagi and Ranebennur during 2010
(n=120)

Annual employment
Milk Procurement (In man days)
Net income
Sl. Co-operative
Situation (`) from
No. Societies (MPCS)
dairy
category
Men Women Total

13207.05
Byadagi I 44.96 150.42 195.38
(23.01) (76.99) (100.00)

10,086.97
1. Byadagi Byadagi II 46.28 159.02 205.30
(Overall) (22.54) (77.46) (100.00)

11,646.97
Sub total 45.62 154.72 200.34
(22.77) (77.23) (100.00)

Ranebennur I 8901.14
76.99 90.58 167.57
(45.94) (54.06) (100.00)

Ranebennur II 7655.59
2. Ranebennur 80.01 99.72 179.73
(Overall) (44.51) (55.49) (100.00)

8278.34
Sub total 78.50 95.15 172.65
(45.46) (54.54) (100.00)

Note:Figures in the parentheses indicate percentage to the total

 Byadgi (Dry area)
Above average milk procurement MPCS Below average milk procurement MPCS

Men
23.01% Men
Women
22.54% Women

76.99%

77.46%

Fig. 7. Comparison of annual income and employment generated through dairy enterprises in Byadagi and
Ranebennur

Ranebennur (Lrrigated area)

Below average milk procurement MPCS

Men
Ranebennur (Irrigated area)
Women

Above average milk procurement MPCS

Men
Women

44.51%

45.94% 45.94% 55.49%

Fig 7. Comparsion of annual income and employment generated dairy enterprises in Byadagi and Ranebennur
 Where as, farmers of Byadagi II earned ` 10086.97 as net income and employment
generated was 205.30 days out of which men labour contributed 46.28 mandays (22.54 %)
and women labour contributed 159.02 mandays (77.46%).
Overall in Byadagi, respondent farmers earn ` 11646.97 as net income and
employment generation was 200.34 days, out of which men labour contributed 45.62
mandays (22.77 %) and women labour contributed 154.72 mandays (77.23%).
Ranebennur taluk
The farmers of Ranebennur I earn ` 8901.14 as net income and employment
generated was 167.57 days annually, out of which men labour contributed 76.99 mandays
(45.94 %) and women labour contributed 90.58 mandays (54.06%). Where as, farmers of
Ranebennur II earned ` 7655,59 as net income and employment generated was 179.73 days
annually out of which men labour contributed 80.01 mandays (44.51 %) and women labour
contributed 99.72 mandays (55.49%).
Overall in Ranebennur, the respondent farmers earn ` 8278.34 as net income and
employment generated was 172.65 days annually, out of which men labour contributed 78.50
mandays (45.46 %) and women labour contributed 95.15 mandays (54.54%).(Table 4.15 and
Fig. 7).

4.4 Opinion of the respondents on the performance of Milk

Producer’s Co-operative Societies and on the problems of
dairy farming
4.4.1 Opinion of sample farmers regarding problems faced in milk production
in study area
The opinion survey conducted regarding the problems faced by respondents in milk
production was analysed and the results are presented in Table 4.16. Opinion of members
were collected on five different aspects relating to milk production viz., availability of dry
fodder/green fodder, feed/concentrates, transport, lack of demand for milk and veterinary
services which were measured in three point continum scale as highly severe, severe and
less severe.
With regard to the availability of dry fodder/green fodder, 40.00 per cent of farmers in
Byadagi were facing highly severe problem, 43.40 per cent of farmers expressed as severe
and only 16.60 per cent of farmers opined that it is less severe. The problem of
feed/concentrates availability was less when compared to availability of dry fodder/green
fodder. Highly severe, severe and less severe scored as 20.00 per cent, 30.00 per cent and
50.00 per cent respectively. The availability of timely transportation facility stands first in the
dairy sector, only 4.93 per cent farmers expressed as highly severe, 11.67 per cent of farmers
expressed as severe and remaining 83.40 per cent farmers expressed as less severe. Lack of
demand for the milk is of less severe as only 5.00 per cent of the farmers expressed severe
and 95.00 per cent farmers opined as a less severe. With regard to veterinary services, the
farmers opined as follows, 10.00 per cent highly severe, 20.00 per cent of severe and 70.00
of less severe.
With regard to availability of dry fodder/ green fodder problem about 20.06 per cent
and 56.60 per cent of sample farmers expressed it as highly severe and severe problems
respectively and remaining 23.34 per cent of the farmers expressed it as less severe. When it
comes to the availability of feed/concentrates, nearly 16.66 per cent of the farmers conveyed
it as highly severe problem, 31.67 per cent of the farmers conveyed it as severe problem and
51.67 per cent of the farmers opined it as less severe problem. In Ranebennur also the
problem of timely transportation facility is meager, as only 6.60 per cent and 10.00 per cent of
the sample farmers expressed them as highly severe and severe problems respectively and
majority of sample farmers (83.40%) expressed it as less severe problem. About 1.66 per
cent, 5.00 per cent and 93.34 per cent of respondent farmers expressed the problems of lack
of demand as highly severe, severe and less severe respectively.
 With regard to the veterinary services nearly 6.66 per cent farmers conveyed it as
highly severe problem, 21.67 per cent farmers conveyed as severe and majority (71.67%)
farmers expressed it as less severe problem. (Table 4.16).
4.4.2 Opinions of sample farmers regarding services extended by Milk
Producer’s Co-operative Societies in study area
The opinion survey conducted regarding extending of services of MPCs are
presented in the Table 4.17. The opinion of members were collected on ten different aspects
viz., supply of inputs, correct weighment, better prices, grading (fat per cent), loan to
purchase milch animals, regular payments, relationship with MPCS, training to members,
protecting consumers interest and market news which were measured in three point continum
scale as highly satisfactory, satisfactory and not satisfactory.
In the Byadagi, the survey indicated that 41.66 per cent of farmers expressed as
highly satisfactory for the supply of inputs, remaining 58.34 per cent expressed as satisfactory
and no member expressed as not satisfactory. Regarding correct weighment 76.67 per cent
respondents expressed as highly satisfactory, 23.33 per cent expressed as satisfactory and
no farmer expressed as not satisfactory. Majority (33.34%) of the sample respondents were
not satisfied with better prices, 40.00 per cent said as satisfied and remaining 26.66 per cent
said as highly satisfied, majority of them (50.00%) were satisfied with grading. Loan for
purchase of milch animals was not at all satisfactory for 50.00 per cent of the respondents,
because this activity was not performed by the society, 30.00 per cent farmers expressed as
satisfactory and 20.00 per cent farmers expressed as highly satisfactory.
In extending of regular payments and relationship with MPCS the majority of the
respondents were satisfied which accounts 66.67 per cent and 63.34 per cent respectively.
With regard to the training the majority of the farmers were not satisfied (70.00%), no farmer
expressed it as highly satisfactory, only 30.00 per cent of the farmers opined as satisfied.
With regard to the market news, nearly 76.67 per cent farmers expressed as not satisfied,
23.33 per cent farmers opined as satisfied and no single farmer expressed as highly satisfied.
Where as in Ranebennur, the supply of inputs 30.00 per cent of farmers expressed
as highly satisfactory, 45.00 per cent and 25.00 per cent, expressed as satisfactory and not
satisfactory respectively, 16.67 per cent respondents expressed as highly satisfactory in
correct weighment and remaining 75.00 per cent and 8.33 per cent farmers expressed as
satisfactory and not satisfactory respectively. Majority (53.34%) of the sample respondents
were satisfied with better prices, about 33.34 per cent were not satisfied while, 13.32 per cent
of respondents were highly satisfied with better prices. Majority of the respondents (45.00%)
were highly satisfied with grading. In loan for purchase of milch animals, majority of
respondents (65.00%) were opined satisfactory, 13.34 per cent of farmers expressed highly
satisfactory and 21.66 per cent of farmer expressed as not satisfactory with loan to purchase
milch animals. In regular payments and relationship with MPCS, the respondents were
satisfied which accounts 58.34 per cent and 50.00 per cent respectively. Around 53.34 per
cent of the farmers expressed as not satisfactory in respect of training to members, 30.00 per
cent of the farmers expressed as satisfactory and 16.66 per cent of the farmers expressed as
highly satisfactory. For protection of consumer interest and market news, no farmer and 1.66
per cent of the farmers expressed highly satisfactory respectively, 63.34 per cent and 33.34
per cent farmers expressed as satisfactory respectively. The majority of farmers expressed as
not satisfactory for market news. (Table 4.17)
4.4.3 Opinion of sample farmers regarding performance of Milk Producer’s
Co-operative Societies in study area
The Table 4.18 indicates the opinions of members gathered with regard to functioning
of MPCS. The opinions were collected on ten different aspects viz., regularity of board
meeting, timing of decisions, supply of information of board, executing decisions, participation
of directors, commitment of directors to the board decisions, annual plans or decisions taken
by the societies, experienced staff, maintenance of accounts and technical advice which were
measured in three point continum scale as highly satisfactory, satisfactory and not
satisfactory.
Table 4.16. Constraints in milk production in study area
(n=120)

Highly severe Severe Less severe

Sl.
Particulars
No.
Byadagi Ranebennur Byadagi Ranebennur Byadagi Ranebennur

1 Availability of dry 24 12 26 34 10 14
fodder/ green (40.00) (20.06) (43.40) (56.60) (16.60) (23.34)
fodder

2 Feed/concentrates 12 10 18 19 30 31
(20.00) (16.66) (30.00) (31.67) (50.00) (51.67)

3 Transport 3 4 7 6 50 50
(4.93) (6.60) (11.67) (10.00) (83.4) (83.40)

4 Demand for milk 0 1 3 3 57 56

(0.00) (1.66) (5.00) (5.00) (95.00) (93.34)

5 Vet. Services 6 4 12 13 42 43
(10.00) (6.66) (20.00) (21.67) (70.00) (71.67)

Note: Figures in the parentheses indicate percentage to the total

Table 4.17. Opinion of sample farmers regarding services extended by MPCS in study area

(n=120)
Highly Satisfactory Satisfactory Not Satisfactory
Sl.
Services
No.
Byadagi Ranebennur Byadagi Ranebennur Byadagi Ranebennur

1 Supply of input 25 18 35 27 0 15
(41.66) (30.00) (58.34) (45.00) (0.00) (25.00)

2 Correct weighment 46 10 14 45 0 5
(76.67) (16.67) (23.33) (75.00) (0.00) (8.33)

3 Better prices 16 8 24 32 20 20
(26.66) (13.32) (40.00) (53.34) (33.34) (33.34)

4 Grading (fat %) 12 27 30 19 18 14
(20.00) (45.00) (50.00) (31.67) (30.00) (23.33)

5 Loan to purchase 12 8 18 39 30 13
milch animals (20.00) (13.34) (30.00) (65.00) (50.00) (21.66)

6 Regular payments 12 10 40 35 8 5
(20.00) (16.66) (66.67) (58.34) (13.33) (25.00)

7 Relationship with 14 17 38 30 8 13
MPCS (23.34) (28.34) (63.34) (50.00) (13.32) (21.66)

8 Training to 0 10 18 18 42 32
members (0.00) (16.66) (30.00) (30.00) (70.00) (53.34)

9 Protecting 18 0 27 38 15 22
consumers interest (30.00) (0.00) (45.00) (63.34) (25.00) (36.66)

10 Market news 0 1 14 20 46 39
(0.00) (1.66) (23.33) (33.34) (76.67) (65.00)
Note: Figures in the parentheses indicate percentage to the total
Table 4.18 Opinion of sample farmers regarding performance of the MPCS in study area

(n=120)
Highly Satisfactory Satisfactory Not Satisfactory
Sl.
Services
No.
Byadagi Ranebennur Byadagi Ranebennur Byadagi Ranebennur

1 Regularity of board 17 14 33 21 10 25
meeting (28.34) (23.34) (55.00) (35.00) (16.66) (41.66)

2 Timing of decisions 8 10 32 31 20 19
(13.32) (16.67) (53.34) (51.67) (33.34) (31.66)

3 Supply of 6 7 28 13 26 40
information of board (9.99) (11.67) (46.67) (21.66) (43.34) (66.67)

4 Executing decisions 11 9 35 15 14 36
(18.33) (15.00) (58.34) (25.00) (23.33) (60.00)

5 Participation of 13 10 40 30 7 20
directors (21.67) (16.67) (66.67) (50.00) (11.66) (33.33)

6 Commitment of 9 9 12 18 39 33
directors to the (15.00) (15.00) (20.00) (30.00) (65.00) (55.00)
board decisions

7 Annual plans or 20 16 23 40 17 4
decisions taken by (33.33) (26.66) (38.34) (66.67) (28.33) (6.67)
the societies

8 Experienced staff 15 12 36 43 9 5
(25.00) (20.00) (60.00) (71.67) (15.00) (8.33)

9 Maintenance of 9 29 43 27 8 4
accounts (15.00) (48.34) (71.66) (45.00) (13.34) (6.66)

10 Technical advice 4 13 10 17 46 30
(6.67) (21.66) (16.66) (28.34) (76.67) (50.00)

Note: Figures in the parentheses indicate percentage to the total

 In Byadagi, with regard to the regularity of board meetings, 16.66 per cent of
members expressed as not satisfactory, 55.00 per cent expressed as satisfactory and only
28.34 per cent of members expressed as highly satisfactory. About 53.34 per cent of the
respondents were found satisfied with the timing of decisions but 43.34 per cent of the
members expressed their dissatisfaction towards the supply of information of board. For
executing the decisions, 58.34 per cent were satisfied, 23.33 per cent not satisfied and only
18.33 per cent highly satisfied. About 66.67 per cent and 20.0 per cent of the respondents felt
satisfactory towards the participation of directors and commitment of directors to the board
decisions respectively. In case of the annual plans taken by the societies, 33.33 were highly
satisfied and satisfied were 38.34 per cent when compared to not satisfied respondents
(28.33%).
With regard to the experienced staff and maintenance of accounts services were
found satisfactory by 60.00 per cent and 71.66 per cent of the members respectively. The
respondents opinion with respect to technical advice; only 6.67 per cent found highly
satisfactory, 16.66 per cent were satisfactory and 76.67 per cent were not satisfactory.
Where as in Ranebennur, majority of members for the regularity of board meeting
expressed as not satisfactory (41.66%), satisfactory (35.00%) and 23.34 per cent were highly
satisfactory. There were 51.67 per cent of respondents expressed their satisfaction towards
the timing of decisions, 31.66 per cent expressed as not satisfied and 16.67 per cent
members said as highly satisfied. Majority of the members (66.67%) expressed as not
satisfactory for the supply of information of board. For executing decisions, about 25.00 per
cent of respondents were satisfied, 60.00 per cent were not satisfied and only 15.00 per cent
were highly satisfied. About 50.00 per cent and 30.00 per cent of the respondents expressed
satisfactory for the participation of directors and commitment of directors to the board
decisions respectively. The annual plans taken by the societies have highly satisfied (6.67%)
and satisfied (66.67%) the group of respondents when compared to the not satisfied
(23.33%). Both the experienced staff and as well as maintenance of accounts were in positive
attitude since 71.67 per cent and 45.00 per cent of respondents were satisfied respectively. It
is of poor reply by the respondents with the technical advice; only 21.66 per cent expressed
as highly satisfactory, 28.34 per cent satisfactory and 50.00 per cent expressed as not
satisfactory (Table 4.18).
 5. DISCUSSION
This chapter discusses the salient results of the study according to the specific
objectives indicated in chapter-I and they are covered under the following sub-headings.
5.1 Performance of dairy co-operatives in Haveri district.
5.2 Analysis of cost and returns structure of milk production.
5.3 Extent of milk production, income and employment of farmer beneficiaries.
5.4 Opinions of the respondents on the performance of Milk producer’s cooperative
societies and various problems of dairy farming.

5.1 Performance of dairy co-operatives in Haveri district

5.1.1 Socio-economic profile of the sample farmers
The results on general information of the respondents with respect to their age, family
size, education level and land holding are discussed. The average age of the farmers was
relatively high in the Byadgi than in Ranebennur. (Table 4.1)
The average size of the family was also relatively higher in the Byadgi than that in
Ranebennur. The average size of the family in Byadgi was 7.33 members and in
Ranebennur, it was 6.02 members. The education level of the respondent families differed
across the areas. However, most of the respondents were found to be illiterate and having
primary level education. Only 6.67 per cent in Byadgi and 10.00 per cent in Ranebennur had
completed college education. The average size of the land holding of respondents in Byadgi
was 3.37 ha while, in Ranebennur it was 3.02 ha.
5.1.2 Livestock situation and MPCS’s wise distribution of sample farmers
Table 4.2 revealed that 120 sample farmers were selected in Haveri district. Out of
120 sample farmers, 60 farmers were members of Milk Producer’s Cooperative Societies of
Byadgi and Ranebennur each. In Byadgi, the members of societies possessed 53.09 per cent
of buffaloes and 46.91 per cent of cows, whereas the members of Ranebennur had 61.93 per
cent of buffaloes and 38.07 per cent of cows. In both the areas, buffaloes were more when
compared to cows because maintenance of buffaloes was easier when compared to cows
and also buffaloes were more resistant to diseases than cows.
Nearly 30 farmers were members of Byadgi I and 30 farmers were members of
Byadgi II. Similarly 30 farmers were members of Ranebennur I and 30 farmers were members
of Ranebennur II.
In Byadgi, 30 members of Byadgi I possessed 54.55 per cent of buffaloes and 45.45
per cent of cows, whereas the 30 members of Byadgi II possessed 51.58 per cent of
buffaloes and 48.42 per cent of cows which were low when compared to the members of
Byadgi I. In Ranebennur, 30 members of Ranebennur I possessed 70.65 per cent of buffaloes
and 29.35 per cent of cows, whereas 30 members of Ranebennur II possessed 52.38 per
cent of buffaloes and 47.62 per cent of cows. It was observed that, the members of Byadgi I
and Ranebennur I had more milching animals compared to the members of Byadgi II and
Ranebennur II. It was clear that farmers would maintain more buffaloes than cows in both the
areas because maintenance of buffaloes was found to be easier than the maintenance of
cows and also buffaloes were found to be resistant to diseases when compared to cows.
5.1.3 Performance of selected milk producer’s cooperative societies
5.1.3.1 Compound growth of selected physical and financial indicators of MPCS operating in
Byadgi taluk
Physical indicators
In Byadgi I, the physical indicators such as total membership and total number of
employees were found to be highly significant (1.44 per cent and 1.52 per cent) whereas, the
growth in total milk procurement was found to be declining (Table 4.3).
 Similarly, in Byadgi II also the total membership was highly significant (1.52 per cent)
whereas total number of employees showed positive growth but failed to exert significant
impact. However, the total milk procurement has showed negative growth. In Byadgi also, the
compound growth rates of physical indicators like the total membership and total number of
employees were found to be highly significant (1.48 per cent and 0.79 per cent) whereas, the
growth of total milk procurement showing negative growth over the years.
In Byadgi I, Byadgi II and in Byadgi, the total membership and total number of
employees were more significant since the farmers showed interest towards dairy enterprise
to get additional income and they have faith on dairy co-operatives. The study also noticed
that, total number of employees was increasing year after year to assist in their functioning
and the daily milk collection of MPCS. In Byadgi, the growth of total milk procurement showed
negative growth due to intervention of private milk agencies which were operated in the
sample areas very actively and they have procured even the low quality milk and paying
marginally higher price for dairy farmers than MPCS, where as the MPCS accepted only high
quality milk and the price availability was mainly based on the quality of the milk. Similar
results were reported by Jain et al. (1978).
In Byadgi I and over all Byadgi, the results with regard to financial indicators like
share capital, total sales value of milk, total assets, total liabilities, net worth, fixed asset and
net profit were found to be almost same and showed significant growth because the MPCS’s
were found performing satisfactorily. Similar results were reported by Jithendra Kumar (1990).
Where as in Byadgi II, the results with regard to financial indicators like share capital, total
sales value of milk, total assets, total liabilities, net worth, fixed asset and net profit showed
positive growth but failed to exert any significant impact (Table 4.3).
5.1.3.2 Compound growth rates of selected physical and financial indicators for MPCS in
Ranebennur
In Ranebennur I, the physical indicators like total membership and total number of
employees were highly significant (2.27 per cent and 1.39 per cent) whereas, the growth of
total milk procurement showed negative growth. (Table 4.4)
Similarly, in Ranebennur II also the total membership was found highly significant
(1.85 per cent) whereas, total number of employees showed positive growth but did not have
any significant impact. Total milk procurement showed negative growth during the study
period. In Ranebennur also, the compound growth rate of physical indicators like the total
membership and total number of employees were highly significant (2.01 per cent and 0.81
per cent) whereas, the growth of total milk procurement showed negative growth.
In Ranebennur I, Ranebennur II and in over all Ranebennur, the total membership
and total number of employees were highly significant since the farmers showed interest
towards dairy enterprise to get additional income and they were having trust on dairy co-
operatives. It was observed that, total number of employees was increasing year after year to
assist in their functioning and the daily milk collection of MPCS. In Ranebennur I, Ranebennur
II and in over all Ranebennur, the growth of total milk procurement showed negative growth
due to intervention of private milk agencies which were operated in the sample areas very
actively and they were procured even the low quality milk and paying little bit higher price to
dairy farmers than MPCS, where as the MPCS accepted only the high quality milk and found
giving better price based on the quality of the milk. Similar results were reported by Jain et al.
(1978).
The results with regard to financial indicators like share capital, total sales value of
milk, total assets, total liabilities, net worth, fixed asset and net profit were found almost same
and shows significant growth because the MPCS’s were performing satisfactorily. Similar
results were reported by Jithendra Kumar (1990). Where as in Ranebennur II, the results on
financial indicators like share capital, total sales value of milk, total assets, total liabilities, net
worth, fixed asset and net profit showed positive growth (Table 4.4).
5.1.4 Financial ratio analysis of dairy co-operatives
To test the solvency position of the dairy co-operatives, the Debt-Equity ratio was
used. It indicated the ability of the dairy co-operatives to meet the medium and long term
obligations and it also provided a basis for measuring the leverage effect.
 The ratio was found to be higher in Ranebennur as compared to Byadgi. It indicated
the dominant leverage effect. (Table 4.5 to 4.10).
To measure the liquidity position of the dairy co-operatives, the current and quick
ratios were used. The current ratio measured the dairy co-operatives short run solvency. The
ratio was greater than unity in all the years except few years mainly because of drought. This
showed that dairy, co-operatives had sufficient current assets to meet the current liabilities.
The quick ratio represented the ratio between quick assets and quick liabilities. This
ratio reflected the dairy co-operatives dependence on its inventory for liquidity. They normally
required some time before they were converted into cash and their value also had a tendency
to fluctuate. To diagnose the financial status of the dairy co-operatives and its overall
efficiency, the profitability ratio was computed which represented the ratio between the net
profits and the total assets. The net profit to the total assets ratio showed less than unity for
Byadgi and Ranebennur during the study period.
Two turnover ratios were computed to analyse the effectiveness with which different
assets had been utilized by the dairy co-operatives. The working capital to turnover ratio
reflected the efficiency of the total working capital employed in its business by dairy co-
operatives. The working capital was efficiently managed by dairy co-operatives to improve its
sales which were more than one in both Byadgi and Ranebennur.
The another important test of turn over ratio computed was the inventory-turnover
ratio. It reflected the efficiency of the dairy co-operatives in selling its products. The ratios
computed for the entire period showed wide variations. The higher inventory-turnover ratios
during the period from 2006-07 to 2009-10 showed a remarkable inventory turnover in
Byadgi. This progress was a clear evidence of the dairy co-operatives efforts to attain a
significant inventory-turnover ratio.
To assess the operational efficiency of the dairy co-operatives, the operating ratio
was computed. It reflected the extent of costs incurred in effecting the sales. The operating
ratios for Byadgi and Ranebennur were less than unity during the period from 1997-98 to
2009-10. The lower operating expenses indicated the efficiency of the dairy co-operatives in
effecting its sales.

5.2 Cost and returns structure of milk production

The Table 4.11 to Table 4.14 revealed that in Byadgi I, Byadgi II, Ranebennur I,
Ranebennur II, over all Byadgi and Ranebennur, the utilization of human labour, green
fodder, concentrates followed by dry fodder constituted the bulk of milk production cost. In
Byadgi, the total value expenditure of human labour (49.36%) followed by green fodder (21.69
%) followed by concentrates (10.84%) and dry fodder (8.85%). In Ranebennur, the total value
expenditure of human labour was 43.42 per cent followed by green fodder (29.01%), dry
fodder (9.67%) and concentrates (8.24%). This situation prevailed because always milch
animals yield better milk if they were fed with green fodder and concentrates since they were
rich in different minerals and proteins and also green fodder and concentrates were costlier
than dry fodder. Where as dry fodder was fed to milch animals only during summer periods.
When compared to Byadgi and Ranebennur, in Ranebennur the use of green fodder
(29.01%) was more than in Byadgi (21.69%) because the Ranebennur was irrigated area so
availability of green fodder was higher than Byadgi. As such the Byadgi was dry area,
dependence was more on concentrates for their mulching animals. Similar results were
reported by Kumar and Rout (1974).
In Byadgi I, Byadgi II, Ranebennur I, Ranebennur II, over all Byadgi and Ranebennur,
the dairy enterprise provided maximum employment to women labour as compared to men
labour since men labour concentrated more on agricultural activities. In the Byadgi, total
human labour used in dairy enterprise was more as compared to Ranebennur because in
Ranebennur, farmers practicing the agricultural work throughout the year since it was a
irrigated area and also involved in seed production activities but in Byadgi, the farmers didn’t
found the agricultural work through out the year since it was a dry area, so farmers were
depending on dairy enterprise for their livelihood.
 In case of human labour, both the areas were consuming more, the present findings
were supported by the reports of Neeraj Rao et al. (2004) who reported that amongst all
costs, labour charges accounted for highest share.
The total cost were noticed high in Ranebennur i.e. ` 31609.61 compared to Byadgi (`
30843.75) because it is obvious that in the Ranebennur the net returns
(` 8278.34/animal/year) were low when compared to Byadgi (milk production 2204.29 lts/year
and net returns ` 11646.97/animal/year). This clearly indicated that in both Byadgi and
Ranebennur, the dairy enterprise gives better returns i.e. returns/rupee of expenditure ` 1.38
and ` 1.26 respectively. The returns from dairy enterprise are considerably high in Byadgi
compared to Ranebennur because in Ranebennur farmers found the agricultural work
through out the year since it was a irrigated area but Byadgi farmers didn’t found the
agricultural work through out the year since it was a dry area so mainly dependent on dairy
enterprise for their additional income.

5.3 Extent of milk production, income and employment of farmer

beneficiaries of study area
The Table 4.15 revealed that the income earned by members of above average milk
procurement societies was high when compared to members of below average milk
procurement societies of Byadgi and Ranebennur respectively. The employment generation
annually by members of Byadgi was 200.34 mandays out of which 22.77 per cent for men
and 77.23 per cent for women as against 172.65 mandays out of which 45.46 per cent for
men and 54.54 per cent for women of Ranebennur. In both Byadgi and Ranebennur, net
income by members of above average milk procurement societies stands first followed by
members of below average milk procurement societies. This situation prevailed because
women found their employment and income through dairy enterprise when the men labour
found their employment in agricultural activities. Even then men labour also dedicated their
time in dairy enterprise when there were no agricultural activities during summer season and
also where there were no irrigation facilities available for agricultural activities. Similar results
were reported by Reddy et al. (2000) who reported that dairy farming created 45 per cent of
extra work as against mixed farming and 92 per cent of extra work as compared to arable
farming. And also the present findings were supported by the reports of Ramachandran
(2004) who concluded that cattle rearing occupy a pivotal place among women folk of the
rural areas.

5.4 Opinion of the respondents on the performance of milk

producer’s cooperative societies and on the problems of
dairy farming
5.4.1 Opinion of sample farmers regarding problems faced in milk production
in study area
The Table 4.16 revealed that in Byadgi most of the respondents conclude that there
was a severe problem in availability of dry fodder/green fodder than Ranebennur respondents
since they didn’t have irrigation facilities throughout the year to grow fodder. In both Byadgi
and Ranebennur, the respondents conclude that there was a severe problem in
feed/concentrate availability since the demand for the feed was more than supply. There was
no severe problem regarding timely transportation, lack of demand for milk and veterinary
facilities in both Byadgi and Ranebennur.
5.4.2 Opinions of sample farmers regarding services extended by milk
producer’s cooperative societies in study area
The Table 4.17 revealed that in Byadgi most of the respondents expressed their
satisfaction towards supply of inputs. Regarding correct weighment and grading, respondents
from Byadgi and Ranebennur expressed their satisfaction since MPCS have appointed
trained persons for weighment and grading. Only 33.34 per cent of respondents in Byadgi and
Ranebennur expressed their dissatisfaction regarding better prices due to higher cost of
fodder and feed. 50 per cent of respondents in Byadgi expressed their dissatisfaction towards
loan to purchase milch animals since no MPCS’s provided loans to purchase milch animals.
 Majority of respondents in study area expressed their satisfaction regarding regular
payments and relationship with MPCS’s. Due to lack of technical persons majority of
respondents were expressed their dissatisfaction towards training to dairy farmers and market
news in Byadgi and Ranebennur.
5.4.3 Opinion of sample farmers regarding performance of Milk Producer’s
Cooperative Societies in study area
In Byadgi most of the respondents were satisfied with regularity of board meeting
since the secretaries of MPCS’s were conducted board meetings timely. But in Ranebennur,
41.66 per cent of the respondents were not satisfied with regularity of board meeting. With
regard to timing of decisions 33.34 per cent and 31.66 per cent of respondents from Byadgi
and Ranebennur were not satisfied. Directors of MPCS’s of Ranebennur were not participated
in the dairy activities regularly so 33.33 per cent respondents of Ranebennur were not
satisfied. Decisions taken by the societies were not satisfied for 28.33 per cent respondents of
Byadgi. More than 85.0 per cent of the respondents from both the Byadgi and Ranebennur
were satisfied with the experienced staff of MPCS’s because dairy co-operatives provided
regular training for their staff. Regarding maintenance of accounts in MPCS’s majority of the
respondents from Byadgi and Ranebennur were satisfied as the accounts of each and every
MPCS’s were audited annually. But in case of technical advise, majority of the respondents
from Byadgi and Ranebennur were not satisfied as there was a shortage of technical staff in
the MPCS’s (Table 4.18).
 6. SUMMARY AND POLICY IMPLICATIONS
As India enters an era of economic reforms, Agriculture, particularly the livestock
sector, is positioned to be a major growth area. In fact dairying could play a more constructive
role in promoting rural welfare and reducing poverty. Milk production alone involves more than
70 million producers, each raising one or two cows/buffaloes. Cow dung is an important input
as organic fertilizer, for crop production and is also widely used as fuel in rural areas. Cattle
also serve as an insurance cover for the poor households, being sold during times of distress.
India produced 112.5 million tons of milk in 2010-11. Dairy farming is practiced by
13.90 million farmers in villages registered as milk producers under 1,33,349 dairy co-
operative societies. India’s milk production grows at more almost 4% annually as against
expected growth of 5.5% to meet estimated domestic demand. Uttar Pradesh, Haryana,
Punjab, Rajasthan, Gujarat, Maharashtra andhra Pradesh, Karnataka and Tamil Nadu are
milk surplus states in India and account for 80% of the milk produced. India processes less
than 20% of the total milk produced into tradable products while Australia, New Zealand, EU
process more than 50% of the milk produced into tradable products indicating greater
opportunity for investment and growth in the Indian dairy processing industry.
Milk cooperatives are an integral part of the milk marketing and dairy development
programme in India. It is popularly known as “operation flood” launched by the government of
India in collaboration with the world food programme of the United Nations in July 1970. One
of the worlds largest rural development programmes ever undertaken, the operation flood
aims at the setting up of modern dairy industry to meet the India’s rapidly increasing need for
milk and its products and making it capable of viable and self sustaining growth. Operation
flood helped dairy farmers to direct their own development, placing control of the resources
they create in their own hands. A national milk grid links milk producers through out India with
consumers in over 700 towns and cities, reducing seasonal and regional price variations while
ensuring that the producer gets fair market prices in a transparent manner on a regular basis.

6.1 Objectives
The specific objectives of the study
1. To study the physical and financial indicators of dairy cooperatives in Haveri district.
2. To analyze the cost and returns structure in milk production of dairy farmers.
3. To analyse the extent of milk production, income and employment generation to farm
households.
4. To identify the problems in production and marketing of milk by member producers.

6.2 Sampling design

A list of dairy farmers who are members of the selected Milk Producer’s Cooperative
Societies was prepared with the help of secretaries of the MPCS. Among the members in the
list, 60 dairy farmers from each taluk, of which 30 each from above and below average milk
procurement societies were selected. Similarly, from Ranebennur taluk, 60 dairy farmers were
selected following the above criteria. In all, 120 dairy farmers were selected in the study area
for detailed investigation.

6.3. Nature and source of data

For evaluating the objectives of the study, both primary and secondary data were
collected. The primary data were collected from the respondents through pre-tested schedule
prepared for the purpose. The information relating to the input output data on milk production,
age of milch animal, number of hours spent on grazing, cost of dry fodder, green fodder,
concentrates, labour, veterinary and medicine charges and maintenance charges, total
annual milk yield, income from other sources, etc., was collected by personal interview
method for the year 2010.
 The secondary data on various activities of the MPCS selected for the study were
collected from different sources for a period of thirteen years from 1997-98 to 2009-10.
The data relating to the financial aspects of the societies such as balance sheets,
profit and loss account, receipts and payments statements and trading accounts were
abstracted from the annual reports and audit reports of societies.

6.4 Tools and Techniques Employed For Analysis

In order to achieve the objectives of the study, data collected from primary and
secondary sources were subjected to statistical analysis. Various methods were adopted to
suit the specific purpose. The technique of tabular analysis was employed for identifying the
cost and return structure of milk production, income and employment. The compound growth
rate analysis was employed to study the performance of physical and financial indicators of
the societies. The performance of dairy enterprise can be assessed through the financial test
ratios.

6.5 Findings of the study

1) The milk production in the study area was mainly contributed by buffaloes. Members of
societies possessed more number of buffaloes than cows on the whole, in milk union
area 57.30 percent of buffaloes and 42.70 percent of cows were observed in the study
area.
2) The physical performance of the societies in the study area revealed that the overall
physical indicators had an increasing trend except the total milk procured in the
societies.
3) The profits of societies showed fluctuating trends in both the areas. The share capital,
total sales value of milk also showed fluctuating trend along with the increase in the
members. The societies of Byadgi dominated in all aspects.
4) The compound growth rates in respect to the physical indicators, membership was
highly significant where as, milk procured showed negative growth for Byadgi and
Ranebennur. The compound growth rates of financial indicators in both the areas were
fluctuating in almost all aspects and showed negative growth in net profit of Byadgi. The
financial indicators showed the high percent of growth in Ranebennur when compared
to Byadgi.
5) The debt equity ratio was found to be higher in Ranebennur as compared to Byadgi. It
indicated the dominant leverage effect. Current ratio showed that dairy co-operatives
had sufficient current assets to meet the current liabilities. The net profit to the total
assets ratio showed less than unity Byadgi and Ranebennur during the study period.
The working capital was efficiently managed by dairy co-operatives to improve its sales
which were more than one in the both Byadgi and Ranebennur. The lower operating
expenses indicated the efficiency of the dairy co-operatives in effecting its sales.
6) In Byadgi, per animal-rearing cost per annum amounted to ` 30843.75. In case of
Ranebennur, per animal rearing cost amounted to Rs 31609.61. Net returns were more
in Byadgi (Rs 11646.97/annum) than in Ranebennur (8278.34/annum).
7) In both the areas, the study revealed that the income generated from members of
Byadgi I and Ranebennur I was more when compared to Byadgi II and Ranebennur II.
8) Employment generation out of members of Byadgi I and Ranebennur I respondents
was more in both the areas when compared with the employment creation out of
members of Byadgi II and Ranebennur II of both the areas. i.e, on an average 368.23
employment days from Byadgi as against 336.2 employment days from Ranebennur.
9) As per the opinion of members of societies, it was observed that the performance of
Byadgi was better than Ranebennur. The members in the Byadgi were highly satisfied
regarding the correct weighment (76.67 percent) and transport problem was less severe
(83.40 percent). The transportation was easily accessible for both the areas but when
compared to Byadgi, for Ranebennur the accessibility of transportation was less.
 10) Loan for purchase of milch animals and linking of credit with marketing were important
aspects, which were not included in the activities of societies. Training to members and
accessibility to market news to the members were very poor in the whole study area.

6.6 Policy Implications

On the basis of findings of the study, the following recommendations are made for
improving the performance of dairy cooperatives in the study area.
1. The growth in total quantity of milk procured in Byadgi taluk was declining at the rate of
6.67 %/annum while, in Ranebennur area it was 0.08 %/annum. The MPCS operating
in study area can improve the quantity of milk procured by providing remunerative
prices to the members as in case of private milk vendors operating in the study area to
procure milk.
2. The cost incurred on concentrates in milk production in Byadgi area was
` 3343.90 while, in Ranebennur area it was ` 2605.86. The cost on concentrate can be
reduced by adopting Green Fodder Production Unit by DCS on a co-operative basis in
the study area.
3. The net income generated from dairy enterprise in Byadgi area was ` 11,646.97 while,
in Ranebennur area it was ` 8278.34. The income from dairy enterprise can be
improved by utilizing the labour hours of the households during slack period of crop
production activities.
4. About 43.40 percent of sample respondents in Byadgi and 56.60 percent in
Ranebennur taluks have expressed the severe scarcity of dry fodder/green fodder.
Hence, this problem can be solved by supplying of fodder by establishing fodder banks
on cooperative basis in the study area. The MPCS operating in the study area can
involve in this process.
5. With regard to various services rendered by the MPCS, majority of sample respondents
in Byadgi (76.67%) and Ranebennur (65.00%) area are not satisfied with market news.
The MPCS should provide market information relating to dairy enterprise such as price
of milk, veterinary charges, prices of concentrates/fodder etc.
6. The MPCS members of Byadgi taluk (76.67%) and Ranebennur taluk (50.00%) have
expressed that the performance of MPCS with regard to technical advice was not
satisfactory. The technical advice plays vital role in adopting dairy enterprise. Hence,
MPCS has to give technical advice at appropriate time.
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 PERFORMANCE OF DAIRY CO-OPERATIVES IN
HAVERI DISTRICT - AN ECONOMIC ANALYSIS
NAVEEN N. 2012 Dr. N. R. MAMLE DESAI
MAJOR ADVISOR

ABSTRACT
Milk co-operatives are an integral part of the milk marketing and dairy development
programme in India. In Haveri district, about 412 Dairy Co-operative Societies (DCS) were
functioning till 2010. The present study aimed at analyzing the physical and financial
performance of diary co-operatives followed by costs and returns structure in milk production,
extent of milk production, income and employment generation to farm households and
constraints involved in production and marketing of milk by member producers. For evaluating
the objectives of the study, both primary and secondary data were used. The primary data
was collected from 120 dairy farmers while secondary data on various activities of the Milk
Producers Co-operative Societies (MPCS) selected for the study were collected from different
sources for a period of thirteen years from 1997-98 to 2009-10. Tabular analysis, compound
growth rate and financial ratio analyses were employed.
The milk production in the study area was mainly contributed by buffaloes. Overall,
physical indicators had an increasing trend except the total milk procured by societies. The
share capital, total sales value of milk also showed fluctuating trend along with increase in the
members. The compound growth rates in respect to the physical indicators and membership
was highly significant whereas, milk procured showed negative growth for Byadgi (-6.67%)
and Ranebennur (-0.88%) taluks. The financial indicators showed high percent of growth in
Ranebennur compared to Byadgi. Members of the societies opined that the performance of
Byadgi was better than Ranebennur.
The MPCS operating in study area can improve the quantity of milk procured by
providing remunerative prices to the members as in case of private milk vendors operating.
The cost on concentrate can be reduced by adopting Green Fodder Production Unit by DCS
on a co-operative basis. These were some of the policy suggestions made by the study for
better performance of dairy co-operatives in the study area.