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BHUBANESWAR
Himansu S M
07-Sep-2009
Milk Processing Unit Page 2 of 31
This is the detailed description of the Business Model or Plan with all the possible ancillary units, on the
back-drop of various Subsidy Schemes available from various Statutory / Government Bodies.
Contents :
Contents :....................................................................................................................... 2
Information Tables :........................................................................................................ 4
Table-1 : Units Of Area & Conversion Ratios.................................................................4
Table-2 : Units Of Counting – Cardinal Numbers..........................................................4
Table-3 : Abbreviations Used In This Report.................................................................4
STATE AGRICULTURE POLICY – 2008...............................................................................7
Agriculture Department, Government of Orissa................................................................7
INTRODUCTION...........................................................................................................7
AGRICULTURE IN ORISSA...........................................................................................7
The State’s Vital Statistics :..........................................................................................8
OBJECTIVES............................................................................................................... 8
Projects Out-look.......................................................................................................... 10
Proposed Business Plan............................................................................................. 10
Main Projects :........................................................................................................ 10
The Ancillary Projects which can utilise the By-products effectively (INEVITABLE) :. .10
Also there are a few Projects that can enhance the main Project (RECOMMENDED) :
.............................................................................................................................. 10
Approximate Project Cost...........................................................................................11
Land :..................................................................................................................... 11
Dairy Farm Project :................................................................................................11
Man Power :............................................................................................................11
Detailed Description, Scope & Explanation.................................................................11
Cattle / Dairy Farms :.............................................................................................11
Milk Processing / Packaging Unit :..........................................................................12
Fodder Cultivation :................................................................................................12
Calf Rearing & Trading :..........................................................................................13
Cattle Breeding & Artificial Insemination :...............................................................14
Fertilisers :............................................................................................................. 14
Farm Mechanisation :............................................................................................. 15
Rain Water Harvesting & Watershed Development :.................................................16
Marketing Network :................................................................................................16
Bio-Gas Plant :....................................................................................................... 16
Part A : Organisational............................................................................................26
Part B : Financial....................................................................................................27
Part C : Technical................................................................................................... 28
Conclusion :........................................................................................................... 28
Information Tables :
INTRODUCTION
The Government of Orissa has adopted an Agriculture Policy for the entire state for bringing
commercialisation in the field of agriculture amongst other related fields like animal
husbandry and fisheries, while improving the overall productivity in the sector.
Orissa is an Agrarian State. It is endowed with a wide range of fertile soil along with
adequate rainfall and suitable climate for agriculture. But it’s yet to be fully utilised. Nearly
70% population in the state depend on agriculture. But the agriculture sector contributes
only 26% of the Gross State Domestic Product (GSDP). Thus it results in low per capita
income in the farm sector. Consequently, there’s a large disparity between the per capita
incomes in the Farm & Non-Farm sectors.
The National Agriculture Policy approved by the Government of India during 2000, aimed to
achieve an annual growth of more than 4% in the agriculture sector on a sustainable basis.
But the growth rate achieved during the Tenth Five-Year Plan was a mere 2.3%, whereas the
non-farm sector grew faster. Considering the high growth of Gross Domestic Product (GDP)
in recent past, a major reorientation in the policy is necessary to make this growth more
inclusive.
The decline in agriculture growth coupled with declining profitability in the agriculture
sector in the face of rapid growth of non-farm sector is one of the most critical concerns. The
National Policy for Farmers - 2007 has envisaged focusing more on the economic well-being
of farmers rather than just on production.
The public investment in agriculture has been declining and is one of the main reasons
behind the declining productivity & low capital formation in the agriculture sector. Private
investment in agriculture has also been slow and must be stimulated & motivated thro’
appropriate policies. The fact that nearly 70% of population live in villages, agricultural
growth will continue to be the driving force of the broad-based economic growth and
development. This will also have natural resources conservation, food security & poverty
alleviation. Thus accelerated investment is needed to facilitate agricultural development.
It’s quite distressing that the farmers feel themselves at the lowest rung in the social
hierarchy. It will be an important task to bring back the glory & self respect of the farming
community. There are no policy tools that can achieve this directly. However, putting
agriculture sector on a better path and resurrecting its importance across the sectors will go
a long way in making farming a respectable profession.
AGRICULTURE IN ORISSA
In the above backdrop, a wholesome policy framework for the benefit of the farmers of the
State is now brought out with a focus more on the economic well-being of the farmers,
rather than just on production & growth. Thus the development of agriculture holds key to
total development of the state.
The Government of Orissa has decided to give agriculture the status of industry. And for
this reason, the Government has taken the first historical steps to announce a bold
agricultural policy in 1996, which sets forth the agenda for growth. This policy is refined &
revised from time to time.
Meanwhile more than a decade has passed since then. There have been many significant
changes in the realm of agriculture development, and more so in the post-WTO (World Trade
Organisation). Therefore, this is an appropriate time to take note of the changing situation
and bring out a policy to meet the present challenges in the sector.
OBJECTIVES
Agriculture in the Sate of Orissa continues to be characterised by low productivity on
account of :
1. Problematic soil – acidic, saline, waterlogged,
2. Lack of assured irrigation, or / and inadequate irrigation facilities,
3. Low water use efficiency,
4. Low seed replacement rate,
5. Low level of fertiliser consumption – 53 Kg/Ha as against the national average of 113,
6. Traditional agricultural practices, low level of mechanisation, etc.
7. Inadequate capital formation, low investment,
Projects Out-look
Main Projects :
1. Two numbers of Cattle / Dairy Farms each having 100 Milch cows,
2. Two numbers of 10 Acre patch of Land each for Fodder Cultivation & Cattle Grazing,
3. One number of 10-12 KL/day milk packaging unit, with all modern facilities,
4. One number of 2 T/d milk & dairy products processing Units,
5. The project will aim at the following main end Products :
a. MILK Category :
i. Premium Fresh Milk Pouches (Toned, Skimmed, Whole or Full-Cream)
ii. Flavoured Milk,
iii. Butter Milk,
iv. Plain Curd,
v. Sweet Curd.
b. MILK-Products Category :
i. Butter,
ii. Ghee,
iii. Khoa,
iv. Chhena,
v. Paneer,
vi. Cheese.
The Ancillary Projects which can utilise the By-products effectively (INEVITABLE) :
1. Fertilisers, Bio Fertilisers (Vermiculture), Cow-dung processing,
2. Marketing Network & Support for Agricultural Produces,
3. Cattle-feed & Poultry-feed manufacturing,
4. Calf rearing & trading activities,
5. Electricity from Bio-gas plant,
6. Cattle Breeding & Artificial Insemination,
7. Chilling Plant,
8. Refrigerated Milk-Van.
Also there are a few Projects that can enhance the main Project (RECOMMENDED) :
1. Rain-Water Harvesting,
2. Door-to-Door Service Vans,
3. Farm Mechanisation & Equipment Support,
4. Export of Cheese to Middle-East & African Countries.
Land :
1. For Dairy farms of 100 X 2 Cattles = Approx 16 X 2 =32 Acres.
2. For one Milk Processing Plant 4 Acre.
3. Total = 36 Acres. Better to start with 40-50 Acres, so that future expansion will be
smooth.
Man Power :
1. For each of the 100 Cattle dairy farm = 15 employees.
2. For the milk processing unit = 25 employees.
3. So total man-power needed is = 55 employees.
Procurement of cows of “Cross Breed Jersey” type & species are popular in Orissa, because
they can be adapted to Orissa climate & are available in nearby state of Andhra Pradesh.
While transporting, and also for the normal lives of cattle, they must be covered by adequate
insurance. For uniform milk yield we suggest the cattle be bought in two instalments of 50
each after a gap of six months.
Health management of cattle is a must, and the presence of a full time qualified animal
husbandry doctor is recommended. He can look after day to day health check-up, disease
treatment, medication, vaccination, food, nutrition, breeding, pregnancy, artificial
insemination, & maintaining health records, etc
Sewerage & slurry of cow-dung & urine are appropriately processed. We suggest reuse of
these waste material either in production of fertilisers or energy - for cooking or electricity.
Fodder Cultivation :
Normally the cows are not allowed to graze in the open. There are two basic reasons : (1)
they may take in harmful insects, or organisms, and (2) idle time chewing of food consumes
a lot of energy which reduces milk yield. So fodder cultivation is a must. The vast area can
be utilised for this. For this farm mechanisation can be effectively used.
We recommend various types of fodder : like leguminous, non-leguminous, grass family,
quick growing, seasonal, perennial, and other leafy fodder. The dry type like husk & hay can
be purchased as per requirement.
For cultivation of fodder we require water, which can come from rain water harvesting, bore
well, dug well, or a pond inside the campus. We suggest a peripheral canal around the
compound which can be used as a rain water reservoir.
5. Well, we can’t do that from our own cattle reproduction because a female calf needs 3
yrs to reach the reproductive age. We may procure additional cattle for that.
6. Also, when we start we may not have any pregnant cows. So it will add one more year to
that.
7. So the practical suggestion is that – to have a uniform round the year optimum milk
yield & reproduction we buy 50 cattle each at one go every 3 months.
8. Say Jan-2010 we buy 50 cows. Apr-2010 the next batch of 50 cows. Jul-2010 the third,
& Oct-2010 the forth & final.
9. So by Jan-2011 we expect approx 20 female calves and it goes on in the same cycle.
10. And by Jan-2014 they all will become milk producing in the same cycle.
11. So for the fist 3 years (2011,12,13) the sale of female calves is not recommended.
12. From 2014 onwards, sale of female calves may be done depending on the practical &
actual data on mortality, infrastructure, health etc.
13. Thus we see that we can add a little over 100% of the initial no. of cows in 4 th year, with
addition of a little less than 100% in milk production in the 6 th year.
14. Then onwards it becomes regular.
15. Assuming that the average age of the initially procured cows being 5 year, again by
6th/7th year the yield will start falling & a few of them may become old or diseased.
16. Thus the cycle of replenishment & drop-outs will become stabilised after 6 th year and the
cycle will go on after that.
Fertilisers :
To increase agricultural production, it is necessary that chemical fertilisers as well as
organic manure are used adequately and also in a balanced manner. Presently (2008) the
fertiliser consumption in the state is 53 Kg/Ha only, as compared to the national average of
100 Kg/Ha. Hence there is adequate scope for increasing fertiliser consumption in the state.
While suitable measures are to be taken to increase fertiliser consumption, emphasis also
shall be laid on the balanced fertilisation. “Balanced Fertilisation” is the accurate fertiliser
application equal to the plant need and the nutrient content of the soil. To achieve balanced
nutrition for sustainable crop production, Integrated Nutrient Management (INM) is very
important.
The goal of INM is to integrate the use of all natural & man made sources of plant nutrients
required for high agricultural productivity besides ensuring the health of the soil. The state
will endeavour to promote INM practices in a big way thro’ suitable programmes &
incentives.
The effect of prolonged and over use of chemicals on soil results in soil health deterioration,
human health hazards and pollution of the environment. Hence it is necessary to switch to
an alternate source of nutrient supply to the crops which is ecologically protective of
farming. The state will promote the use of bio-fertilisers in a big way thro’ suitable incentives
and effective extension.
Farm Mechanisation :
Farm mechanisation brings about a significant improvement in agricultural productivity in
a number of ways. The timeliness of various agricultural operations is crucial in obtaining
optimal yield, which is possible only thro’ mechanisation.
Secondly, the quality & precision of operations are equally significant for realising higher
yield. The various operations such as land levelling, irrigation, sowing and planting, use of
fertiliser, plant protection, harvesting & threshing need a high degree of precision to
increase the efficiency of the inputs and reduce the losses. Farm mechanisation goes a long
way in reducing the drudgery of agricultural operations. With mechanisation there are good
chances of :
1. Reduction of Cost, Labour, Effort, etc.,
2. Increase of Production, Productivity, Profitability, etc.
In our State, the current level of mechanisation is very low. Farm mechanisation will be
promoted in a big way by ensuring easy availability by appropriate farm machinery at
substantially subsidised rate. The Rate of Subsidy on farm mechanisation and equipment is
now at 50% level. (See the Table of Subsidies). The following are the salient features of this
facility :
1. The farm machinery suitable for different types of soil and operation for important crops
shall be developed.
2. Women-friendly farm equipment will be promoted.
3. Technical know-how shall be provided to the farmers with respects of appropriateness of
the farm machinery for the situation.
4. The training related to farm machinery & equipment shall be imparted to the farmers
and artisans.
5. Integrated Pest Management (IPM) and use of Bio-Control agents will be encouraged in
order to minimise the indiscriminate and injudicious use of chemical pesticides. Subsidy
will be provided for plant protection equipment.
6. Agro Service Centres (ASC) will be promoted to provide door-step services for farm
mechanisation.
In our context of fodder cultivation, we can use the farm mechanisation efficiently in the two
pieces of land of 16-18 Acres each. The unutilised time can be utilised for giving the
equipment on hire for support of profit margin.
Marketing Network :
This is the Marketing of the products of Milk Plants. It involves procurement of milk from
the villages, chilling, pasteurisation, homogenisation, packing of milk of various brands
(whole, standard, toned and double toned milk) and supplying them to the consumers. The
surplus fat is converted into ghee or table butter or sold as cream to bakeries. The market
for the product (domestic and export), type of arrangements for distribution and sales,
commission and additional incentive to be given, the proposed net work and the
advertisement plans should be furnished. Detailed market survey report is required to be
submitted.
Bio-Gas Plant :
The impending scarcity of petroleum threatens the world’s fuel supply. Mankind can face
this threat successfully with the help of biogenous methane, but the world is yet to take full
advantage of this technology, because its practitioners have so far ignored the basic tenet of
science – viz. output of work is dependant on the energy available for doing that work. This
fact is seen in the current practice of using low calorie inputs like cattle dung, distillery
effluent, municipal solid waste or sewerage, in biogas plants, which makes methane
generation highly inefficient.
To efficiently dispose the waste and recycle it profitably we must have a Bio-Gas plant.
Primarily it can be a gobar-gas plant. As of today the technology is also advanced enough to
utilise house-hold waste for production of energy. The huge amount of methane gas present
in the cow-dung is utilised for generating clean fuel the remaining refuse can be used for
manufacture of bio-fertilisers. The fuel thus generated can be used as domestic fuel or
alternatively this can be used to produce electricity.
The bio-gas / gobar-gas plant will cater to the needs of fuel & lighting for the dairy farm, as
well as the families of the workers.
The following are some facts about biogas from cow dung :
1. Cow dung gas is 55-65% methane, 30-35% carbon dioxide, with some hydrogen,
nitrogen and other traces. Its heating value is around 600 Btu per cubic foot. (1
Btu/Cu.Ft = 8.9 Kcal/Cu.M)
2. Natural gas consists of around 80 % methane, yielding about 1000 Btu per cubic foot.
3. Biogas may be improved by filtering it through limewater to remove carbon dioxide, iron
filings to absorb corrosive hydrogen sulphide and calcium chloride to extract water
vapour after the other two processes.
4. Cow dung slurry is composed of 1.8-2.4% nitrogen (N 2), 1.0-1.2% phosphorus (P2O5),
0.6-0.8% potassium (K2O) and 50-75% organic humus.
5. About one cubic foot of gas may be generated from one pound (=1 Cu.M/16 Kg) of cow
manure at around 28°C. This is enough gas to cook a day's meals for 4-6 people in
India.
6. About 1.7 cubic metres of biogas equals one litre of petrol. The manure produced by one
cow in one year can be converted to methane which is the equivalent of over 200 litres of
petrol. That means approx 15 Kg of cow-dung is generated per cow per day.
7. Gas engines require about 0.5 m 3 of methane per horsepower per hour. Some care must
be taken with the lubrication of engines using solely biogas due to the "dry" nature of
the fuel and some residual hydrogen sulphide, otherwise these are a simple conversion
of a petrol engine.
Chilling Plant :
These are the Milk Chilling plants. It involves collection of milk from the villages, chilling the
milk to 3-4 degree Celsius and transporting to the main dairy for further processing and
manufacture of products. This is actually a section of the milk processing plant.
Depending upon the need, the requirement of vehicles may be considered in the project
cost.
Explanation :
1. For the 4 years, UAE has remained as the top-most importer of cheese from India (44-
48%) followed by Singapore (12-18%), Nepal (8-11%) & Australia (7-8%).
2. The average export price is around Rs.120/Kg (2007-08), 107 (2006-07), 101 (2005-06).
3. These figures are shown in Bold letters in the last row of the Table.
The GATT agreement further gave a boost to the dairy industry, as India has a comparative
cost advantage in regard to milk production. NABARD has been actively involved in credit
disbursement in number of schemes in dairy sector. It also encourages development of new
products through its research and development funds besides guiding various
entrepreneurs in new areas of business and technology.
Women in Agriculture :
Advocacy for women’s rights and gender sensitisation is at the very core of developmental
approaches today. Communications for social mobilisation therefore should incorporate
gender as an equity perspective.
1. Women will be important project partners in agricultural developments. So, emphasis
will be given to capacity building and empowerment of women to achieve the goals.
2. The creativity, productivity and entrepreneurship of women and their capacity for
furthering their skills will be dealt with special focus thro’ gender-analysis and gender
sensitisation in all agricultural developmental approaches.
3. Capable women SHGs will be given preference, if they come forward to deal in the
agricultural-inputs.
4. Women-friendly farm equipment will be promoted.
Milk Products
Chhena
Chhena differs from paneer in that no pressure is applied to remove the whey. The
coagulum is collected in a cloth and hung on a peg without applying pressure to drain off
the whey.
Method of preparation : Chhena is usually prepared by mixing old Chhena whey with boiled
hot milk. For Chhena production, cow milk is preferred since it yields a soft bodied and
smooth textured product. Both these characteristics are suitable for production of high-
grade sweets. Chhena from buffalo milk has a slightly hard body, a greasy and coarse
texture, and does not produce good quality chhena sweets. Commercial manufacturers
generally use sour whey for economic reasons.
Paneer
Mainly consisting of acid coagulated milk solids. Paneer is made from cow, buffalo or mixed
milk although buffalo milk is preferred. It can be taken as such or can be used in the
manufacture of rassagolla, paneer pickle, curry etc.
Dahi /Curd
It is the most important fermented milk product used in India since time immemorial.
Method of preparation : The production of dahi is mostly carried out on a small scale, in
every household. The household milk is boiled, cooled to room temperature (37 0C),
inoculated with 0.5-1% starter which usually is the previous day’s dahi or butter-milk, and
then allowed to set overnight. The starter culture used is the Lactic acid bacteria.
In cooler weather the dahi setting vessel is usually wrapped in a cloth to maintain warmth.
In shops, the method is more or less the same except that milk is concentrated somewhat
before inoculation and the dahi is usually set in a shallow circular earthen pot, which helps
in the absorption of any whey that may ooze out.
Yoghurt
Yoghurt is considered as the western counterpart of the Dahi. Scientists attribute many
health benefits for consuming yoghurt.
Method of preparation : Whole fresh clean milk has to be used in the preparation of yoghurt.
To this, required quantity of skim milk powder is added so that the solid not fat is increased
to 12%. Sugar may be added at the rate of 5-8%. The mix is heated and later homogenised
followed by pasteurisation. The mix is cooled and later inoculated with a 1:1 mixture of
Lactobacillus bulgaricus and Streptococcus thermophilus at the rate of 2%. The yoghurt
mix is then packed and incubated at 41- 420C for three hours so that the acidity reaches
around 0.75% of lactic acid. The container is removed from the incubator and stored at 5 0C.
Khoa
It is a product obtained by heat desiccation of cow, buffalo or mixed milk in an open pan to
65-70% solids.
Method of preparation : In the traditional method, milk is taken in small lots of about 4-5
litres in an open, shallow iron pan. It is directly heated over a non-smoky vigorous fire. Milk
is slowly agitated in the beginning with a continuous light scraping action, with iron scraper
on the sides to avoid scorching of milk solids sticking to the sides of the pan.
Continuous evaporation takes place and milk thickens rapidly. At certain concentration,
usually of 2.5-2.8 times, the heat coagulation of protein begins. Concentration now takes
place faster and a change of colour is seen. The heating is turned down to about 82-87 0C
and stirring and scraping intensified to avoid browning of milk solids due to scorching. The
viscous milk begins to dry up. When the khoa mass begins to leave the sides and bottom of
the pan, heating is shut off and khoa forms into pats.
The final solids content in khoa ranges between 65 and 70%. Cow milk usually yields 18
percent of khoa. The yield from buffalo milk is usually 20 percent. Buffalo milk is preferred
since it yields a whiter product with a soft loose body and a smooth granular texture which
makes it suitable for the preparation of khoa based sweets.
3. If we analyse the costing / pricing from the “Fat-SNF” composition point of view, we get
very interesting results :
a. The cow milk of OMFED contains 3.5% Fat & 8.5% SNF, the input milk price
becomes = (154 × 0.035 + 113 × 0.085 ) × 1.028 = Rs.15.45/Ltr. So we get 20 paise
to offset 25 paise of loss.
b. The Toned (Low-Fat) milk recently introduced (20-09-2009) has a composition of
0.5% Fat & 8.7% SNF. So the input price becomes = (154 × 0.005 + 113 × 0.087 ) ×
1.028 = Rs.10.90/Ltr.
c. Assuming that the other costing are the same & the sale price being Rs.17.00/Ltr,
the net profit is = ( 15.65 – 10.90 ) – ( 20.25 – 17.00 ) = ( 4.75 – 3.25 ) = Rs.1.50/Ltr.
d. Note here that, if the sales & distribution cost is considered proportionately, then
the margin becomes Rs.1.75/Ltr. Thus, this has a tremendous potential of
profitability, despite the fact that whole of over head cost is apportioned to liquid
milk.
e. The general public is not bothered about these composition, what they understand
is that low-fat milk is thinner than normal cow-milk & yields less curd, butter,
chhena etc. And hence the price is less. But they can’t gauge “how low” is the quality
and what would be the low price.
f. And, this precisely is the trick of the trade.
Curd (Plain) :
1. For better yield and texture of the curd, SMP is added to the raw milk.
2. Average proportions are : SMP = 7%, Milk = 93%, and yield = 95%.
3. Cost = ( 130 × 0.07 ) + ( 15.65 × 0.93 ) = 9.10 + 14.55 = 23.65
4. With yield = 23.65 ÷ 0.95 = Rs.24.90/Kg.
5. Market price on the average is Rs.60/kg.
Sweetened Curd :
1. Sugar is added to sweeten the curd.
2. The ingredients and proportions are : Milk = 70.5%, SMP = 12% and Sugar = 17.5%.
3. Cost = ( 15.65 × 0.705 ) + ( 130 × 0.12 ) + ( 30 × 0.175 ) = 11.05 + 15.60 + 5.25 = 31.90
4. Average yield is 80%. So the final price is 31.90 ÷ 0.80 = Rs.39.90/Kg.
5. Normal packing is in ice-cream cups (13 × 80gm) & normal cups (7 × 150gm), and the
cost is approx Rs.8/Kg.
6. That makes a final cost of R.48.Kg.
7. The average market price is Rs.80/Kg.
Ghee :
1. Let’s say we produce Toned milk at 1.5% of fat.
2. So starting at 4% we are left with 2.5% fat, which is processed into Ghee.
3. At this rate for every Ltr of Ghee we must have 40 Ltrs of input milk. ( 1 ÷ 2.5% = 40 ).
4. Cost of fresh Milk is Rs.20.25/Ltr. (OMFED).
5. Cost of Toned Milk is Rs.16.50/Ltr. (OMFED).
6. So the difference is Rs.3.75/Ltr and for 40 Ltrs it is Rs.150/Ltr.
7. Hence, this is the cost of Production of 1 Ltr. of Ghee.
8. OMFED price of ghee is Rs.256/Ltr. Other Companies’ prices are from Rs.220-300/Ltr.
9. Note that we have not added any extra cost of ghee processing. It is nominal, and even if
added, we have a margin of Rs.75/Ltr.
10. Remember, this profit is out of no extra input. It just adds to the profitability.
11. There’s an alternate method of calculation : Ghee is approx 92-96% fat & rest moisture.
12. So calculating at the Fat rate = ( 154 × 0.94 ) = 144.75, plus separation cost say 5.75
will give the same figure as Rs.150/Ltr
13. Final pricing and positioning of the product need accurate decision.
Paneer :
1. This is the solid suspension of liquid milk. (Milk is chemically a colloidal Solution).
2. Normally, 160 gm of Chhena is obtained from 1 Ltr (1.028 Kg.).
3. So if the raw input milk is Rs.15.20/Ltr, then Chhena is = 15.20 ÷ 0.16 × 1.028 =
Rs.97.65/Kg.
4. Chhena is a soft coagulated product having some water content. Paneer is a hard
coagulated product and pressed to remove water and bring to a particular shape.
5. Assuming that we have 7.5% water content, the cost can be = 97.65 ÷ 0.925 =
105.55/Kg
6. The Market price is between Rs.130-150/Kg, and OMFED price is Rs.126/Kg.
7. The Chhena-water thus extracted known as WHEY-MILK is very rich in vitamins &
minerals and can be sold for Rs.32-40/Ltr. This is out of no extra input again,
strengthening the margin.
8. The Paneer is marketed in the name of “Cottage Cheese” because of VAT implications
(Panner carries 12.5% & Cottage Cheese none).
Cheese :
Cheese is nothing but paneer, treated with some favourable organisms and stored in
controlled conditions for over a period. This is high in demand for the ever increasing
urbanisation. Also there is a great demand for exports. The export is controlled and
subsidised by APEDA, a central body. For this separate sanction has to be obtained.
The costing is similar to paneer plus the controlled storing cost for normally a year. If we
take the rate of bank interest for a year, say 15% and storage cost at 35%, then the cost of
cheese shall be Rs.160/Kg. The selling price is normally Rs.300-350/Kg.
Note : “Ash” generally refers to the salts & minerals present in milk.
TABLE-6 : PFA AND BIS STANDARDS FOR MILK AND MILK PRODUCTS
Description Fat % (Min) SNF%(Min)
Cow milk 3.5 8.5
Buffalo milk 5.0 9.0
Goat milk 3.5 9.0
Standardised milk 4.5 8.5
Recombined milk 3.0 8.5
Toned milk 3.0 8.5
Double toned milk 1.5 (max.) 9.0
Skimmed milk 0.5 (max.) 8.7
Full cream milk 6.0 9.0
A Note on Subsidies :
A single project can have only one subsidy in total from all sources, like state agency or
central agency. Even further expansions or phased implementation will have only one time
subsidy.
For this it is recommended that the projects may be suitably divided into viable divisions
having separate land and maximum subsidy in terms of project cost.
The cost of land is excluded from the calculation of subsidy. However, the land development
cost is taken into consideration.
Some Additional Facts About Milk Demand & Supply :
1. Demand of liquid milk in Bhubaneswar = 170 KL/day.
2. Demand for the whole of Orissa = 1300 KL/day
3. Demand for Pasteurised Milk in Orissa = 800 KL/day
4. Supply for the State = 475 KL/day (OMFED=400, Private=40, Unorganised=35)
5. Demand Gap = 325 KL/day
6. OMFED market share in Orissa = 90%.
7. The Fresh Cow-Milk Price in neighbouring state (Jharkhand) = Rs.22/Ltr (packaged) &
Rs.26/Ltr (unpackaged).
8. Amul “Taza” milk (low fat and high SNF content) sells for Rs.34/Ltr
9. The recently introduced Low-Fat Milk Price from OMFED shall be Rs.17/Ltr. (0.5% fat)
Part A : Organisational
Part B : Financial
1. Financial outlay with phasing (item wise detailed break up of the outlay) :
2. Promoters contribution :
3. Foreign collaborators contribution/equity participation from any organisation. :
4. Public issue, if any :
5. Bank loan (Indian Rupee) : Name and address of the bank branch (letter of consent to be
enclosed) :
6. Foreign exchange component loan :
7. Name of the bank providing foreign exchange and letter of consent. :
8. Working capital requirement (Item wise detailed estimates) :
9. Arrangement for the working capital loan :
10. Subsidy component (if any) and name the details regarding the organisation giving
subsidy. :
11. Marketing arrangement/buy back arrangements(letter of consent) :
12. Arrangements for insurance of capital goods and the product. :
13. Lending terms - rate of interest, repayment schedule, security. :
Part C : Technical
1. Location(present constraints on procurement, storing, transportation, processing,
packaging). :
2. Present market demand/ supply and future projections - domestic and export. :
3. Promoters :
4. Proposed plant capacity :
5. Availability of raw Material :
6. Site location - suitability of site, environmental social Issues. :
7. Project engineering :
a. Site plan and map along with necessary approval :
b. Land, Land Development fencing, drainage, :
c. Civil works - detailed drawings, specifications quantities and costs. :
d. Machinery - specification and costs, quotations, and layout plan (Section wise). :
e. Detailed list and cost of imported items of equipment and license for import. :
f. Utilities - water electricity, fuel with detailed specifications. :
g. Detailed processing mechanism (process flow Chart) :
h. By-product processing :
i. Handling, processing, packaging, preservation and marketing of milk including
countries to be exported. :
j. Effluent treatment :
k. Other amenities, transport facilities, etc. :
l. R & D, quality control lab and equipment. :
m. Office, essential quarters etc. :
8. Man power requirement Technical staff and training needs. :
9. FDA regulations and Export of quality products. :
10. Implementation schedule and PERT Chart. :
11. Steps to involve farmers participation in maintaining milch animals. :
12. Supply of inputs - All, veterinary aid, Feed, fodder, fodder seed, etc.
Conclusion :
This business plan takes into consideration of all the possible aspects of a rural based cattle
/ dairy farm, and not just a milk processing unit. We have adopted an “integrated” approach
in suggesting the plan. This approach has a two-fold advantage :
1. A lone unit of milk packaging unit being an unprofitable proposition, all possible areas
for making up the loss and add to the profitability are envisaged.
2. This project is expected to be an integral part of our rural life, helping the society, and in
return obtain the power of long-term sustenance out of it.
This report is not a Project Report. It’s a Business Plan prepared for a particular group of
companies which are already in business for a long time.
This is also a long term plan for developing or diversifying the business vertically &
horizontally :
1. Vertically by adding other milk and dairy products, like ice-cream, milk-made sweets,
etc. Or even cheese export.
2. Horizontally by adding similar agro-based or village-based projects like horticulture,
Vermiculture, mushroom farming, fish farming, vegetables, commercial fruits, herbal /
ayurbedic medicinal plants, etc. The list is long.
3. Such a scenario is foreseen 8-12 years hence. Poor farmers will cease to be able to
sustain themselves and loose the little land they have. And rich farmers / businessmen
will come to grab the situation and control the agriculture, so that they can sell the
produce in their malls.
For this long term in view, we suggest that basic infrastructural arrangements which are
explained in this report, need to be considered in the preparation of the Project Report.
As far as practicable all the figures are obtained from the up-to-date and reliable sources.
The costing and pricing figures of the individual products are indicative in the sense that
they pertain to a particular set-up. The project may have its own. (Errors & Omissions are
expected.)
[ End ]
© Himansu S M / 27-September-2009.
Divine Light ( Dibyajyoti ) Consultants ( DILICONS ), 308, Laxmisagar, P.O.- Budheswari,
Bhubaneswar – 751006. Tel : +91 674 2575683, Cell : +91 98611 20207.