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Of
MASTER OF BUSINESS ADMINISTRATION
(INTERNATIONAL AGRIBUSINESS)
ANAND – 388110
JUNE 2017
INTERNATIONAL AGRI-BUSINESS MANAGEMENT INSTITUTE
ANAND AGRICULTURAL UNIVERSITY
ANAND – 388110
CERTIFICATE
I have great deep sense of gratitude for Bharat Krushicare Pvt. Ltd.
providing me the opportunity to undergo my MBA-International Agribusiness
final Project work.
ABSTRACT
Milk in its natural form has high food value due to its nutritive value, milk is
significant to young and old people. Adulteration in milk has been a cause of concern
for both the Government and the Dairy Industry. The Indian Council of Medical
Research has reported that “milk adulterants have hazardous health effects.
Organic milk is defined as milk from cows that have been exclusively fed organic
feed, have not been treated with synthetic hormones, are not given certain
medications to treat sickness, and are held in pens with adequate space. There are
two varieties of cows based on their genes: one that produces Al milk protein, and
the other, that produces A2 milk protein. Most dominant cows of todays’ possess Al
genes, while the Indian Gir cow, which is on the verge of extinction, possesses A2
genes. Recent studies say that milk from cows with A2 genes is far healthier than its
Al counterpart, besides also being compatible with those with lactose intolerance.
With this background, the study entitled, “Market Analysis of Organic Milk at
Ahmedabad, Gandhinagar and Vadodara”, was carried out for Bharat Krushi Care
based in Ahmedabad, with the following specific objectives; knowing about
consumer behaviour and consumption pattern of organic milk, analyse the market
i
potential for organic milk, to know about potential distribution channel of organic
milk and to know the constraints in buying of organic milk.
Indian desi cows are the backbone of organic agriculture. So, in this study Gir cow’s
milk was consider as organic milk according to the decision of my Industrial guide.
The study covered 150 consumers and 18 retailers selected as per purposively from
Ahmedabad, Gandhinagar and Vadodara cities of Gujarat. Primary data were
collected with the help of schedule. Chi-Square test was used to find out association
of the socio-demographic variables on quantity of purchase. Descriptive statistics
were used to calculate different consumption variables and price of organic milk.
This study was designed to characterize consumer behaviour towards organic milk
and then evaluating personal and household characteristics for understanding
consumption pattern. The analysis of data revealed that out of total respondents 81%
graduate and 15% post graduate. Respondents were consuming more loose milk than
packed. The average quantity of consumption of milk was 0.700 ltr/day and average
price was 71 Rs/ltr. Mostly respondents were purchasing milk from local dairy of
producer’s or they got home delivery. The major information relating to organic milk
transmitted through word of mouth. Family structure and family members were two
variable having most signification association with quantity of milk purchase.
The major factor affecting buying of organic milk were health, nutritious value, and
freshness and least affecting factors were taste and price. Consumer’s major
constraints in buying of organic milk were availability, no certification and limited
information. Market potential of organic milk in the study area was valued around Rs.
250 crore annually. Mainly three distribution channel were found in survey, farmer-
consumer, farmer-retailer-consumer, and famer-trader- retailer-consumer.
ii
CONTENTS
Chapter Number PARTICULARS Page No.
ABSTRACT i
TABLE OF CONTENT iii
LIST OF TABLES vi
LIST OF CHARTS vii
LIST OF ABBREVIATIONS ix
1 INTRODUCTION 1-38
1.1 Operation Flood 2
1.2 The Cooperatives 4
1.2.1 Amul - The Success Story 5
1.2.1.1 Milk Strike 5
1.2.1.2 Priceless Lessons 6
1.2.1.3 Then and Now 7
1.2.1.4 The Amul Model 8
iii
1.10 Growth Drivers 29
1.11 Akshayakalpa Farms 31
1.12 Overview of Organization 33
1.12.1 Product range of Bharat Krushicare Pvt. Ltd 34
1.12.1.1 Organic Fertilizers 34
1.12.1.2 Soil Conditioner 35
1.12.1.3 Crop Enhancer 36
1.12.1.4 Seeds 37
1.13 Objectives 38
2 REVIEW OF LITERATURE 39-44
3 RESEARCH METHODOLOGY 45-49
3.1 Area of Study 45
3.2 Nature of Data 45
3.2.1 Primary Data 45
3.2.2 Secondary Data 45
3.3 Research Design 46
3.3.1 Type of research 46
3.3.2 Sampling Method 46
3.3.3 Sampling Technique 46
3.3.4 Sample Unit 46
3.3.5 Sample size 46
3.3.6 Sampling Area 46
3.3.7 Research instrument 46
3.3.8 Analytical Tools 46
3.3.8.1 Chi square 46
3.3.8.2 Garett’s Ranking Technique 47
3.3.8.3 Market Potential 48
3.3.8.4 Consumer Behavior 48
3.4 Scope of the Study 49
3.5 Limitations of the Study 49
4 RESULTS AND DISCUSSION 50-71
4.1 Sample Distribution 50
iv
4.1.1 City Wise Sample Distribution of Consumers 50
4.1.2 City Wise Sample Distribution of Retailers 51
4.2 Consumers Details 52
4.2.1 Gender of Respondents 52
4.2.2 Age of Respondents 53
4.2.3 Occupation of Respondents 54
4.2.4 Education of Respondents 55
4.2.5 Family Structure of Respondents 56
4.2.6 Family Members 57
4.2.7 Earning Members 58
4.2.8 Income of Respondent’s Household 59
v
5.2 Conclusions 75
6 REFERENCES x
vi
LIST OF TABLES
S.N TITLE Page No
1.1 Key Statistics for India’s Dairy Industry 2
1.2 Species and population 10
1.3 Milk and Milk Product Consumption 17
1.4 Milk Production 19
3.1 Selected Area 45
4.1 City Wise Distribution of Consumers 50
4.2 City Wise Distribution of Retailers 51
4.3 Gender of Respondents 52
4.4 Age of Respondents 53
4.5 Occupation of Respondents 54
4.6 Education of Respondents 55
4.7 Family Structure of Respondents 56
4.8 Family Members 57
4.9 Earning Members 58
4.10 Income of Respondent’s Household 59
4.11 Type of Milk Purchase 60
4.12 Purchase Decision 61
4.13 Frequency of Purchase 62
4.14 Purchase Point 63
4.15 Price of Milk 64
4.16 Source of Information 65
4.17 Factor Affecting Buying 66
4.18 Constraints in Buying 67
4.19 Total Consumption per Day 68
4.20 Price of Milk 68
4.21 Census Data 69
4.22 Mode of Purchase 70
4.23 Mode of Selling 71
vi
LIST OF CHARTS
vii
LIST OF FIGURE
S.N TITLE PAGE NO.
1.1 Amul Model 9
1.2 Vertical Restraints Used by the Organised Sector 11
1.3 Vertical Restraints Practised by the Unorganised Sector 12
1.4 Relation between Organised and Unorganised Milk Sector 13
viii
NOMENCLATURE
BAIF : Bharatiya Agro-Industries Foundation
CAGR : Compounded Annual Growth Rate
CLA : Conjugated Linoleic Acid
DAHD : Department of Animal Husbandry, Dairying & Fisheries
FAO : Food and Agriculture Organization
FDA : Food and Drug Administration
FSSAI : Food Safety and Standards Authority of India
GCMMF : Gujarat Cooperative Milk Marketing Federation Limited
GDP : Gross Domestic Product
GOI : Government of India
IT : Information Technology
Kg : Kilogram
MIDH : Mission for Integrated Development of Horticulture
MMT : Million Metric Tons
MNC : Multinational Company
NDDB : National Dairy Development Board
NFSM : National Food Security Mission
NMSA : National Mission for Sustainable Agriculture
PUFA : Polyunsaturated Fatty Acids
RKVY : Rashtriya Krishi Vikas Yojana
SMP : Skimmed Milk Powder
SNF : Solids-Not-Fat
U.K : United Kingdom
U.S. : United States
UHT : Ultra-High Temperature processing
USDA : United States Department of Agriculture
ix
1. INTRODUCTION
India is the world’s largest producer of dairy products by volume and has the world’s
largest dairy herd. The country accounts for more than 18.5% of world’s total milk
production and is also the world’s largest consumer of dairy products, consuming almost
all of its own milk production. Dairying has been regarded as one of the activities that could
contribute to alleviating the poverty and unemployment especially in the drought‐prone
and rain‐fed areas. In India, about three‐fourth of the population live in rural areas and
about 34% of them are poor. Therefore among these people, as well as the large vegetarian
segment of the country’s population, dairy products provide a critical source of nutrition
and animal protein to millions of people in India.
Prior to year 2000, India was not noticed by most international dairy companies, as the
country was neither an active importer nor an exporter of dairy products. Although India
has imported some milk powder and butter oils as aid between 1970 and 1990, exports
from India were insignificantly small and it was not until 2000 onwards, when Indian dairy
products started having more presence in global markets. (Chawla et al, 2009)
Milk production in India has developed significantly in the past few decades from a low
volume of 17 million tons in 1951 to 160.36 million tonnes in 2015-16 (Min. of Agri, GoI,
2016). Currently, the Indian dairy market is growing at an annual rate of 6.25%. Despite the
increase in production, a demand supply gap has become imminent in the dairy industry
due to the changing consumption habits, dynamic demographic patterns, and the rapid
urbanization of rural India. This means that there is an urgent need for the growth rate of
the dairy sector to match the rapidly growing Indian economy.
1
Table 1.1 Key Statistics for India’s Dairy Industry
Annual Milk Production (2015-16) 155.5 Million Tonnes
Annual Export Volume (2016) 33,377.16
Share of world dairy production (2016) 18.5%
Share of world trade in dairy products (2003) 0.3%
Milking herd size 115.5 million
Number of milk producers’ cooperative unions 170
Number of local dairy cooperatives 96,000
Number of state cooperatives 15
Per capita consumption (Drinking milk) 322g /day
Estimated percentage of dairy farmers in 40‐50%
organised sector
% of dairy produce consumed by unorganised 65%
sector
Dairy industry workforce 75 million women/ 15 million men
(Source: Livestock Censuses, Department of Animal Husbandry, Dairying & Fisheries,
Ministry of Agriculture, GOI, 2016)
2
India’s White Revolution has attracted world-wide attention and Indian performance is
expected to continue to play a major role in the future of the dairy industry in the world in
coming years. It is expected that the world milk production will rise to 867 MMT by 2016
per cent from current 714 MMT. However, as per the current CAGR of 4 per cent and
optimistic projection of 4.5 per cent, India`s milk production is estimated to touch 180
million MT by 2020. This will lead to increase of India`s share in the world milk production
from the current 16 per cent to 21 per cent in 2020. The core of the dairy industry lies with
the milk producing farmer, who gets affected by many factors ranging from fuel and
agricultural input prices to government`s foreign policy. Hence, the state of milk producing
farmer is crucial for the dairy industry. To sustain the milk production there has to be a
right mix of social, environmental and economic factors influencing the farmer. (BIEC,
Dairy tech, Bangalore, India, 2017)
Against this backdrop, the national policy on dairy is critical for the growth of dairy
industry. Milk production in US has been growing at a very good pace as a result of policies
of the US government which nurture and protect cooperative marketing by dairy farmers.
Experts feel India should also continue its emphasis on dairy development through
cooperatives and private investments to ensure long term growth and sustainability of the
industry. India has the largest bovine population in the world with a large processing
capacity of 98.3 million litres per day. It shows milk producers in India enjoy highest
percentage share of consumers` rupee -- 70 to 86 per cent. This is more than double that in
other countries like US, European countries and New Zealand where the returns to milk
producers is less than 40 per cent of the consumers’ spending on milk. (BIEC, Dairy tech,
Bangalore, India, 2017)
3
1.2 THE COOPERATIVES
Efforts prior to independence and for quite some years after it the immediate problem of
the Indian dairy industry was not facing so much of shortage of milk but of transportation,
processing and distribution of rurally produced milk in huge quantities to large
consumption centres. As a response to this
logistical problem, colonial government of
India had established a strong tradition of
active government presence in dairy
processing and marketing, since late 1920s,
government milk colonies were established
by municipal corporations in large cities
which promoted huge dairy farms in their
peripheries.
Thus, Bombay has its milk colony at Agarey, Calcutta's was near Haringhotta and the milk
colony in Madras was at Madhavaram. These edificies were a legacy of the colonial dairy
policy to hasten the pace of dairy development the Milk sub-committee of the Policy
Committee on Agriculture (1950) recommended for the monopolization of milk supply and
distribution through Milk Control Board and from this recommendation that the city milk
scheme originated. However, by the end of 1960 it was clear that the idea of the city milk
scheme was unworkable primarily because the city milk scheme never drew their milk
supply from the urban periphery, they found it difficult to compete with the dudhias who
pedaled cans of fresh milk on their bicycles and provided doorstep delivery to the
customers. Being controlled by the government it has a rigid pricing policy and failed to
keep pace with the rising price. As a result, producers started supplying to unorganized
sector vendors. This drastically hit the milk supply to the scheme which now had to resort
to rationing to cope with the heavy demand pressure for their cheap, subsidized milk. The
scheme began to increasingly combine imported powder to augment milk supplies which
raised their dependence on imports. Moreover, it also compelled the scheme to continue to
offer low procurement prices to the producers. This, throughout the 1950s and the 1960s
official policy in dairy processing and marketing militated against the goals of the official
4
policy in the animal husbandry success raised questions about the wisdom of the city milk
scheme as well as the city milk colonies.
Patel and Kurien were joined by HM Dalaya, a forgotten name today, and the three became
the pillars of the cooperative movement. Kurien’s help was sought to put the dairy
equipment together and run the units, and he also took care of marketing and external
affairs. . As Kurien admitted, the technical and internal aspects of running the dairy were
looked after by Dalaya, and Patel brought together farmers to set up more cooperative
societies. New machinery was bought and milk procurement increased from 200 litres in
1948 to 20,000 litres in 1952. A dairy was set up in 1955 to process excess milk into milk
5
powder and butter. A large part of the dairy’s success was thanks to Dalaya’s path-breaking
discovery of a method of producing skimmed milk powder from buffalo milk. This was a
first across the world, and an important breakthrough, as the farmers in the region depended
on buffalo milk and excess milk could be processed into powder.
In 1965, the National Dairy Development Board (NDDB) was established at Anand. With
Kurien’s expertise and the then-Prime Minister Lal Bahadur Shastri’s advice, the world’s
largest dairy development programme known as ‘Operation Flood’ was born. This
replicated the success of the ‘Amul Model’ in other parts of the country.
The system, known as the ‘Anand Pattern’, operates at three levels. A dairy cooperative
society at the village level is responsible for collecting the milk; the District Milk Union to
which the village dairy is affiliated procures and processes the milk; and the State milk
federation markets the milk and milk products. All the personnel involved are selected or
elected by the farmers — whether it is to manage the various levels efficiently or run the
dairy profitably. Almost 80-85 per cent of the amount earned from consumers is returned
to the farmers to encourage better milk production. Most importantly, the cooperatives
understand and respond to the needs and demands of the farmers.
6
1.2.1.3 Then and Now
Today, GCMMF is India’s largest food products marketing organization. It is jointly
owned by about 36 lakh farmers from 18,000 villages who are members of the 17 unions.
Marginal farmers, landless laborers and tribal comprise more than 70 per cent of the
number. It is mandatory for GCMMF to buy all the milk that farmers bring in and at the
highest rate possible; on an average, about 18 million litres of milk is procured per day
The Amul brand reaches about 1 million retailers through a wide-ranging network of 10,
000 dealers. Its product range includes milk, milk products, milk-based sweets, ice creams,
chocolates and much more. In the ice cream sector alone, Amul is among the top 10 brands
in India. Its sugar-free pro-biotic ice-cream won The International Dairy Federation
Marketing Award for 2007. The chocolate range, launched to counter the hold of MNC’s
over cocoa-bean producers in the country, is said to be doing very well — coming fourth
after Cadbury, Nestle and Ferrero in sales.
Amul leads the packaged milk segment with its UHT (Ultra-High Temperature processing)
products, which maintain the shelf life of milk without the need of cold supply chains. It
has also introduced Stamina, a sports drink.
7
1.2.1.4 The Amul Model
The Amul Model of dairy development is a three-tiered structure with the dairy cooperative
societies at the village level federated under a milk union at the district level and a
federation of member unions at the state level.
Establishment of a direct
linkage between milk
producers and consumers by
eliminating middlemen
Professional management
8
Figure 1.1: Amul Model
The Amul model has helped India to emerge as the largest milk producer in the world.
More than 15 million milk producers pour their milk in 1, 44,500 dairy cooperative
societies across the country. Their milk is processed in 184 District Co-operative Unions
and marketed by 22 State Marketing Federations, ensuring a better life for millions.
9
1.3 INDUSTRY STRUCTURE
The Indian dairy sector is different from other dairy producing countries as India places its
emphasis on both cattle and buffalo milk. Out of all bovine population in India, 60 percent
are cattle, 40 percent are buffalo. Out of the nation’s total milk production, about 55 percent
comes from buffaloes, and the remainder from dairy cows. (Livestock Censuses, DAHD,
Ministry of Agriculture, GoI 2012)
Traditionally, buffalo milk has been preferred for its high milk fat content. However, as
the organised sector procures more milk, dairy cattle becoming more popular due to their
increased yields and shorter dry periods.
10
So, vertical restraints are common in the food sector and are specific to the country, type
of food type and agent and the Indian dairy sector is not an exception. These vertical
restraints have been modified for the Indian dairy sector for the organised and unorganised
sectors separately and shown as dotted lines In Figure1.2.
11
Figure 1.3: Vertical Restraints Practised by the Unorganised Sector
The unorganised sector consists of cash rich milk traders collecting about 100 to 500 litres
per day from a group of villages. (Rajeshwaran, S, 2016). The primary vertical restraint
used by these traders is advance payment for milk to dairy farmers. It is sometimes given
even before the animal comes into milk. They also have a very flexible payment system as
per the needs of the farmer and develop a personal relation with each farmer. They also
provide cattle feed and other inputs required by the dairy farmers. Since convenience of
the farmer is being met, the price at which they buy milk or the price at which they sell
inputs become secondary. Some of the milk traders also act as market facilitators in the
purchase and sale of animals of all age groups, productive and unproductive. In the absence
of any other alternative these traders are doing service to the dairy farmers, so they claim.
Interestingly, the two are not mutually exclusive. There is a grey area wherein, the
unorganised sector represented by the local milk trader acts as an interface between
individual dairy farmer and the organised sector, buying from the farmer and selling to the
latter. This grey area is indicated by the dotted line. The grey area exists as farmers are
able to benefit from the best of organised and unorganised sectors. It may be on account
of this that the unorganised sector is still able to continue sourcing 70% of the marketable
surplus of milk from farmers. (Rajeshwaran, S, 2016)
12
Figure 1.4: Relation between Organised and Unorganised Milk Sector
These restraints in general are not only constraints to the farmer but also prevents
competition to set in these services. Farmers supplying milk to the organised sector are said
have a higher income on account of higher milk yields while farmers supplying milk to the
unorganised sector receive a higher price (Sharma, 2015). Small dairy farmers who are the
largest in number in India and the mainstay of milk production are being consciously
excluded by the modern private sector which has nearly doubled between 2002 and 2011
after deregulation of the Indian dairy sector, as against the cooperative sector which was
more inclusive (Sharma, 2015).
India has experimented with different types of collectives of dairy farmers, for selling their
marketable surplus milk on a day-to-day basis. Cooperatives, multi-state cooperatives,
producer companies in the dairy sector are some of the organisational means of entering
into a contract. Milk processors encourage such a situation as this builds peer pressure to
reduce behaviours such as side selling and establish a trust-based relationship nurtured over
time and act as an enforcement mechanism, thus ensuring their regular supply of milk.
For the farmer supplying milk, three issues are of paramount importance. First is the
availability of a ready market. Second is the surety of the price realised and finally the
credit line required to realise the sales amount. Once a buyer is fixed, it is difficult for an
individual farmer to change the buyer as he faces the vertical restraints discussed earlier.
13
As a result, price and credit line availed are given by the marketer. Though many dairies
may procure milk from the same village, they operate as oligopsony to lock in their milk
supply from farmers over time, using various vertical restraints. This is true of both
organised and unorganised sectors, as discussed earlier.
It needs to be highlighted here that while their discussion is focused on reduction in price
of agricultural produce being transmitted from farmer to consumer; our discussion with
regard to the Indian dairy sector is about transmission of price in the reverse direction, that
is, transmission of the increased consumer price to the farm gate. Only a consistent if not
a higher proportion of the consumer rupee to the farmer will encourage him to produce
more. We see clearly here that the demand as experienced by the dairy farmer has very
little to do with the demand of the consumer. Hence, any change or shift in the demand
curve of the consumer has little or no effect on the farm gate price of milk and hence the
production function of milk.
1.4 PRODUCTION
More than 90 percent of India’s milk production is concentrated in 14 states (the top five
states are Uttar Pradesh, Rajasthan, Andhra Pradesh, Gujarat, and Punjab. India’s
organized dairy sector comprises only 20 percent of the total milk production, which
includes government supported dairy cooperatives and private sector dairies. However,
cooperatives and private dairy companies are expanding their processing capacities and
distribution network with growing demand for fluid milk and other value-added dairy
products. Most of the dairy cooperatives and private dairies market products at the state or
regional level and only a few players have a wider national presence.
14
The yield is significantly less than that of 22 and 28 kg per day in U.K. and U.S.
respectively. The lower milk yield is mainly due to low genetic potential, lack of nutritional
feeds and inadequate veterinary services. India’s growth in milk production therefore
largely depends on an increase in the number of dairy animals, but that increase is
constrained by the lack of sufficient additional quantities of feed and fodder. Water
buffaloes are preferred by some farmers due to its higher fat content milk, which fetches
higher prices since milk prices are determined by volume, fat, and Solids-Not-Fat (SNF)
content. The water buffaloes can also be sold for slaughter, unlike cattle, the slaughter of
which is banned in most Indian states. The crossbred cows are preferred in certain states
including Tamil Nadu, Maharashtra, Kerala, Karnataka, West Bengal, and Punjab. India:
Major Milk Production States.
15
Chart 1.2: Milk Production by Dairy Animal
Source: Department of Animal Husbandry, Dairying and Fisheries (2015)
1.5 CONSUMPTION
India is not only the largest producer of milk but also the largest consumer of milk. The
policy approach should be to create growth path for the dairy industry. Currently, milk
constitutes 15 per cent of the average households’ expenditure on food. (BIEC, Dairy tech,
Bangalore, India, 2017). However, with increasing urbanization and growing GDP, income
rises are leading to fall in share of food as percentage of total expenditure.
Despite its huge production volume, India nevertheless faces a milk supply gap due to
increasing demand from a growing middle class population. Estimation suggests that
Indian dairy production is growing at a rate of about four percent per year, yet consumer
demand is growing at approximately double that rate. In response to increasingly strong
demand for milk products.
16
Table 1.3 Milk and Milk Product Consumption
Product Percentage (%)
Fluid Milk 46.0
Ghee (clarified butter) 27.5
Butter 6.5
Yogurt 7.0
Khoa (partially dehydrated condensed milk) 6.5
Milk Powder 3.5
Paneer (cottage cheese) 2.0
Others, including Cream, Ice Cream 1.0
India is the largest consumer and producer of milk accounting for 17% of the world’s total
milk production and self-sufficient, as of now. Consumption of milk and dairy products in
the entire developing world including India and China which have a major portion of the
world’s population, is expected to continue rising till 2030. Hence, the present rise in the
growth rate in milk production to 6.25% in 2014-15, is indeed a ray of hope that higher
growth rate is possible.
Causes for increase in demand for milk have been well-identified and defined as growth in
population, urbanisation, changing demography, increasing per capita GDP, widespread
and 24 × 7 availability of liquid milk and milk products, changing food consumption
patterns, high income elasticity of demand for milk and regional imbalances in
income/consumption. The share of calories from milk in total food calories increased from
1.8 to 2.4% in very poor income group and 8.6% to 9.2% in the high income group between
17
1983 and 2004 (Kumar et al., 2011), indicating a shift in demand for milk. This shift in
demand is expected to be of long-term nature and expected to continue till date as analysis
over a forty-year period for all countries reveals that the dietary energy intake from dairy
products increased from 3.5 to 4.4% (Gerosa and Skoet, 2012). Further, the number of
households consuming milk in India has increased from 80 to 85% and from 66 to 76% for
urban and rural areas, respectively.
The enormous possibility for future growth in consumption in India is indicated by the fact
that while India had a per capita consumption of 68.7 kg per year in 2007, developed
nations had over 380 kg per year with even Brazil having a per capita consumption of 125
kg per year, as per FAO. Income elasticity of demand for milk is high, especially amongst
lower income levels in developing countries (Gerosa and Skoet, 2012). Expenditure
elasticity for milk and milk products in India varies from 1.5 (Dastagiri, 2001) to 2.185
(Bhattacharya et al., 2014). (Kumar et al., 2011) have found that while the average income
elasticity for all classes of households is 1.65, it is as high as 2.34 for poor households. One
study across countries has shown positive relationship between dietary energy intake from
dairy products and per capita GDP (Gerosa and Skoet, 2012). Hence, as income levels rise,
demand for milk and milk products will go up and if sufficient supply is not forthcoming,
it would drive up food inflation.
18
(Source: Lagos and Intodia, 2015)
Chart 1.3: Annual Milk Production
19
1.8 ADULTERANTS USED IN MILK
Milk in its natural form has high food value. It supplies nutrients like proteins,
fat, carbohydrates, vitamins and minerals in moderate amounts in an easily digestible
form. Due to its nutritive value, milk is significant to young and old people. Adulteration
in milk has been a cause of concern for both the Government and the Dairy Industry. The
Indian Council of Medical Research has reported that “milk adulterants have hazardous
health effects. The detergent in milk can cause food poisoning and other gastrointestinal
complications. Its high alkaline level can also damage body tissue and destroy proteins.
Other synthetic components can cause impairments, heart problems, cancer or even death.
While the immediate effect of drinking milk adulterated with urea, caustic soda and
formalin is gastroenteritis, the long-term effects are far more serious.”
Here are a few examples of what adulterants can be added to milk in order to maintain its
freshness and market value which in turn is harmful to the consumer leaving them clueless
of what direct effect these adulterants have on
Milk is most commonly diluted with water - this not only reduces its nutritional value,
but contaminated water can also cause additional health problems.
The other adulterants used are mainly detergent, foreign fat, starch, sodium hydroxide
(caustic soda), sugar, urea, pond water, salt, maltodextrin, sodium carbonate, formalin,
and ammonium sulphate.
Water is an adulterant in milk which is often always added to increase the volume of
milk which in turn decreases the nutritive value of milk which if contaminated poses
a health risk especially to infants and children.
Detergents are added to emulsify and dissolve the oil in water giving a frothy solution,
the characteristic white colour of milk. Detergents cause gastro – intestinal
complications.
Urea is added to milk to provide whiteness, increase the consistency of milk and for
leveling the contents of Solid-Not-Fat (SNF) as are present in natural milk. The
presence of urea in milk overburdens the kidneys as they have to filter out more urea
content from the body.
20
Hydrogen Peroxide is also added to milk to prolong its freshness,
but peroxides damages the gastro intestinal cells which can lead to gastritis and
inflammation of the intestine.
Starch is also used as an adulterant and if high amounts of starch are added to milk
this can cause diarrhea due to the effects of undigested starch in colon. Its
accumulation in the body may prove very fatal for diabetic patients.
Carbonates and bicarbonates are added to milk too, this can cause disruption in
hormone signalling that regulate development and reproduction. Keeping in view the
above facts, the present study was conducted to detect various common adulterants in
milk samples obtained from public and educational institutions.
Collected 1,658 milk samples from various selling and distribution points, including milk
collection centres, tankers, processing units, local dairies and vendors and tested them at
notified public health laboratories. Of them, over 90 milk samples were found to be
adulterated with sugar and glucose and remaining with edible oil and milk
powders..Barring these 89 samples that were found unsafe for human consumption, the
21
remaining 317 samples were sub-standard, but safe for consumption. While the sugar
content in milk is bad for diabetics, the oil is a worry for those fighting obesity.
A city-based internal medicine expert said, "If a diabetic is following the prescribed diet
and medication, he or she may still have less control over the sugar level after consuming
sugar-laced milk every day."
The law underlines strict punishment for people who supply milk that is unsafe for human
consumption. Earlier, when the Prevention of Food Adulteration Act, 1954 was in force,
FDA would file a case against a supplier even if the sample had less amount of fat and
SNF. Now, with the new Food Safety and Standards Act, 2006, FDA officials can only
fine them for such offences. A case is filed against a supplier only when the sample is
found unsafe for consumption.
22
presence of common adulterants such as fat, neutralizers, hydrogen peroxide, sugar,
starch, glucose, urea, detergent, formalin and vegetable fat. Just around 31.5% (565) of
the total samples tested conformed to the FSSAI standards while the rest 68.4% (1,226)
failed the test. Detergent was found in 103 samples (8.4%). “This was because the milk
tanks were not properly washed. Detergents in milk can cause serious health problems,”
an FSSAI official said. The non-conforming samples in rural areas numbered 381 (31%)
out of which 64 (16.7%) were packet milk and 317 (83.2%) were loose samples. In urban
areas, the number of non-confirming samples were 845 (68.9%) out of which 282 (33.3%)
were packed and 563 (66.6%) were loose. The most common adulteration was that of fat
and solid not food (SNF), found in 574 (46.8%) of the non-conforming samples. This is
because of dilution of milk with water. The second highest parameter of non-conformity
was skim milk powder (SMP) in 548 samples (44.69%), which includes presence of
glucose in 477 samples. Glucose would have been added to milk probably to enhance
SNF. “The study indicates that addition of water to milk is most common adulterant,” the
report said. This only confirms that food adulteration is common in India. Even milk,
consumed primarily by children, isn’t spared. What’s particularly worrying is the kind of
substances used to adulterate, including toxic chemicals. This shows that the trade-off
between the risk of getting caught and the ‘reward’ of huge profits is skewed heavily in
favour of the latter. The government must focus on raising the risks to the adulterator. One
way of doing this is by hiking the penalty, including making it analogous to attempt to
murder in extreme cases. It’s equally important to regularly check foodstuff for
adulteration and ensure speedy trials. (Source: Sinha, K. (2012, January 10). 65% of the
milk you drink may be adulterated: Study Samples across India Fail Govt Test. The Times
of India. Retrieved from http://timesofindia.indiatimes.com/)
23
1.9 ORGANIC MILK
Across the world, Milk is considered a completely nutritious food, and is especially
recommended for children, adolescents and pregnant and lactating women. We’ve grown
up believing that our day is incomplete without 2 glasses of milk daily. So obviously,
being faced with the media reports of ‘synthetic’ or spurious milk, or of high chemical/
antibiotic levels even in trusted milk brands is very discomforting. Today, organic milk is
regarded as a healthier alternative to conventional milk. According to the United States
Department of Agriculture, organic milk is defined as milk from cows that have been
exclusively fed organic feed, have not been treated with synthetic hormones, are not given
certain medications to treat sickness, and are held in pens with adequate space.
Organic milk has been found to be rich in omega 3, vitamins, CLA (Conjugated Linoleic
Acid - a type of fat that may prove to be one of our most potent cancer fighters) and
antioxidants. Apart from the health benefits, Organic milk also addresses environmental
concerns and animal welfare issues. Although some studies comparing organic and
conventional milk, do suggest that there was no significant difference in the total fat or
protein content, Organic milk had 24% higher total polyunsaturated fatty acids (PUFAs)
than conventional milk. The only fall out seems to be a price premium, but once you are
convinced of the benefits of organic milk, then that should not be a deterrent. Let’s try and
make a healthy switch to safer and healthier milk. Scout around for a dairy near you
supplying Organic milk, satisfy yourself of the standards, and make an informed decision
for the health of your family.
The organic milk market encompasses all milk and milk products derived from animals
that are fed organic feed that is devoid of any animal by-products, have access to fresh
pastures, and are not treated with any synthetic hormones or antibiotics. The term organic
only refers to the process in which the milk is prepared and has no relation to the end-
product nutrient profile. The market for organic milk is expected to grow at a rapid pace
with the mainstreaming of natural and organic foods.
24
A1 or A2?
There is, however, a slight twist in this plot of happy cows, endless meadows, and
contamination free milk utopia. There are two varieties of cows based on their genes: one
that produces Al milk protein, and the other, that produces A2 milk protein. Most
dominant cows of today possess Al genes, while the Indian Gir cow, which is on the verge
of extinction, possesses A2 genes. Recent studies say that milk from cows with A2 genes
is far healthier than its Al counterpart, besides also being compatible with those with
lactose intolerance. Back28asics, which provides only organic A2 milk, has farms in
Gurgaon and Noida. The dairy only keeps Gir cows and grows its own green fodder by
using dung manure and bio pesticides. "Holsteins, the cows used by many new dairies
today, are genetically modified breeds, whereas the A2 gene is found only in few old
species of cows, which haven't been genetically altered. These are also known to have the
healthiest milk.
The consumer shift towards organic dairy products is also influenced by the large scale
food adulteration scandals that have occurred recently. For instance, the 2008 Chinese milk
scandal wherein a large number of children were hospitalized due to an excessive amount
of melamine in the milk and infant formulas, has led to a great number of regulations,
import restrictions and price fluctuations in the market. Events such as these have increased
consumer interest in what the animal is fed, how it is raised and processing methods.
25
The regulatory aspects of the organic milk market are mostly centered on the use of the
‘organic’ label. The U.S. Department of Agriculture (USDA) requires that apart from the
use of organic feed, cows should have access to fresh grass and spend at least four months
a year grazing in pastures. The crucial aspect of organic milk market is a lack of use of
synthetic hormones such as rBGH, a growth hormone given to almost 30% of the dairy
cows in the US. These ingredients are considered very negatively by most consumers.
On the basis of packaging type, the market can be segmented into pouches, cartons, bottles,
and cans. The use of any specific packaging type depends on the end-purpose and use. For
instance, pouches offer a relatively cheap way and easy way to pack milk and are therefore
very popular in emerging nations such as India. Cartons are an important packaging type
in terms of the longer shelf life and convenience. Bottles can be of both glass and plastic
and are heavily used for packing milk and beverages. Cans are mainly used to transport
heavy loads of organic milk and in the case of many dairy products.
26
mainly because a significant number of organic products are concentrated in large stores.
Direct selling in the form of home deliveries is also an important and growing distribution
channel because such delivery systems usually source the organic milk from local sources
thereby ensuring freshness and quality.
These include pesticides and fertilizers for growing the fodder, as well as hormones and
antibiotics that are fed to the cows. The excessive use of these chemicals in conventional
milk production, and the harmful effects that they create, have resulted in an increased
demand for organic milk from health conscious consumers.
27
1.9.4.1 Health Benefits of Organic Milk
More Omega3
Organic Milk has 71% More Omega 3
More Conjugated Linoleic Acid:
No chemical contamination.
Does not contain traces of antibiotics, GM feed, urea, or fertility hormones
More Antioxidants
Higher concentration of vitamins such as Vitamin A and Vitamin E than conventional
milk
28
Organic India, Vedic Cow and Holy Cow Foundation have entered the fast growing
niche category - organic cow ghee. Organic dairy products market is predicted to grow
at 15% per annum in the near future as customers become more conscious and aware
about its health benefits.
29
Increasing support from Government of India
The Government of India (GoI) is promoting organic farming and the
consumption of organic food in the country. Financial assistance is provided to
farmers who are adopting organic farming under various central sector schemes
such as National Mission for Sustainable Agriculture (NMSA), Mission for
Integrated Development of Horticulture (MIDH), National Food Security
Mission (NFSM) and Rashtriya Krishi Vikas Yojana (RKVY).
30
1.11 AKSHAYAKALPA FARM
Around 150 km from India’s Silicon Valley, Bangalore, several IT professionals are
returning to their roots – the farms where they spent a significant amount of their childhood,
wanting to escape to the cities. As farm-based entrepreneurs, they are successfully
managing organic, sustainable, rural dairy farms – each of which gives them an earning of
Rs 40, 000 – Rs 1, 00, 000 each month! An innovation by veterinary expert Dr. GNS
Reddy, Akshayakalpa Farms and Foods Ltd. is one of India’s first private initiatives that
incubates rural entrepreneurship by radically redefining dairy processes. The benefits
include providing high-quality and nutritious milk to the end beneficiaries, boosting
economic benefits for farmers, bringing technology that is bridging the urban-rural divide,
and helping reverse urban migration. Deeply inspired after a lecture by Dr. Manibhai Desai,
a Gandhian who pioneered rural development in India and founded Bharatiya Agro-
Industries Foundation (BAIF), Dr. Reddy decided to work with Dr. Desai in BAIF – a stint
that lasted nearly two decades and led to significant innovations in the areas of forestry,
irrigation, and watershed management. When Dr. Reddy couldn’t incubate the
Akshayakalpa model within BAIF owing to certain constraints, he decided to turn in to an
entrepreneur. In 2010, he founded Akshayakalpa farms with an upfront investment of Rs
25 crore in Karnataka’s Tiptur district to realise his dream “to create wealth in villages, to
empower the disempowered.”
31
With 25 cows in each shed on the five-acre farm land where a variety of fodder is grown,
the farmer is also able to generate power for irrigation pump set through bio-gas plant, run
with the cattle's urine and dung as raw material. A mix of organic fodder; monocots and
dicots along with tree fodder, all of which are grown organically by the farmers themselves,
are fed to the cows. In the ‘udder to cap’ automated technology, right from milking the cow
to chilling it, everything is done through machines without the touch of a human hand,
eliminating the need for pasteurisation completely. As a move towards sustainability, cow
dung and urine are diverted to the biogas plant, which effectively produces enough methane
gas that can operate the entire technology in the farm for eight hours every day, largely
reducing the dependency on the state’s power grid, which is often a challenge in the rural
areas.
The processes are benefiting in many ways for all stakeholders –
The farmers are typically earning anywhere between Rs 40, 000 – Rs 1, 00, 000,
depending on the scale of their farms. This salary is at par with a person living and
working in a city.
The cows are healthy and happy, which has resulted in increasing the national
average of milk production from 2.5 litres per cow per day to 10 litres per cow per
day.
The glass of milk that the consumer drinks everyday contains over 60 digestive
enzymes and immunoglobins, amino acids and proteins – all vital for the body’s
overall functioning and development, in addition to being completely digestible.
Apart from this Akshayakalpa also produces a wide range of milk products such as
paneer, curd, ghee and butter.
.
32
1.12 OVERVIEW OF ORGANIZATION
"BHARAT KRUSHICARE PVT. LTD" was conceptualized and grounded by a cadre of
experienced Agri professionals, with an aim to impart "Partnership in accelerated growth
of agriculture quality production". The company has extensively worked on different
propositions of Agri-business and provided its professional advisory services for
sustainable growth of the sector. The core competence of company lies in its
unimpeachable credibility, unmatched analytical rigor and perceptible value addition to its
client. Company has Infrastructure Support for Production of Organic Fertilizer "Sundar
Organics" from its Channel Partner "Bharat Biogas Ltd". Company aims to actively
participate for growth and development of Organic Farming in India.
Vision:
"To Provide Complete Solution to Agri-business Industry and be Specialized in
Agriculture field with Latest Technology for complete customer satisfaction"
Mission:
Bharat Krushicare Pvt. Ltd. has been launched in Jan 2016 to provide services to
agriculture industry. Our core strength is to provide Farming Solutions, Turnkey Project of
Hi-tech horticulture project, Processing Unit etc.
33
Economies of Scale: Bharat krushicare enjoys the large market share of being one of the
leading marketers of organic agro inputs in India providing it economies of scale and with
timely opportunity to set up state of the art manufacturing units to produce products in the
most economical way.
R & D Capabilities: Research and Development continues to be the strongest asset that is
backed by well-equipped state of the art laboratories and plants that are constantly
upgraded to keep pace with the changing market scenario.
Current Market Focus: Bharat krushicare keeps interacting with the end users employing
the ear-to-the ground approach. All this feedback helps Bharat krushicare to research more
and come up with products that suits the needs of the market and are sustainable in the
future run also.
34
2) Sundar Gold: Sundar gold is organic fertilizer specially prepared for kitchen
gardening, vegetable gardening, nursery, flowers etc. It is highly balanced and
enriched organic fertilizer with all micro nutrients required by plants.
2) Ricoplus:
High Protein Castor Doc Powder
Protein: 50%
Organic matter: 79%
Nitrogen: 7%
35
3) Matris: Soil Conditioner for All Types of Soil
Combination of sea weed extract, bacterial extract &
fermented milk Packing: 10kg Matris increase the crop
productivity along with improving the soil quality and
productivity. It is a bio fertilizer which enhances the
function of plant hormones and enzymes. Its Micro
elements help plant to develop resistance power to fight
with pest and diseases. Its natural extracts helps develop
the micro climate for plants which helps to increase the
natural fertility of the soil.
36
1.12.1.4 Seeds
NAMAN (bitter gourd) POOJA (sponge gourd)
37
1.13 OBJECTIVES
• To know about Consumer Behaviour and Consumption Pattern of Organic milk
• To analyse the Market potential for Organic Milk
• To know about potential Distribution Channel of Organic Milk
• To know the Constraints in buying of Organic Milk
38
2. REVIEW OF LITERATURE
Grunert and Kristensen (1991) highlighted that higher income households are more
likely to form positive attitudes and to purchase more organic food.
Silverstone (1993) highlighted the reasons that account for a reversal in favourable
attitude towards organic products are price and availability.
Tregear et al. (1994) found that motivations to purchase organic food includes health
concern, environmental concern, food safety, sensory variables, ethical concerns or
value structure.
Davis et al. (1995) revealed that purchase motives are attributed to environmental and
health consciousness, safety and quality concerns and exploratory food buying
behaviour, as well as to specific product attributes such as nutritional value, taste,
freshness, and price.
Schifferstein and Oude (1998) found that organic produce buyers are concerned about
the safety of foods and that they are willing to pay a premium for such produce.
Thompson and Kidwell (1998) the studied about of the socio-demographic profile of
organic product buyers, all studies agree they are mainly women, who buy in larger
quantities and more frequently than men. The age factor does not play role of buying
organic foods. But the presence of children in the family seems to play an important
role, positively influencing organic purchase.
Worner and Meier-Ploeger (1999) stated that consumers have doubts about product
guarantees, lack of promotion and misunderstanding of organic ways of production.
39
Mintel (2000) survey found youngest and oldest age groups least concerned with
organic, reflecting a lower emphasis on health and diet. Organic purchasing grows as
consumers reach their 30s and have no children.
Glaser and Thompson (2000) Organic milk started to make a notable presence in the
U.S. food market research around 1993. Increased consumer concern for food safety
and animal welfare spurred the introduction of organic and hormone-free milk. Much
of the safety concern revolved around the recombinant bovine somatotropin (rBST),
the synthetic version of a naturally occurring growth hormone that increases milk
production Organic Milk 2 in cows by about 10-20%.
Magnusson et al. (2001) stated that university educated people and young respondents
had more positive attitudes than their comparison groups toward the purchase of
organic alternatives, although among survey participants, the experience quality
attribute ‘taste’ ranked as the most important criterion and the credence quality attribute
‘organically-produced’ the least important criterion in the purchase decision. Long
shelf-life and healthiness were also relatively important.
Fotopoulos and Krystallis (2002) concludes that three types of consumers exist in
terms of attitude towards, purchase intention and awareness of organic products: the
“unaware”, the “aware non‐users”, and the “aware users” (or simply users) of organic
food products.
Hill and Lynchhaun (2002) analysed the perception of organic milk packaging and
found that its appearance was regarded by consumers as relatively subdued. Only one
of the packages tested was perceived not to be so, because of its bright and colourful
design. Consumers emphasized that it was important for them to be able to distinguish
between organic and conventional packaging.
Makatouni (2002) posited that the main reasons that prevent consumers from buying
organic food are; high price, lack of availability, satisfaction with conventional food,
lack of trust, the limited choice and lack of perceived value.
40
Dhar and Foltz (2003) poised that Organic milk demand increased almost seven fold
between 1997 and 2002. This is a reflection of the growing popularity of organic milk.
In response to this demand, organic milk processors are actively recruiting dairy
farmers to transition to organic milk production and serve as their suppliers.
Wier et al. (2003) studied the effect of both public organics. Their results show that
private benefits i.e. user values such as product health benefits, taste, and freshness
influence purchases more than public (non-user) values such as environmental and
animal welfare.
Baker et al. (2004) described development of the organic sector has been driven by
growing interest of consumers, retailers that have had a role in furthering growth,
promoting products, increasing range and aiding farmers to convert.
Padel (2004) found that marketing is managed through mostly multiple retailer
channels but on the other hand, direct marketing, organic shops are expecting to get
less importance with the development. While rural areas grade direct marketing as the
most second important channel, urban prefers special shops.
Honkanen et al. (2006) found that Organic food is produced without pesticides,
herbicides, inorganic fertilisers, antibiotics and growth hormones.
Tsakiridou et al. (2008) studied that Greek consumers seem to be informed about
environmental and health issues. They seek information about the nutritional value
of food and demand more products free from chemical residues. The results show
that most consumers associate organic consumption mainly with fruit and
vegetables. Although demographics seem to affect attitudes towards organics, their
value in explaining actual behaviour is minimal.
41
Zagata (2012) discovered that, for Czech consumers, health beliefs and quality
attributes are most prominent when purchasing organic products. They showed that
environmental issues and the development of sustainable rural areas or local foods
appeared to be less significant.
Chandrashekar (2014) stated that the people were well aware of images and
availability, but not loyal entirely to organic food products. The respondent without
doubt attracted towards Organic food products. So, the marketers must create
promotions which are both realistic and moral and the product availability in terms
of volume and variety are required to become successful in marketing organic food
products.
Bharathi et al. (2014) found that Consumer behaviour plays a major role in Organic
food products. The marketers of organic foods need to be innovative and dynamic in
order to compete with the changing purchase behaviour in the Organic food products
market among urban residents.
Mehra and paluri (2014) studied that the organic food sector is growing significantly
and surmounted growth is being witnessed from tier 1 and tier 2 cities in India,
indicating huge acceptance among the masses. The study provides insights into
identifying the factors influencing the attitude and behaviour of consumers for organic
food, which is currently gaining momentum in tier 2 cities in India. Six significant
factors were found to influence the attitude towards organic food. They were perception
towards organic food, health consciousness, product information, value for money,
accessibility and trust. The demographic factors seemed to affect the attitude towards
organic food, while they did not explain the actual buying behaviour.
Wee et al. (2014) studied consumer’s perception, purchase intentions and actual
purchase behavior of organic food. It presented consumer’s perception of safety, health,
environmental factors and animal welfare influencing intention to purchase organic
food significantly.
42
Sivathanu (2015) stated that there are various factors impacting the preference
including demographic characteristics of the consumers. It has been observed that
females have more preference for organic food products as compared to male
respondents. More number of educated respondents prefers to buy organic food
products. Age group of 29-39 prefers to buy organic food as compared to other age
groups. Also people of higher income group prefer to buy organic food. Consumers
prefer to buy organic food products because of their perception that the organic food
products are healthy and safe, nutritious and environment friendly.
Basha et al. (2015) found that purchase intention of consumers based on the
influences of factors like environmental concern, health concern and lifestyle, product
quality and subjective norms on the attitude towards organic foods. The results of the
study show that quality of products, environmental concern, health concern and lifestyle
are the most commonly stated motives for purchasing organic foods.
McCarthy et al. (2015) showed that the purchase of organic food in China is motivated
by environment, animal welfare and health concern.
43
Dasari et al. (2017) found that the factors affecting consumers to buy organic food
products in Hyderabad and Secunderabad, India. The results revealed that ten factors
such as labels, health, concern, environment concern, brand advertising, safety,
accessibility, affordability, freshness and store location that are influencing customers
to buy organic food. Out of these, health, environment and safety are key factors that
are found as primary influencers. Health, safety and environment are key reasons why
people buy organic food products.
44
3. RESEARCH METHODOLOGY
45
3.3 RESEARCH DESIGN
3.3.1 Type of research
The research type used in study was Descriptive Research.
3.3.2 Sampling Method
Non-Probability sampling method was used for research work.
3.3.3 Sampling Technique
Purposive sampling technique was used at all stages of sampling among the population
for research work.
3.3.4 Sample Unit
Consumers who are consuming organic milk and retailors who were selling organic
milk were interviewed as respondents at Ahmedabad, Gandhinagar and Vadodara.
3.3.5 Sample size
In this survey, 150 consumers and 18 retailors were selected from Ahmedabad,
Gandhinagar and Vadodara cities of Gujarat.
3.3.6 Sampling Area
Ahmedabad, Gandhinagar and Vadodara cities of Gujarat state were selected for the
entire research work through judgmental sampling.
3.3.7 Research instrument
Considering the nature of study, it was decided to collect information through structured
schedules prepared by the interviewer, with the help of college guide, company guide
and pilot survey which was carried out earlier.
3.3.8 Analytical Tools
Mainly tabular analysis, charts and graphical presentation Garrett’s Ranking
Technique and Market Potential Formula were used as analytical tools.
3.3.8.1 Chi square test
Chi-square test is one of the important nonparametric tests that is used to compare more
than two variables for a randomly selected data. The expected frequencies are
calculated based on the conditions of null hypothesis. The rejection of null hypothesis
is based on the differences of actual value and expected value.
A test that uses the chi-square statistic to test the fit between a theoretical frequency
distribution and a frequency distribution of observed data for which each observation
may fall into one of several classes.
46
The data can be examined by using the two types of Chi-square test, which is given
below:
It is used to observe that the closeness of a sample matches a population. The Chi-
square test statistic is,
It is used to check whether the variables are independent of each other or not. The
Chi-square test statistic is,
where Oi is the observed count, r is number of rows, c is the number of columns, and
Ei is the expected counts.
47
Fourth stage: Summation of these scores for each factor was worked out for
the numbers of respondents who ranked for each factor. Mean scores were
calculated by dividing the total score by the numbers of respondents.
Fifth stage: overall ranking was obtained by assigning ranks 1, 2, 3 and 4 in
the descending order of the mean score.
48
3.4 SCOPE OF THE STUDY
The study would be helpful to understand the consumption pattern of Organic
Milk consumers.
The study would be useful to find out various factors that affect to buy Organic
Milk.
The study helps to find out which are the main constraints for consuming
Organic milk.
Collected Information might be helpful to the organization while making
marketing strategy for Bharat Krushi Care.
The study was confined to only Ahmedabad, Gandhinagar and Vadodara city;
therefore the results and conclusion should not be replicated to other regions.
The results have been totally derived from the respondent’s answers. There
might be a difference between the actual and projected results.
The sample size for the survey of consumers was limited to 150 respondents
and 18 retailors, which might not be representing the whole scenario.
Uneven availability and limited amount of secondary data from various sources
was another limitation of the study.
As the time given for the study was limited, study could have been more
elaborative, provided an extended time.
49
4. RESULTS AND DISCUSSION
The study was conducted Ahmedabad, Gandhinagar and Vadodara cities of Gujarat.
The data regarding covered consumers are as following:
Table 4.1: City Wise Distribution of Consumers
City Consumers Percentage (%)
Ahmedabad 50 33.33
Gandhinagar 50 33.33
Vadodara 50 33.33
Total 150 100
Sample size of the survey was 150 respondents. Sample size was divided in to 3 major
cities of Gujarat as per city area. So, from each city 50 respondents were surveyed from
Ahmedabad city which was 33.3% by Gandhinagar 33.3% and Vadodara 33.3%.
Vadodara Ahmedabad
33% 34%
Ahmedabad
Gandhinagar
Gandhinagar
33% Vadodara
50
4.1.2 City Wise Sample Distribution of Retailers
The study was conducted Ahmedabad, Gandhinagar and Vadodara cities of Gujarat.
The data regarding covered retailor are as following:
From total 18 retailors, 8 were from Ahmedabad, 5 from Gandhinagar and 5 from
Vadodara.
Ahmedabad,
Vadodara, 28
44
Gandhinagar,
28
Ahmedabad
Gandhinagar
Vadodara
51
4.2 CONSUMERS DETAILS
The study was conducted Ahmedabad, Gandhinagar and Vadodara cities of Gujarat.
Basic information of the respondents from the cities was collected during survey, which
contains age, gender, education, occupation, family structure, income, earning
members and also information regarding consumption of organic milk like type of milk
purchase, purchase decision, price of milk, quantity of purchase, frequency of purchase
and point of purchase has been collected.
The data regarding basic information are as following:
Out of total sample surveyed, 57% respondents were male and 43% were female.
Gender was not significant in determining respondents quantity purchase of organic
milk as χ2 test value is greater than 0.05.
Female
43%
Male
57%
52
4.2.2 Age of Respondents
According to survey, there were no respondents found whose age was below 20 years,
20% of respondents were found in the age group of 21-30 years, 46% were in the age
group of 31-40 years, 16% were in age the group of 40-50 years, 12% were found in
age group of 50-60 and 6% were found in above 60 years. Age does not play a
significant role in Quantity of purchase.
80
69
70
60
50
40
30
30
24
20 18
9
10
0
0
<20 21-30 31-40 41-50 51-60 >60
53
4.2.3 Occupation of Respondents
According to survey, 62% of respondents were doing Job, 15% were doing business
and 23% were housewife. The willingness to purchase of the organic milk was found
comparatively high among the respondents who were doing job. There is no association
between the occupation of the respondents and quantity of purchase.
100 93
90
80
70
60
50
40 34
30 23
20
10
0
0
Student Job Business Housewife
54
4.2.4 Education of Respondents
Quantity(ml) Pearson
Percentage
Education ≤500 500-1000 1000-2000 Total χ2 test
(%)
(p value)
Primary 0 0 0 0 0
Secondary 0 0 0 0 0
Graduate 19 32 71 122 81
PG 0 7 15 22 15 0.185
Diploma/ 2 2 2 6
4.0
Other
Total 21 41 88 150 100
According to survey, 81% of respondent were graduate, 15% were post graduate and
4% were diploma or other courses. The procurement of the organic milk was high
among the graduates and post graduates, whereas it was low among the respondents
with primary and secondary education. There is no association found between the
income level of the respondents and quantity of purchase.
140
122
120
100
80
60
40
22
20
6
0 0
0
Primary Secondary Graduate PG Diploma/Other
55
4.2.5 Family Structure of Respondents
Alone 7 0 0 7 5
Nuclear 10 20 44 74 49
0.000
Joint 4 21 44 69 46
According to survey, above table shows that 4.7% of the Respondents stay Alone,
49.3% respondents having nuclear family structure and 46% having Joint family.
Family structure and quantity of purchase were analyzed with Chi-Square test and it
was found that there was significant relation between family structure and quantity of
purchase.
Alone
5%
Joint
46%
Nuclear
49%
56
4.2.6 Family Members
According to survey, majority of respondents (55%) were having 3-5 family members,
37% having 6-10 members, 4% having >10 members and only 1% having ≤2 family
members. There is significant relation between family members and quantity of
purchase.
90
82
80
70
60 55
50
40
30
20
10 6
2
0
<2 3-5 6-10 >10
57
4.2.7 Earning Members
2 13 21 41 75 50.0
3 8 17 40 65 43.3
0.607
4 0 3 7 10 6.7
Total 21 41 88 150 100
According to survey, 50% of family having 2 earning members, 43.3% having 3 earning
members and 6.7% having 4 earning members. No association between the earning
members in household and quantity of purchase of organic milk.
80 75
70 65
60
50
40
30
20
10
10
0 0
0
1 2 3 4 >4
58
4.2.8 Income of Respondent’s Household
According to survey, respondents were divided as per their income the above table
shows that 16% of the Respondents comes under income group of less than 0.5 to 1Lakh
Rs, 47.3% falls under income group of 1.1.5Lakh Rs, 22% falls under income group of
1.5-2Lakh Rs, 8% falls under income group of 2 to 2.5Lakh Rs and 6.7% falls above
2.5Lakh Rs. There was no association found between the income of the respondents
and quantity of organic milk purchased.
80
71
70
60
50
40
33
30
24
20
12
10
10
0
0.5-1lac 1-1.5lac 1.5-2lac 2-2.5lac >2.5lac
59
4.2.9 Type of Milk Purchase
Packed 44 29.3
Total 150 100
Above table shows type of milk purchased by respondents as per survey 70.7% were
purchasing loose milk and 29.3% purchasing packed milk.
120
106
100
80
60
44
40
20
0
Loose Packed
60
4.2.10 Purchase Decision
Quantity(ml)
Decision Percentage
≤500 500-1000 1000-2000 Total Pearson
By (%)
χ2 test
Self 16 31 68 115 77 0.977
Spouse 5 10 20 35 23
Total 21 41 88 150 100
According to survey, 76.7% respondents told that they take decision their self and 23.3
told that spouse take decision. No association between who make decision of the
respondents and quantity of purchase organic milk.
140
120 115
100
80
60
40 35
20
0 0
0
Self Spouse Children Parent
61
4.2.11 Frequency of Purchase
Above table shows frequency of purchasing, 30% of respondents were purchasing milk
daily, 34% were purchasing alternate day and 36% were purchasing twice in a week
and no respondents found who purchasing milk weekly. There is no association
between frequency of purchase and quantity of purchase
60
54
51
50
45
40
30
20
10
0
0
Daily Alternate day Twice a week Weekly
62
4.2.12 Purchase Point
Above table shows that from where consumer purchase milk. 36.7% purchase from
Local Dairy, 37.3% of respondents told home delivery and 26% purchase from
Specialty food stores.
There is no any association found between Purchase point and Quantity of purchase.
60 56
55
50
39
40
30
20
10
0
Local Dairy Home Delivery Speciality Food Store
63
4.2.13 Price of Milk
According to survey, respondents were asked for price of organic milk from total
respondents 17.3% told that price varies between 41-60 Rs, 59.3% told that price varies
between 61-80Rs, 23.3% told 81-100 Rs and No one says that they purchase milk
above100 Rs. There is no association found between price and quantity of organic Milk.
100
89
90
80
70
60
50
40 35
30 26
20
10
0 0
0
<40 41-60 61-80 81-100 >100
64
4.2.14 Source of Information
According to survey, respondents were asked for sources of information 1.3% told that
they got information from TV, 58% told that they got information from word of mouth,
27.3 told that they got information from agent and 13.3% told that they got information
from internet.
100
90 87
80
70
60
50
41
40
30
20
20
10
2 0
0
TV Hordings Word of mouth Agent Internet
65
4.2.15 Factor Affecting Buying of Organic Milk
Freshness 54.7 3
Nutritious 58.7 2
Tastes 53.5 5
Trendy/ fashionable 51.2 6
Health 60.3 1
Doctor's recommendation 26.5 8
Price 40.5 7
Respondents were asked to rank given factors which they think (in descending order)
for the buying of organic milk. The rank was converted to Garrett’s score using
Garrett’s ranking technique. At the aggregate level it was found that for the factor health
got highest Garrett’s score (60.3) and was ranked 1 by respondents followed by
nutritious (58.7), freshness (54.7). Average score was given to chemicals free (54.6)
and tastes (53.5). Least affecting factors were trendy\fashionable (51.2), price (40.5)
and doctor Recommendation (26.5).
66
4.2.16 Constraints in Buying Of Organic Milk
Color 24.9 7
Taste 33.9 6
No certification 66.6 2
Availability 72.7 1
Price 44.3 5
Respondents were asked to rank given factors which they think (in descending order)
for the constraints in buying of organic milk. The rank was converted to Garrett’s score
using Garrett’s ranking technique. At the aggregate level it was found that for the factor
availability got highest Garrett’s score (72.7) and was ranked 1 by respondents followed
by no certification (66.6), limited information (61.7), and quality (45.8). Low score
was given to price (44.3), taste (33.9) and color (24.9).
67
4.3.1 Total Consumption per Day
Above table shows that Total consumption per day was 104542 ml/day and
consumption per household was 700ml/day.
68
4.3.3.1 Census Data
City Number of
Households
Ahmedabad 11,798,23
Gandhinagar 2,89,990
Vadodara 2,13,540
Total 16,82,453
Source: (www.census2011.co.in)
(Source: Bhattacharya J Mar 14 2016, The great Indian middle class: the promise
and the reality, Live mint e-paper)
As per source there is huge change in Upper middle class from 1990 to 2015 so our
target population is 22 Million household which is 8.2% of total households in India.
69
Market Potential = Total Number of Household income above 9 Lakh x Average
Consumption x Average Price
= 1.38 Lakh Households x 0.700 Ltr/Day x 71Rs/Ltr x 365 Days
≈ Rs 250 Crores/year
Thus, 250 crores Rs/year of market potentiality in Ahmedabad, Gandhinagar and
Vadodara for organic milk.
According to survey, it was found that majority of retailors (72%) were purchasing
organic milk from farmers and Suppliers and rest (28%) they were had their own farms.
8
7
7
6
6
5
5
0
Farmer supplier Own
70
4.4.2 Mode of Selling
Percentage
Mode of Selling Respondents
(%)
Own shop 6 33.3
Home Delivery 4 22.2
Both 8 44.4
Total 18 100
According to survey, I found that 33.3% of retailor were having own shop so they sell
directly to the consumers they were not doing home delivery. 22.2% were doing only
home delivery and 44.4% were having their own shop and they were also doing home
delivery.
9
8
8
7
6
6
5
4
4
0
Retailing Home delivery Both
71
5. SUMMARY AND CONCLUSION
5.1 SUMMARY
The demand for organic milk is closely tied to the increasing consumer preference for
naturally and organically grown products. The consumer shift towards organic dairy
products is also influenced by the large scale food adulteration scandals that have
occurred recently. There are two varieties of cows based on their genes: one that
produces Al milk protein, and the other, that produces A2 milk protein. Most dominant
cows of today possess Al genes, while the Indian Gir cow, which is on the verge of
extinction, possesses A2 genes. Recent studies say that milk from cows with A2 genes
is far healthier than its Al counterpart, besides also being compatible with those with
lactose intolerance.
The global organic dairy market was valued at US$15.0 billion in 2014 and is expected
to reach US$ 26.1 billion by 2019, growing at a CAGR of 11.7%.The organic dairy
market is less than 1% of the total dairy market in India. Despite occupying small
market share at the current time period, the organic milk market is expected to grow at
a significant level in emerging nations such as India and Brazil.
72
Data collected from surveyed region reveal that 62% of respondents were doing Job,
15% were doing business and 23%were housewife. The willingness to purchase of the
organic milk was found comparatively high among the respondents who were doing
Job.
It was found that 81% of respondent were graduate, 15% were PG and 4% were diploma
or other courses. The procurement of the organic milk was high among the graduates
and PG, whereas it was low among the respondents with primary and secondary
education.
As per data 4.7% of the respondents stay alone, 49.3% respondents stay in nuclear
family and 46% stay in joint family. From total number of respondents (55%) were
having 3-5 family members, 37% having 6-10 members, 4% having >10 members and
only 1% having ≤2 family members.
On the basis of income the 16% of the respondents comes under income group of less
than 0.5 to 1Lac Rs, 47.3% falls under Income group of 1.1.5Lac Rs, 22% falls under
Income group of 1.5-2Lac Rs, 8% falls under Income group of 2 to 2.5Lac Rs and 6.7%
falls above 2.5Lac Rs.
According to survey, it was found that in households purchase decision was taken by
either husband or wife. From total respondents 70.7% were consuming loose milk and
29.3% consuming packed milk.
As per consumption 30% of respondents purchase milk daily, 34% purchase alternate
day and 36% purchase twice in a week and no one purchase milk weekly. Quantity of
purchase per day, 14% were purchasing <500ml, 27.3% consuming 500-1000ml,
58.7% consuming 1000-2000ml at once. Average consumption was 0.700ml/day
approximately.
According to survey, respondents were asked for price of organic milk among all
respondents 17.3% said that price varies between 40-60 Rs, 59.3% said that price varies
between 60-80Rs, 23.3% said that 80-100. Average price was around 71Rs
approximately.
73
The association tested between quantity purchases of organic milk with regard to socio-
economic factors of the respondents, shows that the chi-square value is lesser than the
table value at five percent level of significant. There is no association between
socioeconomic factors except family structure and number of family members of the
respondents and quantity of purchase of organic milk.
Out of surveyed consumers, it was found that health was most important factor behind
the purchase of organic milk with highest Garrett’s score (60.3) followed by nutritious
(58.7), freshness (54.7), chemicals free (54.6), tastes (53.5), trendy\fashionable (51.2),
price (40.5) and doctor recommendation (26.5).
For constraints in buying of organic milk, it was found that for the factor availability
got highest Garrett’s score (72.7) and was ranked 1 by Consumers followed by no
certification (66.6), limited information (61.7) and quality (45.8), price (44.3), taste
(33.9) and color (24.9).
The study reveal that, as per company’s target consumers were household whose
income is above 9 lakhs. In Ahmedabad, Gandhinagar and Vadodara 1.38 lakhs
households were there whose income is above 9lakhs so they were our potential
consumers. Average quantity consumed by per household was 0.700ml/day and
average price was 71rs/ltr approximately. So, the potential sales could be of Rupees
250 crores/year in surveyed region.
74
5.2 CONCLUSION
Health is most important factor behind the purchase of organic milk with highest
followed by nutritious, freshness. Least affecting factor are price and doctor
recommendation. There is high association found between family structure, number of
family members of the respondents and quantity of purchase of organic milk. It was
found that for the availability is major constraint followed by no certification, limited
information, quality, price, taste and color. Market Potential sales could be of 250 crores
/year in surveyed region. Farmer-consumer, farmer-retailer-consumer and farmer-
trader-retailer-consumer are three major channel in surveyed region.
75
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xiv
ANNEXURE
Schedule for Consumer
Personal Information
Name
Address
Mobile Number
Education
Primary Secondary Graduate PG Diploma or other
courses
Gender
Male Female
Age
<20 20-30 31-40 41-50 51-60 >60
Family Structure
Alone Nuclear Joint Family members...............
Occupation
Student Job Business Housewife
Earning members of the family
Income
<0.5-1 lakh 1-1.5 lakh 1.5-2lakh 1.5-2lakh >2.5lakh
Product Information
1. What type of milk you use?
Loose Packed
2. How much quantity purchase daily?
Factor Rank
Chemical Free
Freshness
Nutritious
Tastes
Health
Price
Doctor
Recommendation
Trendy/Fashionable
8. Which are constrains you face at time of buying?
Factor Rank
Color
Tastes
Price
Quality
No
Certification
Availability
Limited
Information
Schedule for Retailer
Personal Information
Name
Address
Mobile Number
Mode of Purchase
Directly from Farmer Through Trader Having Own Farm
Mode of Selling
Own Shop Home delivery Agent