PRADESH MILK FEDERATION

GIST
Mr. Mohan Kumar,50, is newly appointed Managing Director at Pradesh State Co-Operative Milk producers Federation. PMF was set up in 1985, with headquater in Raajpur city. PMF have 3 tire system. Village level- district level milk union- board of milk federation PMF. It provides the farmer a remunerative price and an assured outlet for his or her entire milk production throughout the year. PMF showed a loss Of Rs 1.5 crore in march 2001 and Rs 5 crore in march 2002.

Mr. Mohan was an engineer with several years of production experience in the textile industry. Mr. Mohan strongly believed that company failed because they did not use the degree of freedom they already had. The PMF board od directors had farmer representatives from each district union as well as some government nominess. Mr. Ethiraj Kasturi, 46, Manager of Dairy Extention briefed the new MD about extention activities. He told the MD that the scope and reach of PMFS extention activities was increasing and were satisfactory but the cost of production for farmers was on the rise. At the present procurement price, he had estimated that a farmer with two milch animals could make a net profit of less than Rs. 1000 annually from dairy farming.

Mr. Pradeep Kanga, 48, Manager (Procurement) then briefed the new Managing Director about the milk procurement activities at PMF. The steady procurement price provided by the village dairy co-operative, farmers in villages located near the private dairies had the best of both worlds. They sold the milk at higher prices to private dairy in summer and what ever milk was refused by the private dairy in winter was sold to the co-operative. Mr. Pradeep Kanga noted that this behaviour of farmers was against the co-operative norms and looked down upon by the village co-operatives, but little could be done by the PMF to prevent it.

Mr. Ashwin Prasad, 47, Manager said milk production was typically high in winter compared to summer, while liquid milk consumption was steady throughout the year, adequate processing facilities were essential to convert surplus milk procured in winter into milk powder, butter, butter oil, ghee and other products for storage and sale across the year. Mr. Murlidhar Mathur, 40, Manager said that the demand for milk was growing at the same rate as the population within the state.

PROBLEMS
Dairy Extension Inspite of extension production cost for farmers is high ( net profit less then Rs 1000 with 2 animals). Village Cooperative pressurizing PMF to increase procurement price. Milk Procurement Small pvt dairies have set up in 1995 the procures 5 llpd a year. Villagers sell milk to pvt to get higher price and in winter the milk refused by pvt was sold to PMF. This is against norms but no actions has been taken against the chairperson.

Milk Processing In winter milk production is more compared to summer but demand is constant throughout. In summer when they lack milk , butter milk, butter oil that they make with excess milk, mix that with skim milk powder and blend it with fresh milk and sell. All these led to unavoidable cost of Rs 3- 4 per liter. Liquid Milk Sale Higher processing cost , packaging cost , higher retailer margin increased cost to Rs 12 for 500 ml Net Profit on the product was thin . Retailer were even not interested to sell.

Milk Product Sales Profitable in the liquid market section of the market due to low distribution and packaging cost. Selling of the remaining whitener in kolkata wholesale market unbranded. Losses on sale of skim milk powder. Environmental Question Reduction of market share due to the entry of foreign competitors.

SOLUTIONS
Proper market research of the customer requirements. As mentioned in the case study that raajput is quality consicous and not price offering products accordingly. Better packaging techniques. Long lasting products. Can have line extention. Proper promotion of products. Offering varities of product. Making strategies to increase the profit.