chapter - v marketing of milk by madurai district co...

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CHAPTER - V

MARKETING OF MILK BY MADURAI DISTRICT CO-OPERATIVE

MILK PRODUCERS' UNION LTD

5.1 INTRODUCTION

Milk being perishable commodity needs to have an effective and efficient

marketing system. An efficient and effective marketing system minimizes the cost

of marketing services and ensures the largest share of consumers price to the

producers. The quality produce should be provided to the consumers at reasonable

price. But the presence of the intermediaries in the channel of milk marketing and

distribution not only works against the managerial skill of milk producers but also

decreases the marketing efficiency. For the development of the dairy industry, it is

necessary to know the marketing margin, and price spread of milk which may help

to explore the possibilities of reducing marketing costs and margins for the welfare

of the producers and consumers.

5.2 MARKETING CHANNELS

A schematic diagram of milk marketing channels in India is presented in

Figure 1. Eighty per cent of milk is marketed through the highly fragmented un-

organized sector, which includes local milk vendors, wholesalers, retailers, and

producers themselves. On the other hand, the organized dairy industry, which

accounts for about 20 percent of total milk production, comprises two sectors:

government and co-operatives. Even though co-operatives provide a remunerative

price to the producer, the unorganized sector plays a major role in milk marketing

because of three factors.

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The first factor is the pricing policy of the co-operatives: their purchase

price is based on the fat content of the milk, whereas the private sector pays a flat

rate per liter of milk. The second factor, which motivates the milk producers to sell

milk to private vendors, involves the type of milk animals reared by the producer.

Crossbred cows yield more milk with a lower fat than do buffalo. The crossbred

cow population has increased over the years because of management practices. The

third factor is payment policy. The private sector can pay their producers everyday,

whereas the co-operatives pay weekly or fortnightly. Producers sometimes have to

fight with the co-operatives to get their payments.

Within the organized sector, the co-operative sector is by far the largest in

terms of volumes of milk handled, installed processing capacities, and marketing

infrastructure. The eighty-two thousand Dairy Co-operative Societies (DCSs)

across the countries have a strong membership of nearly 10 million landless,

marginal, and smallholder milk-producer families. Although the organized sector

handles less than 20 percent of the production, it has an installed capacity to

process about 33 percent of India’s total milk production. Much of the processing

capacity created by the private sector in the wake of the liberalization of the Indian

economy in 1991 remains idle; only about 60 percent of the installed capacity of

the private sector is operated on a day-to-day basis. In the government sector, too,

most of the primary processing facilities installed in rural areas (mainly milk-

chilling centers) are not functional and dairy plants in the smaller towns and cities

are grossly under-utilized. In the co-operative sector, all plants are used to their full

capacity and remain under-utilized only during the lean production season.

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FIGURE 5.1

MILK-MARKETING CHANNELS IN INDIA

The marketing of milk channels may vary from place to place. The

following three prominent milk distribution channels have been identified in the

study area. They are as follows;

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CHANNEL I

Producer

Milk Producer

Society

Milk

Producer’s

Union

Consumer

The first channel consists of producer – Milk Society – Milk Producer’s

Union – Consumer. The Madurai District Co-operative Milk Producer’s union

Limited has many societies at various blocks. Ten societies were selected for the

sample on the basis of the highest volume of milk procurement.

CHANNEL II

Producer Private Milk Agency Consumer

This channel of distribution is also similar to the first channel but it is

owned by private people. The private society may be a registered or an

unregistered body. These kinds of societies collect fees from the members,

distribute loan to the members for purchasing milch animal or feed with the help of

government. The members are asked to bring their milch animals to the society for

milking from 2 a.m to 5.a.m and from 2 p.m to 5 p.m. The value of pooled milk is

credited in the member’s books of accounts, and they receive payment once a week

or once a fortnight after the recovery of a portion of loan and interest amount.

Various schemes are being provided by the private milk agencies to their

members such as giving incentives according to milk turnover per farm,

distributing prizes and conducting tours in order to motivate the milk producers.

The veterinary services are also provided to all milch animals owned by the

members, once in a month. Artificial insemination is also provided at free of cost.

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The private milk agencies sell the milk which is collected from the

producers in two ways. They are (i) through their depots at various places and

(ii) through their workers. The consumers get two types of services from the

society. The society issues pre-paid milk cards and the milk is collected by the

consumer at the milk depots of the society.

Another type of service is that the society engages workers to deliver milk

at the consumer’s house after collecting the pre-paid milk coupons. Sometimes

milk is sold for cash also. But the priority is given to the coupon holders.

CHANNEL III

Producer Milk Vendor Consumer

The marketing of milk in the third channel is through milk vendors which is

very popular in the study area. Most of the milk vendors are either single persons

or a group of two or more persons. They go to the milk producer’s house directly

and collect milk, two times a day between 2 a.m – 5. a.m and 2 p.m – 5 p.m. The

mode of transportation is either bicycles or motorcycles. Generally each of them

covers 50 to 60 households. The collected milk is sold to the consumers and if

there is any surplus it is given to tea stalls. The money settlement for milk

delivered will be once in a week or daily. Producers are sometimes given advance

amount by the vendors and advance paid is adjusted at the time of settlement.

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The major activity of the Madurai District Co-operative Milk Producers'

Union Ltd is to procure milk from the farmer members of the Districts and also to

provide necessary technical input facility to them. The procurement is carried out

by forming village level Milk Producers’ Cooperative Societies. The main

objective of the organization is to give good remunerative price to the milk

producing farmers of the Madurai and Theni District, to supply good quality milk

to the consumers of Madurai and Theni city at a reasonable price and to assured,

round the year procurement of milk from the farmer members of this Union.

5.3 PROCUREMENT OF MILK

The Madurai District Co-operative Milk Producers' Union Ltd Procurement

of milk from members is based on quality of the milk. The poured milk is tested

for its Fat and Solid Non Fat% content. Based on the quantity poured and on the

quality ( contents of Fat% and SNF%), payment to the producers are made.

Present procurement price to society is Rs.108.30 / Kg. of total solids. The milk

procurement is carried out through formation of Village level Coop Societies. It

convinces the farmers to pour milk to Co-operative to fetch higher price. It assured

year round milk collection from the societies’ door step by milk collection routes.

It educates the farmers on Animal management, infertility and feeding

management. The procurement price is calculated and given to the farmers based

on the chemical quality of milk i.e. Fat and Solid Non Fat. Payments to the

producers are effected once in 10 days by the Union . Monthly payment comes

nearly 9crores to the rural villages.

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5.4 MILK PROCUREMENT AND INPUT INFORMATION:

The milk procurement and input information of the Madurai District Co-

operative Milk Producers' Union Ltd are presented below;

1. No of Milk Collection Routes : 22

2. No of Milk Producers' Societies (Functional) : 639

3. Average Milk Procurement per day : 1,20,000 lits

4. Total no of milk producers : 1,22,019

5. No of societies having A.I. facility : 224

6. No of mobile veterinary routes operated : 9

7. No of Emergency veterinary route operated : 1

8. Cattle feed marketed per month : 70.324 metric tonnes

9. Average Milk Sales per day : 76000 lts.

10. Total No of City Milk Distribution Routes : 15

11. Total No of Rural Milk Distribution Routes : 5

12. Milk Procurement Teams Functioning : 9 they are

a) Vadipatty

b) Melur

c) Usilampatti

d) Tirumangalam

e) Chellampatti

f) Kallupatti

g) Andipatti

h) Theni

i) Uthamapalayam

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5.5 DAIRY PLANT INFORMATIONS:

The dairy plant information of the Madurai District Co-operative Milk

Producers' Union Ltd are presented below;

1) Installed Milk Handling Capacity: 1.5 lakh lits per day

2) Milk Powder Plant Capacity: 10 metric tonnes per day

3) Butter Production Capacity: 10 metric tonnes per day

4) Ghee Production Capacity: 5 metric tonnes per day

5.6 PRODUCTS MANUFACTURED:

The products manufactured by the Madurai District Co-operative Milk

Producers' Union Ltd are

1. Market milk,

2. Butter, Ghee,

3. Skimmilk Powder,

4. Sterilized Flavoured Milk,

5. Khoa,

6. Mysore Pa,

7. Curd.

5.7 MARKETING DEPARTMENT DETAILS:

The marketing department details of the Madurai District Co-operative

Milk Producers' Union Ltd are presented below;

1) Total Number of Milk Selling Booths : 324

2) Total Number of Parlours : 20

3) Total Number of Milk Marketing Zones : 5

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5.8 TECHNICAL INPUT AND SERVICES OFFERED

The union offers the following technical input and services

1. Free veterinary healthcare to animals of the producer members of this

organisation. This service is provided by operating 8 Nos. of Mobile

veterinary routes covering 420 Societies in the District. The veterinarians

visit the societies at a scheduled time, every week and treat the animals in

the village itself.

2. Free De worming of all calves.

3. Emergency veterinary service on call at a reasonable charge of

Rs 25.00 per visit even to remote village.

4. Door step Artificial Insemination service in 503 villages.

5. Supply of cattle feed at a reasonable price.

6. Bull production programme by selecting good quality cows and

inseminating with a proven bull and the expected male calf is

selected for semen production. The farmer is given good price

for his male calf.

7. Progeny testing scheme.

8. Arranging of loans from nationalized banks to purchase

animals.

5.9 TRAINING CENTRE: The union is running a training centre to train the

society level employees as well as the farmers. The training programmes

conducted are;

1. AI & FA Training - 30 days

2. UDC Secretary Training - 30 days

3. Milk Tester Training - 5 days

4. UDC Refresher Training - 5 days

5. BMC Training - 5 days

6. AI Refresher Training - 5 days

7. MACom Training - 5 days

8. CMP Training - 3 days (DCS employees)

9. CMP Training - 2 days ( Members )

10. Farmers Orientation Programme - 1 day

11. Dairy Animal Management Training - 2 days

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5.10 QUALITY CONTROL LABORATORY

Quality control in the Dairy Industry is essential to ensure that the

consumer, the ultimate recipient of the products gets them in an acceptable

condition without adulteration of any kind and thereby safeguarding their health

and aesthetic sense.

The Quality Control laboratory in Madurai Dairy is equipped to analyse

and evaluate the quality of milk and milk products both chemically and

bacteriologically. A system of quality checking has been drawn up and followed at

every stages of production, processing, storage and marketing with a view to

assess and improve the quality in conformity with the stipulated standards laid

down in “Prevention of Food Adulteration Act, Indian Standard Institution”.

Agmark and weights and measure Act.

The milk on its receipt from the various cooperative societies is accepted

by screening organoleptically (colour taste flavour etc.) and subjected to chemical

and bacteriological analysis. As we make payment on the basis of quality, milk

from each source is tested for its fat and solid non fat content. In respect of

Buffalo milk, the payment is made on the basis of kilo fat and for cow milk on

total solids basis.

The raw milk reception is computerized and the farmers are made known,

the milk rate and Quantity of milk supplied on the next day itself. The milk cost

payment is also done by computerised billing to avoid delay. The bulk raw and

pasteurized milk from chilling center and other Districts are subjected to

Metheyline Blue Reduction test to assess the hygienic quality and keeping quality

in addition to the fat and SNF, Acidity, Roselic Acid test (for Neutralizer) etc.

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If the quality of incoming milk is found to be poor, the fact is being

immediately brought to the notice of the production personnel to take immediate

steps to process the milk in priority and informed the source concerned to take

immediate remedial measures to rectify the problem.

The milk thus received is pasteurized, Homogenized standardized and

packed for marketing. During these stages, series of quality check is being carried

out to check the efficiency of the pasteurization Homogenization correctness of the

standard and its keeping quality.

The various by products like butter, skimmed milk powder, ghee, butter

milk, curd, flavored sterilized milk, khoa, mysorepa and Aavin Jamun are

subjected to strict quality control checks at different levels of production and

storage and all concerted efforts are being taken to ensure that the products thus

manufactured confirm to the standards prescribed by the prevention of food

adulteration act, Indian Standard and Agmark.

In addition to this, the strength of Acid and detergents used for cleaning,

boiler feed water, packing materials such as cartons, tins etc., cleaning efficiency

of cans, storage tanks and other equipments, temperature of deep freezes, cold

room are being checked at periodical intervals and reported to the concerned for

taking remedial measures.

The packed milk (sachets) and the market milk are tested for there quality

and other chemical components. Madurai Aavin Milk has been tested at CFTRI

(Centre for Food Technology Research Institute) for the residuals of pesticides,

heavy metals and Aflatoxin and the certificate shows that they are all below the

detectable limit.

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5.11 MICROBIOLOGICAL TESTS:

Milk is an excellent medium for the growth of bacteria. To protect

consumers from the undesirable pathogens, various inspections and checks are

being carried out to ensure bacteriologically safe milk supply. The hygienic

production, processing, storage is always given primary importance and results are

being communicated to production personnel for complete safety of our products

from the Public Health point of view. Some of the bacteriological tests that are

being conducted are given below;-

a. Standard plate count (primary test for quality of milk).

b. Coliform Bacteria (Post pasteurization contamination presence of these

bacteria in pasteurized milk products is suggestive of in sanitary conditions or

practices during production processing or storage).

c. Yeast and mold count.

d. Rinse or swab test to judge the cleaning efficiency etc.

5.12 AVERAGE COLLECTION OF MILK BY SOCIETIES

The average collection of milk collected by the sample societies in the

study area is shown in table 5.1

TABLE 5.1

AVERAGE COLLECTION OF MILK BY SOCIETIES

S.No Quantity of milk collected (in

liters per day)

No. milk producer

society %

01 Below 1000 03 30.00

02 1000 – 2000 04 40.00

03 2000 - 3000 02 20.00

05 Above 3000 01 10.00

Total 10 100.00

Source: Primary data

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Table 5.1 shows the average collection of milk collected per day by sample

societies. It is understood from the table that 40 per cent of the sample societies

collect 1000 – 2000 liters per day followed by 30 per cent of societies which

collects below 1000 liters of milk per day. 20 per cent of the societies procure

milk between 2000 to 3000 liters per day and 10 per cent of the societies procure

milk above 3000 litres. Table indicates that 70 per cent of the societies collect milk

more than 1000 liters per day.

5.13 REASONS FOR SELLING MILK TO SOCIETIES

To analyze the reasons for selling milk to milk producer’s societies, the

respondents were assigned a list of predetermined reasons. They were asked to

rank the reasons according to their perception. To find out the important reason

among the given, the Garrett’s Ranking Technique was adopted. The information

given by the respondents was converted into ranks by using the formula of

Garrett’s ranking method.

n

Per cent position = Σ [ (Rij - 0.5) / Nj ] × 100 …(1)

j=1

Where,

Rij = Rank given for the ith item by the jth individual, and

Nj = Number of items ranked by the jth individual.

By the use of the above formula, the mean scores were obtained and the

ranks were provided according to the mean score.

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5.14 REASONS FOR THE PREFERENCE OF MILK SOCIETY AS

MIDDLEMAN

To avoid the exploitation by the middlemen in the marketing of milk, milk

societies were started. They aim at greater price to the producer and lesser price to

the consumer. But the respondent’s perceptions about the societies are different.

These are analyzed through Garrett’s Ranking Technique. The results are given in

table 5. 2

TABLE 5.2

REASONS FOR SELLING MILK TO MILK PRODUCER’S SOCIETY

S.No Reasons Mean score Rank

01 Regular Payment 74.12 I

02 Better Price 55.98 VII

03 Regular uptake 69.47 III

04 Conventional practice 66.21 IV

05 Problem with milk vendors 64.22 V

06 Absence of other milk agencies 62.89 VI

07 Loan facility 68.87 II


Table 5.2 shows that the first reason for selling milk to the society by

respondents is the disbursement of payment regularly and the second reason is the

possibility availing loan facility. The third and fourth reasons for selecting milk

societies are regular uptake and conventional practice. Problems with the milk

vendors, absence of other milk agencies and better price are the fifth, sixth and

seventh reasons for the selection of milk societies by the milk producers in the

study area.

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In order to find out whether there is any significant difference between

opinion of the respondents about the reasons for selecting milk societies and their

individual demographic variables, such as age, marital status, family size,

educational status, income, herd strength and landholding pattern of the

respondents, a null hypothesis is framed and tested with the help of chi-square test.

Null Hypothesis:

There is no significant difference between opinion of the respondents about

the reasons for selecting milk societies and their individual demographic

variables, such as age, marital status, family size, educational status, income, herd

strength and landholding pattern of the respondents.

Alternate Hypothesis:

There is a significant difference between opinion of the respondents about

the reasons for selecting milk societies and their individual demographic

variables, such as age, marital status, family size, educational status, income, herd

strength and landholding pattern of the respondents.

The result is given in table 5.3

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TABLE 5.3

CHI-SQUARE TEST RESULT

Variable Perception Calculated

value

Table

value (0.05

level)

Result

Age

Regular Payment

24.67 36.42 Not Significant

Marital status 11.86 12.59 Not Significant

Family size 31.25 28.87 Significant

Educational

status 18.57 21.03 Not Significant

Income, 23.94 21.03 Significant

Herd strength 26.86 21.03 Not Significant

Landholding

pattern 38.23 36.42 Not Significant

Age

Better Price



Family size 25.89 28.87 Not Significant

Educational

status 19.34 21.03

Not Significant

Income, 18.39 21.03 Not Significant


Landholding


Age

Regular uptake




Educational




Landholding


Age

Conventional practice

38.61 36.42 Significant

Marital status 15.97 12.59 Significant


Educational




Landholding


Age

Problem with milk

vendors




Educational

status 24.38 21.03 Significant



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Landholding


Age

Absence of other milk

agencies




Educational




Landholding


Age

Loan facility

38.26 36.42 Significant

Marital status 17.65 12.59 Significant


Educational

status 23.69 21.03

Significant

Income, 26.48 21.03 Significant

Herd strength 25.37 21.03 Significant

Landholding

pattern 39.52 36.42

Significant

Computed by the researcher

Table 5.3 shows that there is no significant difference between perception

of the respondents about reasons of regular payment, for selecting a milk society

and Age, Marital status, Educational status, Herd strength, Landholding pattern

except Family size and Income of the respondents.

There is no significant difference between perception of the respondents

about the reasons of better price, regular uptake and absence of other milk agencies

for selecting milk society and age, marital status, family size, educational status,

income, herd strength and landholding pattern of the respondents.

There is a significant difference between perception of the respondents

about the reasons of conventional practice for selecting milk society and Age,

Marital status, and Family size. However there is no significant difference between

the perception and Educational status, Income, Herd strength and Landholding

pattern of the respondents

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There is no significant difference between perception of the respondents

about the reasons of Problem with milk vendors for selecting milk society and

age, marital status, family size, income, herd strength and landholding pattern

except educational status of the respondents.

There is a significant difference between perception of the respondents

about the reasons Loan facility offered by the milk societies for selecting milk

society and Age, Marital status, and Family size, Educational status, Income, Herd

strength and Landholding pattern of the respondents.

5.15 MARKETING COST AND MARKETING MARGIN

The expenditure incurred by the middlemen from the stage of procurement

of milk to the sale of milk to the ultimate consumer is marketing cost. It is the

difference between the consumer’s price and the net price received by the producer

plus the marketing margin. It is measured as under.

Marketing Cost = Consumer price – Net price received by producer (when

there is no middleman)

Marketing Cost = Consumer’s price – Net price received by the producer +

margin of the middleman

The difference between the consumer price and the marketing cost along

with the producer’s price is the marketing margin.

5.7 CONCEPTS USED IN MARKETING COST

(i) Procurement Price:

The actual price received by the milk producer or which is given by the

society to the producer is procurement price. The average procurement price of

cows and buffalo’s is taken in to account for calculating the marketing cost.

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(ii) Procurement Cost

This cost includes the expenditure on the salaries of team officers, field

assistants and cost of chemicals used to test the purity of milk. Procurement cost

is the cost which includes the expenses for the procurement of milk from the

producers.

(iii) Input Cost

Input cost is incurred on the veterinary doctor’s visits to various

households. This is applicable only to the co-operative union members. For others,

it is included in the cost of production of milk because the amount is spent by the

producer himself.

(iv) Chilling Cost

Milk, which is collected in a nearby village, has to be chilled before

bringing it to the union. The cost incurred for chilling is termed as chilling cost.

This cost concept is applicable only to the society/union.

(v) Collection Cost

The cost incurred for collecting milk from the societies is called collection

cost.

(vi) Tanker Transport Cost

The tanker transport cost is the cost involved in bringing the chilled milk to

the dairy union or plant at Madurai. It is applicable only to channel I.

(vii) Processing Cost

Dairy milk has to be processed immediately as its period of life is only six

hours. The cost involved in processing is called processing cost. This cost exists

only in channel I.

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(viii) Skimming Cost

The cost involved in separating fat from the milk is called skimming cost.

This cost exists only in channel I.

(ix) Skimmed Milk Powder Cost

To maintain the standard of milk, milk powder is added. Skimmed milk

powder cost means the cost of milk powder that is added to the milk. This cost

exists only in Channel I.

(x) Packing cost

The milk is supplied by can, bottle or tetra pack. The cost of packing

material and labour is called the packing cost. This cost exists only in Channel I.

(xi) Administrative Cost

The cost incurred to maintain the staff, office stationery and the like related

to the office administration is called the administrative cost.

(xii) Distribution Cost

Distribution cost includes the salesman’s commission and the transport

cost for the distribution of milk to various depots.

5.16 COST OF MILK COLLECTION

Milk society procures milk from the producer and sells it to the union. The

union procures the milk from the societies and sells it to the consumers after

processing it. The total costs of milk collection from Milk society to the union

are divided under the following sub heads:

(a) Charges borne by the milk co-operative society.

(c) Charges borne by the Union.

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Their marketing cost and margin are shown in table 5.4.

5.17 CHARGES BORNE BY MILK CO-OPERATIVE SOCIETIES

The charges borne by the milk co-operative societies are given in table 5.4

TABLE- 5.4

CHARGES BORNE BY MILK CO-OPERATIVE SOCIETIES (RS.)

S.No Particulars Rs. / Litre Percentage

01 Procurement price 15.50 65.96

02 Staff overhead charges 0.29 01.23

03 Room rent 0.21 0.89

04 Electricity charges 0.12 0.51

05 Stationery charges 0.15 0.64

06 Miscellaneous charges 0.10 0.43

07 Cost of milk at society 16.37 69.66

08 Price paid by the milk

producer’s union

16.66 70.89

09 Net margin to society 0.29 1.23


From the table 5.4, it has been inferred that at the milk producer’s society,

the procurement price forms the major components of the charges borne by the co-

operative society and it constitutes 65.96 per cent of the consumer’ price followed

by Staff overhead charges of 01.23 per cent, Room rent 0.89 per cent, electricity

charges 0.51 per cent, Stationery charges 0.64 per cent, and Miscellaneous charges

0.43 per cent of the consumer’ price. The average total cost borne by the milk

producer’s society is 69.66 per cent of the average consumer price. The price paid

by the milk producer’s union to the milk producer’s society is Rs. 16.66 per liter.

The net margin of profit to the society is Rs. 0.29 per litre.

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5.18 CHARGES BORNE BY MILK PRODUCER’S UNION

The charges borne by the milk producer’s union are given in table 5.5

TABLE - 5.5

CHARGES BORNE BY MILK PRODUCER’S UNION (RS.)

S.No Particulars Rs. / Litre Percentage

01 Procurement price 16.66 70.89

02 Procurement cost 0.08 0.34

03 Input cost 0.19 0.81

04 Chilling cost 0.16 0.68

05 Collection cost 0.14 0.60

06 Tanker transport cost 0.27 01.15

07 Processing cost 0.31 01.32

08 Cost of milk 17.81 75.79

09 Skimming cost 0.10 0.43

10 Skimmed milk powder cost 0.16 0.68

11 Packing cost 0.70 02.98

12 Administrative cost 0.79 03.36

13 Distribution cost 0.37 14.34

14 Cost of milk 19.93 84.81

15 Profit by removing fat 0.42 01.79

16 Total margin to milk

producer’s union

3.15 13.40

17 Consumer price 23.50 100.00


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Table 5.5 shows the various cost borne by the milk producer’s union in the

study area. Among the various marketing cost incurred, administration cost is

found to be high which constitute Rs. 0.79 per litre followed by packing cost

Rs. 0.70 per litre and skimming cost Rs. 0.10 per litre, processing cost Rs. 0.31 per

litre, Tanker transport cost Rs. 0.27 per litre, Input cost Rs. 0.19 per liter Chilling

cost Rs. 0.16 per litre and procurement cost Rs. 0.08 per litre respectively.

Hence the cost of milk in the channel comes to Rs. 19.93, that is 84.81 per cent of

the consumer’s price. The cost of milk at the producer’s union plus profit by

removing fat and margin of the milk producer’s union result in the consumer’s

price of Rs. 23.50 per litre in this channel.

5.19 PRICE – SPREAD

The difference between the net price received by the producer and the

consumer’s price is price spread. Since there is small variation in consumer price

only the average price is calculated.

By finding the difference between the net price received by the producer

from the societies and the price paid by the consumer, the price spread is worked

out.

The price spread in the channel I that is milk sold through co-operative

societies is shown in table 5.6

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TABLE 5.6

PRICE SPREAD IN THE MARKETING OF MILK THROUGH CO-

OPERATIVE SOCIETIES

S.No Particulars Rs. Percentage

01 Producer price 15.50 65.96

02 Marketing margin 3.15 13.40

03 Marketing cost 3.98 16.94

04 Consumer price 23.50 100.00

05 Price spread 08.00 -


From table 5.6, it has been revealed a sum of Rs.8.00 per litre of price

spread that is difference between producer price and consumer price. The

marketing margin of the milk producer’s union is Rs.3.15 per litre and the average

total marketing cost is Rs. 3.98 per litre of milk. It is observed from the table that

milk producers got only 65.96 per cent of share in the consumer price, but their

profit was only Rs. 3.49 per litre that is 14.85 per cent of consumer price in the

marketing of milk.

chapter - v marketing of milk by madurai district co...

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