aishwary bp

8/7/2019 AISHWARY BP

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Ishan Institute Of

Management And Technology

A Business Proposal

On

Dairy farming

Submitted to : Submitted by :

DR. D.K.GARGSIR AMIT KUSHAWAH(MMR-3014)

CHAIRMAN OF IIMT, AISHWARYSINGH(MMR-3004)

GR.NOIDA

ISHANINSTITUTE OF MANAGEMENT &TECHNOLOGY 2, INSTITUTIONAL AREA

GREATERNOIDA

Web: www.ishanfamily.com email: [email protected]


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ACKNOWLEDGEMENT

We take the opportunity to express my gratitude to all of them, who in some

or the other way, have helped us to accomplish the assignment. We are

thankful to all of them for their help and encouragement.We sincerely thank to

the sculptor of Ishan Institute of Management and Technology, Greater

NOIDA, Chairman, Dr. D. K. Garg. Lastly we would like to express our feeling

for our parents, without their blessings and moral supports the assignment

could not be possible.

AMIT KUSHAWAH - MMR3014

AISHWARYSINGH - MMR3004


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DECLARATION

WE hereby declare that this project is an original work done by AMIT

KUSHAWAH MMR3014 & AISHWARY SINGH MMR3004 on the behalf of

ISHAN INSTITUTE OF MANAGEMENT & TECHNOLOGY, Greater Noida. All right

reserved. Any unauthorized use of this assignment is strictly prohibited

without the prior permission of the authority.

AMIT KUSHAWAH

MMR-3014

AISHWARYSINGH

MMR-3004

Date-

Place-Greater Noida


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TABLE OF CONTENTS

S.NO CONTENTS PAGENO.

1

PREAMBLE

5-10

2

PURPOSE OF STUDY

11

3

THEBUSINESS

12-13

4

THE LOCATION

14

5MAN POWERREQUIREMENT

15

6

MACHINERY

16-17

7

TECHNICAL KNOW-HOW

18-22

8

PLANT LAY OUT

23

9

DEMAND FOR PRODUCT

24

10

SUPPLY FORRAW MATARIAL

25-26

11

SOURCE FORRAW MATARIAL

27

12

MAJORCOMPETITOR

28-29

13

BREAK EVENANALYSSIS

30-33

14

INTERESTINTHE PROJECT

34-35

15

TAXESAPPLICATION

36-40

16

LEGAL ASPECT

41-45

17 CONCLUSION

46-48


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CHAPTER - 1

INTRODUCTION:

Pure dairy farming: An idea whose time has come

Which is Indias No. 1 farm commodity? Wheat, rice, sugarcane, cotton or oilseeds? Well,

none of them: The right answer is milk. In 2006-07, the country produced an estimated 100

million tonnes (mt) of milk. At an average farmgate price of Rs 10 per kg, this would have

been worth Rs 100,000 crore, exceeding that of any other crop . Moreover, the share of the

milk group in the total value of output from agriculture and livestock during 2004-05 (at

current prices) was 17.89 per cent. This means almost every fifth rupee generated from

agriculture and allied activities in the country comes from dairying. And amidst an overall

stagnant farm sector, this is one segment that has exhibited significant dynamism in recent

times. Between 1990-91 and 2006-07, milk production has nearly doubled from 53.9 mt to

100 mt, while rising from 55.1 mt to 74.9 mt for wheat and 74.3 mt to 92.8 mt for rice.Milk,

not exciting enough Yet, strangely enough, milk excites neither policymakers nor corporates.

The planner sees dairying as basically an activity subsidiary to agriculture. Partly this belief

stems from the cattle and buffaloes in India being largely fed on crop residues wheat and

paddy straw, sugarcane tops or the protein-rich cake remaining after extraction of oil from

groundnut or mustard-seed. Milk, from this perspective, is more of a residual than a primary

agricultural product. Though farmers do grow barseem, sorghum or maize as independent


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fodder crops i isol ted plots, t e idea of a pure dairy farmeris somet i t at has not

really caught on, leave alone capture officialimagination. Li ewise, the big corporate entities

in dairying today are pretty much the same ones that have been around forthe pastthree-four

decades: Nestle, Amul, National Dairy DevelopmentBoard and various other State dairy

federations. Besides, there are the Hindustan Levers and Britannias which have either exited

the business or gone low key afterthe initial hoopla. The more successful recent entrants are

not so well-known names: VRS Foods (Paras brands), SMC Foods (Madhusudan), Bhole

Baba Milk Food Industries (Krishna) and Sterling Agro Industries (Nova). As forlisted

companies such as Hatsun Agro Product and Heritage Foods, these are stocks unlike, say,

sugar or fertilisers that have not exactly setthe market on fire. Even when it comes to the

commodities space, the two premier exchanges MCX and NCDEX dealin everything

from chana, chilly and coffee to guar seed,jeera, mentha oil and mulberry green cocoons,

but not skimmed milk powder, ghee orkhoa. Thatis again surprising, given the seasonal

fluctuations in milk availability and demand, which make its products eminently amenable to

futures contracts.

Harvested and marketed daily


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Why this indifference? One reason has to do with the unique nature of milk as a crop that is

harvested and marketed daily. This is as opposed to wheat and paddy, which take over four

months to mature, or sugarcane that is harvested 11-12 months after planting. Harvesting here

is a conspicuous one-time event, whereas it is a daily affair for milk sans any pongalor

baisakhi festivities marking its arrival. Cane, wheat and rice, furthermore, generate bulk

revenue at one go for the farmer, unlike the steady trickle of cash flowing daily from milk

sales. A buffalo, once it delivers its first calf when around four years of age, keeps producing

milk for the next 290-300 days, before going dry prior to the next calving taking place

roughly 450 days after the first. A single buffalo in its lifetime undergoes 8-9 calvings, with

each cycle yielding 1,500-odd kg of milk. A farmer, who keeps three-four animals and is able

to coordinate their dry periods, can ensure year-round sales. But this simple fact of being

marketed daily in kg or litres against quintals and tonnes in the case of field crops

renders cattle rearing and dairying a business that goes virtually unnoticed or is reported as a

subsidiary farming activity. It also means that milk does not have a distinct lobby akin to

the wheat farmers of Punjab or the cane growers of Uttar Pradesh. This, in spite of milk being

a cash cow in the literal sense. While the bulk monies from cane may help the farmer marry

off his daughter, discharge old debts or buy new farm equipment, it is milk that provides the

liquidity to meet day-to-day household expenses and an effective insurance against drought

or crop failure.

Unattractive to corporates

At the same time, the manner in which dairying has evolved in India being widely

dispersed across space and time has made it relatively unattractive to corporates. Dealing

with a perishable commodity supplied by thousands of scattered producers each delivering

a few litres every day involves formidable logistics requiring not just deep pockets, but

painstaking effort and organisation at the grassroots level. It is the complexity of this task,

often belatedly realised, that has led to many corporates (barring the odd Nestle or Hatsun,

which have invested in back-end extension and procurement infrastructure) burning theirfingers in the sector. The ones to have truly succeeded are the cooperatives, especially Amul,

which procures over 65 lakh litres of milk on an average daily from some 25 lakh producer-

members. That works out to less than three litres per producer, making it arguably the

countrys most efficient and transparent rural employment scheme.


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The Amul model has proved to be robust and stood the test of time, for all the organised

attempts at belittling and sabotage even from within. However, its chief protagonist has been

the small or marginal farmer, engaged in dairying as a subsidiary income activity. The basic

underlying framework, thus, remains one of livestock rearing and milk production being an

adjunct to mainstream crop agriculture. Considering the sheer size to which it has grown

today, there is a need to rescue dairying from a narrow subsidiary/residual approach and

view it as an independent business in itself. The pure dairy farmer is perhaps an idea

deserving of support whose time has come.

Pure dairying

By pure dairying, one is not talking of the farms with 2,000-plus cattle that produce a

quarter of the milk in the US or the average member of New Zealands Fonterra Cooperative,

who supplies 3,600 litres per day (against Amuls less than three!). Even more far-fetched are

the captive dairy farms of Saudi Arabias Almarai Company that house over 45,000 Holstein

Friesians, protected against the desert heat by special air-droplet fans and evaporative cooling

systems, fed on imported barley and concentrates, and milked in fully-automated, continuous

cycle-operated parlours. These models are obviously unsuited for India, both from an

economic cost as well as socio-political angle. More promising are experiments of the kind

being tried out by Hatsun Agro. The Chennai-based company is targeting ordinary five-acre

farmers to switch to pure dairying by getting them to exclusively grow quality fodder (Co-

3, desmanthes, multi-cut sorghum) and raise 35-40 cows (at 90 square feet per animal and

436 square feet equal to 0.01 acres, less than 0.1 acres suffice for 40 cows). By increasing on-

farm fodder yields, relying less on expensive purchased concentrates and selective

mechanisation (use of brush-cutters for harvesting, rain-guns to halve water consumption,

and milking machines to save on labour), milk production costs can be reduced by up to Rs

two to Rs 6.5-7 a litre. A farmer selling 300 litres daily at Rs 10 a litre can, then, earn over Rs

25,000 a month, it is claimed.

Concessional schemes

Models like these, no doubt, offer opportunities for educated rural youth nursing

entrepreneurial ambitions and addressing the rather disturbing flight of talent from the

countryside.


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But this calls for a changed official mindset, still entrenched in the two-animals, milk-as-a-

residual-product mould. A good cross-bred, giving 3,000 litres annually, costs Rs 18,000 or

so. There is no dearth of concessional finance schemes for buying two cows; none when it

comes to a 30-animal farm entailing investment of around Rs 8 lakh (inclusive of sheds and

assorted machinery), even if the promoter is a small-holder having a secure marketing

arrangement with a cooperative or private processor. In this case, not only is there no

subsidy, but banks additionally insist on land as collateral security notwithstanding the

fact that farms are often jointly-held family property, on which clean title deeds may not be

available to the satisfaction of lenders. It is necessary to revisit such policies, more so in a

country that has emerged as the worlds leading milk producer. If only organised dairying

were to get the official recognition and treatment accorded nowadays to horticulture, bio-fuel

plantations, floriculture or wineries, it could stimulate the growth of a new type of educated

farmer-turned-rural entrepreneur without at all undermining the successful home-grown

Amul model.

India derives nearly 33% of the gross Domestic population from agriculture and has66% of

economically active population ,engaged in agriculture. The share of livestock product is

estimated at 21% of total agriculture sector. The fact that dairing could play a more

constructive role in promoting rural welfare and reducing poverty is increasly being

recognised . Milk production alone involves more than 70 million producers, each raising one

or two cows/ buffaloes primarily for milk production .The domesticated water buffalo is one

of the gentlest of all farm animals ,hence it can be breeded easily. The dairy sector offers a

good opportunity to entrepreneurs inIndia. India is a land of opportunity for those who are

looking for new and expanding markets. Growth propsects in the dairy sector are very bright.

Dairy development in India has been acknowledged the world over as one of modern India"s

most sucessful development programme. India is the second largest milk producing country

with anticipated production of about 78 million tons during 1999-2000. The production of

milk products stoood at 3.07 lakh tonnes in 1999-2000.Production of milk powder including

infant milk food has risen to 2.25 lakh tons in1999-2000, whereas that of malted food is at

65000 tons.

The dairy sector offers a good opportunity for those who are looking for new and expanding

markets. While the farming sector is more or less stagnant, the dairy sector has seen much

activity. In the past 15 years, milk production in India has doubled and is now over 100


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million tons a year thus becoming Indias No.1 farm commodity. India s milk production is

expected to grow at about 3 per cent per annum. However, due to increasing population, per

capita availability of milk is expected to increase by only about 1.5 per cent per annum. For

an economy growing at about 8 per cent per annum, this increase in availability will be

grossly inadequate. Production growing at only 3 per cent and consumption growing at more

than double the rate leads to a mismatch between demand and supply. This creates

opportunities for new entrants to this industry.


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Chapter 2:

Purpose of study

Basically we saw now a day it is very difficult to enter in a good company

without references as well as job satisfaction is also one of the important

factors for staying long lasting in the same company. If a person has

potential and regularly he is shifting from one job to another because he is

not satisfied with working environment that results stress and depression

which makes persons confidence lose and losses in professional life. In India

there are so much career option that one can opt and it is not mandatory that

for any business he has to invest big capital. Here I tried to find out that by

investing less capital one can start business and can be reaching 1st

position

with strong determination, hard work and clear goal. In these days as we all

well aware about recession period and market is down that directly impact on

job opportunities. So this study helps me to understand that there are so many

alternates to earn money for this government is also ready to give loan. In

addition to that I realized that wit h less capital one can start business like

milk production.

I selected DAIRY BUSINESS because it is demand of the society. Almost

every people need milk in day today life. this is the need of every house hold

.

Keys to Success: Keys to success for the company will include:

1. Maintaining a reputable and untarnished reputation in the community.2. Quality product3. Competitive pricing.4. Hassle free service.


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CHAPTER-3

THE BUSINESS

1) Rearing ruminating animals for production of milk2) Standardization & pasteurization of milk3) Packaging of milk in 500 ml & 1 litre poly pack4) Selling of male calf5) Selling of manure ( compost)

VISION

We recognise the opportunity of dairy products &we will meet the demand by sustainable

development .As obligation to our stake holders we will provide the platform to educational;

growth ,quality products .To ensure health for all through our nutrient rich product & deliver

them at competitive price with hassle free service .to grow eventually as a market leader in

our field of business

MISSION

Anticipating dairy industry issue from from a unique regional perspective & developing

opportunity & timely response. Working with our business partners to develop & encourage

innovation. The company has ensured to maintain purity & natural goodness of milk at every

step.

GOAL

Expanding its horizon from north U.P to all over U.P. Diversifying business for milk

production to post production processing With in 5 years we will be having our dairy units

and cooperative society in every major cities of north India.


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OBJECTIVE

To employ local , poor , unskilled labour impart training & education to them Rendering

continuous & hygienic supply of milk , stop migration from rural to urban Harness the

locally available resources for production Reinvest the maximum share of profit to extend /

diversify the business.


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CHAPTER-4

LOCATION

The region we are going to open our farm in rural area . It is 10-30 km far away from city

,this area is well suited for this business for the following reasons

We need excess of land ie 1 acre . If we purchase land in urban area we have to payrelatively very huge amount, so we have to go for rural land which costs Rs

10,00,000 only

If we settle our business in rural area ,we will easily get fodder , green grass etc. Labours are of near by locality ,so we both are mutally benifited ie they can easily

go home after work & we call them any problem or necessity

Rural area is the best market for dairy by product ie dung (manure) Local peoples and government authority will not having any objection It provide employment opportunity to illetrate and unskilled of thet locality.

Specific location

Khalilabad,

30 km away from Gorakhpur Distt- sant kabir nagar ,Gol bazaar ,near azad chowk.

Benefits of that particular location

1) Better connectivity with main road2) Ground water lever ig good ie in 45 foot under ground water is available3) Raw materials are easily available


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CHAPTER-5

MANPOEWR REQUIREMENT

we need man power To operate any business and when we talk about dairy farming it means

a business with a lots of buffalos and cows. and for taking care of these animals we need

labour. for our business where we are going to start a dairy farm with 30 cows and 20

buffalos than it becomes necessary to hire some peoples . in rural areas its not very difficult

to find out the people for this kind of particular job, because in rural areas most of the peoples

are depend on agriculture but it does not provide the work for whole year so always they face

some trouble regarding work. And it would be mutually beneficial for both to hire local

people for this work. Because when we hire local people it will slash down the migration

rate, because if we are providing them job in their home then there would not be any need to

go other place for job and it would also give us some benefits like if we will go to another

place for recruiting the people, it will take some more time and it would be quite costly . and

most important think in hiring the local people that it will also increase the employment rate

of that particular area .

Requirement of skilled labour is relatively less. Manage a good team of labourers. You need to choose hardworking reliable persons

preferably with some experience. You can also train them for specific jobs

The strength of labourers in your farm can vary with number of animals usually thethumb rule is one labour for every 10 animals on milk or 20 dry animals or 20 young

stock.

We can hire labours from nearby locality , by this means we provide employmentopportunity to them & also impart make them skilled by giving training to them

regarding dairy

Those workers we are going to hire are less educated and un skilled , so we have topay less ie 1800-3000 to labours & 5000 to supervisors ,who supervises those

workers

We have to hire a skilled driver for transportation, a technician for maintainance ofinstruments and fittings.


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CHAPTER-6

MACHINARY

As we know that dairy farming is not so much based on technical instrumrnts , we have to

generally deal with ruminating animals ,but some instruments are used which are as follows-

PASTEURIZATION

The term Pasteurization , as applied to market today, refers to the process of heating every

particle of milk to at least 63 degree Celsius for 30 min, or 72 degree Celsius for 15 sacs (or

any temperature-time combination which is equally efficient), in approved and properly

operated equipment. After pasteurization, the milk is immediately cooled to 5 degree Celsius.

Unlike sterilization, pasteurization is not intended to kill all pathogenic micro-organism in the

food or liquid. Instead, pasteurization aims to reduce the number of viable pathogens so they

are unlikely to cause disease. There are different standards for different dairy products,

depending on the fat content and the intended usage. For example, the pasteurization

standards for cream differ from the standard for fluid milk, and the standards for pasteurizing

cheese are designed to preserve the phosphatise enzyme, which aids in cutting.

There are two main types of pasteurization uses today: High Temperature/Short Time(HTST) and UHT (Ultra High Temperature).

We will use HTST BECAUSE:

In the HTST process, milk is forced between metal plates or through pipes heated on the

outside by hot water, and is heated to 71.7 degree Celsius for 15-20 seconds. The HTST

pasteurization standard was designed to achieve a 5-log reduction, killing 99.999% of the

number of viable micro-organisms in milk. This is considered adequate for destroying almost

all yeast, moulds and common spoilage bacteria and also to ensure adequate destruction of

common pathogenic heat resistant organisms (mycobacterium tuberculosis, which causes

tuberculosis and Coxiella burnetii, which causes Q fever). HTST pasteurization process must

be designed so that the milk is heated evenly, and no part of the milk is subjected to a shorter

time or a lower temperature.

Advantages


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1) Capacity to heat treat milk quickly and adequately, while maintaining rigid quality controlover both the raw and finished products.

2) Less floor space required.3) Lower initial cost.4) Milk packaging can start as soon as pasteurization begins, thus permitting more efficient use

of labour for packaging and distribution.

5) Easily cleaned and sanitized.6) Development of thermopiles not a problem.

milking machine

The machine we going to employ is sucking type . It cost Rs 1,50, 000. I think automatic

milking machine is far better than manual milking due to following reasons

1) It prevents contamination2) Cost effective & fast3) Reduce labour cost

Cold storage

We need two types of storage systems

1) A refrigeration chamberFor temporary storage of milk before and after standardization , pasteurization , and

packaging .2) A transport van equipped with refrigeration facility.

To avoid adverse effect of temperature ( by thermopiles & cycrophiles )

To avoid contamination (salmonella, clostridium botulinum , )

Transportation

For transportation we need tata 207 Di (equipped with refrigeration) . It cost Rs 4,

00,000. It is ment for transportation of milk and fodder for ruminating animals.


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CHAPTER-7

TECHNICAL KNOW HOW

(How to do something / how something works)

Starting the Farm - How to begin..

y One needs to decide first on the aims and objective of the farm. Every year thereshould be a progressive aim for breeding ( including number of animals to be

maintained) and production.

y You can visit dairy farms that run on commercial basis and have a discussion withexperienced farm owners. You need not have to rely much on others experience,

analyze every event logically and if needed consult with local Veterinarians for

more information.

y If you plan to manage the farm on your own, look for opportunities to work for anexisting farm for a minimum period of six months.

y Develop interest and study feed and fodder's market in your region, its difficultiesin relation to seasons.

y Manage a good team of labourers. You need to choose hardworking reliablepersons preferably with some experience. You can also train them for specific

jobs.

y Visit the cattle market occasionally. Observe animals on sale and talk withpersons engaged with purchasing of animals.

y Read magazines on Dairy Industry and keep yourself informed. Performance Monitoring in a Dairy Farm

Some Points:

y Minimum 30% of animals in production should be of first lactation. y First lactation animals should produce at lease 70% ofMilk in the farm in any

given time.

y Individual cows should have at least 280 days lactation period. y Minimum 60% of the cows in the herd should breed within 60-90 days after

previous calving. Cows breeding after 140 days or more should not be in

any case more than 5 %.

y here should not be a single death due to contagious diseases. y Calf mortality up to 6 months of age should not be more than 5% p er year.y Non functional teat should not be more then 1% of the total


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( Total teats = Number of cows x 4 )

y Total cost on feed should not exceed 70% of net income through sale of milk. y At any given time, Seventy percent (70%) of animals should be in milk where

as 20% should be dry pregnant and 10% should be dry empty.

y On any given day , average days in milk ( of all animals in milk ) should be150 to 160 days : On any day , count the number of days ( respect to each

animal) in milk from date of calving and take the average for all the animals

in milk )

y Sixty percent (60 %) of the animals should breed upon first insemination (AI)it self.

Some Tips:

y Every year try to improve the daily average milk yield by 15 to 20% (Achievable only through good management )

y Use semen of those bulls which can give progenies with at least 1.5 times ofpotential of milk production than your herd average, but in any case it should

not have the capability of giving progenies with more than twice the potential

of milk production. ( e.g. if your herd average is 3000 liters per lactation , use

bulls having potential of giving progenies with 4500 to 5500 liter herd average

NOT bulls having potential of producing progenies giving 6500 liters or above)

y Give incentive to the labors for correct detection of heat (estrous), Goodgrowth rate of calves, feed and fodder saved etc.

y Cull non-profitable animal e.g. Animals with breeding problem, Animalsproducing not up to the average. Every year cull 20-30% of animals from the

herd and replace them from own grown young stock. Do not cull animals if

you do not get better replacement. A regular breeder can be retained even if

it is producing 20% less then herd average.

y If animals are required to be purchased for replacement :o Purchase them from within 20 25 kms area.o Know their Sire

Take utmost care that they are health


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Selecting the animal to farm with - Cows v/s. Buffaloes

Cows Buffaloes

y Good quality cows are availablein the market and it cost around

Rs.1200 to Rs.1500 per liter of

milk production per day. (e.g.

Cost of a cow producing 10 liter

ofMilk per day will be between

Rs.12,000 to Rs.15,000).

y If proper care is given, cowsbreed regularly giving one calf

every 13-14 month interval.

y They are more docile and canbe handled easily. Good milk

yielding cross breeds (Holstein

and Jersey crosses) has well

adapted to Indian climate.

y The fat percentage of cow's milkvaries from 3-5.5% and is lower

then Buffaloes.

y In India, we have good buffalobreeds like Murrah and Mehsana,

which are suitable for commercial

dairy farm.

y Buffalo milk has more demand formaking butter and butter oil

(Ghee), as fat percentage in milk is

higher then cow. Buffalo milk is also

preferred for making tea, a

welcoming drink in common Indian

household.

y Buffaloes can be maintained onmore fibrous crop residues, hence

scope for reducing feed cost.

y Buffaloes largely mature late andgive birth to calves at 16 to 18

months interval. Male calves fetch

little value.

y Buffaloes need cooling facility e.g.Wallowing tank or showers /foggers with fan.

A suggestion to help you in deciding the animal to farm with:

Middle class health-conscious Indian families prefer low fat milk for consumption as

liquid milk. We suggest you to go for a commercial farm of mixed type. (Cross breed,

cows and buffaloes kept in separate rows under one shed). Conduct a through study of

the immediate market where you are planning to market your milk You can mix milk

from both type of animals and sold as per need of the market. Hotels and some general

customers (can be around 30%) prefer pure buffalo milk. Hospitals, sanitariums prefer

cow's milk.


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What are the various breeds? What is the economic life of animals?

Popular buffalo milch breeds are Murrah, Surti, Mehasani, Jaffrabadi, and Nali -

Ravi and Badhawari.

The indigenous milch breeds of cattle are Gir, Sahiwal, Red Sindhi and Tharparkar.

The exotic breeds of cattle are Holstein Friesian, Jersey and Brown Swiss.

Economic life of buffaloes is 5 -6 lactation and that of Crossbreed cows is 6-7 lactation.

The minimum economic size to go with?

Under Indian condition a commercial dairy farm should consist of minimum 20 animals

(10 cows, 10 buffaloes) this strength can easily go up to 100 animals in proportion of

50:50 or 40:60. After this however, you need to review your strength and market

potential before you chose to go for expansion.

A glance at the Infrastructure and Manpower requirements

The space required per animal should be 40 sq.ft in shed and 80sq.ft open space.

Besides, you will also need:

1. One room 10'' x 10'' for keeping implements.2. One room 10''x 12'' for milk storage 3. Office cum living room of suitable size.4. Water tank capable of storing minimum 2000 liters5. Bore well with capacity to fill water tank in 1 hr

Total land requirement for a unit of 20 animals can be sited as 3000 sq.ft. There should

be space for expansion. Ideal space requirement for 100 animals is 13,000 to 15,000

sq.ft (120" x 125''). For 20 animals initially, you can make contractual arrangements for

getting an assured supply of 300 kgs. of Lucerne and 400 kgs. of maize fodder per day.

However, in long run, as the strength of you farm will go up to 100 animals, It is

advisable that you should go for a lease land of 15 to 20 acres with irrigation facility to

cultivate green fodder for your animals. (One acre of green fodder cultivation for every

five animals is required as a thumb rule.) The economics of whole dairy animal

management depends upon its economic feeding. By making fodder's like Lucerne or


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Berseem available for your animals you can reduced cost on feeding concentrate feed.

The strength of labourers in your farm can vary with number of animals usually the

thumb rule is one labour for every 10 animals on milk or 20 dry animals or 20 young

stock.


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CHAPTER-8

PLANT LAYOUT

Alphabets

A LIVE STOCK SHED, 4 PARELLEL ROES HORIZINTALLY , HAVING 25 ANIMLS IN EACH ROW

B PASTURIZATION PLANT

C SPACE FOR PACKED MILK STORAGE

D WATER TANK 5000 LITRES 20 FOOT ABOVE THE GROUND , FITTED WITH 2 HP PUMP

ESPACE FOR DUNG & WASTR DUMPING (MANURE FORMATION)

GSPACE FOR GREEN GRASS

HSHED FOR INSTRUMENTS & TRANSPORT VEHICALS

I SHOWS CONNECTION OF FARM WITH MAIN ROAD


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CHAPTER-9

DEMAND

We are going to establish our dairy at Gorakhpur region , it means we want to exploit the

potential of that area .There is very much demand of milk in that area .

Market Coverage by organised sector 72%

Market coverage by unorganised sector 28%

Despite of such coverage there is very much scarcity if liquid milk in the city .so I think

liquid is the potential product of that region. In Gorakhpur region everyday consumption of

milk is- 3.7 lakhs litres, there is still requirement of 1.5 lakh litre In city. Indias milk

production will grow at about 3 per cent per annum in spite of difficulties due to stagnant

livestock herd size and shortage of fodder. Due to increasing population, per capita

availability of milk will increase by only about 1.5 per cent per annum. For an economy

growing at about 8 per cent per annum, this increase in availability will be grossly

inadequate.

* India is the largest producer of milk producing more than 100 million tons of milk per

annum. Yet, her per capita milk consumption is around 250 g per day.

* India has a population of more than 1 billion with diverse food habits, cultures, traditions

and religions. Regional variations within the country can be mind boggling. On one hand, the

country has plains with long tradition of milk production and consumption. On the other

hand, there are forest and hilly regions with no tradition of dairying.


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CHAPTER-10

RAW MATERIAL

y Dairy animals are ruminants and as such need bulk amount to fill theirstomach.

y Dairy animals need to be fed for :o Maintenance of their body ( day to day function ).o For production of milk.

y In case of pregnancy, they need extra feeding in the last two months (forgood health of the calf)

y Dairy animals are herbivorous and eat crop residues, cultivated grasses, treeleaves etc.

y On average dairy animal needs following quantity of dry matter ( out of feed ,fodder , concentrate they are being fed with ) per day:

o 2% of body weight for their survival. o 2.5 % of body weight for their survival and little production ( 6 -8 Liters

of milk per day)

o 3% of body weight for their survival and production of 10 to 12 litersof milk

o More than 3% of body weight in case of more production. y Dairy animal young or old, empty, pregnant, in milk, or dry must be fed with

mineral mixtures.

y Fresh, cool and abundant drinking water as or when required is necessary forgood health and efficient production. Animals can drink hard water once they

are accustom to it (usually needs 8- 10 days). They reject water containing

more then 2% sodium chloride.

y Dairy animals are fed with fodder (green / dry), concentrate (home made orcommercial): Concentrate is the mixture of grains and lugumin seeds besides

bran. Ready-made commercial concentrates are mixtures of grains, urea, and

molasses and may contain mineral mixture and vitamins.y Dry matter content can be grossly calculated as:

o Concentrates : 70% is dry mattero Green Fresh fodder : 10% is dry mattero Green dried in air / sun : 20% dry matter o Dry fodder / crop residues: 85% dry matter.

y While feeding note that, dry matter requirement should be met with 1/3 from


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green fodder, 1/3 from concentrate and 1/3 from dry fodder. Give dry fodder

ad lib. Proportion of leguminous and non leguminous fodder should be in the

ratio of 40:60

y Concentrates are usually costly. If needed, you can replace some amount ofconcentrate with green fodder. Five kilogram of leguminous green fodder is

nutritionally equivalent to one-kilogram concentrate. Similarly, 8-10 Kilogram

of non -leguminous green fodder is equivalent to one kilogram of concentrate.

y In home made concentrates: mainly crushed leguminous seeds (afterthreshing) and food grains are mixed in the proportion of 40: 60 along with oil

cakes and bran in small quantity. For leguminous seeds Gram , Soya , arhar ,

Udid , Mung , Math are used and for food grains Maize , Jower , Bajra , Wheat

, Rice are used.

y Fodder tree leaves viz. Subabhool; anjan, Shewarietc. are best utilized asdairy animal fodder.

y Concentrate of leguminous nature contain 20-24% proteins, food grainscontain 8 12 % protein. Green leguminous & non-leguminous fodder

contains same quantity of protein on the dry matter basis. Dry fodder

contains 3 to 5% proteins.

y Concentrate also contains oil cakes (Groundnut, cottonseed, copra, seasam,soya, sunflower etc.) On an average, they contain 24% protein.

y Besides protein animal needs energy. The best and cheapest source of energyis food grains (They contain carbohydrate). Protein and fats can also provide

energy but they are costly. Oil in extracted oil cakes can also provide energy.

y Mineral mixtures are essential especially in growing, lactating and pregnantanimals. These mixtures contain Calcium, Phosphorous, Magnesium, Iron,

Copper, Zinc, Manganese, Selenium, Cobalt, and Iodine in appropriate

proportion. Such mixtures are commercially available. The recommended

doses are.

Adult 30 gram per day

Growing Animals 15 to 20 grams per day.

Lactating animals 50 grams per day.Advanced pregnant animals 40 grams per day

y There is no need to supplement vitamins. Animals, which are under shade,need Vitamin D and Vitamin E. Animals not getting green over a period of six

months need vitamin A to be supplemented. While Vitamin D & E remains

intact, Vitamin A in mineral mixture is not generally available to the animals.


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CHAPTER-11

SOURCES FOR RAW MATERIALS

1) Crop residue , cultivated grass and tree leaves is available locallyDry matter content can be grossly calculated as:

a. Concentrates : 70% is dry matterb. Green Fresh fodder : 10% is dry matterc. Green dried in air / sun : 20% dry matter d. Dry fodder / crop residues: 85% dry matter.

2) water for drinking & washing purpose we use ground water3) mainly crushed leguminous seeds (after threshing) and food grains are mixed in

the proportion of 40: 60 along with oil cakes and bran in small quantity. For

leguminous seeds Gram , Soya , arhar , Udid , Mung , Math are used and for

food grains Maize , Jower , Bajra , Wheat , Rice are used. For these we have to go

for lacal and domestic market

4) Besides protein animal needs energy. The best and cheapest source of energy isfood grains (They contain carbohydrate). Protein and fats can also provide energy

but they are costly. Oil in extracted oil cakes can also provide energy.

5) Mineral mixtures are essential especially in growing, lactating and pregnantanimals. These mixtures contain Calcium, Phosphorous, Magnesium, Iron,

Copper, Zinc, Manganese, Selenium, Cobalt, and Iodine in appropriate proportion.

Such mixtures are commercially available. The recommended doses are.


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CHAPTER-12

COMPETITORS

The major competitor of Parag Dairy in GORAKHPUR is Amul Dairy and also there are

some local dairies like Mamta dairy and Shyam Dairy which are affecting the sales of Parag.

Amul Dairy

Amul (Anand Milk Union Ltd.) formed in 1946, in a dairy cooperative movement in India.

The brand name Amul, sourced from the Sanskrit word Amoolya, means priceless. It was

suggested by a quality control expert in Anand and it was chosen because it was perfect

acronym for Anand Milk UnionL

td. It is brand name managed by an apex cooperativeorganization, Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), which today

is jointly owned by some 2.6 million milk producers in Gujarat.

Amul is based in Anand, Gujarat and has been a sterling example of a cooperative

organizations success in long term. It is one of the best cooperative movements in the

developing world. Anyone who has seen the dairy cooperatives in the state of Gujarat,

especially the highly successful one known as Amul, will naturally wonder what combination

of influences and incentives needed to multiply such a model a thousand times over in

developing regions everywhere. The Amul pattern has established itself as a uniquely

appropriate model for rural development. Amul has spurred the white revolution in India,

which has made India the largest producer of milk and milk products in the world. It is also

the worlds biggest cheese brand. Amul is the largest food brand in India and worlds largest

pouched milk brand with an annual turnover of US $ 1050 million (2006-07). Currently

Amul has 2.6 million producer members with milk collection average of 10.16 million litres

per day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA,

Bangladesh, Australia, China, Singapore, Hong Kong and few South African countries.

GCMMF is Indias largest food products marketing organization. It is state level apex body

of milk cooperatives in Gujarat, which aims to provide remunerative returns to the farmers

and also serve the interest of consumers by providing quality products, which are good value

for money. GCMMF markets and manages the Amul Brand. Amul has entered areas not

related directly to its core business. Its entry into ice cream was regarded as successful due to


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the large market share it was able to capture within short span of time, primarily due to the

price differential and the Brand name. It also entered the Pizza business, where the base and

the recipes were made available to restaurant owners who could price it as low as 30 rupees

per pizza when the other players were charging upwards of 100 rupees.

Local Players

Local Dairies like Shyam Dairy and Mamta Dairy are also affecting Parag sales of milk and

milk products. Shyam Dairy started functioning recently and affected Parag sales in some

parts of Allahabad. Shyam Dairy is started by one of the renowned family in GORAKHPUR .

Shyam dairy core business is selling of Bidi and they recently started selling milk and

affecting Parag sales. Mamta Dairy is also a local player and is also affecting Parag sales in

some parts of Allahabad. Both Shyam Dairy and Mamta Dairy are private dairies.


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CHAPTER-13

Income Statement

For the year ended 31-03-10

Receipts Amount(Rs) Payment Amount(Rs)

Equity Capital:

AISHWARYSINGH

AMIT KUSHAWAH

Loan from SDBI

ICICIBank

INCOME FROM SELLING

10,00,000

10,00,000

10,00,000

10,00,000

30,51,000

Land

Construction

Machine

Vehicle

Raw material

Insurance of Manufacturing unit

& outlet

Manpower for the whole year

Electricity & Telephone Exp.

Other expenses

Interest on loan @ 12% p.a

Working capital

CASHINHANDATTHEYEAR

ENDED

8,40,000

7,00,000

1,50.000

1,20,000

3,00,000

1,60,000

6,36,000

1,20,000

1,00,000

2,40,000

6,18,000

30,27,000

70,11,000 70,11,000

Note: Monthly production capacity

Total milk production cost Rs - 508500


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BREAK-EVEN POINT ANALYSIS

One of the most common tools used in evaluating the economic feasibility of a new enterprise or

product is the break-even analysis. The break-even point is the point at which revenue is exactly

equal to costs. At this point, no profit is made and no losses are incurred. The break-even point canbe expressed in terms of unit sales or dollar sales. That is, the break-even units indicate the level of

sales that are required to cover costs. Sales above that number result in profit and sales below that

number result in a loss. The break-even sales indicate the dollars of gross sales required to break-

even.

It is important to realize that a company will not necessarily produce a product just because it is

expected to breakeven. Many times, a certain level of profitability or return on investment is

desired. If this objective cannot be reached, which may mean selling a substantial number of units

above break-even, the product may not be produced.

However, the break-even is an excellent tool to help quantify the level of production needed for a

new business or a new product. Break-even analysis is based on two types of costs: fixed costs and

variable costs. Fixed costs are overhead-type expenses that are constant and do not change as the

level of output changes. Variable expenses are not constant and do change with the level of output.

Because of this, variable expenses are often stated on a per unit basis.

Once the break-even point is met, assuming no change in selling price, fixed and variable cost, a

profit in the amount of the difference in the selling price and the variable costs will be recognized.

One important aspect of break-even analysis is that it is normally not this simple. In many instances,

the selling price, fixed costs or variable costs will not remain constant resulting in a change in the

break-even. And these changes will change the break-even. So, a break-even cannot be calculated

only once. It should be calculated on a regular basis to reflect.

1 Cost of production (per year) (Rs.)

y Total recurring costy Deprecation on machinery & equipment @ 10%y Deprecation on vehicle @ 10%y Deprecation on building @ 10%

11,56,000

15,000

12.000


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1,54,000

Total 13,37,000

The break-even point of the project including cost of finance when it starts to operate at full capacity

( year 3) is estimated by using income statement projection.

2) Turnover (per year) :

ItemQuantity Rate(Rs.) Total(Rs.)

Milk 2,18,571 litre 28/ litre 61,02,00

Total 61,02,000

(3) Net Profit (per year)

= Turnover - Cost of Production = Rs. 47,65,000

(4) Net Profit Ratio

= Net Profit x 100

Total Turn Over

=47,65,000 x 100

= 47.65%

(5) Rate of Return

= Net Profit x 100/

Total Investment


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= 47,65,000 x 100/

40,00,000

= 119.125

6) Break-even Point Fixed Cost (per annum) (Rs.)

i) Depreciation on machinery and equipments

@10%

15,000

ii) Deprecation on vehicle @ 10% 12,000

iii)Deprecation on building @ 10% 154000

iv) 40% of salary & wages 5,08,800

v) 40% for other contingent liability + insurance 104000

Total 7,93,800

7) Break- even point:

= Fixed Cost x 100/

Fixed Cost + Profit

= 1256000 x 100/

12,56,000 + 47,65,000

= 12,56,000 x 100 /

60,21,000

= 20.86%


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CHAPTER-14

WHY INTRESTED IN THIS PROJECT

The dairy sector offers a good opportunity to entrepreneurs in India. India is a land of

opportunity for those who are looking for new and expanding markets. Growth propsects in

the dairy sector are very bright. Because India derives nearly 33% of the gross Domestic

population from agriculture and has 66% of economically active population, engaged in

agriculture. The share of livestock product is estimated at 21% of total agriculture sector. The

fact that dairing could play a more constructive role in promoting rural welfare and reducing

poverty is increasly being recognised .

being village boy we can sure that we have a lot of knowledge about agriculture and other

activities which is related to this field .because since our childhood we have been watching

that how this whole process takes place. We have a basic knowledge about this area that

motivates us to do the business in this field . apart from this we also understand the rural

tradition very well which plays a measure role in success of this business. We have chosen

this field because this is eco friendly , we can enter in this business with small amount also

,there is not so much legal formalities, and most important we can give something in return to

our rural areas. Quality production ensures profitability as you can get premium price for

quality milk besides you can also create good will amongst your customers.

Government of India through its various nodal agencies is trying its best not only to increase

milk production in the country but also to crate awareness for quality control at various levels

of production. Note that only quality can make us a world leader in Milk production. This is

also essential for survival of the domestic industry in the light of changing market scenario.

The dairy sector offers a good opportunity for those who are looking for new and expanding

markets. While the farming sector is more or less stagnant, the dairy sector has seen much activity.

In the past 15 years, milk production in India has doubled and is now over 100 million tons a year

thus becoming IndiasNo.1 farm commodity.

Dairy farming is asafe business for the following reasons:


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y It is eco-friendly and does not cause environmental pollution as compared toother industries.

y Requirement of skilled labour is relatively less.y Dairy product market is active round the year.y Minimum investment on inventory. (No need to to stock raw materials in huge

quantities.)

y Entire establishment can be shifted to a new location (if need arises e.g. Fire,Floods etc.)

y One can insure animals.y Less energy requirement. Biogas plant fed with cow dung can supply

maximum energy to meet farms day to day requirement. Decomposed slurry of

such plant can also be effectively used as organic manure.

There are several other factors that make dairy a safe sector to venture into. They are:

y The demand for milk and its products is active year round. Demand for Milk isincreasing day by day.

y Dairy farming does not need skilled labor, thus reducing costs and making availabilityof labor easy.

y Unlike other agricultural sectors, Dairy is not dependant on rains and production goeson year round.

y Returns on this business are available within a month. Today, virtually no otherbusiness offers such a short gestation period.

y Use of by products provides additional income and increases returns. For exampledung can be used to produce biogas for cooking and even as manure and compost.

y Veterinary Aid is available at most of the villages in India.y There is no direct competition from the foreign counterparts.

In India, farmers carry on dairy activity secondary to their main agricultural activity. Also,

dairying is carried on in a traditional manner as was being done by past generations. For

example, the same patterns of feeding and watering are followed as was being done years

ago. Lack of scientific and modern methods, proper training and proper counseling regarding

are some reasons why a dairy might fail. Another reason why a dairy might incur losses is

that the farmer is unaware of the costs incurred and the economics of his day to day business.


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CHAPTER-15

TAX ASPECTS OF DAIRY BUSINESS

However,in my understanding Dairy Industry comes under Agriculture enterprise so it has no

tax means it just increase ur taxable slab - so u pay marginal tax on agri income .It has other

taxes ie after you start processing on milk ,as it cames under businessing ,there is no tax for

raw milk production. Section 4, read with section 148, of the Income-tax Act, 1961 - AOP -

Assessable as - Assessment years 1993-94 to 2001-02 - Whether volition on part of members

to form an association of persons is an essential ingredient - Held, yes - Four members of a

family were carrying on business of dairy farming - On basis of statement of one of members

K, recorded during survey conducted under section 133A at their business premises,

Assessing Officer held that dairy business was being carried on by an AOP - Thus, he issued

notices under section 148 in name of dairy farm being run by family and farmed assessment

orders, accordingly, in status of AOP - However, there was no material on record to show

that members of family had joined together, of their own volition, and had pooled their

funds/resources with a view to jointly engage themselves in common activity of dairy

business, and facts brought on record only showed that family members were doing their

business at same premises and that they were helping each other in their business activities -

Whether on facts, it could be said that Assessing Officer failed to discharge his onus to prove

that an AOP existed and, consequently, impugned assessment, made in status of AOP was not

sustainable - Held, yes - Whether further, since notices under section 148 were not served on

all four members, on this ground also, assessment order became unsustainable and deserved

to be quashed - Held, yes.


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FACTS

Four members a family - father and his three sons, were carrying on the business ofdairy farming. A survey was conducted under section 133A at their business premises

and on the basis of statement given by one of the sons K, during the surrey, the

Assessing Officer held that that dairy business was being carried on by an AOP

formed by the said four persons of the family. The alleged members argued that

during the survey no effort was made by the authorized officer to identify the buffalos

belonging to them individually, that the buffalos were identifiable by the badges

attached to their body - ears and/or neck, that they were filing their returns in their

individual capacity in respect of their individual dairy business which were accepted

by the department. It was further submitted that registrations under the Bombay Shops

and Establishment Act, 1948 were available in the names of individual members, that

they were enrolled under section 5(2) of the Maharashtra State Tax on Professions,

Trades, Callings and Employments Act, 1975, that they had separate electric

connections provided by Maharasthstra State Electricity Board, Nasik, that municipal

taxes were paid separately by them, and that there existed separate electric

connections, water connections, borewells, electric motors, etc. However, the

Assessing officer initiated proceedings under section 147 against such an AOP and

passed assessment orders, accordingly, in the status of AOP.

On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On second appeals:

HELD

In terms of the provisions of sections 4 and 2(31) an AOP must be one in which twoor more persons join in a common purpose or common action, the object of which is


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to produce income, profits or gains. Hence, volition on the part of the members of the

association is an essential ingredient. (Para 15)

The decision of the Assessing Officer was, primarily, based on the statement of one ofthe family members, K, recorded during the survey conducted under section 133A at

their business premises. The Assessing Officer had noted in his order that while

giving his statement, K had taken the help of other members of the AOP, that the

dairy business was being conducted, for the last 8 years, by all the four members from

a common premises (tabelas), that there were 498 buffalos, that there was a common

activity and design of production and sale of milk by all the members, that the

members were unable to identify their respective buffalos, that during the survey the

authorized officer did not find badges affixed on the body of buffalos for

identification, that the purchase and sale of milk was effected under a common name,

that during the survey conducted under section 133A it was noted that credit cards

were being used for selling milk in one name, that no books of account were

maintained which could show that the business was being done by the members in

their individual capacity, that cash, cattle feed, milk cans and other material were kept

together without any separate identification, that salary, wages, electricity charges,

municipal taxes were paid under common name and not separately by individual

members, that an employee stated, in reply to questions, that milk was brought to the

shop from the farm, that K, in his statement stated that sale of about 2000 litres of

milk was made by the dairy which had 450 buffalos out of which only about 350 were

producing milk, that the affidavits filed by the members were afterthought. (Para 19)

The reasons given by the Assessing Officer for holding that an AOP existed were notsupported by relevant material on record. What actually transpired at the time of

survey was not borne out from records. For instance, the Assessing Officer had noted


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in his order that at the time of survey the buffalos belonging to individual members

were not identifiable, but the material/basis for this observation was not brought on

record. The Assessing Officer did not appear to have examined the other two

members. (Para 22)

The Assessing Officer and the Commissioner (Appeals) had put much emphasis onthe fact that books of account were not maintained in respect of the dairy business.

But, this fact went to support the case of the assessee that the members were doing

their business in their individual capacity and, hence, there was no need to keep the

records, and that the existence of an AOP should have surely necessitated

maintenance of books of account or some such records. In fact, apart from the

statement of one of the members, no documentary evidence appeared to have been

found during the survey to support the conclusions reached by the lower authorities.

(Para 23)

There was no material on record to show that the four members of the family had joined together, of their own volition, and had pooled their funds/resources with a

view to jointly engage themselves in the common activity of dairy business. The facts

brought on record only showed that the family members were doing their business at

the same premises and that they were helping each other in their business activities.

The Commissioner (Appeals) had rightly noted in his order that the onus was on the

Assessing Officer to prove that an AOP existed and the Assessing Officer failed to

discharge that onus. (Para 24)

Also, it was contended by the assessee that the notices under section 148 were notserved on all the four members and, therefore, the proceedings under section 147 were

not valid. In ground No. (1) raised before the Commissioner (Appeals) the assessment

order was pleaded to be annulled, being without jurisdiction. In the ground no. (3), the


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proceedings initiated under section 147 had been challenged, on the ground of being

not in accordance with law. It was seen that the notices under section 148 were

addressed to the dairy farm being run by the family. There was nothing on record to

show that these notices were served on all the four members. (Para 24)

In a case where the existence of an AOP is admitted by the assessee and its membersand its Principal Officer is duly identified, a notice served on such Principal Officer

alone will be a valid notice in view of the provisions of section 282(2)(c). But in a

case where four persons assessed individually were held by the Assessing Officer to

form an AOP, in that case the onus will be on the Assessing Officer to prove that an

AOP existed and also the notice under section 148 will have to be served on all the

members in order to validly assume jurisdiction under section 147. (Para 25.1)

In the instant case, there was no material on record to snow that the notices undersection 148 were served on all the four members. On this ground alone the assessment

orders became unsustainable and deserved to be quashed. (Para 25-2)

Therefore, the decision of the lower authorities that there existed an AOP, constituted by the aforesaid four family members - father and his three sons, could not be

sustained. And once it had been held that the impugned AOP did not exist, all the

assessment orders passed by the Assessing Officer in the status of AOP were to be

quashed. (Para 26)

In the result, the appeals were to be allowed. (Para 27)


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CHAPTER- 16

LEGAL ASPECTS

Vendors and milk dealers dominate the informal market where the former generally procures

milk from the producer and sells them to urban households while the latter supplies to private

processing units. Of the milk that enters the formal and informal market, almost 45 percent is

consumed in the raw form while the remaining is processed to produce ghee, khoa, curd etc.

Operation Flood played a very prominent role in Indian Dairy Industry. Operation flood

programme aimed at replicating Amul Type milk cooperatives throughout the country, which

essentially provide a favourable price to milk producers. As a result of these policies, the

growth in milk production has experienced a structural break in its trend during the year

1973-74. The per capita availability of milk, which started declining during the first two

decades, has shown an increasing tendency after the mid-70s. There has been encouraging

trend in the sources of milk production as well. The rate of growth in the breedable bovine

population has slowed down after the 80s, suggesting that the increase in milk production is

largely contributed to an increase in the productivity of milch population. Liberalization of

the Dairy sector, the cornerstone of Indias milk revolution has been the cooperatives dairies

which were protected from the cheap subsidized imports through quantitative restrictions and

by strict control over exports and imports through the state owned Indian Dairy Cooperation.

The competition from the private sector was controlled through licensing under the Industrial

Development and Regulation Act, 1951, which discourage new entrants into the dairy

processing sector. A suitable price environment was created and is considered as a key factor

for the impressive growth in the sector. There is a change in the policy in the early nineties

when major financial and trade policy reforms were initiated in all sectors of the Indian

economy including the dairy sector. The first step was to encourage private participation and

the dairy industry was de-licensed in1991. Dairy is a lucrative business became obvious when

within a year of de-licensing; more than 100 private-owned milk processing plants came up

in the major milk production states. Despite their numerical strength, the cooperative sector

did not have the capacity to compete against these private players flush with capital and


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fortified with modern technology. Realising this, the Government had to step in again and the

Milk and Milk Products Order (MMPO) was issue in in 1992 under the Essential

Commodities Act (ECA) to regulate production of milk and milk products. The MMPO

reintroduced licensing and also require private players to set up their own zones of

procurement (milk-sheds) that were beyond the existing milk-sheds of cooperatives. This was

done to check private players from poaching on milk-sheds of the cooperative sector.

However, swept by the wave of liberalization, the government again amended the MMPO in

2001 and allowed State Government to grant a one-time to private sector, and also abolished

renewal of license. In 2003 restrictions on setting up milk processing and milk product

manufacturing plant and also the concept of milk-sheds were eliminated. The amended order

emphasized sanitary, hygiene, quality and food safety of milk and milk products. The Indian

Dairy Industry has grown and diversified enormously in the last few years. To ensure the

proper development and growth of this industrial sector, the Government of India has

instituted various laws and regulations. The various regulations that govern the dairy Industry

are as follows:

Compulsory Legislation

Prevention of Food Adulteration Act, 1954

This act is the basic statute that is intended to protect the common consumers against the

supply of adulterated food. This specifies different standards for various food articles. The

standards are in terms of minimum quality levels intended for ensuring safety in the

consumption of these food items and for safeguarding against harmful impurities and

adulteration. The central Committee for Food standards, under the Directorate General of

health services, Ministry of Health and Family Welfare, is responsible for the operation of

this act. The provisions of this Act are mandatory and contravention of the rules can lead to

both fines and imprisonment.

Objective

1) To protect the public from poisonous and harmful foods. 2) To prevent the sale of substandard foods.3) To protect the interests of consumers by eliminating fraudulent practices.

Standards on Weights and Measures (Packaged Commodities) Rules, 1977


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These rules lay down certain obligatory conditions for all commodities that are packed form,

with respect to declaration on quantities contained. These rules are operated by the

Directorate of Weights and Measures, under the Ministry of Food and Civil supplies.

Export (Quality Control and Inspection) Act, 1963

The Export Inspection Council is responsible for the operation of this Act. Under the Act, a

large number of exportable commodities have been notified for compulsory pre-shipment

inspection. The quality control and inspection of various exports products is administered

through a network of more than fifty offices located around major production centres and

ports of shipments. In addition, organization may be recognized as agencies for inspection

and quality control. The government has exempted agriculture and food products, fruit

products and fish and fishery products from compulsory pre-shipments inspections, provided

that the exporter has affirm letter from the overseas buyer stating that the overseas buyer does

not require pre-shipment inspections from official Indian inspection agencies.

Voluntary Standards

There are two organizations that deal with voluntary standardization and certification system

in the food sector. The Bureau of Indian Standards looks after standardization of processed

foods and standardization of raw agricultural produce is under the purview of the Directorate

of Marketing

BUREAU OF INDIAN STANDARDS (BIS)

During the pre-independence period, standardization activity was sporadic and confined

mainly to a few government organization. However immediately after independence,

economic development through coordinated utilization of resources was called for and the

government recognized the role for standardization in gearing industry to competitive

efficiency and quality production. The Indian Standard Institution was therefore, set up in

1947 as a registered society under a government of India resolution. The Indian Standard

Institution gave the nation the standard it needed for nationalization, orderly industrial and

commercial growth, quality production and competitive efficiency. However, in 1986 the

government recognized the need for strengthening this National Standards Body due to fast

changing socio-economic scenario and according it a statutory status. Thus come the Bureau


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of Indian Standard Act 1986 and on 1 April 1987, newly formed BIS took over staff assets.

The activities of BIS are twofold, the formulation of Indian standards in the processed food

sector and the implementation of standards through promotion and through voluntary and

third party certification systems. BIS has on record, standards for most of processed foods. In

general, these standards cover raw materials permitted and their quality parameters, hygienic

conditions under which products are manufactured and packaging and labelling requirements.

Manufacturer complying with standards laid down by the BIS can obtain and ISI mark that

can be exhibited on product packages. BIS has identified certain items like food

colours/additives, vanaspati, containers for packing milk powder and condensed milk for

compulsory certification.

Objectives of BIS

1) Harmonious development of standardization, marking and quality certification.2) To provide new thrust to standardization and quality control.3) To evolve a national strategy for according recognition to standards and integrating them

with growth and development of production and exports.

HACCP (Hazard Analysis Critical Control Point)

HACCP is a process control system designed to identify and prevent microbial and other

hazard in food production. It includes step designed to prevent problems before they occur

and to correct deviation as soon as they are detected. HACCP involves a system approach to

identification of hazard, assessment of chances of occurrence of hazards during each phase,

raw materials procurement and distribution, usage of food products and in defining the

measures of hazard control. HACCP enables the producers, processors, distributors etc. Of

food products to utilize technical resource efficiently and in accost effective manner in

assuring food safety. Such preventive control system with documentation and verification are

widely recognized by scientific authorities and international organizations as the most

effective approach available for producing safe food. HACCP certification is offered by

Bureau of Indian standards (BIS) after audit of the company by BIS assessment team. BIS

assessment team see the quality manual and if it is found satisfactory then certificate is

awarded. Parag is ISO: 9000 HACCP certified company.

Directorate of Marketing and Inspection (DMI)


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The DMI enforces the Agricultural Products (Grading and Marketing) Act, 1937. Under this

Act, Grade Standards are prescribed for agricultural and allied commodities. These are

known as Agmark Standards. Grading under the provision of this Act is voluntary.

Manufacturer who comply with standard laid down by DMI are allowed to use Agmark

label on their products.

Other Government Regulations

Industrial License

No license is required for setting up a Dairy Project in India. Only a Memorandum has to be

submitted to the Secretariat for Industrial Approvals (SIA) and an acknowledgement is to be

obtained. However Certificate of Registration is required under the Milk and milk Product

Order 1992.


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CHAPTER- 17

Conclusions

This study is an attempt in this direction. It might be recalled that there were four mainissues, outlined earlier in this study:

y Do small-scale milk producers have lower profits per unit of output than do largeproducers?

y Are small-scale producers more efficient if family labor is not costed andenvironmental externalities taken into account?

y Do profits per unit of output of small-scale producers are more sensitive toTransaction Costs (TC's) and policy distortions than are those of large-scale

producers?y Do smallholder dairy producers generate a lower negative environmental externality

per unit of outputthan large-scale producers?

Main Findings

Dairy is an important sub-sector of the Indian agriculture accounting for nearly 17 percent ofthe value of output from agriculture and allied activities. The government efforts in dairydevelopment were intensified with the launching of the Operation Flood (OF) program in1970 The results of financial profitability show that small-scale producers have higher profits(without family labour) per liter of milk than large-scale producers, other things equal.. With

increased animal densities, manure quantity and its disposal become important issues withsocioeconomic implications for livestock owners and communities. Livestock sector iscoming under increasing social pressures to control negative externalities from theiroperations..

The above findings clearly show that smallholder milk producers have higher profits per literof milk and are more efficient than those of large-scale producers, however, smallholderscould still be driven out of the market due to:

(i) large farmers produce large volumes

(ii) smallholders have difficulty complying with SPS/quality standards

(iii) small-scale producers are more sensitive to transaction costs due to policy distortions andpoor institutional support

(iv) smallholders have less access to world dairy markets


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SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY

STRENGTH

Demand Profile: Absolutely optimistic.

Margins: Quite reasonable, even on packed liquid milk.

Flexibility of Product Mix: Tremendous, with balancing equipment you can keep on adding

to product line.

Availability of Raw material: Abundant, Currently India is the largest milk producer in the

world.

Technical manpower: Professionally trained technical human resource pool built in over last

30 years. Due to the formation of Cooperatives technical expertise increase.

WEAKNESS

Perishability: Pasteurization has overcome this weakness partially. Surely many new

processes will follow to overcome this weakness and improve the quality of milk.

Logistics of procurement: Woes of bad roads and inadequate transportation facility make

milk procurement problematic.

Low Productivity: Large number of unproductive animals, poor nutrition and lack of key

services are the major factors for low productivity.

OPPORTUNITIES

Failure is never final and success never ending. Dr Kurien bears out this statement

perfectly. He entered the industry when there were only threats. He met failure head-on and

now he clearly is an example of never ending success. If dairy entrepreneurs are looking foropportunities in India the following areas must be tapped

Value addition: There is a phenomenal scope for innovations in product development,

packaging etc. Given below are potential areas of value addition:


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Emphasis should be given on value added products like shrikhand, paneer, khoa, dairysweets, etc. This will lead to a greater presence and flexibility in the market place along with

opportunities in the field of brand building.

Addition of cultured products like yoghurt and cheese lend further strength both in terms ofutilization of resources and presence in the market place.

Yet another aspect can be the addition of infant foods and nutritionals.

THREATS

Milk vendors, the unorganized sector. In India 80 percent of the Dairy sector is unorganized

which is the major threat for the our Dairy industry.

The Indian Dairy Industry following its delicensing has been attracting a large number of

entrepreneurs. Their success in dairying depends on factors such as efficient yet economical

procurement network, hygienic and cost effective processing facilities and innovativeness in

the market place. All that needs to be done to innovate, convert products into commercially

exploited ideas.

Big players such as parag dairy , amul dairy etc


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WORD OF THANKS

In the end WE thank to all those persons who have directly or indirectly helped me to complete this

project successfully without whose cooperation it was not possible to complete the project due to

various constraints. WE thank to all those readers who will study this project in the future. WE

welcome any type of suggestions or comments from the readers.

Thanking you.

AMIT KUSHAWAH

Enr. MMR-3014

AISHWARY SINGH

Enr. MMR-3004

aishwary bp

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