Value of Dairy Industry in Rajasthan

Topics: Milk, Dairy, Dairy farming Pages: 11 (2681 words) Published: July 3, 2013

The study reveals that dairy industry in Rajasthan has gone through a sea change, transforming itself from import-dependent industry to a self-reliant industry. The success of dairy industry revolves around a quadrilateral, viz. procurement, processing, value addition and marketing of dairy products. Production is the base on which the edifice of dairy industry stands. The four factors needs to be strengthened for the healthier growth of the dairy industry to serve the consumers so that economic multiplier effects of dairying are realized. For the study secondary data was collected from relevant sources and requisite samples of cooperatives and private dairy plants were taken. Accordingly a study was carried out with the following specific objectives: • To estimate the cost of milk procurement of cooperative and private dairy plants. • To study the processing and manufacturing costs and marketing costs of dairy products by the co-operative and private sector plants. • To work out top three dairy products in terms of value addition.

The results shows that the marketing cost is lower for toned milk, standardized milk and full cream milk for private dairy plant and only of butter for the co-operative dairy plant. The marketing margins and value addition in per cent have been found higher for the private plant in toned milk, standardized milk and butter than the co-operative plant.

Keywords: Value addition, Procurement cost, Processing Cost, Marketing Cost


During the last three decades, our nation’s milk producers have transformed Indian dairying from stagnation to world leadership. During this period and before, science and technology (S&T) have played a critical role in supporting our farmer’s effort.

According to industry research, even assuming status quo, the milk output in India is expected to grow at a rate of 7% per annum. If reform is carried out in all the above mentioned areas that currently inhibit the dairy sector, milk output could grow at a rate of 11% per annum. As compared to this contribution from milk has been assumed to grow at a CAGR of about 5% over the next 25 years [1].

In India, about 46 per cent of the produced milk is retained for home consumption, while 54 per cent is disposed off to various agencies [2]. About 80 per cent of milk produced in the country is handled by the unorganised sector and the remaining 20 per cent is shared equally by co-operative and private sectors for processing with varying degree of product mix. About 35 per cent of milk produced in India is processed. The organised sector (large-scale dairy plants) processes about 20 Mt milk annually, while the unorganized sector (halwais and vendors) processes about 29 Mt per annum.

Rajasthan is third largest milk producer in the country accounting for 9% of all India’s output. The per capita consumption of milk in India is only about 72 lbs per annum as compared to about 200 lbs in countries such as United States, Australia and Canada. The state has a total of 566.63 lacs livestock population as per 18th livestock 2007 census [3], out of which cattle and buffalo population amounts to 121.20 lacs & 110.92 lacs respectively. The breedable cattle and buffalo population in the state is 53.53 lacs and 57.28 lacs, respectively. Growth in dairy farming is crucially dependent upon existence of urban areas since per capita consumption of milk in large cities is three to four times the per capita consumption in rural areas. Districts like Jaipur, Alwar, Sikar, Jhunjhunu, Bikaner and Hanumangarh are the key contributors to milk production in the state. Proximity of some of these districts to large urban markets outside of the state is likely to help expand the market for milk and milk products from the state.

But, the co-operative dairy plants in Rajasthan are handling milk much below their installed capacity and face severe competition from the private milk vendors and private dairy...

References: 1. Source - Price Water House Coopers Report on Rajasthan Infrastructure Agenda 2025
2. Source - Agricultural Economics Research Review
3. Source - Animal Husbandry Govt. of Rajasthan
4. D. Babu & N.K. Verma (2010), Value Chains of Milk and Milk Products in Organised Sector of Tamil Nadu — A Comparative Analysis, Agricultural Economics Research Review, 2010, Vol.23, pp 480-481
5. Source - Dairy India Year Book 2011
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