THE PERFORMANCE EVALUATION OF PRIMARY DAIRY MILK CO-OPERATIVE

i

THE PERFORMANCE EVALUATION OF PRIMARY DAIRY MILK CO-OPERATIVE

SOCIETIES IN GOA Submitted to the

Goa University

for the award of the degree of

DOCTOR OF PHILOSOPHY in

COMMERCE by

Suraj M. Popker

Under the guidance of Prof. Guntur Anjana Raju

HOD

Department of Commerce, Goa University Taleigao- Goa

May 2016

ii

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iii

DECLARATION

I, Suraj M. Popker, hereby declare that this thesis for Ph.D. degree in Commerce titled ‘The Performance Evaluation of Primary Dairy Milk Co- operative Societies in Goa’ is a bona-fide record of original research work done by me under the guidance and supervision of Prof. Guntur Anjana Raju, Department of Commerce, Goa University and that the same has not been previously formed the basis for the award of any degree, diploma or any certificate or similar title of Goa University or any other Universities.

Place: Taleigao Date:

Suraj M. Popker Research Scholar

Department of Commerce

Goa University- Goa

iv

CERTIFICATE

This is to certified that the thesis titled ‘The Performance Evaluation of Primary Dairy Milk Co-operative Societies in Goa’ is a bona-fide record of the original work done by Mr. Suraj M. Popker, under my guidance and supervision and the same has not been previously formed the basis for the award of any degree, diploma or any certificate or similar title of Goa University or any other Universities.

Place: Taleigao Date:

Prof. Guntur Anjana Raju Research Guide

HOD,

Department of Commerce, Goa University

Taleigao- Goa

v

ACKNOWLEDGEMENT

This research work is result of blessings and motivation from my parents, pure academicians, researchers as well as the support from my family members.

It gives me an immense pleasure to express my sincere and heartfelt deep sense of gratitude of indebtedness and unfeigned gratefulness to my research guide, Prof. Anjana Raju Guntur, Head, Department of Commerce- Goa University for her motivation and guiding force right from beginning till the completion of my research work.

I am also thankful to Prof. Y. V. Reddy, Prof. B. Ramesh, Prof. Subhash K.B. and the supportive staff members of Commerce Department- Goa University for their encouragement and suggestions given to my research work.

My indebtedness is due to the Librarian Dr. Gopakumar V. and his staff for providing necessary help and assistance from time to time

My earnest thanks to Dr. Avinash V. Raikar, HOD, Department of Economics, CES College of Arts and Commerce, for his inspiration, motivation, and constructive ever available guidance during my research work.

I am profoundly thankful to Prof. P. K. Sudarsan, Department of Economics - Goa University for his continuous advice and help in the revision of my research work.

I am thankful to my college Former Principal Dr. Laximan G. Naik and Management of the college for granting me permission to pursue my Ph.D.

I am fortunate and grateful to Dr. M. R. Patil, Principal of Vidhya Prabhodini College of Commerce, Education, Computer and Management for his support and inspiration to pursue my dream.

I am unfeigned gratefulness to my colleague Late Dr. Sharon D’Cruz for her incessant

inspiration and motivation.

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I am thankful to the Registrar of Co-operative Societies, Government of Goa, for having providing excess to audited annual reports of the various Primary Dairy Milk Co-operative Societies in the state of Goa. My sincere thanks are also due to the staff of all the Co-operative Societies and the respondents for their kind co-operation and timely help.

I am also grateful to Dr. Vikrant Vijay. Mudliyar for his support, help and guidance during my research work.

My sincere thanks to Ms. Deepa Prajit for her kind support and editorial advice during my research work.

I also express my sincere gratitude to my colleagues and friends Dr. Ramlal S. Vernekar, Dr. Apoorva A. Marathe, Dr. Sarla V. Katageri, Dr. Prakash Morakar, Shri Anand Dessai, Smt. Teja M. N. Gaunekar for their moral support, suggestions, valuable guidance, motivation for my research work without them it would not have been possible for me to complete this work.

Suraj Mosso Popker

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TABLE OF CONTENTS

Sr. no. Content Page no.

01

Title page

02

Declaration

03

Certificate

04

Acknowledgement

05

Table of Contents

06

List of Tables

07

List of Figures

08

List of Abbreviation

09

Appendix

Chapter No.

Title Page No.

1. AN INTRODUCTION TO DAIRY CO- OPERATIVES

1 to 32

1.1 Introduction 1

1.2 Need of Co-operative 2

1.3 Definitions and Principles of Co-operative 4 1.4 Development of Dairy Co-operative 8 1.5 Current Status Dairy Co-operatives in India 21 1.6 Structure of Dairy Co-operatives in India 28

1.7 Dairy Co-operatives in Goa 29

1.8 Structure of Dairy Co-operatives in Goa 30

1.9 Conclusion 31

2. REVIEW OF LITERATURE AND RESEARCH METHODOLOGY

33 to 97

2.1 Review of Literature 31

2.2 Research Gap 67

2.3 Statement of Problem 68

2.4 Significance of the Study 69

2.5 Objectives of the Study 70

viii

2.6 The Scope of Study 71

2.7 Research Methodology 72

2.8 Limitations of The Study 90

2.9 Chapterisation Scheme 90

2.10

Conclusion 92

3. THE GROWTH OF PRIMARY DAIRY MILK CO-OPERATIVE SOCIETIES

98 to 140 3.1 Overview of the Growth of Dairy Milk Co-

operative Societies

98 3.2 Taluka Wise Growth of Primary Dairy Milk Co-

operative Societies

102 3.3 Growth Performance Evaluation of Primary

Dairy Milk Co-operative Societies

114 3.4 Ranking of Primary Dairy Milk Co-operative

Societies

122

3.5 Conclusion 125

4. FINANCIAL PERFORMANCE OF PRIMARY DAIRY MILK CO-OPERATIVE SOCIETIES

141 to 222 4.1 Financial Performance Evaluation of Primary

Dairy Milk Co-operative Societies

142 4.2 Overall Rating of PDMCSs on Financial

Performance

168 4.3 Taluka Wise Financial Performance of PDMCS 173

4.4 Conclusion 221

5. EFFICIENCY OF PRIMARY DAIRY MILK COOPERATIVE SOCIETIES

223 to 266

5.1 Introduction 223

5.2 CRS Technical Efficiency 224

5.3 VRS Technical Efficiency 235

5.4 Scale Efficiency 246

5.5 Input Output Slack of PDMCSs For The Year 2014-15

257

5.6 Conclusion 260

6. STUDY OF SOCIO-ECONOMIC STATUS OF DAIRY MILK PRODUCERS

267 to 303

6.1 Introduction 267

6.2 Socio Profile of Milk Producers 269

6.3 Economic Profile of Milk Producers 276

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6.4 Consumption Profile of Milk Producers 281 6.5 Members Experience With Dairy Business 292 6.6 Problem and Perception of Members Towards

Dairy Business and Services Provided By the Societies

293

6.7 Conclusion 303

7. FINDINGS, CONCLUSION AND SUGGESTIONS

304-330

7.1 Introduction 304

7.2 Major Finding of The Study 305

7.3 Conclusion and Suggestions 323

7.4 Scope for the Future Research 330

BIBLIOGRAPHY ^{331 - 339}

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LIST OF TABLE

Table No. Title of the table Peg No.

Table 1.1 Major Milk Producing Nations 10

Table 1.2 Item wise Allocation and Expenditure on Operation Flood-I.

15 Table 1.3 Allocation and Expenditure on Operation Flood –

II.

17 Table 1.4 Operation Flood – II Targets and Achievements. 18 Table 1.5 Comparing Performance of all Three Operation

Floods.

21

Table 1.6 Dairy Co-operative Societies. 25

Table 1.7 Milk producer Members. 26

Table 1.8 Milk Production. 27

Table 2.1 List of Taluka wise selected Primary Dairy Milk Co-operative Societies.

74 Table 2.2 Profile of selected Primary Dairy Milk Co-

operative Societies.

74 Table 2.3 Categories of PDMCS on the bases of ‘Z’ Score. 78 Table 2.4 Taluka Wise List of sample of Primary Dairy Milk

Co-operatives Societies

89 Table 3.1.1 The Growth of Dairy Co-operatives in the State

of Goa.

100 Table 3.1.2 Growth Index of Dairy Co-operatives in the state

of Goa

101 Table 3.2.1 Taluka-wise Growth in Membership of PDMCS 106 Table 3.2.2 Taluka-wise Growth Index of Membership of

PDMCS

106 Table 3.2.3 Taluka-wise Growth in Milk in Litres of PDMCS 107 Table 3.2.4 Taluka-wise Growth Index of Milk in Litres of

PDMCS

107 Table 3.2.5 Taluka-Wise Growth in Owned Funds of PDMCS 108 Table 3.2.6 Taluka-Wise Growth Index of Owned Funds of

PDMCS

108 Table 3.2.7 Taluka-wise Growth of Working Capital of PDCS 109 Table 3.2.8 Taluka-wise Growth Index of Working Capital of

PDMCS

109 Table 3.2.9 Taluka-wise Growth of Income From Milk of

PDMCS

110

xi

Table 3.2.10 Taluka-wise Growth Index of Income From Milk of PDMCS

110 Table 3.2.11 Taluka-wise Growth of Operating Expenditure of

PDMCS

111 Table 3.2.12 Taluka-wise Growth Of Index of Operating

Expenditure of PDMCS

111 Table 3.2.13 Taluka-wise Growth of Net Profit of PDMCS 112 Table 3.2.14 Taluka-wise Growth Index of Net Profit of

PDMCS

112 Table 3.2.15 Taluka-wise Growth of Other Income of PDMCS. 113 Table 3.2.16 Taluka-wise Growth Index of other Income of

PDMCS.

113 Table 3.3.1 The Index of Growth Indicators of Primary Dairy

Milk Societies for the terminal Year 2014-15.

126 Table 3.3.2 Ranking on the Index of Growth Indicators of

Primary Dairy Milk Societies for the Period 2000-01 To 2014-15.

131

Table 3.3.3 Marks on the Index of Growth Indicators of PDMCSs for the Period 2000-01 To 2014-15.

142 Table 4.1.1 Average Ratios of the PDMCS for the period

2000-01 To 2014-15.

146 Table 4.1.2 Overall Grading of PDMCS on Gross Profit Ratio. 148 Table 4.1.3 Overall Grading of PDMCS on Net Profit Ratio. 149 Table 4.1.4 Overall Grading of PDMCS on Operating Ratio. 150 Table 4.1.5 Overall Grading of PDMCS on Profitability Ratio. 151 Table 4.1.6 Overall Grading of PDMCS on Income From Milk

to Total Ratio.

152 Table 4.1.7 Overall Grading of PDMCS on Income From

Fodder to Total Ratio.

154 Table 4.1.8 Overall Grading of PDMCS on Other Income to

Total Ratio

155 Table 4.1.9 Overall Grading of PDMCS on Business Income

to Total Income Ratio.

156 Table 4.1.10 Overall Grading of PDMCS on Business Income

to Total Income Ratio.

157 Table 4.1.11 Overall Grading of PDMCS on Turnover Ratio. 159 Table 4.1.12 Overall Grading of PDMCS on fixed Assets to

Owned Fund Ratio.

160

Table 4.1.13 Overall Grading of PDMCS on Current Ratio. 162

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Table 4.1.14 Overall Grading of PDMCS on Liquid Ratio. 164 Table 4.1.15 Overall Grading of PDMCS on Stock-Working

Capital.

164 Table 4.1.16 Overall Grading of PDMCS on Proprietary Ratio. 167 Table 4.1.17 Overall Grading of PDMCS on Equity Ratio. 168 Table 4.1.18 Overall Grading of PDMCS on Financial

Efficiency, Liquidity and Stability

169 Table 4.2.1 Overall Rating on Financial Performance of

PDMCS

169 Table 4.3.1 Taluka-wise Average financial Performance of

PDMCS.

173 Table 4.3.2 Taluka-wise average Gross Profit Ratio of

PDMCS.

177 Table 4.3.3 Taluka-wise average Net Profit Ratio of PDMCS. 181 Table 4.3.4 Taluka-wise average Operating Ratio of PDMCS. 184 Table 4.3.5 Taluka-wise average Income From Milk of

PDMCS.

187 Table 4.3.6 Taluka-wise average Income From Fodder of

PDMCS.

190 Table 4.3.7 Taluka-wise average Income from Other Source of

PDMCS.

195 Table 4.3.8 Taluka-wise average Income From Business to

Total Income of PDMCS.

198 Table 4.3.9 Taluka-wise average Turnover Ratio of PDMCS. 201 Table 4.3.10 Taluka-wise average Ratio of Fixed Assets to

Owned Funds of PDMCS.

204 Table 4.3.11 Taluka-wise average Current Ratio of PDMCS. 207 Table 4.3.12 Taluka-wise average Liquid Ratio of PDMCS. 210 Table 4.3.13 Taluka-wise average Stock Working Capital

Ratio of PDMCS

214 Table 4.3.14 Taluka-wise average Stock Working Capital Ratio

of PDMCS

217 Table 4.3.15 Taluka-wise average Stock Working Capital Ratio

of PDMCS

220 Table 5.2.1 CRS technical efficiency of primary dairy Milk

co-operative societies.

231 Table 5.3.1 VRS technical efficiency of primary dairy Milk

co-operative societies.

242

Table 5.4.1 Scale efficiency of primary dairy Milk Co- 253

xiii

operative societies

Table 5.5.1 Output Slacks of PDMCSs for the year 2014-15. 260 Table 5.5.2 Output Slacks of PDMCSs for the year 2014-15. 262

Table 6.1 Taluka Wise List of sample of Primary Dairy Milk Co-operatives Societies.

269

Table 6.2.1 Size of Family Members. 270

Table 6.2.2 Social profile of the Respondents. 272 Table 6.2.3 Economic Status and Education of the

Respondents.

275 Table 6.2.4 Gender wise Marital Status of the Respondents. 276 Table 6.3.1 Dairy Business as Occupation. 277 Table 6.3.2 Monthly Family Income From Dairy Business and

from all Sources.

279 Table 6.3.3 Tax Paid By The Family and Monthly Income of

family From all Sources.

280

Table 6.4.1 Type of houses. 282

Table 6.4.2 Cooking Fuel. 283

Table 6.4.3 Phone / Mobile 283

Table 6.4.4 Types of Vehicle. 285

Table 6.4.5 Bio-Gas Consumption. 285

Table 6.4.6 Electricity Connection. 286

Table 6.4.7 Water supply. 287

Table 6.4.8 Quantity of milk for household consumption in Flush season.

288 Table 6.4.9 Quantity of milk for household consumption in

Lean season.

289 Table 6.4.10 Assets possess by respondents. 289 Table 6.5.1 Experience in dairy farming. 292 Table 6.5.2 Undergone Dairy Farming Training and Agencies

Provided Training

293 Table 6.6.1 Problem face by dairy farmers in dairy business. 294 Table 6.6.2 Perception about Next-Generation pursuing dairy

business.

296 Table 6.6.3 Perception of dairy farmers towards marketing. 297 Table 6.6.4 Perception of dairy farmers towards services

provided by dairy societies.

298 Table 6.6.5 Perception about the Extension service. 299 Table 6.6.6 Perception of members towards the dairy co-

operative societies.

301

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LIST OF FIGURES

Figure No.

Title Peg

No.

Fig. 1.1 Structure of Dairy Co-operatives in India. 29 Fig. 1.2 Structure of Dairy Co-operatives in Goa. 31

Fig. 4.1 Taluka Wise Gross Profit Ratio 174

Fig. 4.2 Taluka-wise Average Gross Profit Ratio of PDMCS 175

Fig. 4.3 Net Profit Ratio 178

Fig. 4.4 Taluka Wise Average Net Profit Ratio of PDMCS 179

Fig. 4.5 Operating Ratio 182

Fig. 4.6 Taluka-wise Average Operating Ratio of PDMCS 183

Fig. 4.7 Income from Milk 185

Fig. 4.8 Taluka-wise average Income from Milk Ratio of PDMCS

186

Fig. 4.9 Income From Fodder 188

Fig. 4.10 Taluka-wise Average income from Milk Ratio of PDMCS

191

Fig. 4.11 Other Income 192

Fig. 4.12 Taluka-wise average Income from Milk Ratio of PDMCS

193

Fig. 4.13 Business Income 196

Fig. 4.14 Taluka Wise Average Income Business to Total Income Ratio of PDMCS

197

Fig. 4.15 Turnover Ratio 199

Fig. 4.16 Taluka-wise Average turnover Ratio of PDMCS. 201 Fig. 4.17 Ratio of Fixed Assets to Owned Fund. 202 Fig. 4.18 Taluka Wise Average fixed Assets To Owned Funds of

PDMCS.

203

Fig. 4.19 Current Ratio. 205

Fig. 4.20 Taluka Wise Average Current Ratio of PDMCS. 206

Fig. 4.21 Liquid ratio. 208

Fig. 4.22 Taluka-wise average Liquid Ratio of PDMCS 209

Fig. 4.23 Stock working capital ratio. 211

Fig. 4.24 Taluka-wise Average Sock Working Capital Ratio of PDMCS.

213

Fig. 4.25 Proprietary Ratio. 215

Fig. 4.26 Taluka-wise average Proprietary Ratio of PDMCS. 216

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Fig. 4.27 Equity Ratio. 218

Fig. 4.28 Taluka-wise average Equity to Total Fund Ratio of PDMCS.

220 Fig. 5.1 Average CRS TE for the period 2000-01 to 20014-15. 225 Fig. 5.2 Year wise average CRS Efficiency Score. 226 Fig. 5.3 Year-wise Percentage of societies on CRS efficiency

frontier.

227

Fig. 5.4 Year-wise Percentage of DMUs above average efficiency Score under CRS TE.

227

Fig. 5.5 Difference in CRS TE Efficiency for the Year 2014-15 and 2000-01.

230

Fig. 5.6 Average VRS TE for the period 2000-01 to 20014-15. 236 Fig. 5.7 Year-wise Average VRS TE Efficiency Score. 237 Fig. 5.8 Year-wise Percentage of societies on CRS efficiency

frontier.

238 Fig. 5.9 Year-wise Percentage of DMU above average VRS TE

Scores.

239

Fig. 5.10 Difference in VRS TE for the year 2014-15 and 2000-01. 241

Fig. 5.11 Average SE TE for the period 2000-01 to 20014-15. 247

Fig. 5.12 Year-wise Average SE TE Efficiency Score. 248

Fig. 5.13 Year-wise average scale Efficiency Score. 249

Fig. 5.14 Year-wise Percentage of DMU above average SE 250

Fig. 5.15 Difference in SE TE for the year 2014-15 and 2000-01. 252

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ABBREVIATION

AI : Artificial Insemination APL : Above Poverty Line

BCC : Banker, Charner and Cooper BPL : Below Poverty Line

CCR : Charner, Cooper and Rhoder CRS : Constant Return to Scale CS : Composite Score

DCANZ : Dairy Companies Association of New Zealand DEA : Data Envelopment Analysis

DMU : Decision Making Units

GDMUL : Goa Dairy Milk Union Federation Ltd.

ICDP : Integrated Cattle Development Project KVS : Key Village Scheme

LPG : Liquid Petroleum Gas

NAFSCOB : National Federation of State Co-operative Banks NDDB : National Dairy Development Board.

NPA : Non Performing Assets OBC : Other Backward Classes OF : Operation Flood

PACS : Primary Agriculture Credit Societies PDMCS : Primary Dairy Milk Co-operative Societies PDS : Public Distribution System

RBI : Reserve Bank of India.

SC : Scheduled Caste

xvii SE : Scale Efficiency

SPSS : Scientific Package for Social Science Research ST : Scheduled Tribe

TE : Technical Efficiency VRS : Variable Return to Scale WHO : World Health Organisation

xviii

APPENDIX

Sr. No Title Page

No.

01 Questionnaire i-xi

02 Financial Ratios of PDMCS from study period 2000-01 to 2014-15

xii-ci

03 Publications in Research Journals -

1

CHAPTER: I

AN INTRODUCTION TO DAIRY CO-OPERATIVES 1.1 INTRODUCTION

Co-operation means working together for mutual benefit. The concept of co- operation is as old as human existence. It is accepted that socio-community living is a basic need for human mutual socio-economic development. The history of modern civilization clearly depicts that social and economic evolution of humanity is made possible due to mutual and co-operative institutions.

Modern sociologists profess three basic instincts in man, viz. conflict, competition and mutual assistance. Whereas co-operative philosophy deals with mutual instinct of mankind aims to improve his social existence. It is found that capitalism emphasizes the competitive instinct that is continuously in the state of struggle for survival. To thinkers like Emerson, “Co-operation has a more evolutionary force in the development of human beings than competitive struggle for survival "¹.

Co-operative activity is one of the important economic pillars, whose inception as a passive instrument against the exploitation of capitalist economies led to the birth of a solution to this very exploitation. To solve the problem of exploitation on 24^th October 1844, weavers from Manchester, England came together and formed the first co- operative society with explicitly stated principles of co-operative business. The society was named as the Rochdale Society of Equitable Pioneers and adopted eight principles of co-operative business: as Open membership, Democratic control, Limited interest on capital, Cash trading, Sale of pure and unadulterated goods, Education of members, Political and Religious Neutrality and Patronage Dividend on Purchases.

2

It is observed that the fundamental philosophical concepts of co-operative are identical. However, its forms, content, objectives, functions and obligations towards the communities differ from one nation to another. Co-operative organization in various countries has emerged with varying objective, function and obligation towards the communities. The evaluation of co-operatives confirms a common resistance and efforts to overcome exploitation of the weaker section of the society.

The history of co-operation reflects its emergence in Europe at the beginning of the 19^th century with five different traditions. These included the workers co-operatives in France, the credit co-operatives in Germany, the agricultural co-operatives in Denmark and Germany. The service co-operatives were operating in the form of housing and health co-operatives in many parts of industrial Europe. As a result, co-operatives are generally regarded as an important trend that occurred in the last century².

1.2 NEED OF CO-OPERATIVES

1.2.1 Special Need:

1. Co-operatives bring together people with small means and provide opportunities of large scale business by pooling resources, products and purchases and ensure benefits of economies of large scale production with the formation of co-operative enterprise.

2. Co-operative enterprise helps to bring together both consumers and producers through consumer and marketing societies. As a marketing society, co-operative organization helps members in marketing his produce. In addition, the co- operative enterprises help their members by providing services like procurement, processing, grading and storage, transportation, financing and packing of products supplied by members.

3

3. Co-operative enterprises eliminate the middle man and help farmers to obtained reasonable price for their product; reducing exploitation of both producers and consumers.

4. By providing guarantee of purchase or marketing of product, the co-operative enterprise encourages members to undertake risk of large scale production and improve method of production.

5. Co-operative organization offers better price then the market price for the members produce that motivates members to supply quality products to co- operatives.

6. Marketing co-operative provides related services like storage, grading, sorting packaging which the individual farmers are not in a position to undertake and enable to obtain higher price for the members produce.

7. In a country like India, where farmers live in villages and the bulk of the consumers in urban centres, the co-operatives have to play an important role in price stabilization. It is found that stabilization of prices requires stability in production and consumption, which co-operatives enterprises can provide to a greater extent.

1.2.2 Local Need of Co-operatives

Apart from general need of the community, the co-operative enterprises are expected to cater to specialized needs of the community that varies from place to place and from time to time. The co-operative societies catering to particular sections of the society aim to satisfy specific need of the community. It is found that, consumer’s co-

4

operatives aim to promote the interest of the consumers whereas marketing societies market the farmers produce.

Dairy co-operatives, which this study focuses on, have dairy farmers as a community at the top of its priority. It aims to enhance output and offer better price to its members which would not have been available to the farmers in the event of non- existence of dairy co-operatives. The co-operatives are organized with the following needs:

1. To supply product or service that is not supplied by the market due to market failure,

2. To improve the quality and extent of services provided to the community,

3. To challenge the high prices charged by the private enterprises for goods and services provided by them; and

4. To improve socio-economic condition of the members in particular and the community in general.

1.3

DEFINITIONS AND PRINCIPLES OF CO-OPERATIVE

1.3.1

Definitions

Co-operation means mutual association of economically weaker persons against exploitation and monopoly of stronger and socially privileged persons for the mutual betterment of their social and economic condition. Under co-operation, economically and socially weaker people having common problems, unites together against the evils of exploitation and monopoly to fulfil their mutual objective through principle of “All for one and one for all”.

The co-operators and experts have defined co-operatives as:

5

Hajella, stated that “Co-operative is a movement whose theory has evolved with time and experience gained by co-operation³”

Herrick, maintains that “Co-operative is the act of poor persons voluntarily united for utilising reciprocally their own forces, resources or both under their mutual management to their common profit.”⁴

P.H. Casselman , remarked that “Co-operative is an economic system with social content.”⁵

V.L. Mehta, found that “Co-operative is a vast movement which promotes voluntary associations of individuals having common needs, who contributes towards the achievement of common economic ends”⁶

W. P. Watkins, concluded that “Co-operative is a system of social organization based on the principles of unity, economy, democracy, equity and liberty”⁷.

International Co-operative Alliance (ICA) in 1995 defined Co-operatives as “an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through jointly owned and democratically controlled enterprises”⁸.

The above definitions stressed the following features of Co-operatives:

(i) The co-operative institutions are autonomous in character, implying they are independent of State.

6

(ii) Co-operatives are an "association of persons". The person implies "legal persons" that includes companies, trusts, local Governments, Co-operatives, etc.

(iii) Co-operatives believe in “voluntary” and “open” membership. Members should be free to join or to leave the co-operative, further more without any strong ground of objections the membership should not be denied.

(iv) Co-operatives are organized to “meet their mutual socio-economic and cultural needs". This implies that the co-operatives are organized by members not only for the fulfilment of their economic needs but have socio-cultural goals before them. Co-operatives may further embrace cultural goals in keeping with members’

concerns and wishes.

(v) The co-operatives are "a jointly-owned and democratically-controlled initiative". This implies that the control over the co-operatives is on democratic lines.

The democratic control and joint ownership are the two factors that differentiate co- operatives from profit seeking private enterprises.

Thus, Co-operatives are community centred organisations that operate in different areas of economic activities in almost all the parts of the world. They can be small in scope catering to small village communities or large ones, with a membership that runs into millions. The co-operatives endorse values such as self-help, self-responsibility, democracy, equity and solidarity and the ethical values like honesty, openness, social responsibility and social concern at the core of the co-operative philosophy. These values are put into practice by guidelines that are known as ‘principles of co-operation’. These principles were for the first time enumerated by the Rochdale pioneers in 1844. The changing socio-economic environment induced the International Co-operative Alliance to

7

periodically revise these principles from time to time. The revision was done in year 1934, 1966 and in 1995.

1.3.2 The Seven Principle of Co-operatives

1. Voluntary and Open Membership

Cooperatives are voluntary associations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2. Democratic Member Control

Co-operatives are democratic organization controlled by their members, who actively pursue their goals by setting their policies and decision making. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote) and co- operatives, at other levels, are democratically organized.

3. Member Economic Participation

Members contribute justifiably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the co-operative, possibly by setting up reserves, part of which would remain indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

4. Autonomy and Independence

Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise

8

capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.

5. Education, Training and Information

Co-operatives provide education and training to their members, elected representatives, managers and employees to enhance their contribution effectively to propel the development of their cooperatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of cooperation.

6. Co-operation among Co-operatives

Co-operatives assist their members most effectually and reinforce the cooperative movement by working together through local, national, regional and international structures.

7. Concern for Community

While focusing on member needs, cooperatives work for the viable development of their communities through policies accepted by their members.

1.4 DEVELOPMENT OF DAIRY CO-OPERATIVE

1.4.1 Milk Co-operatives: Global Scenario

Dairy co-operatives were the first agricultural enterprises to form of co-operative organization in the early 18^th century in the United Kingdom. According to scholars and researchers, the first co-operative was a Creamery Built at Goshen, Connecticut, in U.K. in 1810¹⁰. Further in 1841, Wisconsin farmers made their cheese collectively at the home of a Mr.

Pickett around the Rock Lacke. In 1851, the “American system” and association of cheese manufacturers was initiated at Rome, New York. Similarly, in 1856 a butter factory was established at Compbell Hall, Orange County, New York. Dairymen’s League Co-operative Association, New York was the one of the largest operating co-operative in 1920.¹¹

9

Milk has low ledge life and is a highly perishable commodity. Till the 20^th century, practically no chilling facilities existed and for an individual milk producer this posed a challenge to acquire costly chilling equipment owing to the lack of capital. As a result, milk producers started pooling their resources to launch milk co-operative. Co-operative milk enhances the member’s capacity to invest in costly dairy equipment. The dairy milk producers who supply milk to a dairy co-operative are the mutual owners of this co- operative society. The dairy co-operative societies attempt to realize fair price to their member producers.

Statistics highlight that more than 700 billion litres of milk is processed every year by the dairy industry globally. The world demand for dairy milk and milk product is constantly growing with increase in world population, rising income level and rapid urbanization in developing countries. The Asian nations are a major market of the world, which accounts for 34 percent of all milk imports till 2011. Asian countries import 53 percent of the world’s Skim Milk Powder and 40 percent of the world’s whole milk powder.

The co-operative form of association plays a vital role in the dairy sector, as the top 10 dairy companies of Europe operate under the philosophy of co-operation. Friesland is the biggest dairy co-operative in the world. Nestle, a Suisse company, is the world largest in Europe, followed by Danone from France, in terms of revenue. The Danish consumer co- operative is the largest consumer organization with more than 1.6 million members. In western countries, people drink and eat milk products equivalent to 240 to 250 kilograms per person per year. In contrast, in non- western countries, the consumption rate hovers around 60 kilograms per person per year.

New Zealanders are proud as their dairy farming is considered to have the longest tradition. It is from New Zealand that the first shipment of refrigerated milk supply to the

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UK was executed in1882. Suitable climatic condition for dairy farming with innovative and efficient dairy co-operative societies enabled the dairy industry to grow as one of the most important industries in New Zealand. Dairy Companies Association of New Zealand (DCANZ) was formed in 2003, to motivate members of a dairy to work collectively on important dairy policies. Fonterra is the world’s largest milk processer in New Zealand, collect 22 billion litres of milk annually and distributes it globally. About, 16 billion litres of milk out of total 22 billion litres of milk processed by Fonterra is produced by about 10,500 New Zealand farmer shareholders.

The dairy products of New Zealand are made available to millions of consumers in about 140 countries every day; this is possible only because for the last 150 years, dairy milk producing farmers of New Zealand have built up their co-operatives to be a world leader in dairy excellence through their system of integrated supply chain popularly known as

‘grass to glass’.

Table No. 1.1.

Major Milk Producing Nations (million tonnes) COUNTRY 1970 1980 1990 1996 1997 2000 2005 2010 2015

India 20.80 31.56 53.68 68.36 70.88 79.66 95.62 117.00 135.69 United States of America

53.07 58.24 67.01 69.86 70.80 76.02 80.25 87.46 105.81

China 1.96 2.93 7.04 10.19 10.09 12.37 32.02 41.14 42.77

Pakistan 7.45 9.01 14.72 22.97 23.58 25.57 29.44 35.49 40.45

Russian Federation

0.00 0.00 0.00 35.82 34.13 32.28 31.15 32.14 32.07

Brazil 7.42 12.06 15.08 19.20 19.36 20.53 25.53 31.82 37.47

Germany

28.18 32.10 31.34 28.80 28.72 28.35 28.49 29.67 30.33 France

22.85 27.89 26.81 25.82 25.65 25.74 25.71 24.21 23.44 New Zealand 5.99 6.70 7.51 10.01 11.06 12.24 14.64 17.01 19.40 Source: FAOSTAT

In the United States, Organic Valley, a dairy co-operative with headquarters in Wisconsin is one of the prominent companies that guaranty consumer demand for safe dairy products. In 2000, Organic Valley was a 1056 dairy member firm and by 2007 it has

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significantly enhanced to 1723 dairy member firm. The global scenario of major milk producing nations is depicted in table no.1.1.

It is clear from table no.1.1 that, in 1970 the United States of America topped the chart in world milk production by producing 53.07 million tonnes of milk followed by Germany and France, with 28.18 million tonnes and 22.85 million tonnes of milk respectively. In 1970, India ranked 4^th on world milk production map. China, New- Zealand and Brazil were among the lowest milk producers amongst the major milk producers of the world in 1970. Since, 1997 till date India tops the chart in world milk production by producing 135.69 million tonnes of milk followed by the United States of America which produces 105.81 million tonnes of milk, followed by China and Pakistan who produce 42.77 million tonnes of milk and 40.45 million tonnes of milk respectively.

1.4.2 History and Growth of Dairy Co-operative: The Indian scenario

A historical review of dairy development is depicted in the 'Mahabharata' where it is affirmed that Lord Yougeshwar (Gopal Krishna) had setup University 'Gokul’

specialized in dairy farming and the cow was branded as mother of all beings.¹² As far back as the Aryan period, cows were considered as a valuable asset for human survival.

In India, the Vedas (3000-5000), the Puranas (1000-2000), the Arathastra (300-200 B.C.) establish the fact that the cow worship on the account of their utility as a source of milk is central to Indian culture.¹³

Though apparently the co-operative spirit exists in the fabric of Indian culture, co- operative as a movement actually started only in the last decade of the 19^th century. The main objective of the co-operative movement was to protect the marginal farmers from the exploitation of money lenders (sahukaar) and to enrich the economic condition of poverty ridden, debt trapped peasants. The roots of the co-operative movement in India

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began with the setting up of the Agricultural Co-operative Bank in Madras Province.

However, the co-operative movement grow at a snail’s pace during the British Raj. The formal co-operative movement commenced in India with the enactment of the Co- operative Societies Act, 1904. This Act was replaced by a more comprehensive Act in 1912 to negate the inherent defects of the 1904 Act. This Act provided the platform for the formation of co-operative societies other than the credit societies.

The golden era of the co-operative movement in real a sense came about in the post-independent period. Within two decades of the post-independence period the membership of societies at primary the level had increased fourfold; while the share capital and working capital had increased 23 and 31 times respectively. The history of dairy co-operatives can be broadly categories in two phases: Pre Operation Flood Period and Post Operation Flood Period.

1.4.3 Dairy Co-operative in Pre-operation Flood Period

Establishment of military dairy farms in Allahabad in 1913 was the earliest attempt made by the British Defence Department to ensure the supply of milk and milk product to the colonial army; similar facilities were later developed at Bangalore, Ootacamund and Kernal. The Second World War gave a huge impetus to entry of the private dairy players with modern processing facilities where they processed dairy products like butter and ice-cream and marketed them in select cities of Bombay, Calcutta, Madras and Delhi. The pioneer in dairy business were names like Keventers, Polsons and Express Dairy, but these enterprises were more interested in profit maximization and not concerned about the breed enhancement of milch animals. Private enterprises operating in the dairy business were more interested in securing milk supply through middlemen and exploited producers and consumers of milk. Thus, the system

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that existed then failed to enhance milk production, or quality of milch animal and even with the modernized processing facilities, the dairy sector remain underdeveloped and unorganised.

In the First Five year Plan (1951 to 1956), the goals of dairy development were to provide hygienic milk to the growing urban population. In order to stimulate milk production, the Government implemented different schemes like Milk Schemes, Integrated Cattle Development Project (ICDP) and Key Village Scheme (KVS) in large cities. But, with all these efforts in the two decades from 1951 to 1970, the growth rate in milk production was increased by only one per cent per annum, with decline in per capital consumption in milk by an equivalent percentage.

In order to develop the dairy sector, the state government formulated different strategies (in the 1960s); including establishing separate a department to run dairies, cattle colonies were setup in urban cities and milk schemes were introduced. Most of the milk processing plants were setup in urban cities, rather than in the rural milk shed areas where milk was produced. This urban oriented approach to milk production resulted in the development of cattle colonies in Bombay, Calcutta and Madras; as a result of which the government cattle colonies projects faced extreme challenges in organizing rural milk procurement and implementing of milk schemes economically. This resulted in the destabilization of the organized system of milk procurement and a subsequent reliance on contractors and middlemen to handle the procurement. All these factors amounted to the exploitation of milk producers by traders and money lenders. The growth of cattle colonies in cities emerged as a major curse for the local variety of milch animal which it would never replace.

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1.4.4 Operation Flood and Dairy Development in India

Milk production and distribution during the Plan era had shown significant improvement, but per capital consumption of milk was too low to meet the standards prescribed by the W.H.O. considering the need for improving milk production, the Government of India and State Governments launched a special programme called

‘Operation Flood’.

1. Operation Flood- 1

India’s ambitious dairy development programme was launched with support from the United Nation’s World Food Programme in July, 1970, with the explicit goal of laying the foundation of modern dairy industry in India.¹⁴ It is described as the largest single developmental project which had the potential to enhance the socio-economic status of the rural poor.

a) Objectives of Operation Flood- 1

1.The objective of OF-I was to provide stable income and market for rurally produced milk.

2. To organize and co-ordinate ten million milk producing families with 30,000 primary level village co-operatives in all the states of India.

3.To set up milk processing units in urban and rural area, provide storage and transport facilities, infrastructure for milk production, setting up of feed plant, veterinary centres, and dairy extension service in milk shades colonies.

b) Funding for Operation Flood - I

The total amount of the milk products received as food aid amounted to 1, 23,271 million tonnes of skimmed milk powder and 39,695 million tonnes of butter-oil. The funds generated through the sale of these aided commodities amounted to Rs.1, 165 million.¹⁵

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This amount generated through sales was employed as depicted in table no 1.2. In addition to this, the Government of India provided an assistance of Rs. 278 million for Operation Flood -1 programme. Assistance was also provided in the form of technology, breeding stock, foreign exchange and the like, by countries like Canada, Australia, Denmark, U.K. and others. Operation Flood-1 was completed on 31 March 1981; the targets fixed on many fronts were exceeded. During OF-1, 75 per cent of the dairy capacity of urban dairies and 73 per cent of the dairy capacity of rural the dairies had been utilized thereby enhancing processing facilities in the rural sheds to 3.4 million litres a day.

Table No. 1.2

Item wise Allocation and Expenditure on Operation Flood-I

(Amount in million)

Sr. No Item Original 1970 Allocation Current adjusted Allocation Disbursed as on 31.03.81 Percent of Disbursement Allocated

1 Expansion of Dairies in 4 Metropolitan Cities 19.1 35.1 45.1 (128.6) 2 New of Dairies in 4 Metropolitan Cities 140.0 303.0 252.0 (83.2) 3 Storage and Long Distant Transport 31.7 30.5 31.00 (101.6)

4 Milk Collection 225.7 415.6 448.8 (108.0)

5 Feeder/Balancing Dairy Plants 147.00 N.A. N.A. N.A.

6 Resettlement of City Plants 154.0 21 0.8 (38.01)

7 Increasing Milk Production 285.00 230.00 237.6 (103.3) 8 Development of important Milch Animals 40.00 30.00 29.4 (98.0)

9 Co-operative Organization 118.4 32.4 52.5 (162.0)

10 Project Planning and Men Power Development 35.8 33.3 32.3 (7.0)

11 Miscellaneous 20.6 52.00 50.3 (96.7)

12 Central Pool of Equipment Machinery for Supply of Daires

- - 29 -

TOTAL 12173 1164 1183.1 (101.6)

N.A.: Not available; (-) : Not available

Source: 1.Mascarnhas R.C., “A strategy for rural development dairy co-operative in India”, p.129.

2. Dairy farming in Asia, Asian productivity organization Report, 93.

16 2 Operation Flood – II

Operation Flood-II was introduced in the year 1979, with a budgetary allocation of Rs.

485 Crores. The scope and objectives of OF-II were wide as compare to OF-I, which was limited to the four metropolitan cities. Operation Flood-II was scheduled for completion in the year 1985.

a) Objectives of Operation Flood –II

The Objectives of Operation Flood – II are summarized as under:

1. To enhance the quantity and quality of milk production per day to achieve the set target of 103.2 million litres to meet the rising demand for milk and milk products.

2. To assist the milk producing farmers in implementing programmes relating to cross bred cows and to upgrade the breed of buffaloes.

3. For economic feasibility of dairy co-operatives, OF-II intended: to develop milk processing facilities, to create management information system for sharing information and to promote facilities for man power development.

4. To develop a viable and sustainable dairy industry, Operation Flood – II the fixed target of forming 33,390 primary dairy co-operative societies at the village level.

5. To enhance per capital consumption level of milk to meet WHO standard.

In brief, OF-II aimed at the improving nutritional standard, employment generation and augmenting the rural income through subsidiary occupation extending benefits to cover in particular the small and marginal farmers.

17 b) Funding for Operation Flood – II

The proposed disbursement for Operation Flood- II was projected to be Rs. 485.51 crores, of which Rs. 332.42 crores were reserved for developing milk processing facilities where the emphasis was on strengthening the co-operative structure. The financial resources required for the proposed OF-II were supported by the European Economic Community and the World Bank, as depicted in the table no 1.3.

Table No: 1.3

Allocation and Expenditure on Operation Flood - II

(Amount in crores)

Sir No.

Particulars Allocation of Funds

Percentage Expenditure Up to March 1984

1. Processing Capacity 15.00 31 84.26

2. Technical inputs for milk production

10.85 22 23.47

3. Milk Marketing System 539 11 16.74

4. Support to Village Co-operative Organization

6.52 13 6.85

5. Planning Information System training and Research

17.01 4 9.61

6. Project Implementation 2.67 6 3.84

7. Infrastructure Support For Disease Control And Milk Production Enhancement

2.58 5 0.30

8. Dairy Equipment pool - - 24.21

TOTAL 63.67 100.00 182.45

Source: Mascarnhas R.C., “A strategy for rural development dairy co-operative in India”, p.129.2. Dairy farming in Asia, Asian productivity organization Report, 93.

Operation Funds –II main focus was on enhancing capacity of the plant and hence, as depicted in the table no. 1.3, 31 percent was allocated to improve dairy plant capacity, 22 percent was assigned for technical inputs for improving quantity and quality of milk production, 11 percent of the total budgeted funds were provided for marketing infrastructure and the remaining funds were to be spent on other aspects of dairy development.

18 c) Achievements of Operation Flood –II

Operation flood –II was not as great a success story as OF-I due to the lack of support and co-ordination of the state dairy organizations and departments. Opposition from the state employees’ union and state government policies were the main bottlenecks in the merger of dairy organizations into the “Anand Pattern”. The major achievements of OF- II included: extension of artificial insemination services, frozen semen centres which increased to 4,620 in 1984 from 3150 in 1983 and all the states were covered under the Animal Health Programme.

Table No: 1.4

Operation Flood - II Targets and Achievements Sir.

No.

Particulars Original targets 1978

World Bank Appraisal Report

Six^th Plan Target

Achievement up to

Sept.1985

Percentage Achievement with 6^th plan 1. Total numbers

of village societies

30,000 25,000 29,000 39,486 (136.15)

2. Societies under artificial insemination

30,000 25,000 8,000 8254 (102.3)

3. House Holds Covered (in 000)

10,200 45,000 3,480 3,995 (114.8)

4. Average milk procurement

18.30 8.0 5.53 5.60 (103.3)

5. Urban Milk Marketing

12.40 9.5 4.30 5.01 (116.5)

6. Rural Dairy Processing

14.00 8.0 7.60 5.90 (123.5)

7. Numbers of milk sheds

115 N.A. 128 146 (114.0)

Source: Doornbas Martin: Dairy Aid and Development in India, Sage Publication Delhi, 1990, p.99.

1.4.5 Operation Flood – III

Operation Flood – III was introduced in the year 1985, with the allocation of Rs.

914.95 crores in the union budget¹⁶.The emphasis of OF-III was on measuring and evaluating the achievements of the previous two Operation Flood programmes. The main

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stress lay on assessing efficiency and productivity of dairy co-operatives organization so as to build a strong and sustainable dairy co-operative sector in India.

a) Objectives of Operation Flood–III

The key-tasks of Operation Flood –III are enumerated below:

1. To invest in milk sheds particularly in the area where milk procurement is fast growing.

2. To intensify milk producers’ organization where sustainable primary dairy co-operative societies can be launched.

3. To promote self-financed veterinary care and artificial insemination service centres.

4. To handover Government owned dairy processing facilities to co- operative unions.

5. To invest in marketing research to aid in launch very new products to meet the diverse consumers demands.

6. To introduce uniform accounting and management information system to measure commercial efficiency and viability of processing units.

b) Achievements of Operation Flood –III

The achievements of OF-III can be assessed by comparing performance of all the three Operation Flood programmes. The table no. 1.5 indicates that the overall performance of the three Operation Flood programmes show remarkable and increasing trends in all the three variables like number of dairy co-operative societies, number of milk producing members and annual milk procurement. As per this table, the number of the dairy co- operative societies that were established under OF-I programme stood at 1,588 by the end of 1970-71, this number increased to 29614 during OF-II or by the end of 1983-84

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indicating 223.16 percent increase during the OF-II. During the period of OF-III the numbers of dairy co-operative societies increased to 60,825 indicating an increase of 205.39 percent in OF-III period. Further, across the three OF programmes, numbers of co-operative societies increased by 3830.28 percent. Similarly, numbers of milk producing farmers during operation flood-I stood at 2, 78,000 at the end of 1970-71 which increase to 70, 63,000 indicating a 2540.65 percent at the end of 1989-90. But during OF-I member producers increased to 1747 in 1980-81 from 278 in 1970-71 indicating a positive growth of 628.41 per cent. Further during O.F.- II milk producers’

membership increased to 3116 in 1983-84 from 2124 in 1981-82 or 146.70 per cent;

whereas, member producers has increased to 7063 in 1989-90 from 4484 in 1984-85 indicating a 157.51 per cent during OF-III programme. The achievement of OF-III can be understood when annual milk procurement/collection is compared with the progress of the previous two Operation Flood programs. At the end of OF-I annual milk procurement increased to 9344 (1980-81) as compared 1891 million tonnes of the initial year 1970-71. Similarly at the end of OF-II in 1983-84, annual milk procurement was 1.9016 million tonnes. But, towards the end of OF-III, annual milk procurement was 35821 million tonnes. One of the most decisive messages of all the three Operation Flood programs was that the growth and development necessity is market oriented and market- driven. By developing the market and assuring healthy competition among the market players, a vigorous and transparent system of co-operative organization can be developed which would benefit both the milk producer member of the co-operative as also the final consumer by ensuring quality product at fair price.

21 Table No: 1.5

Comparing Performance of all Three Operation Floods Year No. of Co-

operative Societies

Member Producers (in 000)

Annual milk Procurement (million Tonnes) OPERATION FLOOD-I

1970-71 1588 278 1898

1980-81 13270 1747 9344

OPERATION FLOOD-II

1981-82 18422 2124 10147

1982-83 23496 2620 16133

1983-84 29614 3116 19016

OPERATION FLOOD-III

1984-85 42692 4484 28662

1985-86 49077 5097 28752

1987-88 54525 5666 28105

1988-89 58883 6256 29090

1989-90 60825 7063 35821

Source: 1. NDDB ANNUAL Report 1992 p.103.

2. Dairy farming in Asia, Asian Productivity Organizational Report, 1993.

1.5 CURRENT STATUS DAIRY CO-OPERATIVES IN INDIA

India has made a rapid development in dairy industry during the last few decades as a result of several development programs launched by the Government from time to time.

The Dairy Co-operative Network (as on March, 2009) recorded 177 milk unions, spread in over 346 districts covering 1,33,349 primary societies at the village level with a membership of over 13.9 million farmers of which 3.9 million are women. Dr. Verghese Kurien, the father of the White Revolution and the architect of the Operation Flood Programme has played a pivotal role in the success of dairy co-operatives in India. The growth and success of dairy co-operatives can be attributed to the commitment and loyalty of milk producing farmers at the primary level and the active participation of the local people.

In the year1998, the United State ranked first with a total milk production of 71.23 M.T.

However, post 1999 India over took the United States and capture first position which it

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maintains till the date. In India, Milk production has increased from 17.00 M.T. in 1951 to 110 M.T. in 2008-09. This drastic enhancement in milk production can be attributed to Operation Flood Programs lunched by the Government of India. As a result of the increase in milk production, per-capita milk availability has increased from 112 grams per day in 1968-69 to 252 grams per day in 2007-08. The annual value of milk production in India is estimated to be Rs. 1,430 billion as on 2008-09. The co-operative dairy as a sector contributes substantively to Indian economy and it is generates employment opportunities to about 13.9 million rural families.

In India, dairy co-operative is considered as a ‘successful tool of socio-economic change and progress’. It has potentiality to generate regular flow of income to rural farmers.

Dairy activity helps in generating direct and indirect employment for idle members of the farmers’ family and protects them from vicissitudes of drought and famine. The Government has realized the significance of this sector and hence, allocated huge funds for dairy development programme. In the context of the above, the trend in growth of dairy co-operatives is evaluated on parameters like: number of dairy co-operative societies, milk producing members and milk production per day.

Operation Flood in India has played a significant role in enhancing the co- operative movement through the dairy sector which is depicted in the table no.1.5.

According to the table, the number of dairy societies has increased from 13,284 in 1980- 81 to 1, 62,196 in 2013-14 indicating a growth of 1220.99 percent. Among the regions, remarkable contribution has been observed in the North region contributing (34.40%) followed by Western region (29.14 percent) and the lowest contribution was seen in the East region (15.32 percent) followed by the Southern region (21.14 percent). Among the states in the Northern region, the highest numbers of co-operative dairies were registered

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in Utter Pradesh and the lowest were registered in Jammu Kashmir; in the Eastern region the state of Bihar has the highest number of dairy co-operative societies and Nagaland registered the lowest number. In case of the Western region, Maharashtra has the highest number of dairy co-operative societies followed by Gujarat and the lowest number was in case of the state of Goa. According to table no. 1.5, the state of Karnataka in the South has the highest numbers of dairy societies and Pondicherry has the lowest number of dairy co-operative societies.

Trend of milk production has been positive since OF-III programme and during this period India over took the United States and captured top position in world milk production which it maintains till the date. The membership of dairy societies has a significant role in the quantity of milk produced; table 1.6 clearly depicts the trend of membership. According to this table in the 1980-81 total membership was 1559 thousands and in 2013-14 it had increase to1747 thousands indicating a growth of 884.88 percent. Further, amongst all the region the contribution of Southern region is the highest among all the regions (41.71 percent) followed by the Western region (34.83 percent), the Northern region contribution to the total membership is (16.65 percent) and the Eastern region contributed the least (8.81 percent). The milk producers’ membership among the states within the Northern region was the highest in Uttar Pradesh 955 thousand and the lowest in Himachal Pradesh 35 thousand. In case of the Eastern region, the State of Bihar has the highest milk producing member 842 thousand whereas the lowest was in Jharkhand. Milk producers’ membership in the Western region was the highest in Gujarat 3234 thousand and the lowest in Goa 16 thousand. In the Southern region the milk producers’ membership was lowest in Pondicherry whereas the highest was in Karnataka 2297 thousand followed by Tamil Nadu with a membership of 2202 thousand.

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Table no. 1.7 reveals per day milk production in thousands kilograms from 1980-81 to 2013-14. According to this table the total milk production in the country was 2,562 thousand kilograms per-day in 1980-81 which increased to 34,179 thousand kilograms per-day in 2013-14 indicating an increase of 1334.07 percent over the period. The region wise milk production per day was the highest in the Western region with 17,586 thousand kilograms per-day which was 51.45 percent of the total milk production per day in India.

This was followed by the Southern region with 10,275 thousand kilograms per-day (30.07 per cent) and the lowest output of milk was observed in the Eastern region with 2089 thousand kilograms per-day which was a mere 6.12 percent to total milk production per day in India.

Amongst the states within the Northern region, the state of Rajasthan recorded the highest milk production of 2245 thousand kilograms per-day and the lowest was recorded by Himachal Pradesh with 61thousand kilograms per-day. In the Eastern region highest per day milk production is seen in the state of Bihar with 1485 thousand kilograms per-day and was the lowest in Nagaland with 2 thousand kilograms per-day. In the Western region, the state of Gujarat produced the highest milk output per day and the state of Goa produced the lowest. In the Southern region, the state of Karnataka top the table in milk production with 51,611,485 thousand kilograms per-day and at the bottom of the table was Pondicherry with 36 thousands kilograms per-day.