Marketing Structures for Livestock Products: A comparative study of supply chain in Cooperative and Private Sectors

1. Marketing Structures for Livestock Products: A comparative study of supply chain in Cooperative and Private Sectors

2. The global context Rapidly expanding livestock production Smallholder livestock production Great potential for poverty alleviation Cost efficient milk production

4. The global context Rapidly expanding livestock production Smallholder livestock production Great potential for poverty alleviation Cost efficient milk production Significant economies of scale in post production value chain leading to market barriers for small producers Concerns over private sector participation in milk procurement, processing and distribution Need for organizational innovations throughout the value chain to integrate small producers

5. The local context India-World leader in milk production Cooperatives�key to facilitation of market access But large informal sector continues to exist Cooperatives victim of political and bureaucratic interference Poor quality standards but selected cooperatives and NDDB spreading awareness about milk quality Market competition set to rise Concerns over smallholder survival

6. The Objectives Examine the value chain operations�procurement, processing, promotion and pricing�of two firms, one private and the other cooperative. Examine the profile of farmers from whom they procure milk. Understand the factors that influence farmers� choice for sale of milk to different outlets.

7. Methodology Comparison of supply chain operations of two medium scale dairy firms�one private and other cooperative. Profiling of sample households from where they procure milk. Logit analysis to understand the factors influencing choice of marketing outlet

8. Study Area Study conducted in Gujarat state Accounts for approx 7-8 percent of total milk prodn in India frontrunner in dairy cooperative movement Share of buffalo in milk production more than 60 percent Mahesana and Banaskantha districts (together accounting for nearly a quarter of milk in Gujarat)

10. Results Similarities Procurement through farmer associations/groups. Product range, pack sizes and brand names Differences Marketing, pricing and promotion strategy �Push� vs �Pull� �Reactive� vs �Pro-active� Price pegging

11. Results contd. Mahesana--Nearly 60 percent of the poorest 20 percent sample households sold milk to private dairy compared to approximately 90 percent from top 20 percent households. Banaskantha --Nearly all the bottom 20 percent households and more than three fourth of top 20 percent households sold their milk to private dairy. In villages with large distances to cooperative milk collection centres, private dairies set-up satellite collection points to reduce the distance traveled by farmers.

12. Results contd.

13. To recap Procurement, processing and packaging�Imitative Pricing and branding�reactive Small and medium scale private dairy units driven primarily by short term considerations Private units add value by bringing additional competition Need for continued investment in strengthening commercially viable producer institutions with a focus on furthering long term producer interests

14. Thank you