Milk marketing strategies adopted by dairy farmers: A study of Ernakulam district
Abstract
Various studies and reports expect that due to great potential and increased demand on consumer’sside, dairy market in Kerala will grow at a CAGR of 15.7 percent during 2021-2026. But the reality and projection are quite different. Due to the involvement of many factors like lack of infrastructure facilities, transportation, interference of intermediaries, less bargaining capacity and lack of knowledge about the marketing conditions Kerala’smilk marketing is facing a huge challenges and constraints. Recent studies found that more than 70 percent of milk is sold to dairy cooperative society which implies that a traditional marketing channel dominates in Kerala. In this study, Ernakulam district have chosen. Ernakulam, which has over 330 co-operative societies of Milma in the district, faces a shortage of 70,000 litres per day. This gap is met by importing milk from Tamil Nadu and Karnataka. It indicates that there is a huge scope for dairy market in Ernakulam due to the steady increase in demand on consumer’sside. But recent studies reveal that the existing marketing conditions are not favourable to farmers. Therefore, in this context, the marketing strategy adopted, various milk marketing channels, the reasons for choosing, price received and quantity of milk sold to these stakeholders/channels on the producer’sside to be studied in detail. All these aspects are covered under this study. Present study tries to help the government and concerned department in taking appropriate actions for boosting the milk market in Ernakulam district by giving equal importance to both production and marketing side.
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Introduction
The International Market Analysis Research and Consulting Group‟ (IMARC Group) latest report, titled “Dairy Industry in Kerala: Market Size, Growth, Prices, use segments, Cooperatives, Private Dairies, Procurement and Distribution”, offers an in-depth analysis of the Kerala dairy market. In 2020, the milk production in Kerala reached a volume of 2.5 billion litres. The state currently represents the twelfth largest dairy market in India (IMARC, 2020). According to the report, Kerala dairy market exhibited strong growth during 2015-2020 and dairy market grew at a CAGR of 13 percent during 2014-2019. In Kerala, milk has become the biggest product segment. Like milk, other byproducts such as frozen/flavoured yoghurt, cheeses, UltraHigh Temperature (UHT) milk, flavoured milk and buttermilk also have the scope of growing market. As per IMARC dairy market of Kerala will continue its growth in the coming years. In Kerala, Milma is the major contributor of milk and milk products. Besides Milma other cooperatives like People‟s Dairy Development Project (PDDP) Central Society, Jeeva Milk etc. have significant contribution in Kerala‟sdairy market. IMARC Group expects that Kerala dairy market will grow at a CAGR of 15.7 percent during 2021-26(IMARC, 2020).
Due to the involvement of many factors like lack of infrastructure facilities, transportation, interference of intermediaries, less bargaining capacity and lack of knowledge about the marketing conditions Kerala‟smilk marketing is facing a huge challenges and constraints. As a result, many of the farmers could not find market for their products which creates pricing issues and thereby lowering profit. Proper marketing strategies are essential for the better and successful running of dairy farms. There are many forms of marketing channels like consumers/households, cooperative society and intermediaries in Kerala. Farmers adopts various kinds of marketing strategies like direct marketing, marketing through intermediaries, marketing through advertisement based on their objectives and goals. In this study, Ernakulam district have chosen. Ernakulam, which has over 330 co-operative societies of Milma in the district, faces a shortage of 70,000 litres per day. This gap is met by importing milk from Tamil Nadu and Karnataka. It indicates that there is a huge scope for dairy market in Ernakulam due to the steady increase in demand on consumer‟sside. Therefore, in this context, main purpose of this paper is to explain the various forms of marketing/distribution channels and the marketing strategies adopted by the dairy farmers in Ernakulam district. This paper has been divided into two parts. First part deal with the marketing strategies adopted by the farmers and second part explains the quantity of milk sold to and price received at dairy cooperative society and to local market. In this section detailed analysis of various agents/marketing channels and the reason for choosing them have been done.
Conclusion
It is evident that Kerala has the great potential in dairy sector since there is huge market for the product due to growing demand. Due to the involvement of many factors like lack of infrastructure facilities, transportation, interference of intermediaries, less bargaining capacity and lack of knowledge about the marketing conditions Kerala‟smilk marketing is facing a huge challenges and constraints. As a result, many of the farmers could not find market for their products which creates pricing issues and thereby lowering profit. Proper marketing strategies are essential for the better and successful running of dairy farm. In this context the present study has analysed the marketing strategy adopted, various milk marketing channels, quantity of milk sell to these channels and the reasons for choosing in Ernakulam district are studied in detail. Present study reveals that procurement prices are lower in the cooperative societies. Therefore, it is found that due to the higher price received, selling milk to consumers/households is more profitable and beneficial to farmers than any other marketing channels if and only if farmers can sell more quantities of milk to consumers/households directly. When considering return from milk, dairy cooperative society contributes more since average quantity of milk sold to dairy cooperative society is higher than that of any other marketing channels. It implies the existence of various reasons such as timely/regular payment, high quantity of purchase, accessibility, and no network facility for direct marketing/no household demand. Therefore, out of total milk sold, 72.10 percent of milk is sold to dairy cooperative society which indicates that farmers are notable to extend their market and they have to entirely depend on cooperative society which is found non feasible and non-viable. On an average, price difference of Rs. 12 has been found between the price of milk sold to dairy cooperative society and consumers/households. Apart from that, due to the lack of extended marketing facility/unawareness about the extended marketing opportunities, and lack of transportation facility only 27.90 percent of total milk sold is available for local sale which indicates the dominance of traditional marketing channel like cooperative society. In order to reach a break-even point, some quantities of milk have to be sold to other local marketing channels other than cooperative society. Otherwise, farmers will incur huge loss which in turn adversely affects the willingness of the farmers in producing milk and it will reflect in the decline of milk production in Ernakulam district. Therefore, as the main objective of rural development is to ensure economic well being of people by providing adequate income and employment, it is necessary to ensure reasonable price for the milk produced by farmers without affecting their willingness to produce. In this context, in order to meet the increased demand for milk on the consumer‟sside, government and concerned department have to take appropriate actions to boost the milk market in Ernakulam district by focusing on both production side and marketing side with equal importance.
