Village Based Milk Procurement Systems under NDP

Dairying is a source of income for millions of rural milk producers, which contributes towards strengthening the livelihoods of small holder milk producers who form majority of India’s milk production system. In a market driven economy, it is all the more important to have producer-centric institutional structures that strictly conform to cooperative principles and provide rural milk producers a greater access to the organized market.  

The massive efforts to increase milk production through an increase in productivity as an integral activity of NDP Phase-I would result in a growing marketable surplus of milk. The NDP targets also include bringing a higher proportion of the marketable surplus under the organized dairy sector. It will therefore be necessary to simultaneously work for providing milk producers greater opportunities for sale of their surplus to the organized sector by expanding village based milk procurement systems that facilitate fair and transparent transactions. This would require: 

  • Strengthening of milk procurement system in the existing dairy cooperatives and
  • Promoting Producer Companies in areas where cooperatives are not present or have low coverage and procurement.  

The objectives of the VBMPS include: 

  • Setting up a sustainable milk procurement system while also ensuring fairness and transparency.
  • Ensuring that quality milk is collected by bringing in maximum milk producers under the organized sector.
  • Creating more village level institutional structures following cooperative principles and safeguard the interest of small producers.
  • Helping provide rural milk producers with greater access to the organized milk processing sector and thereby enhance income of small rural dairy farmers. 

The proposed activities would include: 

  • Mobilization and institution building of small holder milk producers through,
  • Expansion/upgradation of milk procurement system in existing Milk Unions through strengthening of selected existing village Dairy Cooperative Societies (DCS) and organizing new DCS in uncovered villages.
  • Support existing Milk Producer Institutions and promote new ones which would form part of a Producer Company under the Companies (Amendment) Act 2002.
  • Training and capacity building of milk producers and other functionaries
  • Investments in the village level Infrastructure for milk collection and bulking such as Milk cans, Bulk Milk Coolers for cluster of villages, associated weighing and testing equipment and related IT equipment.  

The main expected results from the interventions are: 

  • Increase in the number of milk producers organized or enrolled into the milk producer institution.
  • Increase in share of Cooperatives in terms of marketable surplus
  • Milk producers would be encouraged to produce more milk for sale.
  • Improved access to the organized milk processing sector.
  • Improved price realization.
  • Improvement in quality of raw milk procured, indicated by increase in its MBR time.