Milk distribution system- as an Infrastructure in India

Milk Distribution Systems in India
A Graduate Report on
For the Course of
„Urban Infrastructure Planning and Management (CE-634)‟
of the M.Tech (I) Sem-2 of Urban Planning
Submitted by: Yajush G. Sonar (P17UP010)
Faculty Advisor: Dr. Krupesh A. Chauhan
P.G Section (Urban Planning),
Department of Civil Engineering,
सरदार वल्लभभाई राष्ट्रीय प्रौद्योगिकी संस्थान, सूरत
Sardar Vallabhbhai National Institute of Technology
Surat, Gujarat
(2017-2018

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CONTENTS
Certificate
Acknowledgement
Contents
List of Figures
1. Introduction 1
1.1. Introduction
1.2. Existing Scenario
2. Existing Practices 2-11
2.1. Some factors which help in deciding the mode of distribution of milk are as follows
2.2. Distribution of Raw Milk
2.2.1. Distribution of Pasteurized Milk
2.2.2. Factors affecting pattern of its distribution to public
2.2.3. Containers of Milk Distribution
2.2.4. System of Distribution of Milk
2.3. Milk Distribution Chain (Milk Marketing Chain)
2.3.1. Producer and Producer Company
2.3.2. Milk Vendor
2.3.3. Wholesaler
2.3.4. Retailer
2.3.5. Milk Cooperatives
3. Case Study 12-13

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3.1. AMUL (Brand name managed by an apex cooperation) Organization –GCMMF
3.2. AMUL Model
3.3. AMUL Supply Chain Management
4. Planning Parameters 14-20
4.1. Standard Guidelines
4.2. Planning of Dairy Plant
4.2.1. Selection of Location
4.2.2. Types of Location
4.2.3. Selection Criteria for dairy building site
4.2.4. Planning the dairy building on site
4.3. Role of Urban Planner
4.3.1. Role in social planning
4.3.2. Role in physical planning
References

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LIST OF FIGURES
Figure No. Figure Name Page No.
1. Sample of Coupon 4
2. Milk Marketing Channels in India 6
3. Amul Retail Parlour 7
4. GCMMF Plant 12
5. Amul Model (Flow Chart 13
6. AMUL Supply Chain Management 13
7. Classification of Dairy Plants 17
8. Integrated Products Plant 18
9. Integrated Products Plant (Site Layout) 19

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CHAPTER 1
INTRODUCTION
1.1. Introduction:
Milk is a precious gift of nature to all living beings under the sun. It nourishes our health and
tones up the immune system of the body. It is produced mostly in rural areas and is
distributed to the ultimate consumers in urban areas through effective marketing system. The
consumers expect good quality milk at a fair price regularly. The producers want to have
more remunerative price for the milk they sell. The milk produced in the rural areas mostly
on a small scale and sold directly to the consumers or to the private milk traders or to the
organizations (may be private agencies or co-operatives). They neither follow the marketing
strategy nor the marketing mix which are followed for the finished products or for the
industrial products. Milk being perishable in nature, produced in different segments and its
sale depends upon different factors, mainly the marketable surplus.
1.2. Existing Scenario:
Currently around 80% of the total milk produced is distributed through the highly fragmented
unorganised sector, which includes local milk vendors, wholesalers, retailers, and the
producers themselves. On the other hand, the organised dairy industry distributes the
remaining 20% of the total milk produced.
India currently represents the world‟s biggest market for milk and milk products. In light of
its growing population, higher incomes and growing health consciousness, the demand for
milk is steadily increasing in the country. According to IMARC Group‟s new report titled,
“Dairy Industry in India: Market Size, Growth, Prices, Segments, Cooperatives, Private
Dairies, Procurement and Distribution”, the total production and consumption of milk during
2014-15 reached 147 Million Metric Tons and 138 Million Metric Tons, respectively.

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CHAPTER 2
EXISTING PRACTICES
2.1. Some factors which help in deciding the mode of distribution of milk
are as follows:
1. Keeping quality and kind of milk.
2. Perishable nature of milk and its products.
3. Possible contamination.
4. Proper supervision and control in distribution.
5. Cost of distribution/delivery of milk.
2.2. Distribution of Raw Milk:
In places of temperate climate and in sub-temperate conditions raw milk is distributed
directly to consumers. This cannot be recommended in area other than temperate regions.
Where the milk production is carefully supervised and a short period lapses between
production and consumption, the raw milk may be distributed provided the temperature of
milk does not go beyond 10° C at delivery. Raw milk consumption may probably continue in
rural area but strict hygienic control is required to see that milk is of good quality.
2.2.1. Distribution of Pasteurized Milk:
The deterioration in quality of pasteurized milk is mainly due to post pasteurization
contamination.
2.2.2. Factors affecting pattern of its distribution to public:
1. Buildings density in particular locality.
2. Topography of the area.
3. Number of customers.

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4. Distance of the area from dairy plant.
5. Temperature of milk at delivery.
6. Type of delivery vehicles.
7. Shop distribution vs. home delivery.
2.2.3. Containers of Milk Distribution:
1. Dispensing in sealed cans.
2. Dispensing in bottles.
3. Distribution by polythene bags or tetra pack.
2.2.4. System of Distribution of Milk:
Sound system of milk distribution is essential for,
1. Efficient, well organised retail marketing of milk.
2. Simple, convenient for both farmer and customers.
There are four types,
1. Cash And Carry System:
The customers are required to pay the cost of milk to vendors at the time of delivery
of milk.
a) Merits:
 Maintenance of account of sale proceeds of milk is easy.
 Commission of vendors can be calculated easily and promptly.
 Account of each calendar month can be closed in time.
 No extra cost is involved in printing coupons/cards.
b) Demerits:
 Handling of huge amount of coins and currency is a problem.
 Daily counting of money is cumbersome.
 Risk of embezzlement of money by vendors.
 Chances of loss of money due to theft or pick-pocketing.

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 Non-availability of coins poses difficulty for willing customers in purchase of milk.
2. Coupon System:
In this system a set of coupons is issued to the customers on advance payment.
Customers receive milk in exchange of coupons and purchase new booklet of coupons
when they run short of it on advance payment.
(Fig.1. Sample of Coupon)
a) Merits:
 Chances of loss of money are eliminated.
 Money on dairy farm is received much in advance which can be profitably utilized.
 Sale of milk is uniform even at the end of month.
 Counting of coupons is not cumbersome.
b) Demerits:
 Value of unredeemed coupons cannot be ascertained easily.
 Account of sale proceeds of milk at the close of calendar month cannot be as clear as
of cash and carry system.
 Chances of recirculation of redeemed coupons.
 Forged printing of similar coupons is eminent.
3. Card System:
Milk cards are printed and sold to customers on advance payment. Validity of milk
cards is limited to a month. Date of issue is not fixed but expiry of all sold cards is

9
fixed. Customers who could not take milk for a day or days together are liable to get
the cost of milk refunded.
Immediately after supply of milk is made, the quantity of milk is noted at the back of
the card on each date. Card can be issued from the office of the Dairy Officer. One
day time is allowed for customer to register. At the time of issue of card timings of
milk delivery are notified. Usually yellow cards are issued for cow‟s milk and blue
cards for buffalo milk.
a) Merits:
 Cost of milk is received in advance which can be utilized advantageously.
 Trouble of daily counting of money/coupons eliminated.
 Market of milk is assured.
 Chances of loss of money eliminated.
b) Demerits:
 Refund for non-supply of milk causes great inconvenience to both customers and
organisation.
 Monthly account of actual sale proceeds of milk cannot be closed on account of
refund.
 Vendors and booth-men may sell out milk to non-bonafide customers other than card
holders.
 Printing and issue of milk cards and refund involves a good deal of labour and time.
 Customers have to pick up milk only from assigned places.
4. Push Button Mini Dairy:
This is designed or installed on NDDB designed coin (Token) operated milk vending
machine, popularly known as “Push Mini Dairy”. The milk holding capacity of these
machines varies from 1,000 to 1,300 litres each. The consumer is expected to bring
his/her own container large enough to hold the milk required by him/her.

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2.3. Milk Distribution Chain (Milk Marketing Chain):
(Fig.2. Milk Marketing Channels in India)
2.3.1. Producer and Producer Company:
In India, there are many legal forms of organisations into primary producer can organise
themselves. A Producer Company (PC) is one such and relatively new legal entity of the
producers of any kind, viz., agricultural produce, forest produce, artisanal products, or any
other local produce, where the members are primary producers. PC as a legal entity was
enacted in 2003 as per section IXA of the Indian Companies Act 1956. Since the above
enactment, the PC has been hailed as the organizational form that will empower and improve
the bargaining power, net incomes, and quality of life of small and marginal
farmers/producers in India.

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2.3.2. Milk Vendor:
Milk Vendors are the person who owns the cattle or not, mostly owned will sell the Milk
directly to the customers on bearing all expenses and full profit to ourselves.
2.3.3. Wholesaler:
Person or firm that buys large quantity of goods from various producers or vendors,
warehouses them, and resells to retailers. Wholesalers who carry only non-competing goods
or lines are called distributors.
2.3.4. Retailer:
(Fig.3. Amul Retail Parlour)
Amul Parlour (Amul Franchise Business Opportunity):
Amul Parlours are exclusive Amul outlets which stores and sells entire range of Amul
products. The outlets are spread over 100 to 300 Sq. Ft in markets, premier educational
institutes, hospitals, railway stations, bus stations, Municipal Corporation gardens etc. where
there are high footfalls.
The franchisee will have a prebuilt shop / space in a good location either owned or rented.
The franchisee is expected to bear the entire cost (viz. interiors and equipment, excluding

12
property cost) of setting up the store which is expected to be in the range of Rs. 1.50 lacs to
Rs. 6.00 lacs depending upon the format.
Our wholesale dealers will supply stocks at the Parlour and the franchisee will avail retail
margin. Retail margins will vary from product to product. Franchisee need not pay any
royalty or share any revenue with Amul.
Working capital requirement would be extra depending upon sales volume. Expected
monthly sales turnover will vary from place to place depending on location of the parlour. It
may be in the range of Rs. 5 lac to Rs 10 lac per month.
2.3.5. Milk Cooperatives:
The National Dairy Development Board (NDDB) (External website that opens in a new
window) was established in 1965 with the mission of making dairying a vehicle to a better
future for millions of grassroots milk producers. This commitment has been rewarded with
India's emergence as the world's largest milk producing nation. The Board's programmes and
activities seek to strengthen the functioning of dairy co-operatives by providing them
financial assistance and technical expertise in milk production, employment generation,
availability of milk, foreign exchange savings and increased farmer incomes.
Dairy co-operatives account for the major share of processed liquid milk marketed in the
country. Milk is processed and marketed by 170 Milk Producers' Co-operative Unions and 15
State Cooperative Milk Marketing Federations. Over the years, brands created by
cooperatives have become synonymous with quality and value. Brands like Amul (GCMMF),
Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini (Karnataka), Milma (Kerala) and
Gokul (Kolhapur) are among those that have earned customer confidence.
1. State Cooperative Milk Marketing Federations:
a) Some of the major Dairy Cooperative Federations include:
 Andhra Pradesh Dairy Development Cooperative Federation Ltd (APDDCF)
(External website that opens in a new window)
 Bihar State Cooperative Milk Producers' Federation Ltd (COMPFED) (External
website that opens in a new window)

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 Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) (External website that
opens in a new window)
 Haryana Dairy Development Cooperative Federation Ltd (HDDF) (External website
that opens in a new window)
 Himachal Pradesh State Cooperative Milk Producers' Federation Ltd (HPSCMPF)
(External website that opens in a new window)
 Karnataka Cooperative Milk Producers' Federation Ltd (KMF) (External website that
 Kerala State Cooperative Milk Marketing Federation Ltd (KCMMF) (External
 Madhya Pradesh State Cooperative Dairy Federation Ltd (MPCDF) (External website
 Maharashtra Rajya Sahakari Maryadit Dugdh Mahasangh (External website that
 Odisha State Cooperative Milk Producers' Federation Ltd (OMFED) (External
 Pradeshik Cooperative Dairy Federation Ltd (PCDF) (External website that opens in a
new window)
 Punjab State Cooperative Milk Producers' Federation Ltd (MILKFED) (External
 Rajasthan Cooperative Dairy Federation Ltd (RCDF) (External website that opens in
a new window)
 Tamilnadu Cooperative Milk Producers' Federation Ltd (TCMPF) (External website
 West Bengal Cooperative Milk Producers' Federation Ltd (WBCMPF) (External
b) Functions of State Cooperative Milk Marketing Federation:
 Marketing of milk and milk products.
 Manage production planning and State Milk Grid (movement of milk within the
state).
 Coordinate with state government, central government, NDDB and other agencies.

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The Milk Unions become members of a Cooperative Milk Marketing Federation by
subscribing share capital to it as per provision of the bye-laws of the Federation. The
Federation is responsible for evolving and implementation of policies on cooperative
marketing of all member unions‟ liquid milk and milk products, deciding the product-price
mix, cooperative provision of joint services (artificial insemination, breeding, cattle feed
etc.), cooperative marketing of technical inputs to members and strengthening the
institutional structure of the dairy cooperatives.
2. District Level Milk Producers‟ Cooperative Union:
a) Functions of District Level Milk Producers‟ Cooperative Union:
 Procure, process and market milk and milk products.
 Arrange/Provide macro level inputs like cattle-feed, animal health and breeding care,
etc.
 Arrange for training and education of managing committee members, staff, and
members of dairy cooperative society and also for the Board members, managers and
staff of the milk union.
In general, the Union carries out five important functions: procurement, processing and
marketing of milk and milk products, providing technical inputs, institutional strengthening
of milk cooperatives, enhancing women involvement in dairy cooperatives, organisation of
extension activities and rural development services. The union owns and operates dairy
plant; cattle feed plant, fodder and bull mother farms, semen collection station etc. for animal
husbandry activities.
The union pays to the societies dividends on their shares and bonus in relation to the quantity
of milk supplied by them during the year. The milk products processed by the union are also
marketed through the State Milk Federation.
3. Village Level Dairy Cooperative Society (DCS):
a) Functions ofVillage Level Dairy Cooperative Society (DCS):

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 Collection of milk twice a day from farmers.
 Make regular payment to suppliers.
 Dispatch the milk collected to Milk union.
 Provide to members:
Balanced cattle feed.
Fodder seeds of improved variety.
Services for animal health care.
Services for breeding of milch animals.
Patronage based portion of the surplus.
Contribute to village development.
Every morning and evening, the society buys the surplus milk from the member-producers.
The producer is paid for the milk at an interval usually decided by the managing committee
of the society. The payment is made on the basis of milk quality (fat, SNF, bacteriological)
content of milk supplied by individual producer. The union‟s dairy plant organises the
transport of milk from all its member-societies.

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CHAPTER 3
CASE STUDY
3.1. AMUL (Brand name managed by an apex cooperation) Organization –
GCMMF:
1. Type – Cooperative
2. Industry - Dairy
3. Founded – 1946
4. Key people - Dr. Verghese Kurien
5. Milk Producers - 52.8 million
6. Year of Establishment: 1973
7. Members: 17 District Cooperative Milk Producers' Unions (16 Members & 1 Nominal
Members)
8. No. of Producer Members: 3.18 Million
9. No. of Village Societies: 16,117
10. Total Milk handling capacity per day : 13.67 Million litres per day
11. Milk Collection (Total - 2011-12): 3.88 billion litres
12. Milk collection (Daily Average 2011-12) : 10.6 million litres (peak 13 million)
13. Milk Drying Capacity 647 Mts. per day
14. Cattle feed manufacturing Capacity: 3690 Mts. per day
15. Sales Turnover (2011-12) : Rs. 11668 Crores (US $2.5 Billion)
(Fig.4. GCMMF Plant)

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3.2. AMUL Model:
(Fig.5. Amul Model (Flow Chart))
3.3. AMUL Supply Chain Management:
(Fig.6. AMUL Supply Chain Management)

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CHAPTER 4
PLANNING PARAMETERS
4.1. Standard Guidelines:
A planned city for an environment of convenience should have a hierarchical structure; with
each unit planned for basic self‐sufficiency. The smallest planning unit is conceived as
Housing Area for 5000 population with convenience shopping, open area, Anganwadi and
milk booth as minimum infrastructure provision.
Sr.
No.
Category Population served
per unit
Land Area Requirement
Type of Facility Area
Requirement
1. Milk Distribution 5000 Area inclusive of
service area
150 sq.m
4.2. Planning of Dairy Plant:
The design and layout of the dairy plant depend much on the quantity of milk handled and the
type of the product made. Some may need refrigerated condition for the distribution of the
product, while others may not need such requirement. Some of the products may not need a
daily delivery and need to be transported once a week or so. There is a wide variation in the
size and type of dairy plants.
(Fig.7. Classification of Dairy Plants)

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4.2.1. Selection of Location:
Location is a strategic issue, and the decision where to locate cannot be taken lightly. The
most favourable location is one, which attains the lowest unit cost in producing and
distributing the product or service to consumers.
But nowadays, the location decision has become more complex with newer intervening
factors like more sophisticated markets, increased competition, short supply of skills,
technological change that soon outdate newly installed processes, shooting costs of land and
materials, government influences, legal requirements, corporate matters and peoples‟
influences. In general, in selecting an area to locate a plant, following consideration should be
given to the following factors,
1. Availability of spacious land for immediate requirements of all buildings, roads,
service facilities, garden, tree plantation for wind break etc., with provision of land for
expansion at a future date
2. Accessibility and availability of raw materials
3. Accessibility of market
4. Adequacy & availability of labour
5. Adequacy of transportation facilities
6. Volume of power and fuel
7. Water supply and its quality
8. Soil conditions for heavy loading
9. Site cost
10. Elevation in location to facilitate removal of dairy effluent, suitable treatment and
disposal
11. Climatic conditions, including direction of prevailing wind and probable increase in
dust and smoke nuisance from the surroundings, and
12. Government laws
13. Market Potential
14. Clean environment
The two terms location and site are often confused with each other. It must be clearly
understood that, the term, location‟ implies to Area, Region or Territory, while site‟ is the
place, within a selected location, where building is to be constructed.

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4.2.2. Types of Location:
Three types of locations are possible for dairy plants,
1. City location:
When a city is planned by a town planner, all areas are marked for future buildings.
The industries likely to come up are marked in area called „Industrial area‟ and
usually dairy plants are allotted a plot in that area only. Dairy plant in the
neighbourhood of other industry or factories emitting smoke, dust, offensive smell,
gases, carries great risk. It is therefore essential, that the location marked for milk
plant should be free from all pollution.
2. Suburban location:
Suburban location means suburban town or outer skirts of large city. The dairy plant
located in this situation has advantages of being close to consumption area with
possibility of availing all facilities such as electricity, water, waste disposal and labor
etc.
3. Country location:
Country location means sitting dairy plant in country or milk producing area. There
will be little competition from other industries and land will be cheap. The plant will
not create a noise problem and it is unlikely that atmospheric pollution will cause any
difficulty. There will be no traffic congestion. Milk supply routes will be short. But it
will be away from the city consumption area. For all the dairy plants in whatever
region they are, there are some important points which are common and essential to
be considered in determining the location. Moreover there are some problem factors
applicable to both region level and site level.
4.2.3. Selection Criteria for dairy building site:
After selecting the general location for the plant, one needs then to select the actual site on
which the building can be constructed. In order to make this decision one needs to consider
the following,
1. Whether a sloping or level site is required?

21
2. Access to the location - are roads suitable and is a rail link required?
3. Has the land or site been contaminated and what is the underlying geology?
4. Will planning permission be granted?
5. At what level is the water table and what is drainage like?
6. What utilities are available - water, gas, electricity, etc.
7. Security, in particular access and boundaries.
Since dairy plant and products and products manufactured in it have direct public reaction, it
is therefore important, that, the site should have a good landscape. Advertising value plays a
great part in site selection as well as in external plant appearance. To have a good business
and sales, it is suggested to have a thorough check up on the topography of the place and the
other factors.
4.2.4. Planning the dairy building on site:
1. Locate the building about 45 m back from highway. This will allow some space
surrounding the building even after a highway-widening project.
2. Traffic should be planned to ensure safe movement of all vehicles and pedestrians.
Places where pedestrians need to cross roads should be avoided. Truck and
automobile driveways should be segregated close to the entrance with clear
distinction for visitors. Soiled vehicles that could pose a sanitation risk to the product
should be routed in a different way to avoid contamination. Roads should be kept in
good condition to avoid damage to products in transit.
3. Provide driving access to all sides of the buildings, if possible. This allows for one-
way circulation and will allow fire-fighting vehicles to have access where needed.
4. Rail sidings, parking lots for trucks and automobiles, trash collection areas, and
“surplus” equipment dumps can become a source of contamination and a breeding
place for vermin. These areas should be kept groomed and drained to prevent
contamination to food products by seepage.
5. Locate loading bays at the rear of the building. A gentle slope from the front to the
rear will cause the floor of the building to be about 1 m above grade without cutting
or filling.
6. Grade the site for natural drainage to ditches. In some areas, grading must be done so
that all surface water will be channelled into a storm drain system. Surface water must

22
never be allowed to enter the waste drain system, because water treatment costs are
also based on volume.
7. Provide access to the truck building and weigh scale.
8. Locate employee and visitor parking at convenient entry points to the building.
9. Truck parking should be separate from the other parking areas and could be fenced.
10. Raising outside equipment about 20 cm above the pavement will prevent it from
being used by rodents as a breeding place.
11. Landscaping and gardens contribute to the company image. Good planning will
ensure low initial costs and low maintenance costs. Small recreation areas outside of
the plant improve employee morale. Employees should eat in the space provided for
them and should not take food outside. Dropped food attracts birds, rodents, and
insects, and feeding stray cats or birds on site should be prohibited.
12. Around the base of the buildings, a 1 m grass-free strip covered with gravel or stones
are advisable. This controls weeds and is a good area for placing traps and bait.
13. The perimeter should be fenced for security reasons and to prevent children from
entering the grounds. This is important if bait-accessible bait boxes are placed outside
the plant. Chain-link fences, more than 2 m high, are normally sufficient. The fences
will catch pieces of paper, and cleaning them must be part of the overall housekeeping
on the site.
14. Orient the building so that its best features and sign face the busiest street.
(Fig.8. Integrated Products Plant)

23
(Fig.8. Integrated Products Plant (Site Layout))

24
4.3. Role of Urban Planner:
4.3.1. Role in social planning:
Academic and Technical guidance for establishments of Milk Cooperative Unions, Milk
Federations and Milk Cooperative Societies.
4.3.2. Role in physical planning:
1. Traffic, Transportation and Logistics planning for mobility of Milk containers and
other Storage and Mechanical Plants.
2. Macro level planning as inclusion of spaces, i.e. area allocations in D.P.‟s and T.P.
Schemes are as following,
a) Village Dairy Cooperative setup
b) District Milk Cooperative union setup
c) State Cooperative Milk marketing federation setup
d) Chilling Plants
e) Dairy Plants
f) Retailing Shops
g) Cow/Cattle Sheds
h) As per National livestock policy, 2013),
 Animal management centres in urban and regional areas
 Veterinary facilities and Hospitals
 Gaushala with primary milk packaging facilities

25
REFERENCES
[1] K. Rajendran and Samarendu Mohanty, Dairy Co-operatives and Milk Marketing in
India: Constraints and Opportunities, July 2004
[2] Sunil M. Patel & A.G. Bhadania, Dairy Plant Design & Layout, Department of Dairy
Engineering AAU, Anand
[3] Dr. P. Amalanathan, Dr. S. Naseer Mohamed Jaffer, Distribution channels of milk and
the problems encountered by the members of primary dairy co-operatives in Pondicherry
U.T., ISSN: 2394-0085
[4] Amit Nahar, Creating A Hybrid Milk Distribution Channel Strategy For India, February
19, 2016
[5] Rupa Balsekar, Amul: when the milk supply chain takes on a new dimension, 1 June, 2015
[6] Puja Mondal, Milk Distribution: Distribution of Raw and Pasteurized Milk
[7] Presentation on Distribution network management of Amul

Milk distribution system- as an Infrastructure in India

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