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Farmers’ Choice of Milk-marketing Channels in India
Using nationally representative household-level data, the structure of milk markets is examined and the factors that determine the Indian dairy farmers’ choice of milk-marketing outlets are identified. The analysis of participation in various milk-marketing channels indicates that dairy farmers, irrespective of their asset-status, sales volume, and socio-economic status, prefer to sell their output through cooperatives and government agencies, even if these offer lower prices compared to the local traders. Concomitantly, of the various direct-to-consumer outlets, cooperatives are more inclusive and largely transcend the boundaries of caste and land size. Of the various economic factors that influence farmers’ choice, the access to institutional credit is critical in driving sales through the formal milk-marketing channels.
The authors are grateful to Ramesh Chand for his comments on an earlier draft of the paper. The comments of an anonymous referee for improving the paper are also thankfully acknowledged.
Since the 1970s, the contribution of the livestock sector to India’s agricultural gross domestic product (AgGDP) has been increasing, and this represents one of the most significant changes in the structure of India’s agricultural economy. Between 1970 and 2014, the share of the livestock sector in AgGDP increased from about 17% to approximately 29%, with livestock rearing (of which dairying is a major component) playing an important role in ensuring food and income security of rural households (Birthal et al 2014).
Dairying accounts for more than two-thirds of the value of total livestock output and is evidencing a consistent growth in milk production. Milk production in the country increased from about 21 million tonnes in 1970–71 to about 146.3 million tonnes in 2014–15, and the per capita milk availability increased from 112 grams in 1970–71 to 322 grams in 2014–15 (GoI 2016). Correspondingly, the share of milk and milk products in monthly per capita household food expenditures increased from about 12% in 1983 to about 18% in 2011–12 (GoI 2013).
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