ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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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 Indias agricultural gross domestic product (AgGDP) has been increasing, and this represents one of the most significant changes in the structure of Indias 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 197071 to about 146.3 million tonnes in 201415, and the per capita milk availability increased from 112 grams in 197071 to 322 grams in 201415 (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 201112 (GoI 2013).

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Published On : 28th Dec, 2018

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