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

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Impact of Dairy Cooperatives on Milk Productivity

Evidence from Rural Bihar

The impact of dairy cooperative membership on milk yield in Bihar is examined by using cross-sectional data from a 2015 field survey of 675 milk producers. Using an endogenous switching regression model that accounts for selection bias, dairy cooperative membership was found to have a positive and statistically significant impact on milk yield. Dairy cooperative membership was found to benefit small farmers more than other categories of farmers. 


The authors are grateful to the anonymous reviewer of this journal for insightful comments, which improved the paper significantly. 

The livestock sector’s contribution to the agricultural economy has been increasing over time. Between 1970 and 2020, the share of livestock in the value of agricultural output increased from 17% to 29%. The share of livestock in the total food consumption expenditure also increased considerably, from 12% in 1983 to 18% in 2012. Dairy, the most important component of the livestock sector, plays a significant role in uplifting the economic and nutritional status of rural households in India. The dairy sector in India, however, is largely unorganised and subsistence-based. It therefore faces a wide range of constraints such as low productivity, limited processing capacity, and insufficient storage facilities (Samal and Pattanaik 2014; Rajendran and Mohanty 2004; Kumar et al 2013; Kumar et al 2018). Low milk productivity may be attri­buted to factors such as scarcity of feed and fodder, lack of proper sanitation and veterinary care, high input costs, and inefficient marketing channels (Hashem et al 2020; Singh et al 2020). In addition to productivity constraints, dairy farmers face a variety of structural and transactional constraints that hinder their economic development; these emerge from, for example, seasonal fluctuations in demand for dairy products, asymmetries in the market, and the highly perishable nature of the products. Cooperatives of smallholder dairy farmers can play a significant role in alleviating many of these constraints. Such cooperatives can provide bulking and bargaining services to dairy smallholders that enhance their market access and help reduce transaction costs in the production and marketing of milk (Chagwiza et al 2016).

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Published On : 29th Mar, 2024

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