Do Dairy Co-operatives Enhance Milk Production, Productivity and Quality? Evidences from the Indo-Gangetic Plain of India

Dairy development of India has been acclaimed as one of the most successful development programmes in the world. The co-operatives were conceived as the main vehicle for implementing dairy development programmes in India and much of the success of the ‘White Revolution’ in the country is attributed to cooperative framework of the dairy development strategies. Nonetheless, the potential of the dairy cooperatives in the context of emerging globalised markets is often questioned. The emergence of several integrated marketing models backed by giant multinationals is posing stiff competition to the co-operative models of milk marketing. In this backdrop, this study examines the impact of co-operatives at the farm level based on the data collected from 675 dairy farming households in three states of India - Bihar, Punjab and Uttar Pradesh. These states represent geographical and institutional diversity of milk production and marketing in the country. This study aims at analysing the impact of dairy co-operatives on the farmers’ performance with the adoption of milk quality and safety practices. The findings indicate that the stature of the co-operatives as the multifunctional entity for dairy farmers of rural India is still intact. A cross comparison between the member and the non-member farmers of the dairy co-operatives suggests that the scale of farming and level of adoption of improved animals have been significantly higher for member farmers. Similarly, the co-operative member households contributed significantly higher quantity of milk at higher levels of productivity than their non-member counterparts. The co-operative members were found to have better market access for selling milk. Per unit cost of milk production was on the lower side for the members and they realised higher price of milk than the non-member farmers. More importantly, the members were relatively better adopters of milk safety and hygiene practices’ and had lower additional cost of compliance and that in turn would promote better compliance. Further, the paper identifies the major factors that enabled the dairy farmers to participate in co-operatives. The results of the Probit analysis suggested that the socio-economic and demographic factors like education, experience, scale of farming, size of holdings, caste affiliation, etc. determine the participation of dairy farmers in cooperatives. The membership in the co-operatives gives a distinct advantage to dairy farmers for enhanced milk yield, productivity and quality, and thereby increases their competitiveness in the domestic and international markets. The potential of dairy co-operatives need to be fully exploited in the country, and to empower them further, new initiatives should be vigorously pursued.