Feasibility of Traditional Milk Delivery

IRJMSH Vol 7 Issue 5 [Year 2016] ISSN 2277 – 9809 (0nline) 2348–9359 (Print)
Feasibility of Traditional Milk Delivery Channel; A study of milkman’s in

Punjab
Author 1 (Corresponding Author):-
Mithilesh Kumar Pandey

Research Scholar
Mahatma Gandhi Chitrakoot Gramodaya Vishwavidyalaya
Chitrakoot, Satna
Madhya Pradesh- 485334
mithileshpandey.mp@gmail.com
Mob- 8437358437
Author 2:-
Dr. Pradeep Saxena
Associate Professor and Assistant Dean
Department of Commerce
Iswar Sharan degree College
University of Allahabad
Author 3:-
Dr. Nand Lal Mishra

Associate Professor
Faculty of Rural Development & Business Management
Mahatma Gandhi Chitrakoot Gramodaya Vishwavidyalaya
Chitrakoot, Satna,
Madhya Pradesh-485334
Feasibility of Traditional Milk Delivery Channel; A study of milkman’s in

Punjab
ABSTRACT
Purpose- Milkman’s are a part of service industry in terms of supply chain of milk from
producers to customers. Their role extends beyond just supplying the milk to milk marketing as
they act as intermediaries also. Over the period other systems such as Cooperatives and Private
dairies have found their place in milk supply chain. The purpose of this study was to understand
the viability of traditional milk delivery system.
Research Design/Methodology- This paper is based on various literatures and articles published
in journals and magazines. Along with this a quantitative approach is also used in which a
sample of 102 milkman’s as respondents is drawn and the data collected has been analyzed with
the help of various statistical techniques.
Findings- Descriptive analysis has been used to understand the various factors which affect the
system of milk delivery by the Milkman’s. The study found that a milkman serves on an average
International Research Journal of Management Sociology & Humanity ( IRJMSH ) Page 191
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of 34 households and an average of 68ltrs of milk is supplied by them daily. The study also
assessed the cost of delivery for the milkman by considering the cost of various factors such as
fuel cost, maintenance cost of vehicle, utensils cost and spillage cost.
Practical Implications- The study can be used to understand the viability of traditional milk
delivery channel. It can help the entrepreneurs to assess the problems and opportunities in milk
delivery system. Also the study can help the milkman’s to understand and minimize the various
cost involved in milk delivery. This can help them to earn better profits and improve their service
to customers.
KEYWORDS: Milkman, Traditional milk delivery channel, Delivery cost, feasibility.
Introduction
India the largest producer of milk and also the largest consumer of milk has been a country of
milk and milk product for ages. Dairy is currently the top ranking commodity in India. Based on
estimates by the National Dairy Development Board (NDDB.org), the demand for milk is likely
to reach 180 million tons by 2022. To supply the market, an average incremental increase of 5
million tons per annum over the next 15 years is required. Though India is the world’s largest
milk producer, still it is a very minor player in the international market. According to the
Economic Survey 2013-14, tabled in Parliament on July 9, 2014, by Mr Arun Jaitley, Union
Minister for Finance, Government of India, stated that India ranks first in global milk production
and accounts for 17 per cent of world production. India recorded a peak production of milk at
132.43 MT in the year 2012-13.
The traditional way of milk supply was a system of milkman’s also known as dudhiyas
supplying the milk to the prospective customers. Earlier the producers himself acted as milkman,
but over the period of time people adopted milk supply as intermediary in milk supply chain. A
milkman is a person who supplies milk to the households in packaged or unpackaged form.
The traditional milk marketing channels face many problems in collecting the milk and
supplying it to the final consumers. The milkman also incur costs in supplying the milk to the
final consumers and these costs play an important role in the price of the milk, the price further is
an important factor in deciding the demand for the traditional milk. Infrastructure plays an
important role in the supply chain and the milkmen face many problems due to the infrastructure
shortage. This infrastructure shortage adds to the cost of milk supply by milkmen.
Consumers' purchase decisions are influenced by various factors. (Fawi & Abdalla, 2013) in
their study found that, Quality was the main factor affecting the purchase decision, followed by
price of the products. Fresh milk was the highly preferred milk type among the citizens. The
study suggested that, Processors and producers of dairy products should implement modern
marketing concepts that focus on the consumers' needs and wants.
The survival and growth of milkman’s, the traditional milk marketing channel depends largely
on how they adopt the technology and apply modern concepts of milk marketing. Further they
have to take care of changing taste and preferences of the consumers.
Review of Literature
(Acharjee, 2013) investigated the status of livelihood through milk production and marketing in
Tripura. Various problems relating to milk marketing were found out in this study such as
unregulated markets, no fixed price policy, farm land decreasing, and shortage of labours. The
researcher suggested for cooperative markets and women self help groups. Also emphasis to
improve participation of women in milk marketing process was made in the study. (Bairagi,
2013) found out that the dairy sector is characterized by small-scale, scattered, and unorganized
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milk-animal holders; low productivity; inadequate and inappropriate animal feeding and health
care; lack of an assured year-round remunerative producer price for milk; inadequate basic
infrastructure for provision of production inputs and services; an inadequate basic infrastructure
for procurement, transportation, processing and marketing of milk and lack of professional
management. The study further asserted that future of dairying will rely on the continued
adaptation of management techniques to suit markets, environments, and socio-economic
conditions. Managing dairy plants and cattle-feed factories is not the business of government; it
is better left to professional managers who are employees of the milk co-operatives and hence
are accountable to their member milk producers. (Mishra & Rajasekhar, 2011) focused on the
costs of material flow at the different stakeholder’s level of supply chain and their profitability
out of it. The study found that procurement from the milk producers is a bigger challenge than
any other issues. The lack of procurement or sub-optimal level of procurement increases the cost
of collection, chilling, transportation and distribution. The lower price of milk increases the level
of aversion for the profession and has a direct impact on the quality and quantity of milk. (Brar
& Saini, 2011) has observed that efficient and effective milk run system results in reduction in
cost of transportation, travelling path and fuel consumption. The milk run system also reduced
the carbon dioxide emission from the distribution system by reducing travelling path. The overall
supply chain cost can be minimized by using milk run system in transportation. (Kumar et.al,
2011), in his study in Bihar found that the smallholder dairy farmers’ access to modern milk
marketing chains in India. The explanatory variables used in the model included gender, age,
education, price, road connectivity. After analysing the data the study had shown that in spite of
growing presence of modern milk supply chains in the Indian milk market, the traditional milk
supply chain is still dominant. (Akturk, 2010) studied the relationship between milk production
and the factors affecting the milk production and calculated the cost of milk production. The
study conducted in Turkey found that important reasons of the low milk efficiency can be due to;
deficiency in alimentation conditions, not having healthy burrows, high feed prices, not having
the sufficient knowledge about animal health, not securing sufficient hygienic conditions.
(Mangaleswaran et. al, 2010) in his study found that there exists considerable demand for fresh
milk. However, the lack of availability, accessibility, and quality of local fresh milk, and locally
processed milk based products have made the consumers resort to seeking more imported
powdered milk and milk based products. It found that there is considerable willingness to buy or
switch to local products when these constraints are addressed. Study recommended for
improving consumer demand regarding quality, availability and accessibility of fresh milk are
important factors. Others improvement regarding supply chain conditions such as constantly
monitored and new sources of milk supply needs to be identified. Institutional development was
also necessary. (Kumar & Staal, 2010) in his study in Assam, examined the cost and returns of
traditional milk marketing and processing. The study suggested that raw milk trading and
processing offers good opportunities for milk market agents, this formal trading and processing
is an economically viable proposition. The study further stated that the milk traders in Assam are
reasonably cost efficient. (Grace et al, 2009) in their study has illustrated 3 key elements of risk-
based approaches like risk-based targeting to categories milk vendors into a risk hierarchy,
pathway analysis in which the food product is traced from production on farm to consumption,
and participatory risk analysis posits that building on indigenous knowledge will be more
effective than top-down solutions. Cross-sectional surveys of the study showed that point of sales
for milk could be divided into a hierarchy of risk. Developing country informal markets are
characterised by non-linear, un-regulated, heterogeneous and self-organising food value chains.
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The challenges of applying risk-based approaches included: the lack of pre-existing information;
great diversity of structure and practices; difficulties of working with informal sector participants
due to poor relations with officials; and problems of carrying out laboratory analysis given
extreme environmental conditions and lack of equipment and skilled staff. (Karmakar &
Banarjee, 2008) examined the opportunities and challenges in the Indian dairy industry. The
factors considered in the study are policy, milk processing, domestic consumption, trade,
competitiveness, cost of production, productivity of animals, and market infrastructure in Indian
dairy industry. Milk processing industry is small, a specific Indian phenomenon is the
unorganized sector of milkmen, vendors who collect the milk from local producers and sell the
milk in both, urban and non-urban areas, which handled around 65-70% of the national milk
production. In spite of having largest milk production, India is a very minor player in the world
market. For exports, it is essential that India should develop proper production, processing and
infrastructure, which is capable of meeting international quality requirements. (Rangasamy &
Dhaka, 2008) has done a comparative analysis for marketing efficiency of dairy products for
cooperative and private dairy plants in Tamil Nadu. This article discuss about the various costing
method of milk product these are marketing cost, milk procurement cost. The study shows that
marketing efficiency and marketing cost of toned milk are same for the cooperative and private
plant and the price of other product like standardized milk; full cream milk and flavored milk are
higher in cooperative industry. (Sarker, 2008) the study attempted to study the cost, return and
relative profitability of some milk producer households under cooperative and non-cooperative
dairying in West Bengal. This study reveals that out of all the cost components that are
concerned, the variable cost constitutes the significant major contribution of total cost for all
categories of cooperative and non-cooperative dairy farms. Out of total variable cost for all
categories of cooperative and non-cooperative dairy farms, feed cost is the major cost component
in which CF (crude fiber) occupies the highest contribution. (Tariq et.al, 2008) studied about
Milk marketing and value chain constraints in Pakistan. Factors included in the study are:
Traditional production and marketing channels, milk production practices, unorganized farmer
community, seasonal fluctuation, financial aspects of dairying, role of middlemen, infrastructure,
price fixation and role of government agencies. The study suggested various majors for
improvement in these areas. (Sharma et.al, 2007) studied the potential and prospects of dairy
business in Uttarakhand. The study has analysed the inefficiencies existing in improving milk
production, procurement pattern, marketing channels, and price spread of a dairy cooperative.
The study found that a lot of is improvement required in area of livestock management, milk
procurement and milk marketing like breed development of the hilly region has to be done
through better natural breeding, milk quality testing should be improved to eliminate among
society level, milk vending machines should be installed in the main district towns like Haldwani
and Nainital, etc. Awareness programs were required in areas where dudhiyas were more in
number. Customers should be given live demonstrations of the milk adulterations done by
dudhiyas. (Bogdanoiu, 2007) examined the calculation methods used in the dairy industry in
Romania. The basic criteria of costing are those of “specific manufacturing technology,
production type and its mode of organization, size of the entity, organization of production and
production process. There are two methods used in study, standard cost method and phase
method. The study showed that the adoption of standard cost method for the manufacturing of
milk products was helpful in facilitating analysis on spending, because effective leadership
requires permanent information as production costs varies in different stages of production,
which requires detailed analysis of economic processes. (Staal et.al, 2006) in his study discussed
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the smallholder dairy farmer access to alternative milk market channel in Gujarat. The study
focuses on the links between smallholder dairy farmers and alternative traditional, private and
cooperative sector milk markets and service providers. The study found that in spite of the
importance of cooperative milk markets in Gujarat, the result indicate continued preference for
and strong role of direct sales from producers to buyers, in spite of potential transactions costs
associated with that market. Less favored groups show less likelihood to sell milk, and when
they do are more likely to sell to dairy cooperatives, which although tend to offer lower prices,
may offer other benefits. (Rajendran & Mohanty, 2004) reviewed the existing status of milk
marketing and dairy co-operatives in India and provides recommendations to meet future
challenges. The results of the study indicate that 80 percent of the milk produced by the rural
producer is handled by an unorganized sector and the remaining 20 percent is handled by an
organized sector. The study found that the dairy co-operatives play a vital role in alleviating rural
poverty by augmenting rural milk production and marketing. Involvement of intermediaries; lack
of bargaining power by producers; and lack of infrastructure facilities for collection, storage,
transportation, and processing are the major constraints which affect the prices received by
producers in milk marketing. Milk quality, product development, infrastructure support
development, and global marketing were found as future challenges of India’s milk marketing.
(Ghosh & Maharja, 2002) studied the general features of milk marketing in Bangladesh. This
study identified problems faced by farmers in milk marketing and their solutions. In Bangladesh,
milk marketing channel divided in three types of marketing route like Traditional milk marketing
channel, Pala milk marketing channel, and cooperative milk marketing channel. The study
indicated that the milk producers generally sell surplus milk after retaining the quantity required
for self-consumption. Milk collection and marketing varies from area-to-area and season-to-
season.
NEED AND SCOPE THE STUDY

The need of the study is to understand the dynamic of the Traditional Milk Marketing Channel &
Identify intervention to improve the channel. To facilitate milkman some spontaneous actions
that contribute sustainable options to uses of channel to deliver assured quality milk. This study
also helps to know where loop hole is in traditional milk marketing channel. The aim of the study
is to examine the key issues associated with traditional milk marketing channels in Jalandhar.
The study was limited the milkmen of the area and tried to assess the un organized supply chain
of milk.
OBJECTIVE OF THE STUDY

1. To identify the factors affecting the milk availability through traditional milk marketing
channel.
2. To study the various factors affecting the cost of milk through traditional milk marketing
channel.
RESEARCH METHODOLOGY
A descriptive statistics is used to analyze the demand patterns of traditional milk supply chain in
Jalandhar, the costs involved in the supply and the infrastructural challenges faced by the
traditional milkman. A structured questionnaire was prepared for collection of data.
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A convenience methodology was used to collect the data from 102 milkmen from Jalandhar. The
data was analyzed with the help of SPSS and using the techniques of Frequency, t-test and pie
chart.
DATA ANALYSIS AND INTERPETATION

Milk availability
The study tried to assess the milk availability to the consumer through the milkman’s.
Table 1: Milk supplied by Milkman
How much milk you supply in a day
Valid Cumulative
Frequency Percent Percent Percent
Valid up to 20 liter 2 2.0 2.0 2.0
20-40 liter 9 8.8 8.8 10.8
40-60 liter 20 19.6 19.6 30.4
60-80 liter 35 34.3 34.3 64.7
80-100 liter 36 35.3 35.3 100.0
Total 102 100.0 100.0
Analyzing table 1 it can interpreted that most of milkman’s are supplying milk between 60-100
ltrs. Further analysis and calculation for average milk supplied is done with table 2.
Table 2: Average Milk Supplied per Milkman
Class Mid interval Frequency Frequency*Mid
interval (xi) (fi) point (fi*xi) 𝒇𝒊 𝒙𝒊
𝑥 =
𝒇𝒊
up to 20 liter 10 2 20
20-40 liter 30 9 270 Average Milk supplied =
20+270+1000+2450+3240
102
40-60 liter 50 20 1000 =68.43
60-80 liter 70 35 2450
80-100 liter 90 36 3240
𝒇𝒊 𝒙 𝒊
Using the formula for grouped data mean 𝑥 = and considering table 2, the average of the
𝒇𝒊
milk supplied (i.e. Frequency*mid interval) it was found that a milk man supplies 68.43 liters of
milk in a day.
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Table 3 Families served in a day

How many families do you serve
Cumulative
Frequency Percent Valid Percent Percent
Valid 1-10 2 2.0 2.0 2.0
10-20 7 6.9 6.9 8.8
20-30 26 25.5 25.5 34.3
30-40 36 35.3 35.3 69.6
40-50 31 30.4 30.4 100.0
Total 102 100.0 100.0
Table 3 represents the families served by a milkman per day. It can be interpreted that most of
the milkman are able to serve between 30-50 families a day.
Table 4: Average No. of families served
interval (xi) (fi) point (fi*xi) 𝒇𝒊 𝒙𝒊
𝑥 =
𝒇𝒊
1-10 5.5 2 11
Average Milk supplied =
108.5
11-20 15.5 7 11+108.5+663+1278+1410.5
102
21-30 25.5 26 663 =34.02
31-40 35.5 36 1278
41-50 45.5 31 1410.5
Using grouped data mean formula and using table 4 it can be depicted that the average families
supplied by a milkman in a day is 34.
Seasons effect on demand and supply

The effect of season on demand and supply of milk was evaluated in the study.
Table 6: One sample Z test demand and supply
Test Value = 1.5
95% Confidence Interval
Sig. (2- Mean of the Difference
T Df tailed) Difference Lower Upper
Demand is high/low (Jan-march) 17.148 101 .000 .43137 .3815 .4813
Supply is high/low (Jan-march) -10.594 101 .000 -.36275 -.4307 -.2948
Demand is high/low (April-June) -10.594 101 .000 -.36275 -.4307 -.2948
Supply is high/low (April-June) 4.541 101 .000 .20588 .1159 .2958
Demand is high/low (July- Sept) -18.844 101 .000 -.44118 -.4876 -.3947
Supply is high/low (July- Sept) 5.360 101 .000 .23529 .1482 .3224
Demand is high/low (Oct-Dec) 5.360 101 .000 .23529 .1482 .3224
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Test Value = 1.5

95% Confidence Interval
Sig. (2- Mean of the Difference
T Df tailed) Difference Lower Upper
Demand is high/low (Jan-march) 17.148 101 .000 .43137 .3815 .4813
Supply is high/low (Jan-march) -10.594 101 .000 -.36275 -.4307 -.2948
Demand is high/low (April-June) -10.594 101 .000 -.36275 -.4307 -.2948
Supply is high/low (April-June) 4.541 101 .000 .20588 .1159 .2958
Demand is high/low (July- Sept) -18.844 101 .000 -.44118 -.4876 -.3947
Supply is high/low (July- Sept) 5.360 101 .000 .23529 .1482 .3224
Demand is high/low (Oct-Dec) 5.360 101 .000 .23529 .1482 .3224
Supply is high/low (Oct-Dec) -8.006 101 .000 -.32353 -.4037 -.2434
Interpreting the table 6 it can be observed that the p value of all the variables is .000 which is less
that the significance level of .05. Hence it can be said that there is a significant difference
between the opinions of the respondents regarding availability of milk in various seasons.
Table 7: Mean of demand and supply
Std. Std. Error

N Mean Deviation Mean
Demand is high/low (Jan-march) 102 1.9314 .25407 .02516
Supply is high/low (Jan-march) 102 1.1373 .34582 .03424
Demand is high/low (April-June) 102 1.1373 .34582 .03424
Supply is high/low (April-June) 102 1.7059 .45790 .04534
Demand is high/low (July- Sept) 102 1.0588 .23646 .02341
Supply is high/low (July- Sept) 102 1.7353 .44336 .04390
Demand is high/low (Oct-Dec) 102 1.7353 .44336 .04390
Supply is high/low (Oct-Dec) 102 1.1765 .40813 .04041
High was coded as 1 and Low was coded as 2. Considering table 7 it can be observed that
demand of milk is low in seasons of Jan-Mar and Oct-Dec whereas demand is high in seasons of
April-June and July-Sep. Similarly it can be examined that supply of milk is low in April-June
and July-Sep whereas the supply is high Jan-Mar and Oct-Dec.
This pattern shows an inverse relationship of supply and demand situation of milk in various
seasons.
Managing Demand and Supply
The study tried to understand the ways and means by which the milkman’s creates an adjustment
between demand and supply gap.
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More demand less supply

If the demand was more and supply was less, the response of the milkman’s was as displayed in
figure 1
44 Frequency
43.13 34 Frequency
45 33.3%
40
35 21
30 20.5%
25
20 1
15 2
1.96% 0.98%
10
5
0
contact with skip the mix water reduce the Other
producer for customer quantity for
more milk customer
Figure 1: More Demand Less supply

Considering Figure 1 it can interpreted than 20.5% of the milkman prefer to contact with the
milk producers for more milk, 43.13% prefer to skip the customers, 33.3% reduce the quantity
supplied to the customers and only 1.96% accepted to mixing water whereas 0.96% have other
means to tackle the situation.
More supply less demand
If the supply was more and demand was less, the response of the milkman’s was as displayed in
figure 2
Frequency
71 Frequency
80 69.6%
70
60
50
23
40
22.5%
30
1 4 3
20
0.98% 3.9 % 2.9%
10
0
slash the prices find more customers collect less milk contact with dairies Others
Figure 2: More Supply less demand

Considering figure 2 it can be observed that most of the milkman’s prefer to contact dairies for
managing the extra milk supply (69.6%) whereas 22.5% prefer to collect less milk i.e collect
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only required quantity of milk. Very few opt for finding more customers (3.9%), other means
(2.9%) and slashing the prices (0.98%)
Mixing of Water in Milk

The respondents were asked to give response regarding mixing of water in milk on regular basis.
The responses are summarized in table 8
Table 8: Mixing of water in milk

How much water do you mix
Valid Cumulative
Valid high 2 2.0 2.0 2.0
moderate 2 2.0 2.0 3.9
low 65 63.7 63.7 67.6
none 33 32.4 32.4 100.0
Total 102 100.0 100.0
The table 8 depicts that 63.7% of the milkman’s accept mixing of water in milk in low quantity,
whereas 32.4% deny mixing water in milk. Only 2% each accept for High and moderate mixing
of water in milk.
Quantity of water mixed
Milkmen were asked regarding the quantity of water mixed in per 10 liters of milk and responses
are recorded in table 9
Table 9: Quantity of water mixed
What is the quantity of water diluted in 10 liter of milk
Frequency Percent Valid Percent Cumulative Percent
Valid Less than
30 29.4 43.5 43.5
0.5 liter
0.5-1 liter 36 35.3 52.2 95.7
1-1.5 liter 1 1.0 1.4 97.1
1.5-2 liter 2 2.0 2.9 100.0
Total 69 67.6 100.0
Missi System
33 32.4
ng
Total 102 100.0
Considering table 9 it can be observed that 52.5% of milkmen accept mixing water in the range
of 0.5-1ltrs whereas 43.5% accept it as less than 0.5ltrs. Only 69 responses have been recorded as
33 milkmen did not accept for mixing water in milk.
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Table 10: Average milk mixed in water

Class interval Mid interval Frequency Frequency*Mid
(xi) (fi) point (fi*xi)
Less than 0.5 liter 0.25 30 7.5
0.5-1 liter 0.75 36 27
1-1.5 liter 1.25 1 1.25
1.5-2 liter 1.75 2 3.5
𝒇𝒊 𝒙𝒊
Considering table 10 and applying the grouped data mean formula 𝑥 = , the mean has
𝒇𝒊
been calculated as 0.56ltrs.
Hence as per the data collected it seems that milkman mix around ½ ltr of water in every 10 ltrs
of milk.
Demand and supply for cow/buffalo milk
The demand and supply of the milk of cow and buffalo milk was assessed through the study. The
response was recorded as High-1 and Low-2 for the respective animals.
Table 11: Demand and Supply of different animal milk

Test Value = 1.5
95% Confidence
Mean Interval of the
Sig. (2- Differen Difference
t Df tailed) ce Lower Upper
demand for buffalo -
101 .000 -.47059 -.5039 -.4372
milk 27.991
supply for buffalo -
101 .000 -.43137 -.4813 -.3815
milk 17.148
demand for cow milk 27.991 101 .000 .47059 .4372 .5039
supply for cow milk 2.368 101 .020 .12745 .0207 .2342
Interpreting table 11 it can be observed that p value for all the demand and supply variable of
cow and buffalo milk is less than significance value of .05. Hence it can be said that there is a
significant difference between the opinions of respondents regarding the demand and supply of
cow and buffalo milk.
Table 12: Demand and Supply Z test for Animal milk

Std. Error
N Mean Std. Deviation Mean
demand for buffalo
102 1.0294 .16979 .01681
milk
supply for buffalo
102 1.0686 .25407 .02516
milk
demand for cow
102 1.9706 .16979 .01681
milk
supply for cow milk 102 1.6275 .54358 .05382
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As per table 12 it is evident that demand and supply for the buffalo milk is high whereas both the
demand and supply of cow’s milk is low.
Use of Surplus milk

The milkman’s were asked to regarding the surplus milk after daily sale. The responses are as
per figure 3.
Frequency
36 Frequency
34
40
30
30
20
10 2
0
self-consume make curd or store and Others
cream supply next
day
Figure 3: Use of surplus Milk

The milkman’s mostly consume the surplus milk on their own or make curd or cream. Also the
response of many milkmen was recorded as others which they termed as either no milk left or
selling to dairies.
FACTORS AFFECTING THE COST OF MILK

The cost of milk is affected by various factors. The study tried to assess these factors.
Average buying price of Milk
The average buying price of Milk for Milkman was calculated on the two different basis viz.
Cow’s Milk and Buffalo Milk.
Table 13: Cost price of Cow’s milk

Valid Cumulative
Valid up to Rs15 1 1.0 1.0 1.0
Rs15-20 3 2.9 2.9 3.9
Rs20-25 98 96.1 96.1 100.0
Total 102 100.0 100.0
As per table 13 it can be observed that most of the milkman procured cow’s milk between the
price range of Rs20-25.
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Table 14: Average price of cow’s milk

interval (xi) (fi) point (fi*xi)
Upto 15 Rs 7.5 1 7.5
15-20 Rs 17.5 3 52.5
20-25 Rs 22.5 98 2205
𝒇𝒊 𝒙𝒊
𝒇𝒊
been calculated as 22.20 Rs.
Hence as per the data collected it seems that milkman procure cow’s milk at an average cost of
Rs 22.20.
Table 15: Cost price of Buffalo’s milk

Valid Cumulative
Valid up to Rs 15 1 1.0 1.0 1.0
Rs 15-25 2 1.9 1.9 2.9
Rs 25-35 91 89.2 89.2 92.1
Rs 35-40 7 6.8 6.8 98.9
Rs 40-45 1 1.0 1.0 100
Total 102 100.0 100.0
Table 15 shows that approximately 90% of the milkmen purchased the buffalos milk from Rs 25-
30.
Table 16: Average price of buffalo’s milk
up to Rs 15 7.5 1 7.5
Rs 15-25 17.5 2 35
Rs 25-35 27.5 91 2502.5
Rs 35-40 37.5 7 262.5
Rs 40-45 47.5 1 47.5
𝒇𝒊 𝒙𝒊
𝒇𝒊
been calculated as Rs 27.99.
Hence as per the data collected it seems that milkman procure buffalo’s milk at an average cost
of Rs 27.99.
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Spoilage of milk
The spoilage of milk indicates the milk which gets spoilt in the course of delivery or due to non
delivery for various reasons.
Table 17: Milk Spoiled
Valid Cumulative
Valid 0-0.5 liter 51 50.0 50.0 50.0
0.5-1liter 42 41.2 41.2 91.2
1-1.5 liter 5 4.9 4.9 96.1
more than 1.5 4 3.9 3.9 100.0
Total 102 100.0 100.0
The above data represent the milk spoiled in a day and 50 percent say that 0-0.5 percent of milk
is spoiled in one day and 42 percent of milk men say that 0.5-1 milk is spoiled in one day.
Table 18: Average milk spoiled
0-0.5 liter .25 51 12.75
0.5-1liter .75 42 31.5
1-1.5 liter 1.25 5 6.25
more than 1.5 1.75 4 7
Considering above table 18 the average spoiled milk by the milkman’s is 0.57 ltrs. Further the
average milk spoiled per liter can be calculated as:-
0.57/68.43 = 0.008 ltrs.
Spillage of milk
The spillage of milk indicated the milk which is spilled during transportation of milk from the
place of production to the consumers.
Table 19: Milk Spilled Daily
Valid Cumulative
Valid 0-1 liter 64 62.7 62.7 62.7
1-2 liter 30 29.4 29.4 92.2
2-3 liter 7 6.9 6.9 99.0
more than 3 1 1.0 1.0 100.0
Total 102 100.0 100.0
From the above data it can be seen that around 63 percent of milkman’s say that 0-1 liter of milk
is spilled during the delivery of milk and 30 percent say that 1-2 liter of milk is spilled.
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Table 20: Average milk spilled

Class interval Mid interval (xi) Frequency (fi) Frequency*Mid point (fi*xi)
0-1 liter .5 64 32
1-2 liter 1.5 30 45
2-3 liter 2.5 7 17.5
More than 3 3.5 1 3.5
Considering above table 20 the average milk spilled by a milkman in a day is 0.96 ltrs. Further
average milk spilled per liter is:-
0.96/68.43 = 0.014 liter
Cost Incurred on Utensils

The cost of utensils indicate the cost incurred on purchase and maintenance of utensils used for
the delivery of Milk
Table 21: Cost of utensil per year

Valid Cumulative
Valid Rs0-500 5 4.9 4.9 4.9
Rs500-1000 67 65.7 65.7 70.6
Rs1000-1500 29 28.4 28.4 99.0
Rs1500 more 1 1.0 1.0 100.0
Total 102 100.0 100.0
From the above data it can be seen that 65.7 percent of milk mans say that the cost of utensils per
annum is 500-1000 and 28.4 percent of milkman’s say that the cost of utensils per annum is
1000-1500.
Table 22: Utensils cost per annum
Class interval Mid interval (xi) Frequency (fi) Frequency*Mid
point (fi*xi)
Rs0-500 250 5 1250
Rs500-1000 750 67 50250
Rs1000-1500 1250 29 36250
Rs1500 more 1750 1 1750
Considering the above table 22 it can be calculated that the average cost incurred on the utensils
per annum by a milkman is Rs 877.45.
Hence Average cost of utensils per liter sold by the milkman will be:-
877.45/ (365*68.43) = Rs 0.0351
Petrol/ diesel used per day
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The petrol/diesel used specifies the amount of petrol/diesel used in a day by the 102 milkmen’s
for the delivery of milk.
Table 23: Liter of petrol/diesel used in a day

Valid Cumulative
Valid 0-5 liter 93 91.2 94.9 94.9
5-10 liter 5 4.9 5.1 100.0
Total 98 96.1 100.0
Missing System 4 3.9
Total 102 100.0
The above data says that 91.2 percent of milk men use 0-5 liters of petrol daily for delivery and
only 4.9 percent use 5-10 liters of petrol/diesel. 4 people deliver it by cycle and hence no cost
incurred.
Table 24: Fuel cost per day
point (fi*xi)
0-5 liter 2.5 93 232.5
5-10 liter 7.5 5 37.5
Considering the above table 24 it can be calculated that the average fuel used by a milkman’s is
2.75 ltrs. At the time of study the cost of fuel for Punjab State is Rs 51/ltr for Diesel and Rs 66/ltr
for petrol. The average fuel price per ltr is Rs 58.5.
Hence cost incurred on fuel by a milkman is Rs 160.75(2.75x58.5). Further average cost of fuel
incurred on per ltr of milk sold by a milkman is:-
Rs160.75/68.43= Rs2.34/ltr
Cost incurred on maintenance of vehicle
The vehicle maintenance cost indicates the cost incurred per year on maintenance of the vehicle
used for milk delivery.
Table 25: Vehicle Maintenance cost

Valid Cumulative
Valid Rs 0-500 5 4.902 5 5
Rs 500-1000 3 2.941 3 8
Rs 1000-1500 9 8.824 9 17
More than Rs 1500 85 83.33 83 100
Total 102 100.0 100.0
The above data represents that most of milkmen incur more than Rs. 1500 yearly on maintenance
of the vehicle and only 8 percent incur 1000-1500.
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Table 26: Average cost of Vehicle maintenance

point (fi*xi)
Rs0-500 250 5 1250
Rs500-1000 750 3 2250
Rs1000-1500 1250 9 11250
Rs1500 more 1750 85 148750
Interpreting the above table 26 the average cost incurred per year on maintenance of the vehicle
by a milkman is Rs 1602.94.
Hence the average cost of the vehicle maintenance incurred per ltr of milk supplied by the
milkman is:-
1602.94/ (365*68.43) = Rs 0.64/ltr
Considering the above tables and the various cost incurred by the milkmen, the final cost can be
calculated as per the given table.
Table 27: Final cost of Milk for a milkman
Spoiled Vehicle
Procurement milk Spillage Utensils Fuel Maintenance Final
Cost/ltr cost/ltr cost/ ltr cost/ltr Cost/ltr cost/ltr cost/ltr
Cow 22.2 0.2 0.35 0.035 2.34 0.64 25.77
Buffalo 27.99 0.2 0.35 0.035 2.34 0.64 31.56
As per the above table it can be depicted that the average cost of one ltr of cow milk is Rs 25.77
and for Buffalo milk is Rs 31.56.
Table 28: Percentage contribution in milk cost
Procurement Utensils Vehicle
Cost Spoiled Spillage cost Fuel Maintenance cost
Cow 86.16% 0.78% 1.36% 0.14% 9.08% 2.48%
Buffalo 88.70% 0.63% 1.11% 0.11% 7.42% 2.02%
As per the above table it can be interpreted that except procurement cost, other most effective
factors are Fuel, Vehicle maintenance cost, and Spillage.
Average Selling Price of Milk
The average selling price of Milk for Milkman was calculated on the two different basis viz.
Cow’s Milk and Buffalo Milk.
Table 29: Selling price of Cows Milk
Valid Cumulative
Valid Rs 20-25 13 12.7 12.7 12.7
Rs 25-30 69 67.6 67.6 80.3
Rs 30-35 16 15.7 15.7 96
Rs 35-40 4 3.92 3.92 100
Total 102 100 100
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The above table 29 shows that the most of the milkmen sold their milk between the range of Rs
25-30.
Table 30: Average selling price of Cows Milk
Class Mid Frequency Frequency*Mid
interval interval (xi) (fi) point (fi*xi)
Rs 20-25 22.5 13 292.5
Rs 25-30 27.5 69 1897.5
Rs 30-35 32.5 16 520
Rs 35-40 37.5 4 150
Considering the above table 30 it can be calculated that for 102 milkmen the average of selling
price of Cows milk is Rs 28.04.
Table 31: Selling Price of Buffalos Milk
Valid Cumulative
Valid Rs 30-35 8 7.84 7.84 7.84
Rs 35-40 59 57.8 57.8 65.7
Rs 40-45 24 23.5 23.5 89.2
Rs 45-50 11 10.8 10.8 100
Total 102 100 100
The above table 31 shows that the most of the milkmen sold their buffalos milk between the
range of Rs 35-40 and Rs 40-45.
Table 32: Average selling price of Cows Milk

Interval (xi) (fi) point (fi*xi)
Rs 30-35 32.5 8 260
Rs 35-40 37.5 59 2212.5
Rs 40-45 42.5 24 1020
Rs 45-50 47.5 11 522.5
From the above table 32 it can be calculated that for 102 milkmen the average selling price of
Buffalos milk is Rs 39.37
Profit from Milk

The Average cost price of Cows milk and Buffalos milk is Rs 22.20 and Rs 27.99 respectively.
Also the average selling price of Cows Milk and Buffalos Milk is Rs 28.04 and Rs 39.37
respectively.
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Table 33: Profit from Milk

Average Cost Average Selling
Price Price Profit
Cow 22.20 28.04 5.84
Buffalo 27.99 39.37 11.38
As per the above table 33 the average profit generated for per liter of Cows milk is Rs 5.84 and
for Buffalos milk is Rs 11.38.
Earning of Milkmen
The average earning generated by a milkman can be calculated on the basis of average per day
sales and the average profit generated.
Table 34: Average earning of a milkman

Profit/ltr from Profit/ltr from Average Average milk Average earning
Cow milk buffalo milk profit sold in a day per day
5.84 11.38 8.61 68.43 589.19
From table 34 we can see that average earning of a milkman per day is Rs. 589.19, which may be
converted to monthly earnings of Rs 17675.
Results and Discussion

The first part of the study tried to understand the factors affecting the milk availability through
traditional milk marketing channel. The results of the study show that the milkmen on an average
deliver 68.43 ltrs of milk to an average of 34 families every day. As per the seasons an inverse
relationship was observed between supply and demand situations of the milk. Most of the
Milkmen preferred skipping the customers or reducing the quantity of milk to the customers to
accommodate the less supply situation. Around 2% accepted adding water as a solution. When
supply is more, most of the milkmen start to contact milk dairies (retail shops) or collect less
milk form the dairy farmers. When specifically asked regarding adding water to milk on regular
basis most of the milkmen accepted adding water in less quantity. An average of 1/2ltr of water
is added to 10ltrs of milk. Demand and supply of buffalo milk is high whereas for cow demand
and supply both are low. The surplus milk is mostly consumed by the milkmen or they make
curd and cream of the milk.
In the second part of the study the cost of milk and profit was calculated for the milkmen. For
milkmen the average cost of Cows milk was calculated as Rs 25.77 and that of buffalo’s milk
was Rs 31.56. Except procurement cost, the most affecting factors for the cost of milk are Fuel
cost, Vehicle maintenance cost and Spillage. The profit generated per liter from cow’s milk was
Rs 5.84 and that of Buffalo was Rs 11.38. It clearly indicates that the buffalo’s milk is more
profitable to milkmen. Average monthly earning of a milkman is Rs 17675.
Conclusion
Being a traditional milk marketing channel milkmen have their own advantage and disadvantage.
As a typical intermediary of the supply chain they try to maintain the demand supply gap which
occurs in various seasons. They face many problems regarding the milk availability and hence
the same is passed on to the consumers. They add water to milk to maintain the more demand
less supply situation as it’s difficult for customers to detect it. On the other hand they have to
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accept the customer’s argument of milk getting spoilt due to late delivery and have to forfeit the
payments. Problem of surplus milk is also a situation to tackle, which they do by either
consuming it on their own or make curd/cream.
Various factors affect the cost of milk for milkmen. The prominent are Fuel, Vehicle
maintenance cost and Spillage. The average profit for milkmen from cow’s milk is much less
than the buffalo’s milk. The average earning of a milkman per month is Rs 17675, which seems
to be quite less compared to the risk, hard work and time they invest.
Managerial Implications
This study can help the budding entrepreneurs to understand the problems in this area and
innovate in the supply chain of milk. A more organized and technological approach to the
traditional milk marketing channels can revamp the whole business and may prove useful to the
customers as well as the milkmen. It can also help the existing milkmen to understand their
business in a better way and modify their business activities to reduce their cost of operations
and maximize their profits.
References
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Feasibility of Traditional Milk Delivery

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IRJMSH Vol 7 Issue 5 [Year 2016] ISSN 2277 – 9809 (0nline) 2348–9359 (Print)

Feasibility of Traditional Milk Delivery Channel; A study of milkman’s in

Author 1 (Corresponding Author):-

Mithilesh Kumar Pandey

Dr. Nand Lal Mishra

Feasibility of Traditional Milk Delivery Channel; A study of milkman’s in

NEED AND SCOPE THE STUDY

OBJECTIVE OF THE STUDY

DATA ANALYSIS AND INTERPETATION

Table 3 Families served in a day

Seasons effect on demand and supply

Test Value = 1.5

Table 7: Mean of demand and supply

Std. Std. Error

Supply is high/low (Oct-Dec) 102 1.1765 .40813 .04041

More demand less supply

Figure 1: More Demand Less supply

Figure 2: More Supply less demand

Mixing of Water in Milk

Table 8: Mixing of water in milk

Table 10: Average milk mixed in water

Table 11: Demand and Supply of different animal milk

Table 12: Demand and Supply Z test for Animal milk

Use of Surplus milk

Figure 3: Use of surplus Milk

FACTORS AFFECTING THE COST OF MILK

Table 13: Cost price of Cow’s milk

Table 14: Average price of cow’s milk

Table 15: Cost price of Buffalo’s milk

Table 20: Average milk spilled

Cost Incurred on Utensils

Table 21: Cost of utensil per year

Table 23: Liter of petrol/diesel used in a day

Table 25: Vehicle Maintenance cost

Table 26: Average cost of Vehicle maintenance

Table 32: Average selling price of Cows Milk

Profit from Milk

Table 33: Profit from Milk

Table 34: Average earning of a milkman

Results and Discussion

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