Pacific Business Review International

Volume 11 Issue 7, January 2019

Performance Evaluation of Dairy Sector in Odisha:

An Empirical Study of OMFED

Dr. Prabina Kumar Padhi Abstract

Guest Lecturer in Economics In Indian context dairy sector occupies an imperative character in the
Department of Management Studies country's economic development. It provides quality milk and milk
NIST, Berhampur products to people in both urban and rural areas. With a view to keeping
pace with the country's increasing demand for milk and milk products,
the industry has been growing rapidly. The industry is extended from
the milk producers in the rural areas to the consumers in the urban areas
all the way through performing various interim processes similar to
collection, chilling, transportation, pasteurization, distribution etc.
India is witnessing winds of transform as of better milk availability, a
changeover to market economy, the performance dairy sector in the
country shows encouraging trends, in terms of milk production, per
capita availability of milk, sources of milk production, as also
accessibility of Milk. The growth of Diary activities in the State plays
as influential role for up-gradation of socio-economic status of the
rural poor. In particular the state like Odisha signifies the momentous
growth in dairy sector with the help of Odisha State Co-operative Milk
Producers Federation Ltd. (OMFED).In this regards the present paper
is an attempt to put a lime light on the growth and development of dairy
sectors in Odisha with a special reference to the OMFED. Along with
this, the present study tries to explicate the performance evaluation of
OMFED with its basic indicators i.e. physical achievement and
financial achievement.
Keywords: Odisha State Co-operative Milk Producers Federation
Ltd. (OMFED), Diary Performance Evaluation, milk products

Introduction
Dairy Sector occupies a decisive part in providing food security,
eliminating the level of poverty at the same time it helps to sustain the
agricultural growth. In the context of India dairying is an indispensable
component which contributes nearly 67% of the worth of amount
produced of livestock sector. In contrast to this woman play an
exceptionally significant part in miscellaneous dairying activities at
the household level both in rural as well as urban areas. In India Dairy
segment has fully developed gradually over the years. In appropriate to
the consequence of sensible course of action and involvement, India
places itself as a global leader in relation to the milk producing
nations, attaining a yearly output of 137.68 million tonnes of milk
throughout the year 2013-14 in comparison to the 132.43 million
tonnes in 2012-13 observing a expansion of 3.96 percent. It represents

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a relentless development in the accessibility of milk and Odisha with the changes that have taken place over
milk products intended for the rising population. The a given period of time.
sudden boost in the demand for dairy products in
Research Methodology
developing nation has given impetus in improving the milk
manufacturing activities. In this context of India the role of The present research paper is descriptive and based on
dairy co-operatives, produce set of connections for the secondary data. Time period of the data is six years from
rural households spread from corner to corner in the nation. 2005-06 to 2015-16. The annual reports and financial
In the dairy development programme “Operation Flood” statements of OMFED for different years collected for the
which is better supervised, managed and controlled by the purpose of analysis. Data and literatures are collected from
National Dairy Development Board (NDDB) meant for the various issues of Economic Surveys and Periodical
underneath dairy sector from corner to corner throughout journals. The present paper also uses secondary data, which
the nation. The brain behind the concept of operation flood were collected from different websites, journals and
was given by Dr.Verghese Kurien commonly named as newspapers. The data collected are tabulated and analyzed
father of Indian white revolution. It was his idea which laid by the method of trend analysis.
the foundation of white revolution in India. Even now it is
Literature Review
considered to be one of the efficient and largest agriculture
improvement programme throughout the world. Odisha is Dairying has turn out to be a noteworthy ensuing resource
one of the least developed states in India in the midst of of income for millions of rural families. In order to endow
extremely levels of poverty. Mixed crop livestock farming with imperative information of dairy industry and milk
is the most predominant farming system for over 80 percent production following are the relevant literature which
of all rural households in the state. With very small and provides an attention in the scenario of diary sector in India
marginal operational holdings accounting for nearly 80 as well as Odisha.
percent of the 3.94 million farms, escalating milk
Kariuki1, Ann N. and etal ,(2018) in their analysis they all
production possibly will be a proficient way to develop
try to explain the intensity of technological modernization
rural livelihoods. Consequently, cooperative milk supply
within relative to product diversification which will
societies and unions have been organized to solve the
improve the performance of Small Scale Milk Vendors
problem of the producers. In this circumstance the present
(SSMVs) in Kiambu , Kenya. They have found that all the
study is an endeavor to come across about the trend and
way through improved machinery and equipment was
growth of Diary Industry in Odisha by means of particular
definitely connected through efficiency of informal dairy
reference into the OMFED. This study also tries to
enterprises. Rahulmor Arvind Bhardwaj Sarbjit
explicate the performance evaluation of OMFED with its
Singh,(2018) in their study every one of them are putting
basic indicators i.e. physical achievement and financial
rigorous efforts to analyze the role of dairy sector in
achievement.
achieving the economic development of a nation. They
Objective of the Study have given strong emphasis upon the relevant literature in
relation to the supply chain management practices in the
As compares to the technologically superior nations of the
Indian dairy sector further in their finding they have
globe, dairy sector in India emerges as a key a key aspect
suggested the financial reimbursement in dairy industry
for the socio-economic development. In the context of
can be achieved all the way through technical advance,
India dairying acts as a major ancillary in the direction of
elimination of worries, along with the innovative inclusive
agriculture towards generating employment
supply chain management practices. Rao Madhusudana
opportunities for small and marginal farmers and landless
(2017) in his conceptual paper he tries to examine role of
labourers. In consideration with this the present study is an
dairy sector which provides an interlinking path in
attempt to attain an appropriate observation into the growth
promoting both agriculture and industry. In his study he
of the diary industry of Odisha. By taking these into
highlighted the need for better restructured methods
account followings are objectives of the current study.
towards redefining the growth and development Indian
Ÿ To study the growth and development of Diary dairy sector. Gupta Sandeep,(2017) in his study the author
Industry scenario of odisha. tries to analyze the impact of dairy sector on social
development. He also made attentive ideas in relation to the
Ÿ To study the physical achievement of OMFED in
issues and challenges which are involved in the Indian
Odisha with the changes that have taken place over
dairy sector. Shiv Kumar and Md. Kashif Ansari (2016) in
a given period of time.
their paper both of them made a concrete effort to analyze
Ÿ To study the financial achievement of OMFED in the various areas of concern for enhancing the production

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 Volume 11 Issue 7, January 2019

of Dairy sector in India which will ultimately helps towards direction of improving the performance of the member
improving the export trend of a nation. In general the unions .For this purpose this study is not very broad and
particular study has given immense knowledge regarding mainly concentrated on the trend and growth of Odisha
the role of dairy sector in maintaining balance between Diary Industry with a special insight into the OMFED of
export and import level of a nation. Prusty R. Suvashree Odisha.
and Tripathy Sudhakar (2016) in their analysis a
Hypothesis of the study
comparative study was made towards estimating the
marketed surplus and constraints of milk marketing in H0: There is a significant improvement in the financial and
organized and unorganized sector in Cuttack district of physical achievement of OMFED H1: There is not so much
Odisha. They also given importance upon to the low price significant improvement in the financial and physical
and irregular payments were foremost milk marketing achievement of OMFED
problems as well as suggested protective measures for
Dairy Sector: Odisha Scenario
getting marketing benefit; remunerative price with regular
payment to the farmers is needed. S. Adyasha and Roy ,G.P Odisha is considered as one of the emerging state of India
,( 2014) in their study they have strong emphasis upon by means of incredible agriculture and allied opportunity.
practices of supply chain management in Orissa State Co- Approximately its having land area about 1, 55, 820 square
operative Milk Producers' Federation Limited (OMFED), km in the company of thirty districts having a meager
in Odisha . They also highlighted the role of transmission population of 4.19 crores. The economy of the state by and
commencing on or after procurement, marketing of large depends upon agriculture and related subsectors
delivering milk and milk related goods to the consumers. which provides approximately 70 percent of gross state
Deshmukh M. S. (2014), in his study he has made an effort domestic product. Nevertheless this sector provides
to analyze the role of dairy cooperative which plays an employment and sustenance, directly and indirectly more
indispensable character in the overall improvement of a than 60 percent of state's total work force. In Odisha,
society. He also elaborates the suitable proceedings by and around 80 percent of rural households depend on livestock
large for improving the efficiency of Indian dairy sector. S. and draw about 30 percent of their annual income is from
Lipismita, Pattanaik A. K. 1 (2014) in their observation livestock. About 85 percent of livestock are owned by the
they had made attempt to explain the need for better landless, marginal and small landholding families. Though
incorporation of nourishment, wellbeing, and supervision India ranks first in the world in milk Production, Odisha
in improving the performance of dairy sector. In general the contributes less than 2% of the total production of milk.
above said concerns convey additional financially viable Generally in Odisha most of the milk production is of the
benefits en route for small holder farmers for enhanced milk procured by the formal sector is usually sold in plastic
assimilation of the conventional and mechanized systems pouches subsequent to pasteurization, homogenization and
of milk production ultimately augment the Indian dairy standardization to 3 percent fat and 8.5 percent solid non-
sector. T.Hima Bindu And S.E.V. Subrahmanyam (2012), fats or 4 percent fat and 9 percent solid non-fats under
in their study the have made an effort to study of refrigerated conditions as 'toned' milk or cow milk
operational efficiency, financial efficiency and growth of respectively. In this context the role of dairy cooperative
Dairy Industry in Andhra Pradesh using Z score analysis. play an influential agent in strengthening the dairy sector
Deepa Ingavale (2012) in her research paper tries to which will boost the milk production. Furthermore, the
explicate the need of Government measures to enhance the cooperative systems are the impending catalysts for
effectiveness of milk and the per capita availability of milk. justifying the transaction cost, motivating entry into market
and promoting growth of milk market in rural communities
Statement of the Problem
by paying farmers a remunerative, high price. Odisha was
India, with her substantial dairy business mounting swiftly also not so far lagging behind in the implementation
along with the route of transformation, intended for several various programmes which have undertaken by the central
decades to come. The dairy sector in india assumed to be authority. In relation to that the Operation Flood-I
multifaceted In consideration to Odisha OMFED (The programme was started in Phulnakhara, Cuttack in 1970.
Orissa State Cooperative Milk Producers' Federation This was a small scheme of collection and of 6000 lit/day
Limited) is the peak rank dairy cooperative society within from nearby societies of Puri and Cuttack and sold them
all the District Unions are members. The role of OMFED after processing. The Operation Flood -II programme was
such as Procurement of milk from the rural milk producers, started in 1981 which had covered four districts i.e.
provide technological, organizational, monetary in Cuttack, Puri, Dhenkanal and Bhubaneswar. The Orissa
addition to this supplementary indispensable support in the State Cooperative Milk Producers Federation Ltd started

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Pacific Business Review International

functioning from 26th January 1981.Under these the state capital of Orissa registered under Cooperative
programme cattle feed plants 100mt capacity started Society Act – 1962.The federation, is capturing the market
functioning from september1985. OMFED (The Orissa not only by production of great amount of liquid milk, but
State Cooperative Milk Producers' Federation Limited) is also selling number of processed milk products like curd,
one of the Milk Federation affiliated to the National Dairy paneer, ghee, flavoured milk, butter milk, khoa etc.
Development Board (NDDB), situated at Bhubaneswar,

Table1: Milk Production and Per Capita Availability in Odisha

Year Production Per capita availability

(in ‘000 MT) (grams/day)
2005-06 1342.30 98
2006-07 1424.64 103
2007-08 1620.44 115
2008-09 1598.65 113
2009-10 1651.33 112
2010-11 1670.00 109
2011-12 1718.00 112
2012-13 1784.00 113
2013-14 1861.00 117
2014-15 1903.00 118
2015-16 1938.00 118
Source: Director of Animal Husbandry and Veterinary Services, Odisha

It is evident from table1 that the growth and development Prospects

of diary sector in Odisha is reasonably significant in
ŸBetter export potential market for milk and milk
character. Both in terms of milk production and per capita
related products.
availability of milk has increased splendidly. The empirical
data reveals that milk production (in '000 mt) in Odisha ŸMassive requirement for fluid milk as well as value
during the period 2005-06 to 2015-16 shows positive result added products.
i.e. 1342.30 to1938.00. Accordingly the per capita
ŸImproved milk production as a result of enlarged
availability of milk also increases to 118 grams/day in
accessibility of milk processing.
2005-06 from 98 grams/day in 2005-06. It is still far behind
the all India per capita availability of milk. ŸAdvanced transportation conveniences for movement
of milk and milk products.
Prospects and Constraint of Dairy Scenario of Odisha
ŸAvailability of skilled and experienced manpower for
Given the increasing marketplace for milk and milk
this industry
products dairy sector in our countryside offers an enormous
prospect to enhance employment as well as livelihoods in Challenges
rural areas. Furthermore Dairy Industry of Odisha has
ŸUnpredictability in milk quality due to collection of
achieved a producer-owned and professionally-managed
milk from different species.
cooperative system. Notwithstanding the facts that a
majority of dairy farmers are illiterate and run small, ŸLack of advertising opportunities for the promotion of
marginal operations and for many farmers, selling milk is dairy products.
their sole source of income. In this context followings are
ŸPrologue of foreign products that acts as substitute of
the major opportunities and challenges faced by the dairy
dairy products in Indian market.
sector Odisha;

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ŸMounting chemical contaminants as well as lasting Besides, OMFED has started producing fruit juice, pickles,
antibiotics in milk. jam, sauces and pineapple sip. The total turnover of
OMFED during 2015-16 is Rs. 68,309.79 lakh which was
ŸExtreme grazing pressure on marginal and small lands,
more than 2014-15 ie., Rs.67,428.68 lakh .The important
the outcome of which is complete degradation of land.
activities of OMFED are:
An overview of OMFED
ŸProcurement of milk from the rural milk producers
Orissa State Co-operative Milk Producers' Federation from their door step through the Dairy Cooperatives at
Limited (OMFED) operates in Odisha, came into being a remunerative price
01.10.1980 with the objectives of promoting production,
ŸSale of milk and milk products to the urban consumers
procurement, processing and marketing of milk and milk
at an affordable price.
products for the economic development of the rural
farming community. The federation had received funds ŸAdvice, guide and assists the Milk Union in all respects
from the Indian Diary Corporation/ National diary of management, supervision audit functions
Development Board (NDDB) for implementation of
ŸRender technical, administrative, financial and other
different activities like milk processing, technical input
necessary assistance to the member unions and enter
programme, support to dairy cooperatives etc. under
in to collaboration agreement with someone, if the
“operation Flood” Programme in undivided districts of
need arises
Cuttack, Dhenkannal, Keonjhar Puri and Sambalpur.
ŸAdvise the member unions on price fixations, public
It covers all the districts of the State. There are 5,281 Milk
relation and allied matters.
Producers Co-operative Societies (MPCS) with 2.68 lakh
members under OMFED. Besides 12 milk unions covering Performance Evaluation of OMFED
all the districts have been affiliated to OMFED. OMFED
One of the most jeopardy in the area of public sector
has 13 dairy plants with 6.55 lakh litres capacity per day, 9
management is their performance evaluation. Although
milk chilling centres with 1.95 lakh litres capacity per day,
several attempts have been made in this connection it still
345 bulk coolers with 5.41 lakh litres capacity,1 milk
appears to be at the crossroad. It is argued whether the
powder plant with 5 MT capacity per day at C.S. Pur,
objective should be financial or social in nature, pe helps an
Bhubanewar and one cattle feed plant with 200MT
organization to evaluate the overall effectiveness of its own
capacity per day at Khuntuni, Cuttack. During 2015-16, the
programme of management developments. Evaluation
Federation has procured 5.26 lakh and marketed 3.92lakh
from this point of view may be defined as an ongoing
litters per day. In addition, it has also marketed milk
evaluation of the quality style and determinants of the
products viz. ghee, paneer, butter, curd and milk powder
present performance and the behaviour and growth
and agriculture/organic products viz. turmeric powder and
potential of the organization
mustard seeds produced by tribes in Kandhamal district.
Table No: 2 PHYSICAL ACHIEVEMENT OF OMFED
Year Organized Farmer Membership Milk Procurement (KPD)
D.C.S. (No)
2005-06 3377 204013 249369
2006-07 3822 224002 266548
2007-08 4387 236199 288270
2008-09 4625 246410 294383
2009-10 4684 244925 298823
2010-11 4835 253343 342663
2011-12 5022 260611 370179
2012-13 5155 267306 378936
2013-14 5281 272257 390257
2014-15 5409 277117 444473
2015-16 5503 267802 526257

Source: www.omfed.com

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Pacific Business Review International

From the table no.2 it is found out that the number of dairy trend for fulfilling the self sufficiency in the milk
cooperative societies in Odisha is showing an increasing production of Odisha.
trend throughout the respective time period. It increases
Similarly, Table no 3 makes an analysis about the financial
from 3377 in 2005-06 to 5503 in 2015-16. Similarly the
achievement of dairy cooperative societies in Odisha from
farmer membership number also depicts a positive move as
2005-2016. In 2007-08 the net profit after tax is found to be
it has 20413 in 2005-06 which rises to 267802 in 2015-16.
negative whereas the gross profit shows an increase in this
During the given time period milk procurement has been
year. Till 2012-13 both gross profit and net profit after tax
more than doubled along with its potential i.e 249369 in
shows an increasing trend. In year 2015-16 the net profit
2005-06 to 526257 in 2015-16. This achievement of
after tax is again negative.
OMFED in terms of its physical activities indicates a rising

Table No 3: FINANCIAL ACHIEVEMENT OF OMFED

Year Gross Net profit after tax

profit
2005-06 1152.23 103.70
2006-07 1152.24 27.81
2007-08 1489.82 (229.42)
2008-09 2472.38 280.44
2009-10 2446.52 345.35
2010-11 3018.19 226.26
2012-13 3543.41 489.74
2013-14 3498.14 27.74
2014-15 4144.16 226.42
2015-16 1488.58 -2403.58
Source: www.omfed.com

Findings and Suggestion particular time period. in the same way the farmer
membership number also depicts a positive move as it
The major outcomes of the present study are as follows.
has 20413 in 2005-06 which rises to 267802 in 2015-
ŸIt is derive that the milk production in Odisha is 16.
mounting throughout the time period. In 2005-06 it
The diary sector of India as well as Odisha is achieving an
was 1342.30 MT which gradually enhanced to 1938.00
increasing trend of milk production and per capita
in 2015-16. Accordingly the per capita availability of
availability of milk gram/day. It can survive rivalry if the
milk also increases to 118 grams/day in 2005-06 from
respective methods should be taken for upliftment of dairy
98 grams/day in 2005-06.
sector in India such as
ŸDuring 2007-08 the net profit after tax is found to be
ŸProvision of high quality genetic germplasm to milk
negative whereas the gross profit shows an increase in
producers and appropriate genetic material to milk
this year.
producers.
ŸThroughout the period i.e 2005-06 to 2012-13 both
ŸDelivering the products or services to producers as
gross profit and net profit after tax shows a rising trend.
well as customers in the nearly everyone cost-effective
Again in the year 2015-16 the net profit after tax is
approach as well as it ensure that high excellence of
again negative.
products and services are to be delivered.
ŸThe number of dairy cooperative societies in Odisha is
ŸAcceptance of international principles for production
showing an growing tendency all the way through the
and processing of milk is a pre provision meant for

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 Volume 11 Issue 7, January 2019

improving the market share. 13

ŸIt must ensure the skilled as well as well trained human Ingavale, Deepa, (2012), “A Study of International Trade
resources for enhancing the milk production activities. Of Indian Dairy Industry”, Indian Journal Of Applied
Research, Volume: 1 | Issue: 12, pp. 127-128.
ŸLastly the role of research and development should not
be ignored which will be beneficial for further Kariuki1, Ann N. and et,al ,(2018), “Technological
advancement in the dairy sector. Innovation and Performance of Informal Dairy
Enterprises in Kenya: A Product Diversification
Concluding Remarks
Perspective “Journal of Business and Management
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GRANTHAALAYAH ,Vol.4 (Iss.1) pp 153-157
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efforts of stakeholders, including milk producers, Panda L.N. and Mishra S. (2013), “A Project Report On
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