CHANGE IN PRICE OF MILK

COMFED

Introduction about the study

The topic of my project is A comparative study of the change in price of milk of COMFED during the financial year 2007-08 to 2009-10. This project is all about studying the increase in price of milk of Patna Dairy from 2007-08 to 2009-10. These days we can see that the price of milk is going up and up. The main purpose of my project is to study the reasons for such an increase in price of milk. Although two months training was not sufficient to analyze the reasons for such an increase completely but an attempt is made to study and analyze the reasons for such an increase. Objective of the study The basic objective of the study is to find out the percentage increase in price of milk of Patna Dairy from 2007-08 to 2009-10 and to study the reasons for such an increase. The objective of study of price rise includes:1. To study the changes in price of the product during a particular period. 2. To find out the percentage change in price of the product. 3. To compare the change in price of the product during the period. 4. To study the reasons for increase or decrease in price of the product with the help of study of various cost of production.

Scope of the study The price of the product of any organization is of much interest and important to the user or consumer of that product. Milk is one of the
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most important products of daily consumption and it is consumed by every household. So every person is much interested in the price of the milk because any changes in its price affects the budget ones household. Price can be defined as the amount paid for satisfying ones need. And analysis means to put the meaning of a statement into simple terms for the benefit of a person. So price analysis is also done to explain the reasons for a change i.e. increase or decrease in price of a commodity. The study of price rise explains the reason for any kind of increase and tries to convince its customers to avail the use of the product at the increased price.

Importance of the study The eight weeks training in an organization for MFC course is not the answer of all the problems which arise in practical field. There is no certain formula for handling particular problem which arise while doing the work practically. But the aim of the study is to develop the ability of decision making. Right decision at right time itself helps an organization to run smoothly. The training in an organization gives us a true picture of the organizational weakness and strength in its concerned fields and its ability to tackle or to overcome the problem which arises during a particular period for which the study has been made. Though only eight weeks, it was not possible to understand it so deeply but an overall view of the organization has been developed so far.

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LIMITATIONS OF THE STUDY The following limitation behind the study work is expected: 1. The price of milk will fluctuate because of limited resources and time constraints. 2. The rate of milk will find out the position (performance) of the concern but its accuracy cannot be ensured hundred per cent.

INTRODUCTION ABOUT THE FEDERATION The Journey Begins: The Bihar State Milk Co-operative Federation (COMFED) came into existence in 1983 as the implementing agency of operation flood programme of dairy development on Anand pattern in the state. All the operations of erstwhile Bihar state diary corporation were handed over to COMFED. Area of operation: Five district level milk producers coop unions affiliated to the milk federation were covering eighteen districts until the end of operation flood programme in March 1997 (end of eighth plan). One more milk union was organized during 2008-09 and has been affiliated. Number of districts being covered by unions at present has risen to twenty-six. Different Milk Unions , which are organizing the DCS network in different districts: 1. Vaishali Patliputra Dugdh Utpadak Sangh Ltd. (VPMU), Patna covering- Patna, Vaishali, Saran and Shekhpura districts. 2. Deshratna Dr. Rajendra Prasad Dugdh Utpadak Sahkari Sangh Ltd. (DRMU) Barauni covering- Begusarai, Khagaria, Lakhisarai and parts of Patna districts. 3. Tirhut Dugdh Utpadak Sahakari Sangh ltd. (TIMUL), Muzaffarpur covering- Muzaffarpur, Sitamarhi, Sheohar, E.Champaran, Siwan, Gopalganj and West Champaran districts.
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4. Mithila Dugdh Utpadak Sahkari Sangh Ltd. (MMU), Samastipur covering- Samastipur, Darbhanga and Madhubani Districts. 5. Shahbad Dugdh Utpadak Sahkari Sangh Ltd. (SMU), Arrah covering- Bhojpur, Buxar, Kaimur and Rohtas districts. 6. Vikramshila Dugdh Utpadak Sahkari Sangh Ltd. (VIMUL), Bhagalpur covering- Bhagalpur, Munger, Banka and Jamui districts. Coverage by other dairies of COMFED: 1. Magadh Dairy Project, Gaya covering- Gaya, Jahanabad, Arwal and Nawadah. 2. Kosi Dairy Project, Purnia covering- Purnia, Araria, Katihar, Kishanganj, Supaul, Saharsa and Madhepura. 3. Jamshedpur Dairy covering- East, west Singhbhum and Saraikela. 4. Ranchi Dairy covering- Ranchi, Gumla, Lohardagga, Hazaribaag, Simdega and Chatra. 5. Bokaro Dairy covering- Bokaro, Dhanbad and Giridih. 6. STORY OF WHITE REVOLUTION IN BIHAR

Farmers in Bihar traditionally kept one or two mulch animals for household requirement of milk. Dairying on organized sector in Bihar, started with the starting of five year plan. In the first five year, three small dairy plants were set up, in the second plan period (1956-60) a separate dairy wing was created in the state government. In subsequent plans small but new plants were established. It was in the fourth plan, Barauni dairy with 1 lakh capacity was set up. Bihar state dairy corporation (BSDC) was created in 1972 with an objective of running the plants on commercial, the dairy wing of state government was managing the plants. BSDC has also had the responsibility of implementing the operation flood program me in the state. Somehow BSDC could not succeed in delivering the goods for which it was created- the farmers lost faith in the dairy development.

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The beginning: Bihar state milk cooperative federation (COMFED) was born twenty eight years ago on 18th April 1983. Dairy development started in right earnest on Anand pattern after COMFED came into existence. The journey of twenty eight glorious years started since then only. The state government transferred the dairy plants which were being run by BSDC to COMFED on management basis along with selected staff. Initial years were tough for COMFED. The dairy plants were not in good condition and there were doubts/unrest among staff absorbed in the service of COMFED. COMFED will always remain indebted to state government for deputing very good officers to provide leadership to the farmers organization. The seeds of work ethics and culture were sown in the initial years by its founder Managing Director, Shri S. Vijayraghvan (IAS) and the tradition had been followed year after year. This is one of the reasons why the organization has grown silently, slowly and steadily to its present state. After repair and renovation of the plants, these plants were put in operation and milk procurement activities were taken up in late 1984. COMFED hired very talented and devoted officers and staff to win over the lost confidence of farmers. To expand the dairy cooperative movement with the support from national dairy development board, the state government signed the operation flood agreement. The progress initially was slow and in the period 1984-86, there were 1030 Dairy Cooperative Societies (DCS). 25 thousand milk producers became the member of this society. The annual turnover was 9.57 crores. The dairy co-operatives federated at the milk shed level milk unions. Four milk unions viz. Vaishali Patliputra Milk Unions; Patna Khagaria Begusarai Barauni Milk Union; Barauni, Mithila Milk Union; Samastipur and Tirhut Milk Union, Muzzafarpur were formed during 1987 and 1988.

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Turn around plan: Due to low level of operations, the dairy suffered losses. In order to overcome the losses and turn-around the situation, several measures were taken in 1994 which included procurement of cow milk that was normally retained by farmers for their own consumption or religious purposes, regularizing milk payment to them. The DA installments were not released till the dairies were able to plan and generate extra funds enabling them to bear the additional financial burden, thus gradually making the staffs and officers cost conscious and cutting down various operational costs. Production of value added milk products was taken to improve the financial viability of dairies and emphasis on quality of milk and milk products and marketing thereof was laid down. As a result of implementation of turn-around plan, the dairies started wiping out their accumulated losses.

Capacity: Importance of capacity building of milk producers, members of managing committee of the DCS and the employees of COMFED and its affiliated milk unions was felt necessary in the initial years of establishment in Patna with financial assistance from NDDB and subsequently from DRDA for creation of infrastructure. The training center has loading and boarding facility for the participants. Five type of training is imparted, namely, Societies operation training for secretaries of DCS, Orientation of management committees members, Dairy management clean milk production and AI training. So far 11250 farmers have been trained from different training centers. The percentage of women trainees so far has been around 27% so far.

Physical performance: Due to the teething trouble and the setback caused by the natural vagaries, the progress was impeded. Regaining the confidence of the milk producers in the cooperative dairying system was shattered due to
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poor management by erstwhile Bihar State Dairy Corporation. This was also one of the reasons for sluggish growth. Lack of functional infrastructure in the sphere of animal husbandry, especially in breed improvement, artificial insemination (AI) and animal health cover also contributed to the rapid progress. Policy decisions taken in mid nineties have changed the trend of growth in all quarters of cooperative dairying in Bihar. In the earlier year the emphasis was on the horizontal expansion of dairy co-operative network. Now the strengthening of the dairy co-operative is being done to make them viable and gradual expansion of area is also being done. Membership of these dairy cooperative societies was 1.84 lakh households in 2000-01 which has gone up to 4.22 lakhs at the end of January 2010. Features:1. 100% testing of the producers milk at DCS. 2. Timely and regular payment to the milk producers. Payment is made every tenth day. 3. Free supply of milk testing equipments to the DCS. 4. Controlling diversion of milk from DCS. 5. Revision of secretary commission and payment thereof on monthly basis. 6. Disciplining of DCS and secretaries who are diverting milk during lease seasons and accepting milk of middlemen in flush which was widening the gap between lease and flush procurement. 7. Supervision of DCS by the field staff and regular visit to DCS even by the board members of the milk union. 8. Formation of task force for the identification of problem areas and immediate action. 9. Overcoming the shortcomings in the delivery system to the farmers. Distribution of fodder seeds, cattle feed regularized.

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12000

10000

8000 Series 1 6000 Series 2 Series 3 4000

2000

0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Year wise progress of organization of DCS

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Animal health programme

Milk production enhancement programme: Main activities under animal health (AH) programme includes prophylactic vaccination, deworming, mastitic control programme, organization of veterinary camps and treatment of veterinary first aid cases. These are the crucial activities of the milk union/COMFED and are the major strength responsible for the success of the dairy cooperative.the main technical input given to the milk producers includes breeding facility, animal health cover, feed and fodder extension/training services. No input is provided free of cost to the milk producers.

Artificial Insemination (AI) Programme: AI is done with foreign semen using liquid nitrogen (LN) technology through static (single) and mobile (cluster) centre. AI worker who are self employed persons and specially trained by COMFED. Adequate arrangements have been made to expand the coverage of dairy cooperative societies under this programme. For AI training, facilities are available at COMFED headquarters which are being used and some persons are being provided training at ERDTC, Silliguri a NDDB managed centre. Around 1641 AI centers were working at the end of 2010-11 which have done AI of 11.13 lakh animals which was 16.18% more than the last year.

Prophylactic vaccination:
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Around 1885 veterinary first aid centers have been established. Prophylactic vaccinations are mainly done against foot and mouth diseases (FMD), hemorrhage septicemia (HS), block quarter (BQ) and the ileriosis diseases. From 2009-10 state government is implementing special programme for vaccination of animals and COMFED has a special role in this. In 2010-11 approx 15.69 lakh vaccinations has been done. This year the number of vaccination done have been hampered due to lack of vaccines in February, 2011.

Vaccination done:

1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Series 1

Vaccination done

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Mastictis Control Programme: This programme has been taken with the technical assistance from NDDB. Under this programme, screening of milch animals is done using Mastict. The doubtful or sub-clinical cases are given treatment. Awareness amongst the milk producers is created for disinfecting the udder and treat after milking with a view to check the infection of animals. Milk union provides necessary disinfectant and teat cups to the milk producers on cost basis.

Deworming: Worm infestation in the milch animals affects their productivity adversely. Hence for improving the productivity and health of animals deworming with broad-spectrum anthelmintic is arranged regularly by the milk union. During 2008-09, 2.21 lakh animals were dewormed. This figure has increased to 3.07 lakh in 2009-10. In recent year that is 201011, 8.36 lakh has been dewormed.

Vertinary camps: The milk union organizes vertinary camps where the milk producers bring their animals for treatment. In 2010-11 approx. 1885 vertinary camps were organized where approx. 25885 animals were cured in these camps. Apart from this 271407 animals were given primary treatment in these camps.

Cattle feed: Adult cattle feed (ACF) and bypass protein feed (BPF) is manufactured by cattle feed plants (CFP) located at Patna, Muzaffarpur and Ranchi. These
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plants have a capacity to produce 260MTs per day. Cattle feed is supplied to the farmers on the cost basis. Besides producing BPF & ACF cattle feed plant at Ranchi also produces other livestock feed to meet the requirement of the government. Against an annual target of selling 66.66 thousands MTs of feed to the co-operative societies during the year 2008-09 the achievement was 41.79 thousand MTs, which indicates that for every kilogram of milk the sale of cattle feed was 275 gram. In 2010-11 61712 MTs of cattle feed was supplied to milk co-operative societies. Fodder development: Green fodder is very important source of nutrition for animals. Besides providing important nutrition, it helps in reducing the intake of balanced cattle feed and in turn reduces the cost of production. After prolonged extension work and persuasion the farmers have started cultivating different fodders and fodder seed in their own fields. Good quality fodder seeds and their timely availability were the main constraints in popularizing the cultivation of fodder. This will be substantiated from the fact that the sale of fodder seeds is increasing gradually. It was merely 37 MTs in 1993-94 which has gone up to 274 MTs in 2010-11.

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Cattle feed sale

70000 60000 50000 40000 30000 20000 10000 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Series 1

Cattle feed sale in MTs

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Milk procurement: The daily average milk procurement during 1994-95 was 114.33 thousand kilogram per day (TKPD) which has jumped more than 10 times to around 1101.37 TKPD in the year 2010-11. The progress was impeded in July-September 2007 and 2008 due to the devastating flood in Kosi region. It affected the milk production very badly. But the milk production recovered once again in 2009 and crossed the previous peaks.

1200

1000

800

600

Series 1

400

200

0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Milk procurement in TKPD

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Clean milk production: It is an important programme implemented by COMFED along with making the milk producers aware about the production of pure milk efforts are made to install the bulk coolers. The steps involved under this programme are as follows:1. Reducing the arrival time of the milk vehicles at the chilling centers or dairy docks. 2. Use of stainless steel milk cans instead of old aluminium cans. Introduction of stainless steel milk cans and distribution of these cans to milk producers was done in bonus. 3. More vigilant cleaning and sanitation of milk cans. 4. Tasting the presence of adulterants in milk more vigorously. Adulterant kits have been made by the milk unions. 5. Covering the milk procurement vehicles with tarpaulin to protect the milk cans from exposure to direct sunlight to avoid increase in temperature of milk. 6. Providing training, muslin clothes, disinfectant and stainless steel buckets to the milk producers.

Training of farmers and members for awareness about clean milk production has already been started

Processing infrastructure: COMFED is having 14 dairy plants and 8 chilling centers. Dairy plants are having a processing capacity of 13.60 lakh liters of milk per day and the chilling centers are having a capacity of 1.80 lakh liters of milk per day. After seeing the amount of milk received, COMFED has, this year, increased the capacity of dairy plants to 1.90 lakh liters per day. The work of increasing the milk producing capacity of dairy plants at Gaya, Ara, Bhagalpur, Samastipur, Muzafarpur etc is going on. Apart from
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these bulk coolers are also established at village level which have a capacity of 3.56 lakh liters per day. Three cattle feed plants have also been established at Patna, Ranchi and Muzaffarpur for providing good quality of cattle feed to the milk producers. These cattle plants are having a capacity of 260 MTs per day. The process of increasing the capacity of cattle feed plant of Patna from 100 MTs per day to 200 MTs per day is on its way. There is an ice-cream plant of capacity of 3.0 MT in Patna

Liquid milk marketing: A few years back liquid milk marketing was a neglected area. Its progress was very slow. It moved up at snails speed of 100.55 thousands liters per day in 1987-88 to 106.54 thousands liters per day in 1992-93. However, strategies were adopted in 1993-94, which laid greater emphasis on this and changed the trend completely. Year 2003 was declared as Market Development Year. Improvement in quality, development of selling equipment and establishment of new whole day milk booths are important parts of market development strategy adopted by COMFED. Marketing of milk is increasing at a faster rate and in the year 2010-11 it has increased to 7.19 lakh liters per day. Apart from marketing liquid milk COMFED is now fulfilling the demand of liquid milk in neighboring states like New Delhi, West Bengal, Odisha and Assam. COMFED has also provided liquid milk to Nepal in 2010-11. This year these states have received an average of 2.89 lakh liters of liquid milk from COMFED. The marketing equipments of COMFED are spread in Bihar, Jharkhand and Uttar Pradesh. There are 7251 selling booths and 396 whole day booths in 113 cities which are serving the consumers. Apart from liquid milk COMFED is providing other milk products to its customers according to their taste.

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800 700 600 500 400 300 200 100 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Series 1

Average milk marketing (thousand liters per day)

In order to boost the sale of liquid milk, the dairies adopted: Continual improvement in the quality of milk. Reaching closer to the consumers by expanding the retail network and establishing new whole day booth milks and strengthening of door-delivery system. Strengthening of marketing teams by inducting professionals and better supervision. Service to retailer and redressal of consumer complaints. Liberalizing the terms for appointment of retailers viz reduction in the security deposits, facility for cash collection, increased commission etc. Creating consumer awareness and education programmes. Milk products marketing. Processing infrastructure.

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Capacity and Management of Different Plants

Name of the Plant Patna Barauni Muzafferpur Samastipur Arrah Jamshedpur Ranchi Bokaro Bhagalpur Gaya Purnia Total

Capacity (TLPD) 150 300 100 250 100 100 100 100 25 35 10 1270

Management VMPU BMU TMU MMU SMU COMFED COMFED COMFED COMFED COMFED BMU

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Milk chilling centers

Chilling Centers Hajipur Sitamarhi Motihari Khagaria Rosera Darbhanga Kochas Dumraon

Capacity (TLPD) 60 20 20 20 20 20 10 10

Management VPMU TMU TMU BMU MMU MMU SMU SMU

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Bulk coolers

Bulk coolers Biharsharif Ekangarsarai Asthawan Gopalganj Motihari Lakhisarai Jehanabad Daltanganj

Capacity (TLPD) 7 5 5 4 4 5 5 4

Management VPMU VPMU VPMU TMU TMU BMU COMFED COMFED

Other plants

Plant CFP, Patna CFP, Ranchi CFP, Kanti, Muzafferpur Ice-cream plant, Patna

Capacity 100 MTD 100 MTD 60 MTD 3 TLPD

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Other Programmes Implemented by COMFED Rashtriya Krishi Vikas Yojna: After crucial analysis of the situation, the state government, for the development of dairy area has prepared a dairy road map for the period 2008-12. In this plan emphasis will be made for the complete development of dairy area. This programme has few important plans:1. Establishment of milk co-operative societies in villages which will help the farmers to sell their milk. 2. Improvement in the breed of milch animals so that the production of milk in the state can increase and can reach to 172 MT per day from 138 MT. 3. Improvement in the health of animals. 4. Increasing the capacity of dairy equipments. 5. Development of human resource at village level. These plans are being implemented by all the units of COMFED. In 200809 and 2009-10 the state government has provided an amount of Rs 27.59 crore and Rs 21.39 crore respectively to COMFED for implementation of these plans. In 2010-11 Rs 21.86 crore has been provided by the state government. Due to the implementation of the dairy road map programme approx 1210 villages are being benefited. This has been possible due to establishment of co-operative societies in these villages. Approx 11250 farmers have got training in this field. Under this programme there are 65 AI centers which provide their services to five to six villages nearby. These centers are also helping in improving the breed of milch animals.

Bihar Gramin Jeevkoparjan Yojna:

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Bihar government with the help of financial assistance of World Bank has started Bihar Gramin Jeevkoparjan Yojna to improve the living standard of people residing in villages. The main objective of this programme is to raise the living standard of women and other people of backward community by dairying activities. This programme has also aimed to create awareness among the villagers about their fundamental rights. For implementing this plan self help groups are also formed. COMFED is helping the members of this self help group in earning their regular income by connecting them to the milk co-operative societies. For this a plan has been prepared under which the three districts of Bihar i.e. Muzafferpur, Nalanda and Khagaria are targeted for implementation of this plan. In these districts 50 thousand members of these self help groups has been connected to 452 societies and is providing for them a regular source of income. The total cost for implementation of this programme is Rs 11.38 crore. For better management, facility of training programme has been provided at different levels of the co-operative society. For improvement of breed of animals various Artificial Insemination (AI) centers are being established which will be run by the rural people themselves. Till now 27 rural women has been trained for AI. Bulk coolers have been established for milk procurement. Till now under this programme 149 societies has been established and 7642 people has been connected to milk co-operative societies.

Distribution of Milch Animals to the Economically Weaker Members of the Dairy Co-operative: The State SC/ST/BC Finance and Development Corporation have sanctioned funds for the distribution of milch animals especially the crossbred cows for distribution to the scheduled caste members and members from backward classes in the dairy co-operative societies.

Training/Manpower Development:
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Capacity building/skill up gradation has been given maximum emphasis in implementing the dairy development program. This has been achieved through regular training of milk producers, management committee members (MCM) of DCS, staff of DCS/Milk unions of COMFED. Training of milk producers, DCS staff and MCM has been mainly arranged at the COMFED training centers at Patna. Training programme organized at COMFED training center include programs of society operation for secretaries, orientation of MCM, AI and VFA training, dairy animal management, legal literacy and women empowerment refresher courses and tailor made programs as per need of milk unions is also organized.

Financial performance

The profitability and financial position of all the milk unions and dairies has improved a lot by reducing various operational costs, improving efficiency of plants by reducing break-down, increased level of milk procurement and marketing, production and marketing of value added products and control measures. The turn-over which was Rs 989 crore last year has touched a mark of Rs 1339 crore in 2010-11 which is 36% more than the last year. The turn around plan prepared and implemented has helped all the milk unions start making operating profit since 1992-93 onwards. Material Cost: Material cost of milk union for the year 2009-10 was 80.41% of the turnover which has been controlled to 81.30% in the year 2010-11. There has been an increase of 2.36% in the material cost of different units of COMFED in 2010-11. After controlling the material cost of milk unions and making better payments to the milk producer for their products COMFED has still made progress in its financial performance. Milk producers are getting profit of increased sales from February, 2011.
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Procurement Cost: Procurement cost of milk unions has decreased from Rs .80 per liter in 2009-10 to Rs .67 per liter in 2010-11. Procurement cost of milk unions has been controlled and procurement volume has increased but due to increase in prices of petroleum and transportation cost, procurement cost of different units of COMFED has increased by Rs .11 per liter. Processing Cost: Processing cost of different units of COMFED has increased from Rs .03 per liter to Rs .05 per liter due to increased cost of electricity, coal and diesel.

Administrative Cost: Administrative cost of milk unions has decreased to a remarkable extent of Rs 1.02 per liter from Rs 1.47 per liter. On the other hand different units of COMFED have decreased cost from Rs 2.21 per liter to Rs 1.53 per liter.

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Total turn-over

(Figures in crore)
1600 1400 1200 1000 800 600 400 200 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Series 1

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Profit before interest and tax

(Figures in crore)
50 45 40 35 30 25 20 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Series 1

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Future Plans The road map for dairying in Bihar is prepared for the period 2008-12 and it aims at expanding the dairy development activities with main emphasis on increasing the productivity of milch animals, improving the health of animals, expanding market, strengthening manpower and development of processing facilities. It has been envisaged to increase the geographical area under dairy cooperatives to 38% of the total villages which is around 21% at present by adding 5600 new DCS, bringing 5.0 lakh more rural families under dairy co-operatives, thereby increasing the total membership to 8.25 lakh, doubling the milk procurement from 6 lakh to 12 lakh kgs per day. On the input front, 1346 new AI centers are proposed to be established and provide the facility at the doorsteps of the farmers. Establishment of 228 breeding units has also been envisaged in the road map. The production capacity of cattle feed plants will be enhanced from 260 MTs per day to 560 MTs. It has been proposed to set up two mineral mixture plants and introducing a scheme of ration balancing. The milk marketing is targeted to be taken to 9 lakh liters per day in order to provide pasteurized and whole some milk to the consumers. Major investment is proposed to be made in the expansion of processing capacities within two to three years in Bihar to 31.70 lakh liters per day. A new plant of 4 lakh liters per day capacity with a powder plant of 30 MTD and tetra-pack plant with 120.00 crore financial assistance from the state government is coming up in Biharsharif. A new product factory of 1 lakh liters per day capacity is also coming up at Dehri-on-son, with financial support from the state government. Around 7300 farmers are proposed to be trained in AI, DCS operation and another 73000 farmers will be given awareness training in four years
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and for this the capacity of training center will be enhanced from 100 participants to 200. COMFED has reached to every district of the state, for utilization of equipments, taking immediate decisions and for keeping an eye on all the resources the work of launching Enterprise Resource Planning (ERP) system is going on in COMFED headquarters and VPMU. This plan will be completed in current financial year and in the next year it will be implemented in all the units and milk unions of COMFED.

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STRUCTURE OF COMFED, PATNE

CHAIRMAN

MD GM

MANAGER MANAGER MARKETING TRAINING

CHIEF MANAGER CHIEF MANAGER ENGINNERING PERSONAL

MANAGER ACCOUNTS

DY. MANAGER MARKETING

DY. MANAGER ENGINEERING

DY. MANAGER ACCOUNTS

ASSISTANT MARKETING OFFICER

ASSISTANT MANAGER (ENGEENERING)

ASSISTANT MANAGER (ACCOUNTS)

JUNIOR ENGINEER

ACCOUNTS OFFICER

DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 29

CHANGE IN PRICE OF MILK

COMFED

Revision of MRP of Sudha Milk in Bihar

Milk type

2006-07

2007-08

2008-09

2009-10

Pric e

Pcnt inc/de c

Pric e

Pcnt inc/de c 14.29 12.5 11.12 11.76 10 11.76

Pric e

Pcnt inc/de c 12.5 11.12 10 15.79 9.09 10.52

Pric e

Pcnt inc/de c 11.12 10 9.09 9.09 8.33 9.52

DTM TM SM CM FCM Averag e

14 16 18 17 20 17

16 18 20 19 22 19

18 20 22 22 24 21

20 22 24 24 26 23

DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 30

CHANGE IN PRICE OF MILK

COMFED

Change in average price of milk

25

20

15

avg price pcnt change

10

0 2007-08 2008-09 2009-10

DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 31

CHANGE IN PRICE OF MILK

COMFED

Particulars

2006-07 Cost (in lakh)

2007-08 Pcnt Cost (in inc/dec lakh) 13.81

2008-09 Pcnt Cost (in inc/dec lakh) 23.6 16.17

2009-10 Pcnt Cost (in Pcnt inc/dec lakh) inc/dec 17.08 17.81 10.14

Material cost (per unit)

11.17

Procurement .91 cost (per unit) Processing 1.2 cost (per unit) Packaging .37 cost (per unit) Contribution (per unit) .41

.82

-9.8

.81

-1.2

.85

4.93

1.13

-5.8

1.16

2.65

1.17

.86

.39

5.4

.49

25.64

.41

-16.32

-.42

-202.2

-.35

-16.66

.38

-208.5

Total 4186.18 administrative cost Total fixed cost Total cost 4954.56

3546.45

-15.2

3909.37

10.23

5937.01 51.86

4359.86

-12

5113.35

17.28

7201.39 40.83

57235.99

59158.68 3.3

65787.56 11.20

98380.7 49.54

Change in cost of production of milk from 2007-08 t0 2009-10

DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 32

CHANGE IN PRICE OF MILK

COMFED

Change in total cost (Figures in lakh)

100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 2007-08 2008-09 2009-10 total cost

DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 33

CHANGE IN PRICE OF MILK

COMFED

Analysis and Interpretation The analysis of the data of the profit and loss account and the price of milk shows that various cost of production like material cost, procurement cost, processing cost etc are showing an increasing trend from 2007-08 to 2009-10 which has led to an increase in the price of milk. Here are some of the elements of cost which has affected the price of milk of Patna Dairy. They are as follows:Material cost: Year 2007-08 2008-09 2009-10 Cost (per unit) 13.81 16 17.81 % inc/dec 23.6% 17% 10%

The material cost which includes the cost incurred foe purchase of milk from co-operative societies, amount paid to the farmers of co-operative societies and purchase of other raw materials have shown an increasing trend. The material cost has increased to about 23.6% in 2007-08. It has further increased to about 17% in 2008-09 and about 10% in 2009-10. This material cost has increased due to increase in amount paid to farmers of co-operative societies and prices of raw materials.
DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 34

CHANGE IN PRICE OF MILK

COMFED

Procurement cost: Year 2007-08 2008-09 2009-10 Cost (per unit) .82 .81 .85 % inc/dec -9.8 -1.2 4.93

Procurement cost is the cost incurred for bringing the milk from the hands of farmers to the factory. It includes transportation cost paid for procurement of milk. Although procurement cost has shown a decreasing trend in 2007-08 and 2008-09 but this cost has increased in 2009-10 to 4.93%. This cost has increased due to the increased price of petrol and diesel.

Processing cost: Year 2007-08 2008-09 2009-10 Cost (per unit) 1.13 1.16 1.17 % inc/dec -5.8 2.65 .81

Processing cost includes wages paid to the workers for the processing purpose and the cost of fuel and electricity. Processing cost is decreased by 5.83% in 2007-08 but again this cost has increased by 2.65% and .81% in 2008-09 and 2009-10 respectively. Packaging cost:
DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 35

CHANGE IN PRICE OF MILK

COMFED

Year 2007-08 2008-09 2009-10

Cost (per unit) .39 .49 .41

% inc/dec 5.4 25.69 -16.32

Packaging cost is the cost incurred for packaging of milk in packets so that it becomes convenient to transport the packed milk to the various distribution centers and sudha milk booths, so that it can reach to its ultimate consumers. Packaging cost has also shown an increasing trend in 2007-08 and 2008-09 but it was controlled in 2009-10. Administrative cost: Year 2007-08 2008-09 2009-10 Amount (in lakh) 3546.45 3909.37 5937.01 % inc/dec -15.2 10.23 51.86

Administrative cost is the cost which is incurred for the administrative purposes. It includes the salary paid to the employees of the organization, telephone bills etc and other administrative works. This cost was decreased in 2007-08 by 15.2% but it has again increased to approx 10% and 52% in 2008-09 and 2009-10 respectively. Such a steep increase has been seen in the year 2009-10 due to increase in the salary paid to the employees. This salary has increased due to the effect of the sixth pay revision which has increased the administrative cost in 200910. Total cost:

DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 36

CHANGE IN PRICE OF MILK

COMFED

Year 2007-08 2008-09 2009-10

Amount (in lakh) 59158.68 65787.56 98380.70

% inc/dec 3.3 11.20 49.54

Total cost includes the total variable cost and total fixed cost. We can see from the data that total cost is showing an increasing trend from 2007-08 to 2009-10. This cost is increasing due to the combined effect of variable cost like material cost, procurement cost, processing cost etc and fixed cost and administrative cost. Total cost has increased to about 50% in 2009-10 fro 3% in 2007-08.

DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 37

CHANGE IN PRICE OF MILK

COMFED

Conclusion and suggestions Conclusion: The study was undertaken with the main objective of analyzing the change in price of milk of Patna Dairy from 2007-08 to 2009-10 with the help of its profit and loss account. Various cost like material cost, procurement cost, processing cost, administrative cost etc were analyzed from the profit and loss account of COMFED from 2007-08 to 2009-10. After analysis of the data it was found that the financial position of the organization is sound. The main purpose to analyze the data was to study the reasons for the change in price of milk of Patna Dairy. It was found that the price of milk has sown an increasing trend. The reason for such an increase was found out to be the increases in various costs like the material cost, procurement cost and administrative cost. On the other hand processing cost and packaging cost has a minor effect on the increased price of milk. So, on the totality total cost has shown an increase of about 50% in 2009-10 which has resulted in the increase in price of milk of Patna Dairy. The study is expected to benefit all the present consumers of milk of Patna Dairy and also the future consumers of milk of Patna Dairy.

DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 38

CHANGE IN PRICE OF MILK

COMFED

Suggestions: 1. COMFED, Patna is performing better. So it should try to maintain its performance and work hard. 2. Remedial steps should be taken to check the administrative cost as it has increased to a large extent in 2009-10. 3. Though the other costs are also showing an increasing trend but they are increasing in a controlled manner. So this control should be maintained.

Bibliography
I have benefited from scores of book and number of articles, reports, and journals and also from useful websites. As it is impossible to list all of them. I have given here a selected list of books.

I.M. Pandey management accounting, Vikas publishing house Pvt. Ltd. Ninth edition, 2007. I.M. Pandey financial management. Vikas publishing house Pvt. Ltd. Seventh edition, 2007. S.P. Gupta accounting for managerial decision. Sahitya bhawan publication 15th edition, 2008.

DEPT. OF APPLD, ECO & COMMERCE PATNA UNIVERSITY,PATNA 39

CHANGE IN PRICE OF MILK

COMFED

S.P. Gupta financial management sahitya bhawan publication second revised edition, 2008. Profit And Loss Account of COMFED, Patna Data regarding revision of MRP of Sudha Milk in Bihar provided by COMFED Annual report of COMFED, Patna

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