Dairy Cooperative Society, Milk Union, Milk Federation : Relations and Functions

Dairy Cooperative Society, Milk Union, Milk Federation : Relations and Functions

2.1.         Relation between DCS, Union and Federation:

The basic unit of the Anand Pattern is the village milk producers’ cooperative society. The functions of a dairy cooperative society can be classified into the following two categories:

1.  Managerial

2.  Operational


The milk producers of the village with the support of the milk union form a village dairy cooperative society. The milk producers become members by buying a minimum of one share of the society and paying an entrance fee as per the bye-laws. All these members form the general body of the society, which has the supreme powers subject to the State Cooperative Act, Rules and Bye-laws.    The society has an elected Managing Committee (MC) including the Chairman from amongst the member producers as per the provisions of the bye-laws. All the positions of the MC are honorary. The committee employs paid staff to run the day-to-day affairs of the society. The number of such staff depends upon the size of the business of the society.

The provisions of the bye-laws govern the term of the MC and the Chairman of the society. The committee decides policy matters and frames guidelines for efficient running of the society. The committee holds its monthly meetings to discuss issues pertaining to society, members, milk producers, suggestions/guidelines provided by the Milk Union and other relevant matters.


The society’s major operations can be classified in two groups: milk trading and providing input services. Milk trading involves reception, testing, local and sample milk sale, dispatch of milk to milk union, payment and accounts keeping. Input services include animal health coverage, breeding, supply of cattle feed, fodder development, clean milk production and extension services to producer members.

Milk Trading

Reception of milk:

Each society has milk collection centre either in an owned or hired premise. Each morning and evening, the milk producers bring milk in their own containers (stainless steel) to the society. A representative sample of milk is drawn for testing the quality milk. Milk is collected in milk cans or directly to the cooler as the case may be. The collection accessories are made up of stainless steel (AISI 304). The measurement of milk is done carefully so as to avoid foam, shortage etc. Quantity of milk supplied by each individual along with the sample bottle of milk is recorded against her/his name in the purchase register and the card/pass book of the pourer. In many of the societies the process is semi automatic with the help of computer and Electronic Milko Tester placed on line. A printed slip is generated for each member giving details about the date, shift, type of milk, producer identification number, weight and fat% of milk, rate, price etc.

Testing of milk:

Where the Gerber Centrifuge/Electronic Milkotester is used for fat test of milk samples, once sufficient number of samples are collected these are tested as per laid down procedure. The test results are recorded against each sample number in the Fat Test Register. This ensures the confidentiality of the owners of the samples. After the testing is over, the records are compiled; the left over sample milk is disposed off in a manner decided by the management committee. At pourers’ request retesting is also carried out before the samples are disposed off and the changes if any, are recorded.

After the milk collection is over, a composite sample is drawn from the total quantity of milk collected observing the general procedure to draw the sample. This sample is tested for fat and lactometer reading is also noted in the test register. This is commonly known as General Test (GT) of milk collected by the society. All the accessories/equipment used in reception and testing of milk, are then cleaned thoroughly with warm water and or detergent solution.

Despatch of milk:

Lids cover all the filled milk cans tightly and the cans are loaded in the milk vehicle/truck as per the time schedule of a particular society. The staff of the truck deliver the fat slip of previous shift, letters from milk union, other materials as indented by the society. This is done quickly to avoid any stoppage of the vehicle more than the schedule. The vehicle also unloads the cleaned empty cans received from the dairy plant for the use of the society for the next shift milk collection.

Wherever the AMCU/Bulk Cooler is installed in the society, the milk tanker from dairy/chilling centre comes once or twice in a day as per requirement to lift the chilled milk from the society.

Payment for the milk:

The milk union depending upon the policy it adopts on pricing decides the price of the milk. Quality and quantity form the basis for the payment. Normally a price chart or ready reckoner is prepared and supplied by the union to the societies. The society pays the pourers daily/weekly/after every ten days as per the decision of the managing committee. The relevant entries are made in the Card/Pass Book of the members and the registers of the society.

Milk union generally pays the price of milk so procured from societies through bank advice on a regular interval i.e. weekly, every ten days as the case may be. This frequency is generally not changed and is same for all the societies.


There is a set of a standard registers, most of which are to be completed daily. The others are completed as and when any transaction takes place. It is the responsibility of the concerned staff of the society to complete the records on time and regular basis. All the records are to be countersigned by the Secretary/ Chairman as per the decisions of the society and as required under the provisions of bye-laws. The registers and formats are designed in such a way that they reflect the volume of business and financial standing of the society at any given time.

A society appoints a local person as an internal auditor who audits the transactions made by the society on regular basis. The society prepares its monthly accounts statement for the managing committee meeting and also other accounts statements on quarterly basis. The annual accounts are prepared for statutory audit.


Milk is a perishable commodity. In order to have improved quality of raw milk and avoid spoilage besides contamination of milk, a society maintains cleanliness through the clean milk production process and techniques from producers to society level. Various activities and steps are undertaken for cleanliness of the utensils, staff, equipment/ accessories and building emphasising procurement of clean milk.

Standardisation of Testing Equipment and Chemicals:      

Generally the milk union supplies to the society milk testing equipment, accessories and chemicals that have BIS and or other relevant standard. However, the society needs to check the quality / standard of these articles periodically. Otherwise a society may face milk and fat shortage problem and eventually run into losses.

Local Milk sale:

The managing committee is authorised to fix the quantity and price of milk to be sold locally. The price varies from season to season. The general fat in the milk, local demand etc. determines the price of milk.

Sample Milk sale:

After conducting the fat test for all the samples and also the retests, if any, the remaining sample milk is spooled for sale. This sale is generally done on open contract basis (quarterly/half yearly/yearly) with a fixed price as decided by the managing committee.

Distribution of profit:

Besides regular payment of milk price, the society at the end of the year pays dividend on paid up share capital. The major portion of society’s net profit is paid in the form of bonus to the producers proportionate to the value of milk supplied by them during the year. The extent of these benefits is decided in accordance with the provisions made in the bye-laws.

Inputs Services

The second important work of a society after milk trading is making available the technical inputs to the milk producers for production enhancement activities. Generally the basic facilities are owned by the milk unions and the services are provided to the members through the societies on cost / no profit no loss / grant basis as decided by the milk union.

The society has a trained Artificial Insemination (AI) and Veterinary First Aid (VFA) Worker who looks after the job regularly through Single or Cluster Centre basis. Generally the milk union supplies liquid nitrogen, semen doses and veterinary medicine, cattle feed, fodder seed to the society on cost for the members. Apart from this cattle insurance and other group insurance schemes are also available for the benefits of the members.  

Other Functions/Activities

Besides the functions as stated above dairy cooperative society also organises with the help of milk union various awareness and training programmes, meetings, camps, visits in connection with capacity building of managing committee members and members, women involvement in dairy cooperative, clean milk production, better animal keeping and management, health and hygiene, literacy and numeracy.

In addition the society also takes up many promotional activities for the members and the village.

Anand Pattern is a multi –tier vertically integrated cooperative structure which

Ø  Is governed by the elected representatives of the milk producers and managed by Professionals.

Ø  Ensures a direct linkage between milk producers and consumers through integration of production, procurement, processing and marketing of milk.

The salient features of Anand pattern dairy cooperatives are:

Ø  Effective governance by elected representative of farmers.

Ø  Effective professional management.

Ø  Availability of rounds the year market to the milk producers.

Ø  Availability of inputs for enhancing milk production of animals of the members of dairy cooperatives

Ø  Sharing of profits by members of the dairy cooperatives on equitable basis.

2.2.   Function of a Dairy Cooperative Society (DCS)

The functions of a dairy cooperative society can be listed as follows:

1) Collection of milk twice a day from farmers.

2) Make regular payment to suppliers.

3) Dispatch the milk collected to Milk union.

4) Provide to members:

a)      Balanced cattle feed.

b)      Fodder seeds of improved variety.

c)      Services for animal health care.

d)     Services for breeding of milch animals.

e)      Patronage based portion of the surplus.

f)       Contribute to village development.

Every morning and evening, the society buys the surplus milk from the member-producers.  The producer is paid for the milk at an interval usually decided by the managing committee of the society.  The payment is made on the basis of milk quality (fat, SNF, bacteriological) content of milk supplied by individual producer.  The union’s dairy plant organises the transport of milk from all its member-societies.

The producers in this system are not only assured of regular and remunerative payment for their milk but also benefit from the milk production enhancement inputs.   The micro-level inputs such as veterinary first-aid and artificial insemination are organised by village societies with the support of the milk union.  One staff member of the society is trained for carrying out these functions.  In addition, the supply of balanced cattle feed and the sale of fodder seeds are also channelized through the societies. Society also organises other services such as cattle insurance, health insurance and promotional activities for the members and the village.

2.3.  Functions of a Milk Producers’ Cooperative Union:

The major functions of Milk Union are:

1.   Procure, process and market milk and milk products.

2.   Arrange/Provide macro level inputs like cattle-feed, animal health and breeding care, etc.

3.   Arrange for training and education of managing committee members, staff, and members of dairy cooperative society and also for the Board members, managers and staff of the milk union.

In general, the Union carries out five important functions:  procurement, processing and marketing of milk and milk products, providing technical inputs, institutional strengthening of milk cooperatives, enhancing women involvement in dairy cooperatives, organisation of extension activities and rural development services.  The union owns and operates dairy plant; cattle feed plant, fodder and bull mother farms, semen collection station etc. for animal husbandry activities.  


In addition to the above, the milk union carries out research development and other promotional activities for the overall benefit of milk producers.  The milk union organizes the macro-level inputs such as compounded cattle feed, fodder seeds, and various veterinary services for treatment of sick animals, all of which are made available to the milk producers through the dairy cooperative societies.  Thus, it is at the Union level that professional skills are hired for specialized purposes, which individual producers cannot afford to do.

The union pays to the societies dividends on their shares and bonus in relation to the quantity of milk supplied by them during the year.  The milk products processed by the union are also marketed through the State Milk Federation.

A special feature of the Anand Pattern is that the unions are under continuous and concurrent audit to maintain financial propriety.

2.4.   Functions of a Milk Federation:

The important functions of the state milk marketing federation are:

Ø  Marketing of milk and milk products.

Ø  Manage production planning and State Milk Grid (movement of milk within the state).

Ø  Coordinate with state government, central government, NDDB and other agencies.

The Milk Unions become members of a Cooperative Milk Marketing Federation by subscribing share capital to it as per provision of the bye-laws of the Federation.  The Federation is responsible for evolving and implementation of policies on cooperative marketing of all member unions’ liquid milk and milk products, deciding the product-price mix, cooperative provision of joint services (artificial insemination, breeding, cattle feed etc.), cooperative marketing of technical inputs to members and strengthening the institutional structure of the dairy cooperatives.

The Federation’s Board consists of the elected chairmen of all the members unions and the Federation’s Managing Director. There are also other members in the board as ex-officio and also as technical experts. The Board of the Federation evolves the Federation’s policies on all its functions.  Equitable distribution of profit is done on the basis of business transacted by the milk unions with the Federation and as per the provisions of the bye-laws.

The Federation’s Board is advised by its Programming Committee, which is composed of each member union’s chief executive, the Federation’s chief Quality Control Officer and one or more non-voting co-opted technical experts.   The Committee meets on a regular basis and is also responsible for day-to-day implementation of the Board’s policies and plans.