Organisation of a Primary Dairy Cooperative



 Organisation of a Primary Dairy Cooperative

1.1.   Survey of a village:

To assess whether any project or industry would be viable in a certain area, a survey of available resources in that particular area is carried out.  While conducting a survey of the villages concerning milk procurement, the following aspects are studied in detail.

Ø   The existing cattle and buffalo population

Ø   The production and utilization / disposal pattern of milk and milk products

Ø   Marketing channels for surplus milk

Ø   Returns from the sale of milk realized by the farmers

Ø   Agricultural facilities and production patterns

Ø   Basic amenities such as communication links, educational facilities, etc.

Ø   Other sources of income

Ø   Performance of other institutions including multipurpose cooperatives, etc.

Ø   Different communities living in a village and their inter-relationship

Ø   Other relevant information if any

Such a study helps in assessing the future prospects of a milk cooperative society.  It also helps in finding out the interest and faith of farmers in collective activity.  Thus, survey forms the basis for establishing any milk cooperative society.


The Union’s field staff conducts the survey. The study is carried out in the village itself.  A suitable format is designed for this purpose so that all the information is collected (formats on the following page).  The following steps are taken for conducting survey of a village before setting up a milk producers’ cooperative society:

Ø   The field supervisor proceeds to the village.

Ø   He contacts the progressive farmers, village Sarpanch or Pradhan and other important persons of the village.

Ø   He explains to them the purpose of his visit and the entire scheme.

Ø   He collects the basic information about the village from Panchayat office.

Ø   He moves from door-to-door to collect information about individual villagers.

Ø   He visits the people belonging to all communities and areas in a village.

Ø   He also collects information regarding agriculture and animals from the records of district office.

Ø   All information thus collected is crosschecked for validity.


After conducting the survey, the field staff should be in a position to judge whether the people are interested in forming a cooperative society for milk or not.  He should record his opinion on the format accordingly.  He also decides whether the village can be considered for setting up a cooperative in the very first stage, or it should qualify for the same at a later date.


This information is then submitted to the milk procurement section of the Union for review.  The union analyses this information carefully.  And on the basis of marks allotted to each section of information, the merit of a village is finally assessed.  Depending on the merit, further action for organizing cooperative society is decided.


Survey of Village – Format A


Name of village                                               Date of survey

Name of Taluka/Block                                    Area (sq. kms)

Name of District                                             Human population

Name of milkshed                                           No. of house holds



A. Animal Statistics                                         B. Public Facilities Available




Cross bred



Animals in milk





Post Office


Animals dry







Service bulls





Bus service


Average milk yield







Total milk production




Educational facilities with standard



Veterinary facilities




Drinking water

Deep tube well/ well/Nil/Pvt.


A.I. Facilities




Medical facilities




C. General

Village connected by


Metal/Kachha Road

- Village Panchayat

Individual / group


Distance of metal road from village


- Name of Sarpanch



Nearest village connected by road.

Name and distance




- Important crops grown in village



Days for which village not accessible in monsoon



- Name of fodder crops grown



Distance and name of nearest town



- Total area for fodder crops



Distance of village from dairy plant/ chilling centre



- Sources of irrigation



Existing Milk Disposal Details


I.    Liquid


No. of agents

Total Qty. per ltrs.

Basis of payment Quality

Price offered/ ltr.

Payment frequency Advance/ weekly/


Where disposes the milk



No. of farmers supplying

Village vendors









Vendors from other villages









Any coop. Society  Name









Private / Public organised sector  Name










II. Product Conversion Details


Products name

No. of creameries/ shops converting milk into products

Qty. of milk converted (Ltrs.)

Price/kg. product

Price offered to producer Rs./ lit.

Skimmed milk disposal/ utilization if any

No. of producers supplying milk


1. Ghee








2. Khoa








3. Butter
















5. Curd








6. Cream








7. Others









Existence of Cooperative Society other than Milk:


1.  Does any coop. society exist:        _____________                                   Yes / No

2.  If yes, name and financial status:     _____________                         In profit / In loss

3.   General view of villagers about

      above cooperative                        _____________         Unsatisfactory/Satisfactory/Good



Milk Producers Cooperative Organisation:


a) Land holdings   Large                 Small               Marginal       Landless       Remarks

                                    farmers              farmers            farmers         labourers      


No. of farmers in village


No. of farmers expected to become

members of

milk coop.                                                                                           Approx. No.


b)      Marketable            Flush                 Lean                                      Mean

      surplus milk

      (in kg.)                              

c)   Expected milk supply to the society, if formed

d) Name/No. of milk route in which society will fall

Recommendation:  Society to be organized __________________________ Yes / No.

To complete the above format, a supplementary format is required to be filled.  This is possible only if door-to-door survey is conducted.  In other words, a realistic survey has to be done to assess the position correctly.  The design of the format (B) is given on the following page.



Name of village:  _____________________________




Name of prod-ucer

No. of milch animals

Milk prodn. Lts/day


Cow  Buff



Home consu-mption


Marketa-ble surplus of family



of dis-posal


Rate of dis-posal Rs./lit.

Freque-ncy of receiving payment, advance/ monthly/ weekly

In milk




Cow   Buff



Cow Buff
















































































Satisfied or not with existing system  Yes/No.

Land Holding Status




L.F.*     S.F.       M.F.      L.L.

Whether willing to become member of the society   Yes/No.







































* L.F.  –  Large farmers – having more than 5 acres of land

   S.F.  -   Small farmers – having 2.5 to 5.0 acres of land

   M.F. -  Marginal farmers – having less than 2.5 acres of land

   L.L.  -  Landless labourers – having no land

Analysis of the Survey Format and Ratings:

The format (A) consists of 6 important sections from A to F.  Each section has been allotted certain points.  On analyzing, each section should at least score the minimum marks as explained below for deciding to organize the society in a particular village:


Sections                                   A           B         C         D          E           F                  Total

Maximum marks                     5             5          7         13         5          10                   45

Minimum marks                      3             3          4          6          3            4                   23


The above table is based on the following criteria:


Section A – (5 marks) Criteria                                                                        Points awarded


            Total milk production – 500 litrs. and above / day                                         4

                              Between     - 300 litrs. to 500 litrs. / day                                      3         

                              Between     - 200 litrs. to 300 litrs. / day                                      2

                              Less than    - 200 litrs./ day                                                           1


            Veterinary / A.I. facilities in village by                      

            Government / Private / Other agency                                                                         1

            No such facility in the village                                                                         0


Section B – (5 marks)


            Post office facility                                                                                          1

            Bus service / Railway service                                                                          2

            Electricity in village                                                                                        1

            Education facilities                                                                                         1


Section C – (7 marks)


            Metal road up to village                                                                                  3

            Katcha road up to village                                                                                1

            No road up to village / only foot path                                                            0

            Distance from nearest town more than 5 kms.                                               1

            Distance from nearest town less than 5 kms.                                                  0

            Village not accessible in rainy season for about 30 days                                1

            Village not accessible in rainy season for more than 30 days             0

            Good fodder cultivation in village                                                                 2

            Average fodder cultivation in village                                                             1

            No fodder cultivation in village                                                                      0


Section – D (13 marks)          


            Village vendors operating                                                                               1

            No village vendors operating                                                                          3

            Vendors from other villages operating                                                           1

            No vendors from other villages operating                                                      2

            Organised sector collecting milk                                                                     1

            No organized sector collecting milk                                                               2

            Entire milk converted into products                                                               0

            About 50% milk converted into products                                                      3

            No milk is converted into products                                                                5


Section E – (5 marks)


            General idea of villagers about societies performance


                        Unsatisfactory                                                                                     0

                        Satisfactory                                                                                         3

                        Good                                                                                                   4


Section F – (10 marks)                                                                                               


            More number of small and marginal farmers                                         4

            More number of large farmers                                                              2

            More number of landless farmers                                                         2

            Retention of milk by villagers

             - Less than 30% of production                                                             5

             - Between 30-60% of production                                                           2

             - More than 60% of production                                                              1


Rating   Total points awarded                                                                               

              Rank – A  Between      35 to 42

                           B         “           25 to 34

                           C         “           15 to 24                                                      

                           D  Less than     15

After the format (A) is filled out and marks allotted to each section by the surveyor, he should add all the marks and rate the village in either of the above-mentioned categories.


Final Selection of a Village for Society Organisation

The villages with rank ‘A’ and ‘B’ can be easily selected in the first phase itself.  The villages ranking as ‘C’ may be taken up for filling in the gaps at a later stage.  However, villages falling under category ‘D’, as far as possible be avoided for organising independent societies as the same may not be an economical proposition.  

However, this classification should be used only as a guideline as sometimes a village may not obtain the required minimum score but still may be considered for organising a society due to one single reason such as potentiality of village in terms of milk.  In such cases the milk procurement sectional head has to use his own discretion based on practical experience.

1.2.  Organisation and Registration of society:

After the Survey, villages are categorised on the basis of milk potential and other related factor such as approachability and location in the proposed milk route. The milk union’s personnel initiate work pertaining to the organisation of a dairy cooperative society once the categorisations of villages are complete and proposed area for the route is decided. The State Cooperative Societies Act and Rules form the basis for organisation and registration of a society. Normally following steps are taken to form a society:

Organising Gram Sabha

This involves the following activities to be undertaken:

Ø  One person from the milk union’s procurement wing visits the selected villages and arranges meeting of villagers. This meeting is called as gram-sabha and the interested villagers participate in the same.

Ø  A well accepted elderly person from the village is requested to preside.

Ø  The officer / staff of the milk union explains the purpose and advantages of organising the dairy cooperative society in the village. The principles and concept of cooperation and the activities and functioning of the society are explained.

Ø  Once the milk producers have decided to form a milk producers’ cooperative society, an organiser is selected from amongst them.

Ø  The organiser is authorised to collect the share subscription (as per the State Cooperative Societies Act, Rules, model by-laws of the society etc.) and entrance fee from all those milk producers who are interested in becoming members (promoters) of the society. The share collection takes a few days and normally the concerned supervisor keeps a close watch on the developments.

Ø  After a sufficient number of milk producers become members (depending on the expected quantity of milk procurement, number of milk producers in the village etc.), the amount of share money and entrance fee is deposited to a local bank in the name of the proposed society.

Society Organisation Meeting

A general meeting of all the milk producers who have subscribed to the share deposit of the proposed society is convened. At this meeting, one of the members is elected as Chairman to preside over the meeting. The following issues are discussed and resolved. These resolutions are then minuted in the Proceeding Book.

Ø  To form a milk producers’ cooperative society on the lines of bye-laws as suggested by the milk union, named ----Milk Producers’ Cooperative Society and to apply for registration in due course under the State Cooperative Societies Act. Till the registration certificate is obtained, this will be called Proposed Society.

Ø  To decide the area of operation of the society (Revenue village, part of village, Khatian/Daag No, Tola, Hamlets etc.).

Ø  To constitute an ad-hoc managing committee comprising members as per rule to look after the society’s affairs till the registration.

Ø  To elect the Chairman (Chief Promoter) of the proposed society as per rule.

Ø  To authorise the managing committee to appoint society staff for day-to-day work (normally on honorary basis for initial period). Generally at the beginning only a Secretary is appointed and than as the procurement goes up, other supporting staff are appointed. The staff should be the resident of the same village.

Ø  To authorise the Chairman and Secretary to open a bank account in the name of the Proposed Society at the nearest branch. The Chairman and Secretary will operate this account jointly.

Ø  To obtain tangible security from the Secretary to become eligible for operating bank account and handling of cash.

Ø  To regularise the collection of share money and entrance fees from milk producers towards membership.

Ø  To make the dairy cooperative society duty bound to follow all directions and suggestions given by the Milk Union to which the society desires to be affiliated.

Ø   To collect milk from all the members and supply the same to the milk union as suggested/directed by the milk union.

Ø  To supply the inputs on cost to the members as provided by the milk union.  

Ø  To select the milk collection centre/location/premise for the society in the village which desirably a centrally located position and accessible by most of the members.

Ø  To procure the Milk Cans, Milk Collection and Testing equipment, Stationary, Chemicals for testing etc. before the date of commencement of milk procurement by the society.

Ø  To decide the modalities of milk transportation (Head Load) if the society is not on the main road/lifting point of the milk truck.

Ø  To raise fund /deposit from individual or to request milk union for an advance to facilitate quick payment in the beginning.

It may please be noted that constitution of ad-hoc managing committee / Chief promoter, collection of the share money, application for registration etc. are governed and decided by the State Cooperative Societies Act, Rules and the Milk Union’s policy of organisation and registration of society.

Registration of Society

In normal circumstances a proposed society (which has been organised as per bye-laws) is allowed to function as such for a period up to which the milk union assess its attainment of sustainability. A performance review of the functioning of the society is done and if satisfied with its growth and sustainability, the milk union proposes for its registration. The proposal is recommended by the milk union and forwarded to the concerned office of the Registrar, Cooperative Societies of the State. The general procedure for preparing the proposal for registration is indicated below:

Ø  The application form for registration is collected.

Ø  All members including those on the ad-hoc managing committee sign the application as Promoters.

Ø  The application is submitted to the appropriate authority for consideration along with the following documents. The requirement may vary from state to state.

a)      Number of copies (as prescribed in the application form) of the bye-laws signed by the Chief Promoter.

b)      Number of copies (as prescribed in the application form) of the list of members (promoters) with number of shares held by each of them.

c)      Number of copies (as prescribed in the application form) of the resolutions passed at the proposed society’s organisation meeting.

d)     Number of copies (as prescribed in the application form) of the proposed society’s bank balance certificate issued by the bank.

e)      Number of copies (as prescribed in the application form) of the accounts statement for the period it has worked as proposed society.

f)       A certificate regarding jurisdiction of village Panchyat under which this village is located.

The society is considered registered only when a registration certificate is obtained by the society with a registration number and date, issued by the registering authority.

1.3.   First General Body Meeting of the Registered Society:

Once the society is registered, a general body meeting of all the members is convened by the Secretary of the proposed society with the permission /consultation of the Chairman. The following suggestive / indicative agenda items are considered in the meeting (depending upon the state act, rules etc.).

Ø  Selection of a person to chair this meeting.

Ø  Thanks to the registering authority and accepting the registered bye-laws.

Ø  Election to the regular Managing Committee and Chairman of the Society as per bye-laws.

Ø  Regularising / terminating the existing staff / appointing new staff, if required.

Ø  Accepting the statements of accounts for the period it functioned as a proposed society.

Ø  Informing the bank about the registration of the society and request them to make the account of the proposed society in the name of the registered society.

Ø  Regularisation of membership according to the bye-laws. Enrollment of new members.

Ø  Affiliation of the society with the Cooperative Milk Union and other related organisations.

Ø  Appointment of local auditor.

Ø  Any other items with the permission of the Chair.

1.4.  Organisation and registration of Milk Union:

Once sizeable number of societies (40-50) are organised and registered in a milkshed, the steps for organising the District level milk union are taken.  The responsibility of organising the union lies with the implementing agency along with concerned societies.  The societies form the basic unit (member) of a union.  The organisational work is done as per the approved bye-laws for union which are available from the office of the Registrar, Cooperative Societies or his representative office at District level. In some case the implementing agency (Government/Corporation/Federation) may nominate the union directors and ask the union to organize the societies. This happens when a cooperative dairy project is to be started from a scratch.

Nominated/Adhoc Body

In pursuance of the union bye-laws, the Chief Executive Officer of the implementing agency invites the society representatives (normally Chairman of all the registered milk societies) to hold a general body meeting which is called as an organisation meeting for union.   For this purpose a communication in writing is sent to all the registered societies, stating purpose, date, time and place of meeting.

The proceedings of this meeting may differ on the basis of provisions in bye-laws of the union.  In some cases the adhoc board is democratically elected in this meeting itself while in others the State Government/Registrar Cooperative Societies, nominates the first board.  In former case the board continues functioning till the union is registered and holds its first general body meeting to elect the Board as per the bye-laws.  In latter case the nominated board continues to function for the whole term as specified in bye-laws (normally 3 yrs) unless changes are made by the Registrar Cooperative Societies himself. 

The meeting in both cases resolves around the formation of District Cooperative Milk Produces’ Union in accordance with bye-laws.  Also an interim board and Chairman are elected for a period of 3 months or till the union is registered.  In the latter case the meeting resolves all the other matters but election of Board and Chairman which is subsequently nominated.


Registration of Union

The proposal for registration of Union is made on the prescribed application form available from District Registrar’s office.  This is accompanied by 4 copies of bye-laws duly signed by promoter-members, a copy of minutes of organisation meeting, bank balance certificate and other necessary resolutions as prescribed in bye-laws Acts with a request to register the union.

Post Registration General Body Meeting

After the union is registered, an agenda stating date, place, time and purpose of meeting is issued by the Chief Promoter to all member societies.  In this meeting only those member societies are eligible to participate which have signed the original proposal of registration in the organisation meeting and who have also purchased shares of the union.  This is called the first General Body Meeting of the union after registration.  The agenda of this meeting contains following points to be considered:

Ø  Selection of President of the meeting

Ø  Acceptance of registered bye-law

Ø  Election of regular board

Ø  Approval of accounts for the proposed period

Ø  Fixing the borrowing limit for union

Ø  Any other work with the permission of chair.

The election of office bearers is done according to norms prescribed in the bye-laws/Rules and Acts of the State and thus a regular board is installed.

Meeting of Board of Directors

The board conducts its meeting soon after the general body meeting and decides about appointing the staff and taking further actions for achievement of the objectives as per bye-laws of the Union.