Entrepreneurship, Marketing and Cooperative Dairy Organisation
Domain 8 applies business and cooperative principles to a dairy enterprise. You should be able to calculate break-even, explain the three-tier cooperative structure and choose a marketing mix.
Core rules
- The Anand/Amul pattern has village dairy cooperative societies, district milk unions and a state federation; OMFED is Odisha's state-level cooperative federation.
- Milk pricing is commonly linked to fat and SNF; value addition improves margins but adds processing cost.
- A business plan covers market, production, costs, working capital, risks and profit. Working capital covers feed, labour, fuel and collection chillers.
- Break-even quantity = fixed cost ÷ (selling price per unit - variable cost per unit).
Worked example
Fixed cost is ₹60,000 per month, selling price is ₹45/L and variable cost is ₹33/L. Contribution = 45 - 33 = ₹12/L. Break-even = 60,000 / 12 = 5,000 L/month. The reasoning is that each litre contributes ₹12 toward fixed costs; 5,000 litres just cover fixed cost.
Traps
- Subsidy is not profit; it is a cash inflow with conditions.
- Ignoring wastage, spoilage and depreciation understates cost.
- Revenue is not the same as profit.
- Do not confuse a cooperative union with a private processor.