Dairy Development and Milk Cooperatives: The Effects of a Dairy Project in India

Dairy development is an important component of strategies to expand agricultural output in many developing countries. Specifically, the paper reports the results of a study undertaken in 1983 in the state of Madhya Pradesh concerning dairy development and milk cooperatives. Using a variety of econometric techniques the analysis of this paper establishes, in the area of study, that the project improved the milk marketing system thereby increasing competition with the result that the average price of milk to producers rose about 8 percent. This together with improvements in the provision of animal husbandry and veterinary services and an induced increase in the use of variable inputs raised milk production by about 17 percent over five years. Further analysis shows that the resulting increase in incomes for milk producers led to increased food consumption. Finally, the study suggests that future cooperative and dairy policy in areas such as that studied will benefit in the short-run from further intensification of animal husbandry and veterinary services to farmers to allow them to maximize output from their holdings of traditional cows.