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© European Journal of Scientific Research, Vol. 39, No 4, 2010
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© FRDN Incorporated, 2010
Editor-In-Chief & Managing Editor: Adrian Marcus Steinberg, PhD
117, Orion Mall, Palm Street, P.O. Box 828, Victoria, Mahé, Seychelles
Tel: +248 400138344 Fax: +248 400138345
European Journal of Scientific Research ISSN: 1450-216X / 1450-202X
Vol. 39 (4): 130-142, January 2010
DOI: http://www.europeanjournalofscientificresearch.com/issues/EJSR_39_4.html
SUPPLY CHAIN MANAGEMENT: MILK COLLECTION &
DISTRIBUTION SYSTEM IN PAKISTAN
AHMED RIZWAN RAHEEM
Tel: +92-300-829-3560
Hamdard Institute of Education and Social Sciences, Hamdard University, Karachi
Abstract: The objective of this study is to define the prevailing Supply Chain Management system in Milk
Collection and distribution across Pakistan. Moreover, the study also suggests that how these supply chain
management and distribution systems can be improved in order to save cost and enhance the overall productivity of
this industry. In this study, economic share of dairy system has also been discussed. The vision 2015 also discussed
in this study.
Key Words: Supply Chain Management, Milk Collection & distribution, Dairy Industry
1. INTRODUCTION
Pakistan with current estimates is the 4th largest milk producing country in the world with 33 Billion liters of milk
produced annually. The potential is huge but the sector operates mostly in the informal economy and needs a
consistent effort to formalize and be able to contribute better to the national economy. Out of the total milk
produced, 97% is in the informal sector (i.e. loose milk consumed in the villages and or sold in the cities through
"Gawallas" in unhygienic conditions and without any quality standards). There are 8 Million farming households in
Pakistan with a total herd size of 50 million animals. 97% of these farmers are not linked to formal markets and
hence are not progressing in economic terms. Moreover, the overall animal herd of Pakistan is thinly spread across
thousands of square kilometers with an average of 2 to 5 animals per household. Dairy farming practices are very
old and traditional and need overhauling. To formalize and improve the industry, a private sector led Pakistan Dairy
Development Company has emerged with guarantee backup by government of Pakistan [1].
The platform proposes to improve the dairy sector through improved research facilities, training and capacity
building of farmers, training veterinarians, improving the cold chain through milk chillers, promoting healthy
pasteurized milk, develop model commercial dairy farms, focus on breed improvement, facilitation of credit
financing to dairy farmers and linking the rural area based farmer to the market mechanism. This will improve and
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formalize the dairy sector. The White Revolution is targeted to achieve an annual production of 40 billion liters of
milk by 2015, it aims to create an additional 3 million jobs in the formal economy and provide an estimated 350
million rupees per day in cash flow to farmers in the sector or to say that an additional formal economy of 3 Billion
US$ will be developed for the rural economy. The potential is there but needs technical support from the industry,
strategic support from dairy experts, policy and infrastructure from the government and specific projects funding
from the international donor agencies. The potential is estimated on the basis of the fact that livestock and
agriculture sector contributes over 10% to the GDP, and a milk economy that in value terms is 27.7% of the total
agriculture sector. It is an untapped market, expected to grow an additional 3 billion liters in the next few years at a
growth rate faster than most sectors, and 30% by 2015 [1].
1.1 THE ECONOMIC BENEFIT (OVER A DECADE)
With an estimated 33 Billion Liters of annual milk production from 50 million animals managed by approximately 8
million farming households, according to latest statistics Pakistan is the 4th largest milk producing country in the
world. It has a livestock and agriculture sector contributing over 10% to the GDP, and a milk economy that in value
terms is 27.7% of the total agriculture sector. It is an untapped market, expected to grow an additional 3 billion liters
in the next few years at a growth rate faster than most sectors. Undeniably, a sector with such credentials can bring
about not just a radical change but also a dairy revolution in the country [2, 3].
The annual milk production of 33.6 billion liters in Pakistan is shared between a 71.1% share for the rural economy
and a much smaller urban share of 29%. Only 3% of the total production of milk is processed and marketed through
formal channels. For the other 97%, a multi-layered distribution system of middlemen has evolved to supply milk.
The contribution of the formal sector processed milk to real GDP in Pakistan is 0.43% in 2004-05. Despite only a
small percentage (3%) of milk being processed, the (UHT) market is growing at a steady rate of 20% a year.
Presently 97% of raw milk produced in the rural economy is not linked to the market mechanism because of a
number of reasons (defined ahead in this paper). Due to this reason, the dairy sector in the rural economy is not
making a significant impact in the National economy in accordance with its potential and also with the quantity of
milk, which is available. The White Revolution is targeted to achieve an annual production of 40 billion liters of
milk by 2015; it aims to create an additional 3 million jobs in the formal economy and provide an estimated 350
million rupees per day in cash flow to farmers in the sector [4].
1.2 MILK SUPPLY CHAIN MANAGEMENT
1.2.1 Milk Collection and Distribution system
While the structure of the dairy processing industry has improved dramatically, milk collection and distribution is
fragmented compared to systems found in other countries. There is a need to improve the supply chain from farmer
to consumer in Pakistan [5].
There is very limited data available on the routes to market or the distribution channels employed in Pakistan. Most
of the milk produced in the farms is consumed at the household level. The surplus is marketed at the local markets in
form of liquid milk or purchased by milk collectors and transported to urban areas through different distribution
channels [6].
The milk supply and marketing chain involves different players such as milk collectors (dodhis), traditional cream
manufacturers and "Khoya" (milk concentrate for local sweets) makers and retailers. (The traditional cream and
khoya is often very unhygienic and is made in dirty work conditions hence is a danger to human health). Dodhis or
milk collectors play an important role in collection and the marketing chain of the dairy sector of Pakistan. The
dhodhi community may even reach a million in number. Based on their financial and technical abilities, they can be
classified in three groups of small, medium and large-scale milk collectors. The small-scale milk collectors collect
© European Journal of Scientific Research, Vol. 39, No 4, 2010
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an amount of 200-400 kg milk per day from different farms, often in remote areas. Some of them make long-term
contracts at a predetermined price offering a share of the milk price in advance to the farmers. In small towns, they
may directly market the milk, but in larger urban areas, they sell the milk to the large collectors. Medium scale milk
collectors collect 400-800 kg milk per day in a manner similar to the small milk collectors, but on a larger scale.
This group may carry out door-to-door milk delivery and marketing in some nearby urban markets using different
means of transportation. Large-scale milk collectors collect 1.5 to 3 tons of milk/day, purchased often from the small
and medium scale collectors and act as middlemen between them and retail shopkeepers. Large-scale milk
adulteration is practiced mostly by this group of large-scale milk collectors [7].
The rural supply chain for processed milk industry has three patterns: milk collection through third-party milk
collectors; self-collection system of dairy plants and farmer cooperatives. Third party collection and self-collection
are the more prevalent collection systems, whereas to date dairy co-operative systems have failed to succeed in
Pakistan [8].
Of the total milk sold by the farmers, 15 - 19% is thought to be wasted en route-to-market due to spoilage from a
lack of proper cooling, storage, and transport systems. There is an imperative need to prevent the wastage of milk,
which is the result of a poor cold chain. Milk being a highly perishable commodity does not give many choices for
storage or channels; consequently, the unorganized middlemen as a speedy substitute to a cold chain dominate the
supply chain. Both investment and regulation are required to develop the cold chain, which will help consolidate the
milk collection system [9].
The cold chain infrastructure is envisaged as a means to create rural entrepreneurs in the rural economy. Improved
supply chains may reduce milk collection costs faced by the processing industry, presently averaging around 16% of
the factory gate costs (with the remainder being the price paid for the milk). We also believe dairy farmers should be
encouraged to become more flexible in collection hours to allow longer hours for collection of milk that will ensure
cold chain tankers run as economically as possible.
This brings us to the most complicated issue of Pakistan’s Dairy supply chain namely; achieving a “Level
Playing Field” between the middlemen Dhodhis and the processors. At present, middlemen play a critical role in
the Pakistan dairy industry: Without them, a far smaller proportion of milk would find its way from the farmer to the
consumer. To varying extents, processors rely on dhodhis collecting milk and transporting it to collection centers. It
is well known that adulteration of milk occurs in Pakistan on a broad scale. The general view is that much of this
adulteration occurs after the farm gate and before processors receive it, i.e. when the milk is in the control of
middlemen. Further, it is probable that middlemen do not pay tax as per the more formal sectors of the industry [11].
The above factors create a situation under which middlemen have unfair advantages over the formal sector, and in
addition contribute to poor quality milk to the detriment of consumers (especially those who cannot afford the higher
quality presentations provided by the processors) and to the medium term development of a robust dairy industry. In
this situation Dairy Pakistan as the voice of various stakeholders believes that the role of middlemen should be
“regularized”, i.e. middlemen should be encouraged to respect the milk they are handling. Such “encouragement”
could take several forms, both direct and indirect:
Better regulation and enforcement could be established to make adulteration less easy and punished to a greater
extent.
Dairy Pakistan and other industry participants could fund a marketing campaign to educate consumers on the
dangers of loose milk.
Zero rating of the industry will reduce some of the advantages achieved by the tax avoidance thought to be
practiced by at least some middlemen.
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Dairy Pakistan’s Cooling Tank program will result in more collection centers being established, thus improving
access for farmers who wish to deliver milk to processors directly.
Farmers delivering directly need to earn a higher price for their milk than those supplying through middlemen.
1.2.2 Some of these actions will have greater or lesser impact:
Often in developing countries (and indeed in developed countries), a regulatory approach creates as many
problems as it solves. Regulation can be a source of corruption. Adequate regulation is already in place, which
should, in theory, protect milk quality. Further regulation is unlikely to change present practices.
A marketing campaign may be successful over a prolonged period, but within the constraints of present limited
funding availability for Dairy Pakistan, it is probable that higher priorities should be met first. Dairy Pakistan will,
however, play a co-coordinating role with other industry participants, should they wish to fund such a marketing
campaign.
Zero rating is an important step in achieving a level playing field.
Dairy Pakistan’s Cooling Tank Program is another important step.
It should be noted that the intent of Dairy Pakistan is not to cut all middlemen out of the industry; however,
illegal actions such as adulteration and desirably tax avoidance should be made more difficult to undertake.
Middlemen who wish to respect milk, the farmers who provide it and the consumers who drink it, are a welcome
part of the industry. However, none of the above or even all of the above steps is likely to succeed in changing the
role of middlemen, for there is another important function they provide, and that is the provision of credit. Dairy
Pakistan intends to explore with institutions, both national and international, the alignment of the operation of
collection centers with the provision of micro-credit. Only with such credit facilitation will genuine alternatives to
the middlemen exist. It is probable that present interest rates on credit supplied by middlemen are onerous, so the
suggested integration between the operations of collection centers and credit provision could have a major impact on
the welfare of especially small farmers [12].
Traditional Milk Supply Chain model
Dairy&Farmer&
Gawala&(Milkman)&
Consumer&Sweet/Milk&Shop&
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2. RESULTS AND DISCUSSIONS
2.1 EXISTING MILK SUPPLY CHAIN
2.1.1 Milk collection
There are two types of milk collection systems adopted by HFL namely self-collection and contract collection.
2.1.2. Self-collection
A system in which HFL purchases and preserves raw milk that meets its quality standards through their staff
members and delivers at PHE is known as self-collection. It may include the following:
i. Milk Collection through Village Milk Collection Centre (VMCC).
Village Milk Collection Centre (VMCC) is a place where the farmers of an area come and give milk and a person
appointed by the company collects milk after testing it. The person who collects milk there from the farmers is
known as VMCC agent. It is provided by all the essential utilities for the milk collection such as collection tub,
testing chemicals, ice and the rent of the place as well as the electricity bill. At VMCC the agent keeps the record of
all the farmers who supply milk at VMCC and takes samples from the milk. The samples are tested and receipt is
given to the farmer and a copy is kept at the VMCC for record. The mode of payment at VMCC is weekly i.e., after
a week, farmers go to bank and receive their cash of all the week from their account [13].
ii. Direct from Farmers (DF).
As the name indicates, it is a collection directly from the farmers. The collection vehicle, when goes to an area for
the milk collection, there are some farmers who don’t supply milk at the VMCC. They are aware of the timings of
the collection vehicle, so they supply milk directly to the people in the vehicle.
iii. Progressive Farmers (PF)
Progressive farmers are those farmers who supply milk directly to the collection vehicle like direct farmers but the
difference is that these people are progressive farmers and they provide higher quantities of milk [14].
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Existing Milk Supply Chain
2.1.3 Contract collection
It is the system in which HFL deals with the different private milk collecting persons and enters into a contract with
them to provide milk to the company. They may include the following:
i. Mini Contractors
Mini contractors are those who provide milk about 1000 liter of milk per day. They collect milk on their own. In
this type of collection, the company identifies personnel who are willing to work and are of good repute with fair
dealings. The contract is mainly verbal and no written type of contract was observed during our survey. The mini
contractor collects milk from the farmers of the area as well as from the other areas. Milkmen from different areas
also supply milk at mini contractor’s place. A company vehicle collects milk from these mini contactors. The MOT
with that vehicle tests the milk according to their quality standards. If it passes the tests, it is accepted and rejected
otherwise [15].
Dairy&Farmer&
Gawala&(Milkman)& VMCC&
Retailer&
Consumer&
PHE&
Company&Milk&Plant&
Sweet/Milk&
Shop&
Company&Vehicle&
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ii. Sub-Contractors
Sub Contractors are almost the same as that of mini contractors but the main difference is that milk is collected from
the mini contractor’s place but sub contractor has to transport milk to the PHE of the company.
2.2. Milk procurement
Manager Milk Procurement (MMP) Plant is responsible for all the milk procurement in the milk area. Milk
collection area, which consists of mainly the provinces of Punjab and Sindh, is divided into four regions headed by
an MMP (Region). These regional offices are at Arifwala, Chishtian, Jhang and R. Y. Khan. Each region consists
of 3-4 zones, which is headed by a Zonal Manager. There are 14 zones under these 4 regions. Each zone is headed
by Executive Zonal Manager or an Area Executive depending upon the size of daily collection. Each zone consists
of 2-3 sub-zones. At sub-zonal level, there are PHE (Palate Heat Exchanger). Under these sub-zones come
VMCCs, mini contractors and sub contractors, which are further responsible for the milk collection [16].
2.2.1 Milk collection area
There are 14 zones for self-collection of milk having 28 Main centers (PHE)
Table 5: HFL Milk collection area
Sr. No. Milk Collection Zones 7 Jhang
1 Arifwala 8 Pakpattan
2 Bahawalnagar 9 Okara
3 Bahawalpur 10 Rahim Yar Khan
4 Bhowana 11 Shah Jewna
5 Mian Channu 12 Narowal
6 Haveli 13 Upper Sind
Source: Author’s own survey
2.3. MILK PROCUREMENT TYPES:
Milk Procurement is the starting point of dairy industry supply chain. The procurement process starts on the farm,
where producers are advised, quality is monitored and raw milk is collected daily from various Farmers/progressive
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farmers by mini-suppliers and village milk collection centers countrywide and transported to factories in the most
cost-effective manner. Raw milk quality is the cornerstone of excellent dairy products. Milk Procurement guards this
quality with an eagle eye and ensures that company’s production needs are met. Through teamwork within the
supply chain, procurement teams of companies ensure that raw milk losses are kept to the absolute minimum [17].
Milk procurement is basically of two types:
1. Supplier’s collection
2. Self collection
1. Supplier Milk collection system: In this case supplier brings milk with his or her own sources at factory.
Quality assurance department of dairy as per their standards scrutinizes the milk. If milk passes the entire
quality test then this milk is received otherwise the milk is rejected.
Mini/Hilux contractor: In this type of milk collection local supplier of area collects milk with their own
resources and brings this milk to companies sub center. If milk is according to company’s standard that
milk is received otherwise rejected. All types of collected milk are brought to sub centers, where it is
chilled (by chiller or by ice) and transported to Main center either through 1.7, 5 or 9 tons of tankers
depending upon the quantity of milk, here milk is chilled through chillers and transported to plant [17].
2. Self Milk collection system:
A. Village Milk Collection (VMC): In this case a local community nominated person (VMC agent) collects
milk from local farmers on behalf of company by using company facilities. The VMC agent gets
commission from company on per litter-collected milk. After collection VMC agent either himself
approach the nearby center of company for handing over of collected milk or company vehicle collect milk
from that VMC agent as per written agreement. Very good quality milk is collected through the VMCs. No
doodhi is involved in this type of collection.
B. Progressive formers: Having 10 adult buffalo or minimum 25 liters milk.
C. Direct Farmer: Having one or more milk animal and bring milk directly to sub center or MCC.
> Bulk milk transport: Milk procurement teams of companies ensure that milk is collected and transported to
factories daily. Milk cooled on the farm or cooling centre may be transported in bulk tankers. Bulk tankers are
insulated, so the milk will remain cold until it reaches the plant (provided the transport is fast, i.e. short distance or
good roads enabling milk to be delivered before the temperature of milk rises above 10? C).
> Reception of milk at plant: At reaching plant quality assurance staff of reception lab takes the representative
sample of whole milk tanker and analyses it for various parameters as per standards of company. If milk found as
per quality norms of company the tanker is weighed and production department staff receive the milk for further
processing otherwise the sub standards raw milk tanker is rejected.
© European Journal of Scientific Research, Vol. 39, No 4, 2010
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2.4 MILK PROCUREMENT SYSTEM (MPS):
The primary function of any Milk Procurement System (MPS) is to expedite dairy milk producer’s payroll process.
This is accomplished using a complex system that documents the pickup, testing, delivery of milk, and issues
payment to producers of milk and those responsible for its transport. In addition to tracing the movement of milk as
it is picked up, tested, and transported to the plant, the Milk Procurement System issues checks and records financial
information for producers, haulers, and vendors. MPS facilitates the dairy’s milk producer payroll process from
beginning to end [18].
2.5 ROLE OF MPD OF ANY COMPANY IN MILK PROCUREMENT:
Milk procurement department of any company provides a value-added service to all their milk producers, ensuring
that milk of the correct quality is produced and that sufficient raw milk is always available to satisfy company’s
needs, through the use of strategies, processes, projects, systems and policy. Procurement teams of companies
manage a number of Milk Procurement responsibilities including:
1. Ensuring that the producers are paid promptly and accurately.
2. Purchasing raw milk from producers and transporting it to factories effectively and efficiently.
3. Successful clean milk route development in various new identified areas.
4. Installation of bulk coolers in the area.
5. Milk yield improved.
6. Hygiene practices improvement at all levels of milk production and procurement
7. Reduction of Bacterial Count of milk.
8. Advanced training to drivers in the handling of mass milk in case of emergencies.
9. Trainings to field staff for handling of sample and client.
2.6 QUALITY SYSTEMS IN MILK PROCUREMENTS:
In Pakistani dairy industries following types of quality assurance system exist to assure the procurement of the best
quality raw milk.
1. First System: Procurement department is responsible for the procurement of good quality raw milk.
2. Second System:
Quality assurance department support the procurement department for procurement of good quality of
raw milk.
© European Journal of Scientific Research, Vol. 39, No 4, 2010
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2.6.1 First system:
Procurement department is responsible for the procurement of sufficient quantity of good quality milk. Company
develops a lab carrying all the testing facilities of raw milk. A procurement representative is present their to check
and receive the quality of raw milk from area as per given standard of company [19].
> Benefits of this system:
1. Fully under control of one department.
2. Less manpower is required.
3. Less cost to company.
4. Under this system the objective of procurement staff become more quantity with the good quality.
5. More amount of volume procured.
> Problems with this system:
1. Monopoly of procurement staff.
2. Sometimes non-calibrated glassware used for measuring and testing of milk.
3. No proper and accurate record maintenance, which results into reduction of mal practices at gross root
level.
4. More rejection of raw milk at plant, this contributes towards losses of the company.
5. Some times in order to avoid the rejection of milk at plant procurement staff himself treat the milk with
some kind of adulterant.
2.6.2 Second system:
Quality assurance department is responsible for the procurement of good quality milk, in this system at each main
collection center of company. Company develops a lab carrying all the testing facilities of raw milk. A quality
assurance representative is present their to check and receive the quality of raw milk from area as per given standard
of company.
> Benefits of this system:
1. Substandard milk is rejected at gross root level.
2. Avoid any un-necessary milk quantity rejection at plant.
3. Monopoly of procurement staff is abolished at center level.
4. As the main centers are under quality assurance department, so all the equipment’s and glassware used for
measuring and testing of milk is properly measured and calibrated so chances of fat loss or SNF loss is
reduced this ultimately improve company profitability at gross root level.
5. As all tests are performed at gross root level with accurate glassware, this helps to develop a trust of client
on company.
6. Proper and accurate record maintenance, which results into reduction of mal practices at gross root level.
© European Journal of Scientific Research, Vol. 39, No 4, 2010
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7. Control of loss at gross root levels.
8. Quick support of QA staff to procurement staff towards any kinds of improvement issues.
9. Better control of Hygienic conditions of raw milk handling at gross root level.
10. This approach gives a relief to procurement staff regarding
> Problems with this system:
1. Expensive as this increase the quality cost.
2. Create miss understanding between procurement and QA staff.
3. Under this system in same organization the objective of procurement staff become more quantity and at the
same time objective of quality staff become good quality of milk. The lake of harmony between the
objectives of staff sometimes creates company policy issues.
4. In case of rejection of raw milk at plant, procurement staff will not take the responsibility for its disposal.
5. In meetings some time members of both department has blaming attitude towards each other.
6. Some times company needs more qualified staff to be hired for proper running of this system, this will
increase the staff numbers to be managed.
7. This gross root level quality approach sometimes reduces the volume of raw milk procured by any
company.
3. CONCLUSION AND RECOMMENDATIONS
Given success of the programs discussed in this section, what might the dairy industry look like in the year 2015?
• The formal sector to be 40% of the total dairy industry.
• Low cost but good quality pasteurized milk to be available in cities and towns accounting for 70% of
Pakistan’s population.
• Pakistan’s dairy industry meets the needs of consumers, thus minimizing imports.
• The range of goods offered to consumers is as wide as in say the markets of the Gulf.
• The well being of farmers throughout Pakistan is enhanced, and dairying is acknowledged to be a profitable
enterprise.
• Dairying will have lifted millions of farmers above subsistence levels of activity.
• A thriving commercial dairy farming sector will be in place.
• Well-regarded Research Institutes will be active in their chosen fields, with a focus on meeting the needs of
farmers.
• Quality of some sectors of the industry will be such that exports are viable.
• Dairying will be practiced across Pakistan, in a manner that contributes to balanced regional development.
• An integrated rural support economy will be in place, with contractors supplying support services.
• Education for professional service providers will be broader than at present, producing qualified experts
capable of proving advice to farmers across a range of farming related matters.
• Boosted by a greater contribution to GDP from dairying, rural infrastructure will be much improved from
the present.
• Large farms and milk colonies will be generating part of their own energy needs through biogas.
• The linkage between the dairy industry and micro-finance providers will enhance the living standards of
millions of smallholder farmers.
• An industry with a greater proportion of milk handled by the formal sector, and with consumers more
aware of product quality standards, will be attractive to foreign investors.
© European Journal of Scientific Research, Vol. 39, No 4, 2010
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REFERENCES
[1]. Aazim, M. (1997), Milk powder price on the rise. The Dawn [Electronic version] retrieved on July 21, 1997.
[2]. Ahmed, R. R., and Sattar, I., 2009. Distribution Channels in Pakistani Pharmaceutical Industry, European
Journal of Scientific Research, 38 (4): pp. 321-327.
[3]. Rizwan Raheem Ahmed and M. Shafi Azam, 2006. Devolution Plan 2000: Effectiveness of Citizen Community
Boards (CCBs) in income generation, Independent Study for MS, Shaheed Zulfiqar Ali Bhutto Institute of Science
& Technology, Karachi, December, 2006.
[4]. Ahmad, S. (1962), An investigation into supply, consumption and marketing of milk into Lyallpur City.
Unpublished M. Sc. Thesis, West Pakistan Agricultural University, Lyallpur.
[5]. Ali and Saifullah (2006), Milk production and marketing. The Dawn [Electronic version] retrieved in January
2006.
[6]. Ali, T. (2006), A case study of milk production and marketing by small and medium scale contract farmers of
Haleeb Foods Limited, Pakistan. Faisalabad: University of Agriculture.
[7]. Anjum, M. S. (1978), A note on economic analysis of consumer demand for raw and processed fluid milk in
Lahore. The Pakistan Development Review, Volume 17, pp. 495-510.
[8]. Bhatti, M. Y. (1992), Emerging role of livestock in agricultural economy of Pakistan. Progressive Farming,
Volume 12, pp. 50-53.
[9]. Burki, A. A., M. Khan and F. Bari (2005), The state of Pakistan’s dairy: An assessment. CMER Working Paper,
05-34, LUMS, Lahore.
[10]. Government of Pakistan (2006), Economic Survey 2005-06. Islamabad: Ministry of Finance.
[11]. Drabner, Hans J. (1989). The importance of nomadic animal husbandry in E. Africa- requirements and
possibilities of its development.Beitr. trop. Landwirtsch. Vet. Med. 27: 5-15
[12]. Ahmed, R. R., and Jalees, T., 2008. Pharmaceutical Industry in Pakistan: Unethical Pharmaceutical Marketing
Practices, Market Forces Index, 4 (2): pp. 30-39.
[13]. Kurwijila, R.L. (1990). Rural Dairy Technology Appropriate to Rural Smallholder Production: The Tanzania
Experience. Proc. Symposium on Dairy Marketing in Sub-saharan Africa. 26- 30 Nov. 1990. ILCA, Addis Ababa,
Ethiopia, pg. 131 - 142.
[14]. Massae, E. E. (1993). Experiences with dairy development in Tanzania. In: Seminar Proceedings: Dairy
development policy and implementation: sharing experiences between Africa and Asia. Harare, Zimbabwe 12-16
July 1993.
[15]. Mchechu, J.E.U. (1983). The present status of the livestock industry in Tanzania. Proc. 10th Sci. Conf.
Tanzania Soc. Anim. Prod. Vol. 10: 8-43
[16]. Scheinman, D., Kingazi, R., Moshi, G. and J. Mshana (1992). Milk production and Marketing in the West
Usambaras. Unpublished Report for The Soil Erosion Control and Agro Forestry Project (SECAP), Tanga.
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[17]. Rizwan Raheem Ahmed and Tariq Jalees, 2005. Pharmaceutical Industry in Pakistan: Unethical
Pharmaceutical Marketing Practices, Independent Study for MS, Shaheed Zulfiqar Ali Bhutto Institute of Science &
Technology, Karachi, December, 2005.
[18]. Shapouri, S. and S. Rosen (1990). Dairy marketing in sub-Saharan Africa. In: Proc. Symposium on Dairy
Marketing in Sub-saharan Africa. 26 - 30 th Nov. 1990. ILCA Addis Ababa, Ethiopia.
[19]. TDL, (1994). Some Basic statistics on TDL performance (1976 - 1994): Physical quantities in comparison
with budgets and plant capacities. Unpublished data bank

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SUPPLY CHAIN MANAGEMENT: MILK COLLECTION & DISTRIBUTION SYSTEM IN PAKISTAN

  • 1. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 130 © FRDN Incorporated, 2010 Editor-In-Chief & Managing Editor: Adrian Marcus Steinberg, PhD 117, Orion Mall, Palm Street, P.O. Box 828, Victoria, Mahé, Seychelles Tel: +248 400138344 Fax: +248 400138345 European Journal of Scientific Research ISSN: 1450-216X / 1450-202X Vol. 39 (4): 130-142, January 2010 DOI: http://www.europeanjournalofscientificresearch.com/issues/EJSR_39_4.html SUPPLY CHAIN MANAGEMENT: MILK COLLECTION & DISTRIBUTION SYSTEM IN PAKISTAN AHMED RIZWAN RAHEEM Tel: +92-300-829-3560 Hamdard Institute of Education and Social Sciences, Hamdard University, Karachi Abstract: The objective of this study is to define the prevailing Supply Chain Management system in Milk Collection and distribution across Pakistan. Moreover, the study also suggests that how these supply chain management and distribution systems can be improved in order to save cost and enhance the overall productivity of this industry. In this study, economic share of dairy system has also been discussed. The vision 2015 also discussed in this study. Key Words: Supply Chain Management, Milk Collection & distribution, Dairy Industry 1. INTRODUCTION Pakistan with current estimates is the 4th largest milk producing country in the world with 33 Billion liters of milk produced annually. The potential is huge but the sector operates mostly in the informal economy and needs a consistent effort to formalize and be able to contribute better to the national economy. Out of the total milk produced, 97% is in the informal sector (i.e. loose milk consumed in the villages and or sold in the cities through "Gawallas" in unhygienic conditions and without any quality standards). There are 8 Million farming households in Pakistan with a total herd size of 50 million animals. 97% of these farmers are not linked to formal markets and hence are not progressing in economic terms. Moreover, the overall animal herd of Pakistan is thinly spread across thousands of square kilometers with an average of 2 to 5 animals per household. Dairy farming practices are very old and traditional and need overhauling. To formalize and improve the industry, a private sector led Pakistan Dairy Development Company has emerged with guarantee backup by government of Pakistan [1]. The platform proposes to improve the dairy sector through improved research facilities, training and capacity building of farmers, training veterinarians, improving the cold chain through milk chillers, promoting healthy pasteurized milk, develop model commercial dairy farms, focus on breed improvement, facilitation of credit financing to dairy farmers and linking the rural area based farmer to the market mechanism. This will improve and
  • 2. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 131 formalize the dairy sector. The White Revolution is targeted to achieve an annual production of 40 billion liters of milk by 2015, it aims to create an additional 3 million jobs in the formal economy and provide an estimated 350 million rupees per day in cash flow to farmers in the sector or to say that an additional formal economy of 3 Billion US$ will be developed for the rural economy. The potential is there but needs technical support from the industry, strategic support from dairy experts, policy and infrastructure from the government and specific projects funding from the international donor agencies. The potential is estimated on the basis of the fact that livestock and agriculture sector contributes over 10% to the GDP, and a milk economy that in value terms is 27.7% of the total agriculture sector. It is an untapped market, expected to grow an additional 3 billion liters in the next few years at a growth rate faster than most sectors, and 30% by 2015 [1]. 1.1 THE ECONOMIC BENEFIT (OVER A DECADE) With an estimated 33 Billion Liters of annual milk production from 50 million animals managed by approximately 8 million farming households, according to latest statistics Pakistan is the 4th largest milk producing country in the world. It has a livestock and agriculture sector contributing over 10% to the GDP, and a milk economy that in value terms is 27.7% of the total agriculture sector. It is an untapped market, expected to grow an additional 3 billion liters in the next few years at a growth rate faster than most sectors. Undeniably, a sector with such credentials can bring about not just a radical change but also a dairy revolution in the country [2, 3]. The annual milk production of 33.6 billion liters in Pakistan is shared between a 71.1% share for the rural economy and a much smaller urban share of 29%. Only 3% of the total production of milk is processed and marketed through formal channels. For the other 97%, a multi-layered distribution system of middlemen has evolved to supply milk. The contribution of the formal sector processed milk to real GDP in Pakistan is 0.43% in 2004-05. Despite only a small percentage (3%) of milk being processed, the (UHT) market is growing at a steady rate of 20% a year. Presently 97% of raw milk produced in the rural economy is not linked to the market mechanism because of a number of reasons (defined ahead in this paper). Due to this reason, the dairy sector in the rural economy is not making a significant impact in the National economy in accordance with its potential and also with the quantity of milk, which is available. The White Revolution is targeted to achieve an annual production of 40 billion liters of milk by 2015; it aims to create an additional 3 million jobs in the formal economy and provide an estimated 350 million rupees per day in cash flow to farmers in the sector [4]. 1.2 MILK SUPPLY CHAIN MANAGEMENT 1.2.1 Milk Collection and Distribution system While the structure of the dairy processing industry has improved dramatically, milk collection and distribution is fragmented compared to systems found in other countries. There is a need to improve the supply chain from farmer to consumer in Pakistan [5]. There is very limited data available on the routes to market or the distribution channels employed in Pakistan. Most of the milk produced in the farms is consumed at the household level. The surplus is marketed at the local markets in form of liquid milk or purchased by milk collectors and transported to urban areas through different distribution channels [6]. The milk supply and marketing chain involves different players such as milk collectors (dodhis), traditional cream manufacturers and "Khoya" (milk concentrate for local sweets) makers and retailers. (The traditional cream and khoya is often very unhygienic and is made in dirty work conditions hence is a danger to human health). Dodhis or milk collectors play an important role in collection and the marketing chain of the dairy sector of Pakistan. The dhodhi community may even reach a million in number. Based on their financial and technical abilities, they can be classified in three groups of small, medium and large-scale milk collectors. The small-scale milk collectors collect
  • 3. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 132 an amount of 200-400 kg milk per day from different farms, often in remote areas. Some of them make long-term contracts at a predetermined price offering a share of the milk price in advance to the farmers. In small towns, they may directly market the milk, but in larger urban areas, they sell the milk to the large collectors. Medium scale milk collectors collect 400-800 kg milk per day in a manner similar to the small milk collectors, but on a larger scale. This group may carry out door-to-door milk delivery and marketing in some nearby urban markets using different means of transportation. Large-scale milk collectors collect 1.5 to 3 tons of milk/day, purchased often from the small and medium scale collectors and act as middlemen between them and retail shopkeepers. Large-scale milk adulteration is practiced mostly by this group of large-scale milk collectors [7]. The rural supply chain for processed milk industry has three patterns: milk collection through third-party milk collectors; self-collection system of dairy plants and farmer cooperatives. Third party collection and self-collection are the more prevalent collection systems, whereas to date dairy co-operative systems have failed to succeed in Pakistan [8]. Of the total milk sold by the farmers, 15 - 19% is thought to be wasted en route-to-market due to spoilage from a lack of proper cooling, storage, and transport systems. There is an imperative need to prevent the wastage of milk, which is the result of a poor cold chain. Milk being a highly perishable commodity does not give many choices for storage or channels; consequently, the unorganized middlemen as a speedy substitute to a cold chain dominate the supply chain. Both investment and regulation are required to develop the cold chain, which will help consolidate the milk collection system [9]. The cold chain infrastructure is envisaged as a means to create rural entrepreneurs in the rural economy. Improved supply chains may reduce milk collection costs faced by the processing industry, presently averaging around 16% of the factory gate costs (with the remainder being the price paid for the milk). We also believe dairy farmers should be encouraged to become more flexible in collection hours to allow longer hours for collection of milk that will ensure cold chain tankers run as economically as possible. This brings us to the most complicated issue of Pakistan’s Dairy supply chain namely; achieving a “Level Playing Field” between the middlemen Dhodhis and the processors. At present, middlemen play a critical role in the Pakistan dairy industry: Without them, a far smaller proportion of milk would find its way from the farmer to the consumer. To varying extents, processors rely on dhodhis collecting milk and transporting it to collection centers. It is well known that adulteration of milk occurs in Pakistan on a broad scale. The general view is that much of this adulteration occurs after the farm gate and before processors receive it, i.e. when the milk is in the control of middlemen. Further, it is probable that middlemen do not pay tax as per the more formal sectors of the industry [11]. The above factors create a situation under which middlemen have unfair advantages over the formal sector, and in addition contribute to poor quality milk to the detriment of consumers (especially those who cannot afford the higher quality presentations provided by the processors) and to the medium term development of a robust dairy industry. In this situation Dairy Pakistan as the voice of various stakeholders believes that the role of middlemen should be “regularized”, i.e. middlemen should be encouraged to respect the milk they are handling. Such “encouragement” could take several forms, both direct and indirect: Better regulation and enforcement could be established to make adulteration less easy and punished to a greater extent. Dairy Pakistan and other industry participants could fund a marketing campaign to educate consumers on the dangers of loose milk. Zero rating of the industry will reduce some of the advantages achieved by the tax avoidance thought to be practiced by at least some middlemen.
  • 4. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 133 Dairy Pakistan’s Cooling Tank program will result in more collection centers being established, thus improving access for farmers who wish to deliver milk to processors directly. Farmers delivering directly need to earn a higher price for their milk than those supplying through middlemen. 1.2.2 Some of these actions will have greater or lesser impact: Often in developing countries (and indeed in developed countries), a regulatory approach creates as many problems as it solves. Regulation can be a source of corruption. Adequate regulation is already in place, which should, in theory, protect milk quality. Further regulation is unlikely to change present practices. A marketing campaign may be successful over a prolonged period, but within the constraints of present limited funding availability for Dairy Pakistan, it is probable that higher priorities should be met first. Dairy Pakistan will, however, play a co-coordinating role with other industry participants, should they wish to fund such a marketing campaign. Zero rating is an important step in achieving a level playing field. Dairy Pakistan’s Cooling Tank Program is another important step. It should be noted that the intent of Dairy Pakistan is not to cut all middlemen out of the industry; however, illegal actions such as adulteration and desirably tax avoidance should be made more difficult to undertake. Middlemen who wish to respect milk, the farmers who provide it and the consumers who drink it, are a welcome part of the industry. However, none of the above or even all of the above steps is likely to succeed in changing the role of middlemen, for there is another important function they provide, and that is the provision of credit. Dairy Pakistan intends to explore with institutions, both national and international, the alignment of the operation of collection centers with the provision of micro-credit. Only with such credit facilitation will genuine alternatives to the middlemen exist. It is probable that present interest rates on credit supplied by middlemen are onerous, so the suggested integration between the operations of collection centers and credit provision could have a major impact on the welfare of especially small farmers [12]. Traditional Milk Supply Chain model Dairy&Farmer& Gawala&(Milkman)& Consumer&Sweet/Milk&Shop&
  • 5. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 134 2. RESULTS AND DISCUSSIONS 2.1 EXISTING MILK SUPPLY CHAIN 2.1.1 Milk collection There are two types of milk collection systems adopted by HFL namely self-collection and contract collection. 2.1.2. Self-collection A system in which HFL purchases and preserves raw milk that meets its quality standards through their staff members and delivers at PHE is known as self-collection. It may include the following: i. Milk Collection through Village Milk Collection Centre (VMCC). Village Milk Collection Centre (VMCC) is a place where the farmers of an area come and give milk and a person appointed by the company collects milk after testing it. The person who collects milk there from the farmers is known as VMCC agent. It is provided by all the essential utilities for the milk collection such as collection tub, testing chemicals, ice and the rent of the place as well as the electricity bill. At VMCC the agent keeps the record of all the farmers who supply milk at VMCC and takes samples from the milk. The samples are tested and receipt is given to the farmer and a copy is kept at the VMCC for record. The mode of payment at VMCC is weekly i.e., after a week, farmers go to bank and receive their cash of all the week from their account [13]. ii. Direct from Farmers (DF). As the name indicates, it is a collection directly from the farmers. The collection vehicle, when goes to an area for the milk collection, there are some farmers who don’t supply milk at the VMCC. They are aware of the timings of the collection vehicle, so they supply milk directly to the people in the vehicle. iii. Progressive Farmers (PF) Progressive farmers are those farmers who supply milk directly to the collection vehicle like direct farmers but the difference is that these people are progressive farmers and they provide higher quantities of milk [14].
  • 6. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 135 Existing Milk Supply Chain 2.1.3 Contract collection It is the system in which HFL deals with the different private milk collecting persons and enters into a contract with them to provide milk to the company. They may include the following: i. Mini Contractors Mini contractors are those who provide milk about 1000 liter of milk per day. They collect milk on their own. In this type of collection, the company identifies personnel who are willing to work and are of good repute with fair dealings. The contract is mainly verbal and no written type of contract was observed during our survey. The mini contractor collects milk from the farmers of the area as well as from the other areas. Milkmen from different areas also supply milk at mini contractor’s place. A company vehicle collects milk from these mini contactors. The MOT with that vehicle tests the milk according to their quality standards. If it passes the tests, it is accepted and rejected otherwise [15]. Dairy&Farmer& Gawala&(Milkman)& VMCC& Retailer& Consumer& PHE& Company&Milk&Plant& Sweet/Milk& Shop& Company&Vehicle&
  • 7. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 136 ii. Sub-Contractors Sub Contractors are almost the same as that of mini contractors but the main difference is that milk is collected from the mini contractor’s place but sub contractor has to transport milk to the PHE of the company. 2.2. Milk procurement Manager Milk Procurement (MMP) Plant is responsible for all the milk procurement in the milk area. Milk collection area, which consists of mainly the provinces of Punjab and Sindh, is divided into four regions headed by an MMP (Region). These regional offices are at Arifwala, Chishtian, Jhang and R. Y. Khan. Each region consists of 3-4 zones, which is headed by a Zonal Manager. There are 14 zones under these 4 regions. Each zone is headed by Executive Zonal Manager or an Area Executive depending upon the size of daily collection. Each zone consists of 2-3 sub-zones. At sub-zonal level, there are PHE (Palate Heat Exchanger). Under these sub-zones come VMCCs, mini contractors and sub contractors, which are further responsible for the milk collection [16]. 2.2.1 Milk collection area There are 14 zones for self-collection of milk having 28 Main centers (PHE) Table 5: HFL Milk collection area Sr. No. Milk Collection Zones 7 Jhang 1 Arifwala 8 Pakpattan 2 Bahawalnagar 9 Okara 3 Bahawalpur 10 Rahim Yar Khan 4 Bhowana 11 Shah Jewna 5 Mian Channu 12 Narowal 6 Haveli 13 Upper Sind Source: Author’s own survey 2.3. MILK PROCUREMENT TYPES: Milk Procurement is the starting point of dairy industry supply chain. The procurement process starts on the farm, where producers are advised, quality is monitored and raw milk is collected daily from various Farmers/progressive
  • 8. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 137 farmers by mini-suppliers and village milk collection centers countrywide and transported to factories in the most cost-effective manner. Raw milk quality is the cornerstone of excellent dairy products. Milk Procurement guards this quality with an eagle eye and ensures that company’s production needs are met. Through teamwork within the supply chain, procurement teams of companies ensure that raw milk losses are kept to the absolute minimum [17]. Milk procurement is basically of two types: 1. Supplier’s collection 2. Self collection 1. Supplier Milk collection system: In this case supplier brings milk with his or her own sources at factory. Quality assurance department of dairy as per their standards scrutinizes the milk. If milk passes the entire quality test then this milk is received otherwise the milk is rejected. Mini/Hilux contractor: In this type of milk collection local supplier of area collects milk with their own resources and brings this milk to companies sub center. If milk is according to company’s standard that milk is received otherwise rejected. All types of collected milk are brought to sub centers, where it is chilled (by chiller or by ice) and transported to Main center either through 1.7, 5 or 9 tons of tankers depending upon the quantity of milk, here milk is chilled through chillers and transported to plant [17]. 2. Self Milk collection system: A. Village Milk Collection (VMC): In this case a local community nominated person (VMC agent) collects milk from local farmers on behalf of company by using company facilities. The VMC agent gets commission from company on per litter-collected milk. After collection VMC agent either himself approach the nearby center of company for handing over of collected milk or company vehicle collect milk from that VMC agent as per written agreement. Very good quality milk is collected through the VMCs. No doodhi is involved in this type of collection. B. Progressive formers: Having 10 adult buffalo or minimum 25 liters milk. C. Direct Farmer: Having one or more milk animal and bring milk directly to sub center or MCC. > Bulk milk transport: Milk procurement teams of companies ensure that milk is collected and transported to factories daily. Milk cooled on the farm or cooling centre may be transported in bulk tankers. Bulk tankers are insulated, so the milk will remain cold until it reaches the plant (provided the transport is fast, i.e. short distance or good roads enabling milk to be delivered before the temperature of milk rises above 10? C). > Reception of milk at plant: At reaching plant quality assurance staff of reception lab takes the representative sample of whole milk tanker and analyses it for various parameters as per standards of company. If milk found as per quality norms of company the tanker is weighed and production department staff receive the milk for further processing otherwise the sub standards raw milk tanker is rejected.
  • 9. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 138 2.4 MILK PROCUREMENT SYSTEM (MPS): The primary function of any Milk Procurement System (MPS) is to expedite dairy milk producer’s payroll process. This is accomplished using a complex system that documents the pickup, testing, delivery of milk, and issues payment to producers of milk and those responsible for its transport. In addition to tracing the movement of milk as it is picked up, tested, and transported to the plant, the Milk Procurement System issues checks and records financial information for producers, haulers, and vendors. MPS facilitates the dairy’s milk producer payroll process from beginning to end [18]. 2.5 ROLE OF MPD OF ANY COMPANY IN MILK PROCUREMENT: Milk procurement department of any company provides a value-added service to all their milk producers, ensuring that milk of the correct quality is produced and that sufficient raw milk is always available to satisfy company’s needs, through the use of strategies, processes, projects, systems and policy. Procurement teams of companies manage a number of Milk Procurement responsibilities including: 1. Ensuring that the producers are paid promptly and accurately. 2. Purchasing raw milk from producers and transporting it to factories effectively and efficiently. 3. Successful clean milk route development in various new identified areas. 4. Installation of bulk coolers in the area. 5. Milk yield improved. 6. Hygiene practices improvement at all levels of milk production and procurement 7. Reduction of Bacterial Count of milk. 8. Advanced training to drivers in the handling of mass milk in case of emergencies. 9. Trainings to field staff for handling of sample and client. 2.6 QUALITY SYSTEMS IN MILK PROCUREMENTS: In Pakistani dairy industries following types of quality assurance system exist to assure the procurement of the best quality raw milk. 1. First System: Procurement department is responsible for the procurement of good quality raw milk. 2. Second System: Quality assurance department support the procurement department for procurement of good quality of raw milk.
  • 10. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 139 2.6.1 First system: Procurement department is responsible for the procurement of sufficient quantity of good quality milk. Company develops a lab carrying all the testing facilities of raw milk. A procurement representative is present their to check and receive the quality of raw milk from area as per given standard of company [19]. > Benefits of this system: 1. Fully under control of one department. 2. Less manpower is required. 3. Less cost to company. 4. Under this system the objective of procurement staff become more quantity with the good quality. 5. More amount of volume procured. > Problems with this system: 1. Monopoly of procurement staff. 2. Sometimes non-calibrated glassware used for measuring and testing of milk. 3. No proper and accurate record maintenance, which results into reduction of mal practices at gross root level. 4. More rejection of raw milk at plant, this contributes towards losses of the company. 5. Some times in order to avoid the rejection of milk at plant procurement staff himself treat the milk with some kind of adulterant. 2.6.2 Second system: Quality assurance department is responsible for the procurement of good quality milk, in this system at each main collection center of company. Company develops a lab carrying all the testing facilities of raw milk. A quality assurance representative is present their to check and receive the quality of raw milk from area as per given standard of company. > Benefits of this system: 1. Substandard milk is rejected at gross root level. 2. Avoid any un-necessary milk quantity rejection at plant. 3. Monopoly of procurement staff is abolished at center level. 4. As the main centers are under quality assurance department, so all the equipment’s and glassware used for measuring and testing of milk is properly measured and calibrated so chances of fat loss or SNF loss is reduced this ultimately improve company profitability at gross root level. 5. As all tests are performed at gross root level with accurate glassware, this helps to develop a trust of client on company. 6. Proper and accurate record maintenance, which results into reduction of mal practices at gross root level.
  • 11. © European Journal of Scientific Research, Vol. 39, No 4, 2010 _________________________________________________________________________________________" ___________________________________________________________________________ 140 7. Control of loss at gross root levels. 8. Quick support of QA staff to procurement staff towards any kinds of improvement issues. 9. Better control of Hygienic conditions of raw milk handling at gross root level. 10. This approach gives a relief to procurement staff regarding > Problems with this system: 1. Expensive as this increase the quality cost. 2. Create miss understanding between procurement and QA staff. 3. Under this system in same organization the objective of procurement staff become more quantity and at the same time objective of quality staff become good quality of milk. The lake of harmony between the objectives of staff sometimes creates company policy issues. 4. In case of rejection of raw milk at plant, procurement staff will not take the responsibility for its disposal. 5. In meetings some time members of both department has blaming attitude towards each other. 6. Some times company needs more qualified staff to be hired for proper running of this system, this will increase the staff numbers to be managed. 7. This gross root level quality approach sometimes reduces the volume of raw milk procured by any company. 3. CONCLUSION AND RECOMMENDATIONS Given success of the programs discussed in this section, what might the dairy industry look like in the year 2015? • The formal sector to be 40% of the total dairy industry. • Low cost but good quality pasteurized milk to be available in cities and towns accounting for 70% of Pakistan’s population. • Pakistan’s dairy industry meets the needs of consumers, thus minimizing imports. • The range of goods offered to consumers is as wide as in say the markets of the Gulf. • The well being of farmers throughout Pakistan is enhanced, and dairying is acknowledged to be a profitable enterprise. • Dairying will have lifted millions of farmers above subsistence levels of activity. • A thriving commercial dairy farming sector will be in place. • Well-regarded Research Institutes will be active in their chosen fields, with a focus on meeting the needs of farmers. • Quality of some sectors of the industry will be such that exports are viable. • Dairying will be practiced across Pakistan, in a manner that contributes to balanced regional development. • An integrated rural support economy will be in place, with contractors supplying support services. • Education for professional service providers will be broader than at present, producing qualified experts capable of proving advice to farmers across a range of farming related matters. • Boosted by a greater contribution to GDP from dairying, rural infrastructure will be much improved from the present. • Large farms and milk colonies will be generating part of their own energy needs through biogas. • The linkage between the dairy industry and micro-finance providers will enhance the living standards of millions of smallholder farmers. • An industry with a greater proportion of milk handled by the formal sector, and with consumers more aware of product quality standards, will be attractive to foreign investors.
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