Dairy Farm Sector: SWOT-Analysis

(Strengths, weaknesses, opportunities & Threats)

General:

• Rural Based activity.

• Involve small households, rearing one or two cows/buffaloes.

• Income-generating activity.

• Source of mass employment in rural areas.

Strengths:

• Dairy farming helps directly in increasing crop production by making available draught

power, manure and cash income on day- today basis.

• Provide employment to rural population mainly women

• Regular income to the farmer.

• Crop residues and by-products fed to the cattle form the basis of “grain-saving” dairying,

appropriate to the mixed farming system.

• Buffalo is India’s milking machine, accounting for more than half of the country’s milk

production.

• Whitening property of buffalo milk make it more suitable for manufacture of some dairy

products and its acceptance as fluid milk is high.

• Cooperative dairying has increased milk production.

• Additional income improves the quality of life in rural areas.

Weakness:

• Feed availability to cattle throughout the year is not adequate.

• Artificial insemination service for breeding better cattle has limited coverage

• Animal health care activities are not adequate.

• Limited marketing support handicaps rural milk producers seriously.

• Dairy producers in remote areas are neglected.

• Limited investment or delay in the availability of funds in setting up or expansion of

milk procurement.

• Poor infrastructure in many areas for transporting rurally-produced milk to major

processing centers.

• Farmers access to training in modern cattle management is limited.

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Opportunities:

• Cost of milk production in India is low.

-more opportunities for export of quality milk products at competitive price in international

market.

• Scope exists for higher milk yield through

-better use of crop residues and other feeds

- upgrading cattle.

-improving availability of animal health care facilities

• Better returns because of increased awareness in consumers about Quality.

Threats:

• Competency between organized and un-organized sectors resulting in unhealthy business

practices / lowering values (quality/service/ethics).

• Inadequate Regulatory staff to monitor quality of imported / indigenous products.

• Possibility of importing, substandard or low-priced milk products that can destabilize

dairy sector because of corrupt regulatory staff.

• Natural calamities like floods, drought, diseases that can affect feed to cattle/cattle

population.

• Seasonal fluctuations in milk production

Conclusion:

SWOT analysis, indicate if the strengths and opportunities are understood the

weaknesses and threats can be managed to make Dairy Farm Sector into a profit oriented

business.

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Table 1 Strengths of JKMPCL

S. No Strengths Score MPS

1 Weekly milk payment system and regular payment of bonus provided by the co-operatives 4.10 81.95

2 Dairy farming is a livelihood occupation of the majority of the rural population. 4.02 80.46

3 There is good commitment from the government to ensure orderly growth of the

dairy industry and Cooperatives. 3.85 76.96

4 Educated board members with diversified experience and knowledge in the dairy sector. 3.46 69.14

5 Regular and guaranteed supply of raw milk from the milk co-operative societies 3.74 74.80

6 Suitability with respect to ecological conditions for dairy development 3.59 71.85

Table 2 Weaknesses of JKMPCL

S. No Weaknesses Score MPS

1 Low productivity of animals and high cost of milk production 4.16 83.17

2 Lack of structured and clear benefit packages available to keep up the

motivation of member farmers 4.08 81.68

3 Low price for milk as compared to other private competitors. 4.01 80.12

4 Lack of support services viz., A.I. service and animal health services and farm

inputs like cattle feed or veterinary medicine. 3.99 79.82

5 Milk shed area is scattered with less membership and members

producing miniscule quantities. 3.94 78.75

6 Milk collection centres are not well equipped 3.91 78.12

7 Insufficient raw milk supply for milk processing plants 3.74 74.80

8 Low level of milk procurement 3.66 73.15

9 Limited market coverage due to less procurement as compared to private players. 3.64 72.80

Table 3 Opportunities in way of JKMPCL

S. No Opportunities Score MPS

1 More producers willing to join the cooperative societies 4.11 82.23

2 Scope for convergence with allied departments and other agencies for funds 4.01 80.15

3 Substantial scope for modernization of the unit and new product development 3.96 79.13

4 Growing milk demand and expandable market share 3.76 75.24

5 Developing infrastructure like processing equipment, bulk milk coolers, chilling

centres and feed manufacturing units 3.60 71.95

Table 4 Threats faced by JKMPCL

S. No Threats Score MPS

1 Farmers losing interest in dairy farming 4.28 85.70

2 Existence of competition from other private units 4.12 82.43

3 The high cost of credit for dairy farmers 4.08 81.62

4 Lack of financial schemes for dairy enterprise 4.01 80.20

5 Lack of appropriate government policy favouring the dairy sector 3.93 78.53

6 Decline of grazing lands due to urbanization 3.87 77.44

7 Increasing cost of inputs 3.62 72.50

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Lesson 15
SWOT ANALYSIS OF DAIRY INDUSTRY

15.1 Introduction

SWOT Analysis is nothing but analysis of a company or organization on the basis of its Strength,
Weakness, Opportunity and Threat (SWOT).

15.2 Importance and Uses of SWOT

SWOT analysis is used to identify and categories significant internal factors (i.e. strengths and
weaknesses) and external factors (i.e. opportunities and threats) faced by the organization. It provides
information that is helpful in matching the firms' resources and capabilities to the competitive
environment in which it operates and is therefore an important contribution to the strategic planning
process. It should not be viewed as a static method with emphasis solely on its output, but should be
used as a dynamic part of the management and business development process.

SWOT analysis involves the collection and portrayal of information about internal and external factors
that have, or may have, an impact on the evolution of an organisation or business. It generally provides
a list of an organisation's Strengths and Weaknesses as indicated by an analysis of its resources and
capabilities, plus a list of the Threats and Opportunities identified by an analysis of its environment.
Strategic logic requires that the future pattern of actions to be taken should match strengths with
opportunities ward off threats and seek to overcome weaknesses.

People directly involved in various hierarchical levels of decision making in an organisation or business,
or a wider sample of actors are involved if the SWOT analysis concerns a whole region or nation.
Representatives from a variety of stakeholders groups should be involved, as they would bring in the
analysis their own particular perspectives. At least one expert in SWOT analysis should take part or
moderate the process.

15.3 Guide for Preparing SWOT Matrix

Drawing up Opportunity and Threat matrices helps in an assessment of the ‘likely probability’ and
‘impact’ of any factor on the organisation. A scoring system may be used to assign importance to
factors. A factor which have a high score on both 'probability of occurrence' and 'likely impact on the
organisation or business', needs close attention and play a significant part in the development of a
strategic plan. Similarly, Strengths and Weaknesses can be assessed against a scoring system that allows
the factors to be identified according to their significance (i.e. major, minor, neutral) and level of
importance (high, medium, low).
It is possible to represent this analysis in a Performance-Importance matrix that highlights those factors
which are both important and in which performance of the organisation/ business is low. It is towards
these factors that strategy should be addressed. A SWOT analysis is based on hard facts. These can be
time-consuming and costly to gather.

People are needed who have a good knowledge of the business sector under analysis in the specific
exercise.The main tangible output is a matrix presenting the most important strengths, weaknesses,
opportunities and threats for the organization examined and aiming at giving a reasonable overview of
major issues that can be taken into account when subsequently drawing up strategic plans for an
organization.

15.4 Advantages and Disadvantages of SWOT Analysis

The success of this method is mainly owed to its simplicity and its flexibility. Its implementation does not
require technical knowledge and skills. SWOT analysis allows the synthesis and integration of various
types of information which are generally known but still makes it possible to organize and synthesize
recent information as well.

The most common drawbacks of SWOT analysis are: The length of the lists of factors that have to be
taken into account in the analysis; Lack of prioritisation of factors, there being no requirement for their
classification and evaluation; No suggestions for solving disagreements; No obligation to verify
statements or aspects based on the data or the analysis; Analysis only at a single level (not multi-level
analysis); No rational correlation with the implementation phases of the exercise, risks of inadequate
definition of factors; over-subjectivity in the generation of factors (compiler bias); the use of ambiguous
and vague words and phrases

15.5 Strengths

· Enhanced milk production with consequently increased availability of milk processing.

· Improved purchasing power of the consumer.

· Improved transportation facilities for movement of milk and milk products. Increased availability of
indigenously manufactured equipment.

· Large number of dairy plants in the country.

· Vast pool of highly trained and qualified manpower available to the industry.

· Country's vast natural resources offer immense potential for growth and development of dairying.

15.6 Weaknesses

· Lack of appropriate technologies for tropical climate conditions.

· Erratic power supply.

· Lack of awareness for clean milk production.

· Underdeveloped raw milk collection systems in certain parts of the country.

· Seasonal fluctuations in milk production pattern.

· Regional imbalance of milk supply.

· Species-wise variation in milk quality received by dairy plants.

· Poor productivity of cattle and arable land.

· Scarce capital for investment in the dairy development programmes on a priority basis.

· Absence of proper data records which is essential for preparing development programmes.

· Dairy development programmes have not been fully implemented as per the needs of the region in
different agro-climatic zones.

· Lack of marketing avenues for the dairy produce.

· Non-availability of software for preparing needed dairy schemes/projects.

· Lack of infrastructure for offering Dairy Business Management programmes to train dairy personnel.

15.7 Opportunities

· Greatly improved export potential for milk products of western as well as traditional types.

· Expanding market for traditional dairy products.

· Increasing demand for fluid milk as well as value added products.

· Byproduct utilization for import substitution.

· Employment generation.

· Growing demand for milk and milk products.

· Liberalized polices in dairy sector.

· Availability of large resources of unconventional feeds and fodders.

· Availability of diverse germ plasm with unique features like heat tolerance, disease resistance,
draftability and ability to survive and produce under stress conditions.

· Availability of animal production technologies for faster development and effective implementation.

· Integrated structure of marketing for milk and milk products.

· Integrated structure of livestock marketing through regulated markets.

· Improved collection of data on contract basis through agencies.

· Market information intelligence system for milk and milk products.

· Development of software for project formulation for dairy enterprise.

15.8 Threats

· Introduction of foreign products in Indian market.

· Increasing chemical contaminants and residual antibiotics in milk.

· Poor microbiological quality of milk.

· Export of quality feed ingredients particularly cakes under the liberalization policy.

· Deficiency of molasses, a rich source of energy and binding agent in feed industry and constituent of
urea molasses mineral lick.

· Excessive grazing pressure on marginal and small community lands resulting in complete degradation
of land.

· Extinction of the indigenous breeds of cattle due to indiscriminate use of crossbreeding programme to
enhance milk production.

· The liberalization of the dairy industry is likely to be exploited by multinationals. They will be interested
in manufacturing value added products. It will create milk shortage in the country adversely affecting
the consumers.