SWOT Analysis of Dairy Marketing Chain of JMF using Analytical Hierarchy Process

Kalyan Mandi1,*, Ritu Chakravarty2, K. Ponnusamy2, K.S. Kadian2, A.K. Dixit3, Magan Singh4, Niva Bara5, Jagarnath Oraon6, B.K. Jha5
1Department of Agricultural Extension, Birsa Agricultural University, Kanke, Ranchi-834 006, Jharkhand, India.
2Division of Dairy Extension, ICAR-National Dairy Research Institute, Karnal-132 001, Haryana, India.
3Division of Dairy Economics Statistics and Management, ICAR-National Dairy Research Institute, Karnal-132 001, Haryana, India.
4Agronomy Section, ICAR-National Dairy Research Institute, Karnal-132 001, Haryana, India.
5Department of Agricultural Extension Education, Birsa Agricultural University, Kanke, Ranchi-834 006, Jharkhand, India.
6Department of Veterinary and Animal Husbandry Extension Education, Birsa Agricultural University, Kanke, Ranchi-834 006, Jharkhand, India.

Background: Jharkhand State Cooperative Milk Producers' Federation (JMF) plays a vital role in the processing of raw milk purchased from Jharkhand State member-producers and contributes to the development of the dairy sector. The current study explores the essential components in JMF's dairy supply chain, focusing on the marketing unit, and provides a preliminary framework for making decisions regarding its ramifications.

Methods: To compile a SWOT analysis of the milk marketing system in JMF, data were collected from dairy producer members, including dairy farmers, marketing unit executives, and key informants. This includes establishing the objectives of the dairy sector and the internal and external critical factors (CFs). Because SWOT analysis does not give an investigative basis for evaluating the priorities of CFs, the analytic hierarchy approach is utilised to determine the priorities of detected CFs. The CFs have also been ranked according to their importance.

Results: This study's findings indicate that the SWOT-based methodology gives crucial sensitivity when evaluating marketing chain strategy for dairy cooperatives like JMF. The findings of this study show that wide range of quality dairy products, absence of strong sales and marketing experience, emerging new markets offering greater marketing potential, seasonal slump are the major strength, weakness, opportunity and threat of JMF, respectively.

India is the largest producer of milk in the world, accounting for 22.00 per cent of global production (FAO, 2019). India produced 187.7 MT of milk with a per capita availability of 394 g per day, according to the NDDB Report, 2018-19 (NDDB, 2019). The dairy sector produces 27.00 per cent of agriculture’s GDP and 67.00 per cent of the livestock sector’s overall production, supplying 70 million households with a means of subsistence (GoI, 2018). Approximately 80.00 per cent of milk sold continues to be distributed through traditional routes of raw milk and conventionally processed products (Kumar and Staal, 2010; Staal et al., 2006). According to reports, the producer’s share in consumer’s price of milk varies from 50.00 per cent to 98.00 per cent across the country (CALPI, 2006; Kumar et al., 2010). The cooperative framework of dairy development initiatives contributed significantly to the achievement of India’s “White Revolution”. Despite India’s self-sufficiency in milk production, milk production is not consistently spread among its states; as a result, there is a significant demand-supply imbalance for milk and milk products in a few Eastern Indian states. Due to enhanced infrastructure facilities for milk production, the DCSs in the western and southern areas are performing better in terms of milk procurement and marketing compared to their counterparts in the northern and eastern regions (Rajendran and Mohanty, 2004). In terms of dairy cooperatives and milk production, Jharkhand is the least developed state in the nation. Jharkhand is now ranked seventeenth in terms of both milk production and milk productivity (GoI, 2019). In order to promote dairying as a source of income in the rural areas of the state, the Jharkhand State Cooperative Milk Producers’ Federation (JMF) was founded in 2014 with the objective of providing the milk producers of Jharkhand with their own marketing and distribution network to give them access to the most vital link in the system: the customer. The farmers realised that marketing was the key to the success of the JMF Pattern and to their own success when they were in charge of the marketing system. Multiple studies have demonstrated that farmers have benefited from co-op integration, which has also worked as a catalyst for linking Indian dairy smallholders to domestic and international markets (Birthal et al., 2007, 2009; Candler and Kumar, 1998; Cunningham, 2009; Kumar, 2010). Marketing is the most essential aspect of any business endeavour. It is what attracts customers and generates revenue, leads a business’s future trajectory, and decides its success or failure. Consequently, food producers and processors must employ effective marketing tactics to reach the rural market (Mor et al., 2016; Mor et al., 2017; Mor et al., 2018a). Modern milk supply chain scalability will depend on the expansion of milk collecting and transportation facilities, as well as incentive pricing for high-quality products (Kumar et al., 2011). Consequently, any element that could reduce or increase expenses poses a threat to the economic performance of the business (Bailey, 2001).
An analytic hierarchy process (AHP) approach allows the top management to measure the level of uniformity in finding the decision problems (Saaty, 1980). Madaan and Mangla (2015) suggested focusing on CFs in food sector using AHP. Dweiri et al., (2016) found that usage of AHP for supplier selection improves the consistency and robustness throughout the process. Mor et al., (2018b) and Mor et al., (2015) addressed a review of the principles, bottlenecks, and strategies of supply chain practices of Indian agri-food sector and recommended to nurture the system effectiveness over policy direction. Ayodele et al., (2014) recognized the challenges existing in unloading and knowledge optimization schemes into the food chain. Ansari et al., (2019) recognized the key performance outcomes for the adoption of supply chain remanufacturing and prioritized the factors through hybrid fuzzy AHP and fuzzy TOPSIS approach.
The present research was conducted at ICAR-National Dairy Research Institute, Karnal, Haryana from 2021 to 2022. A pre-tested schedule has been employed to accumulate the data from dairy producer members including dairy farmers, experts and key informants of milk marketing units to summarize the factors and sub-factors related to strengths, weaknesses, opportunities, threats (SWOT) of the milk marketing system in JMF. A total of 26 issues, called as SWOT factors here, have been derived on the basis of comprehensive literature assessment, focussed group discussion and a pilot study, conducted in the study area. These 26 factors comprised of seven (7) strength factors, six (6) weakness factors, seven (7) opportunity factors and six (6) threat factors. Further, these factors were considered for AHP analysis in consultation with the marketing professionals of the dairy industry, JMF staffs, workers and academicians. The factors are selected based on their applicability and importance to the marketing unit of dairy cooperative (JMF). Following critical factors as shown in the hierarchy model for SWOT factors (Table 3) have been carried forward for AHP analysis. The model represents various SWOT factors as criteria along with their sub-criteria. During the application of AHP, various pairwise assessment matrix has been finalized in the below Table 4 to 7 for SWOT factors (s) analysis. The nine-point scale developed by Saaty (1980) has been adopted for assessing the interaction among the SWOT factors identified for the study. Five experts from marketing unit of JMF during FGD added their understanding to construct the SWOT factors. Then, the pairwise comparisons of SWOT groups using a Saaty’s nine-point comparison scale were carried out in consultation with the expert’s group. And finally, the SWOT factors were compared in view of every SWOT group.
In this study, AHP method is recommended as a result of its extensive applicability and simplicity of usage (Ho, 2008). AHP is used to support multi-criteria decisions where the problem is divided into different components, i.e., analytical and hierarchy (Saaty, 1980). AHP method provides very satisfactory results and it has been used in various fields, such as process planning, selection of alternatives, optimization, and allocation of resources, etc. It combines both qualitative and quantitative aspects of ranking the alternatives (Harputlugil et al., 2011; Yang, 2010). So, the authors applied AHP to evaluate the CFs of marketing unit of JMF in the current study. Initially, a relation between the elements of the given problem is determined and then, the hierarchy model is built and finally, the consistency is checked whether the solution is feasible or not.
The AHP steps are described below:
  1. Preparation of the goal: Assessing the CFs to find their related priority.
  2. Forming a pairwise assessment matrix: Pairwise assessment matrixes are formed from expert’s feedback. The pairwise assessment matrix between the factors is accomplished by Saaty’s scale (Table 1).
  3. Determination of the Eigenvalues and Eigenvectors and comparative weights: The outlined pairwise comparison matrices are worked to establish the Eigenvalues and Eigenvectors and to compute the relative position of CFs.
  4. Assessment of the consistency ratio (CR): It is calculated to confirm the reliability of pairwise comparisons, as follows.
                                      CR=CI/RI,                                         ...(1)
Consistency index (CI)= (λ max-n)/(n - 1), (λ max is the max. average value) and random consistency index (RI) relies upon value of (n). CR must be ≤0.10 to have an improved level of consistency (Kumar et al., 2011). Table 2 presents the corresponding values of a random index (Saaty, 1980).

Table 1: Scales in pairwise comparisons.


Table 2: Random Index (R.I.).


Table 3: AHP model for SWOT in dairy marketing supply chain of JMF.

The current study summarized and proposed a framework for the identification and assessment of the critical SWOT factors in the dairy marketing supply chain of JMF, using the Analytical Hierarchy Process (AHP) approach. The marketing unit is the heart and soul of JMF where the milk after procurement from Bulk Milk Coolers (BMCs) and Milk Pooling Points (MPPs) are brought to the state of art dairy processing plants located at four districts viz. Ranchi, Latehar, Koderma and Deoghar by milk tankers where milk after quality testing is further processed into fluid milk and milk products. Finally, the milk is marketed and distributed through chain of retail outlets and milk booths.
Strength analysis
The strength factors have been analysed for priority matrix, weight matrix and the calculations of strength as shown in Table 4. An analysis of strengths revealed that JMF products largely dominated in the markets due to wide array of quality products available for the customers. Also, due to presence of strong and intelligent marketing team with vast experience in marketing, JMF was able to execute strategic marketing plan with long term growth. Another, major strength of marketing unit was it strong distribution channels; this was attributed to the fact that JMF was having sufficient number of milk booths with franchise shops spread across the state. Based on the outcome of AHP for strength factors, all the CI, RI and CR scores are valid for AHP criteria (Table 4). Also, consistency among the strength factors was confirmed since CR value (0.06) was less than (0.10).

Table 4: Priority calculations for strength factors.

Weakness analysis
The weakness factors have been analysed for priority matrix, weight matrix and the calculations of weaknesses as shown in Table 5. Even though JMF had strong marketing team but they lacked experience in the domain of marketing and sales which was the major weakness of marketing unit. Also, it was observed that many prospective customers were unaware about Medha dairy products in the markets especially in rural pockets of the state. Therefore, JMF should focus on brand promotion and advertisement for attracting more number of customers. Another, major weakness expressed by majority was that due to low export potential, JMF remained only as a domestic player unlike other national brands like Amul, Mother Dairy etc. Based on the outcome of AHP for weakness factors, all the CI, RI and CR scores are valid for AHP criteria (Table 5). Also, consistency among the weakness factors was confirmed since CR value (0.07) was less than (0.10).

Table 5: Priority calculations for weakness factors.

Opportunity analysis
The opportunity factors have been analysed for priority matrix, weight matrix and the calculations of opportunities as shown in Table 6. Among opportunities it was observed that due to wide market penetration, JMF had potential to capture new markets in both rural and urban areas and expand its market presence throughout the state. Further, it was perceived that more investment from external sources apart from government sources should be encouraged for better brand positioning in the market. Besides this, JMF should also focus more on advertisement and promotional activities in order to appeal large customers. Based on the outcome of AHP for threat factors, all the CI, RI and CR scores are valid for AHP criteria (Table 6). Also, consistency among the threat factors was confirmed since CR value (0.06) was less than (0.10).

Table 6: Priority calculations for opportunity factors of marketing unit of JMF.

Threat analysis
The threat factors have been analysed for priority matrix, weight matrix and the calculations of threats as shown in Table 7. It was observed that during lean season or during the time of festival there was shortage in the supply of fluid milk in the markets which was perceived as major threat to the marketing department. The second threat was heavy competition from national and local players. JMF faced stiff market competition from other reputed milk brands like Amul, Mother Dairy, Ossam dairy etc. apart from unorganized milk vendors. Further, due to this reason there was frequent fluctuations in the price of the milk and milk products, thus severely affecting the cooperative business. Based on the outcome of AHP for threat factors, all the CI, RI and CR scores are valid for AHP criteria (Table 7). Also, consistency among the threat factors was confirmed since CR value (0.05) was less than (0.10).

Table 7: Priority calculations for threat factors of marketing unit of JMF.

JMF plays a crucial role in reducing rural poverty by increasing rural milk production and marketing. Various marketing agents interact at different stages of the milk supply chain, from producers to consumers. The producer’s share in consumer rupee is an assessment of the relative bargaining power in the market. It also demonstrates the producers’ market access and integration. Using the AHP methodology, the identification of the CFs in the JMF dairy marketing chain indicated some of the most significant strengths, weaknesses, opportunities and threats. The Indian dairy business must simultaneously address the challenges of quality, product development, infrastructure-support development and international marketing. Equally critical is the need for technical collaboration and marketing partnerships with some of the leading dairy firms in the world through strategic alliances. However, the participation of middlemen, the producers’ lack of bargaining power and the absence of infrastructure facilities for collection, storage, transportation and processing are the most significant factors affecting the milk prices received by producers. India’s milk marketing faces future challenges in the areas of milk quality, product development, infrastructure support development and global marketing. The SWOT analysis will assist policymakers and marketing executives in minimising JMF’s weaknesses and threats, while capitalising on its strengths and opportunities for improved performance.

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