Dairy industry


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Dairy industry

  1. 1. Indian dairy Industry - a profileToday, India is The Oyster of the global dairy industry. It offers opportunitiesgalore(in large no.) to entrepreneurs worldwide, who wish to capitalize on one ofthe worlds largest and fastest growing markets for milk and milk products. Abagful of pearls awaits the international dairy processor in India. The Indian dairyindustry is rapidly growing, trying to keep pace with the galloping progress aroundthe world. As he expands his overseas operations to India many profitable optionsawait him. He may transfer technology, sign joint ventures or use India as asourcing center for regional exports. The liberalization of the Indian economybeckons to MNCs and foreign investors alike.India’s dairy sector is expected to triple its production in the next 10 years in viewof expanding potential for export to Europe and the West. Moreover with WTOregulations expected to come into force in coming years all the developedcountries which are among big exporters today would have to withdraw thesupport and subsidy to their domestic milk products sector. Also India today is thelowest cost producer of per litre of milk in the world, at 27 cents, compared withthe U.S 63 cents, and Japan’s $2.8 dollars. Also to take advantage of this lowestcost of milk production and increasing production in the country multinationalcompanies are planning to expand their activities here. Some of these milkproducers have already obtained quality standard certificates from the authorities.This will help them in marketing their products in foreign countries in processedform.The urban market for milk products is expected to grow at an accelerated pace ofaround 33% per annum to around Rs.43,500 crores by year 2005. This growth isgoing to come from the greater emphasis on the processed foods sector and also byincrease in the conversion of milk into milk products. By 2005, the value of Indiandairy produce is expected to be Rs 10,00,000 million. Presently the market isvalued at around Rs7,00,000mnBackgroundIndia with 134mn cows and 125mn buffaloes has the largest population of cattle inthe world. Total cattle population in the country as on October00 stood at 313mn.More than fifty percent of the buffaloes and twenty percent of the cattle in theworld are found in India and most of these are milch cows and milch buffaloes.Indian dairy sector contributes the large share in agricultural gross domesticproducts. Presently there are around 70,000 village dairy cooperatives across the
  2. 2. country. The co-operative societies are federated into 170 district milk producersunions, which is turn has 22-state cooperative dairy federation. Milk productiongives employment to more than 72mn dairy farmers. In terms of total production,India is the leading producer of milk in the world followed by USA. The milkproduction in 1999-00 is estimated at 78mn MT as compared to 74.5mn MT in theprevious year. This production is expected to increase to 81mn MT by 2000-01. Ofthis total produce of 78mn cows milk constitute 36mn MT while rest is from othercattle.While world milk production declined by 2 per cent in the last three years,according to FAO estimates, Indian production has increased by 4 per cent. Themilk production in India accounts for more than 13% of the total world output and57% of total Asias production. The top five milk producing nations in the worldare India ,USA, Russia, Germany and France.Although milk production has grown at a fast pace during the last three decades(courtesy: Operation Flood), milk yield per animal is very low. The main reasonsfor the low yield are Lack of use of scientific practices in milching. Inadequate availability of fodder in all seasons. Unavailability of veterinary health services.Milk Yield comparison: Country Milk Yield (Kgs per year) USA 7002 UK 5417 Canada 5348 New Zealand 2976 Pakistan 1052 India 795 World (Average) 2021Source: Export prospects for agro-based industries, World Trade Centre, Mumbai.
  3. 3. Production of milk in India Year Production in million MT 1988-89 48.4 1989-90 51.4 1990-91 53.7 1991-92 56.3 1992-93 58.6 1993-94 61.2 1994-95 63.5 1995-96 65 1996-97 68.5 1997-98 70.8 1998-99 74.7 1999- 78.1 00(E) 2000- 81.0 01(T)E= estimatedT= target / expectedSource: DFPI, Annual Report-1999-2000Worlds major milk producers(Million MTs) 1998-99 ( Country 1997-98 Approx.) India 71 74.5 USA 71 71 Russia 34 33
  4. 4. Germany 27 27 France 24 24 Pakistan 21 22 Brazil 21 27 UK 14 14 Ukraine 15 14 Poland 12 12 New 11 12 Zealand Netherlands 11 11 Italy 10 10 Australia 9 10Operation FloodThe transition of the Indian milk industry from a situation of net import to that ofsurplus has been led by the efforts of National Dairy Development BoardsOperation Flood. programme under the aegis of the former Chairman of the boardDr. Kurien.Launched in 1970, Operation Flood has led to the modernization of Indias dairysector and created a strong network for procurement processing and distribution ofmilk by the co-operative sector. Per capita availability of milk has increased from132 gm per day in 1950 to over 220 gm per day in 1998. The main thrust ofOperation Flood was to organize dairy cooperatives in the milkshed areas of thevillage, and to link them to the four Metro cities, which are the main markets formilk. The efforts undertaken by NDDB have not only led to enhanced production,improvement in methods of processing and development of a strong marketingnetwork, but have also led to the emergence of dairying as an important source ofemployment and income generation in the rural areas. It has also led to animprovement in yields, longer lactation periods, shorter calving intervals, etcthrough the use of modern breeding techniques. Establishment of milk collectioncenters, and chilling centers has enhanced life of raw milk and enabledminimization of wastage due to spoilage of milk. Operation Flood has been one of
  5. 5. the worlds largest dairy development programme and looking at the successachieved in India by adopting the co-operative route, a few other countries havealso replicated the model of Indias White Revolution.Per Capita availability of milk Year gm/day 1950 132 1960 127 1968 113 1973 111 1980* 128 1990 178 1992 192 1996 198 1997 200 1998 202 1999 203 2000 212 2001E 225 2002P 250E= EstimatedP= Provisional* Operation flood was launched in 1970Fresh MilkOver 50% of the milk produced in India is buffalo milk, and 45% is cow milk. Thebuffalo milk contribution to total milk produce is expected to be 54% in 2000.Buffalo milk has 3.6% protein, 7.4% fat, 5.5% milk sugar, 0.8% ash and 82.7%water whereas cow milk has 3.5% protein, 3.7% fat, 4.9% milk sugar, 0.7% ashand 87% water. While presently (for the year 2000) the price of Buffalo milk isruling at $261-313 per MT that of cow is ruling at $170-267 per MT. Fresh
  6. 6. pasteurized milk is available in packaged form. However, a large part of milkconsumed in India is not pasteurized, and is sold in loose form by vendors.Sterilized milk is scarcely available in India.Packaged milk can be divided according to fat content as follows,Whole (full cream) milk - 6% fatStandardized (toned) milk - 4.5% fatDoubled toned (low fat) milk - 3% fatAnother category of milk, which has a small market is flavoured milk.The Indian Market - A PyramidConsumer Habits And PracticesMilk has been an integral part of Indian food for centuries. The per capitaavailability of milk in India has grown from 172 gm per person per day in 1972 to182gm in 1992 and 203 gm in 1998-99.This is expected to increase to 212gms for1999-00. However a large part of the population cannot afford milk. At this percapita consumption it is below the world average of 285 gm and even less than 220gm recommended by the Nutritional Advisory Committee of the Indian Council ofMedical Research.There are regional disparities in production and consumption also. The per capitaavailability in the north is 278 gm, west 174 gm, south 148 gm and in the east only93 gm per person per day. This disparity is due to concentration of milk productionin some pockets and high cost of transportation. Also the output of milk in cerealgrowing areas is much higher than elsewhere which can be attributed to abundantavailability of fodder, crop residues, etc which have a high food value for milchanimals.In India about 46 per cent of the total milk produced is consumed in liquid formand 47 per cent is converted into traditional products like cottage butter, ghee,paneer, khoya, curd, malai, etc. Only 7 per cent of the milk goes into theproduction of western products like milk powders, processed butter and processedcheese. The remaining 54% is utilized for conversion to milk products. Among themilk products manufactured by the organized sector some of the prominent onesare ghee, butter, cheese, ice creams, milk powders, malted milk food, condensedmilk infants foods etc. Of these ghee alone accounts for 85%.
  7. 7. It is estimated that around 20% of the total milk produced in the country isconsumed at producer-household level and remaining is marketed through variouscooperatives, private dairies and vendors. Also of the total produce more than 50%is procured by cooperatives and other private dairies.While for cooperatives of the total milk procured 60% is consumed in fluid formand rest is used for manufacturing processed value added dairy products; forprivate dairies only 45% is marketed in fluid form and rest is processed into valueadded dairy products like ghee, makhan etc.Still, several consumers in urban areas prefer to buy loose milk from vendors dueto the strong perception that loose milk is fresh. Also, the current level ofprocessing and packaging capacity limits the availability of packaged milk.The preferred dairy animal in India is buffalo unlike the majority of the worldmarket, which is dominated by cow milk. As high as 98% of milk is produced inrural India, which caters to 72% of the total population, whereas the urban sectorwith 28% population consumes 56% of total milk produced. Even in urban India,as high as 83% of the consumed milk comes from the unorganized traditionalsector.Presently only 12% of the milk market is represented by packaged and brandedpasteurized milk, valued at about Rs. 8,000 crores. Quality of milk sold byunorganized sector however is inconsistent and so is the price across the season inlocal areas. Also these vendors add water and caustic soda, which makes the milkunhygienic.Indias dairy market is multi-layered. Its shaped like a pyramid with the base madeup of a vast market for low-cost milk. The bulk of the demand for milk is amongthe poor in urban areas whose individual requirement is small, maybe a glassful foruse as whitener for their tea and coffee. Nevertheless, it adds up to a sizablevolume - millions of litres per day. In the major cities lies an immense growthpotential for the modern sector. Presently, barely 778 out of 3,700 cities and townsare served by its milk distribution network, dispensing hygienically packedwholesome, quality pasteurized milk. According to one estimate, the packed milksegment would double in the next five years, giving both strength and volume tothe modern sector. The narrow tip at the top is a small but affluent market forwestern type milk products.Growing Volumes
  8. 8. The effective milk market is largely confined to urban areas, inhabited by over 25per cent of the countrys population. An estimated 50 per cent of the total milkproduced is consumed here. By the end of the twentieth century, the urbanpopulation is expected toincrease by more than 100 million to touch 364 million in2000 a growth of about 40 per cent. The expected rise in urban population wouldbe a boon to Indian dairying. Presently, the organized sector both cooperative andprivate and the traditional sector cater to this market.The consumer access has become easier with the information revolution. Thenumber of households with TV has increased from 23 million in 1989 to 45 millionin 1995. About 34 per cent of these households in urban India have access tosatellite television channel.Potential for further growthOf the three As of marketing - availability, acceptability and affordability,Indian dairying is already endowed with the first two. People in India love todrink milk. Hence no efforts are needed to make it acceptable. Its availability isnot a limitation either, because of the ample scope for increasing milk production,given the prevailing low yields from dairy cattle. It leaves the third vital marketingfactor affordability. How to make milk affordable for the large majority withlimited purchasing power? That is essence of the challenge. One practical way is topack milk in small quantities of 250 ml or less in polythene sachets. Already, theglass bottle for retailing milk has given way to single-use sachets which are moreeconomical. Another viable alternative is to sell small quantities of milk powder inmini-sachets, adequate for two cups of tea or coffee.Marketing Strategy for 2000 ADTwo key elements of marketing strategy for 2000 AD are: Focus on strong brandsand, product mix expansion to include UHT milk, cheese, ice creams andspreads. The changing marketing trends will see the shift from generic products tothe packaged quasi, regular and premium brands. The national brands willgradually edge out the regional brands or reduce their presence. The brand imagecan do wonders to a products marketing as is evident from the words of PerfumePrincess Coco Channel: In the factory, we pack perfume; in the market, we sellhope!Emerging Dairy Markets
  9. 9. Food service institutional market: It is growing at double the rate of consumer market Defense market: An important growing market for quality products at reasonable prices Ingredients market: A boom is forecast in the market of dairy products used as raw material in pharmaceutical and allied industries Parlour market: The increasing away-from-home consumption trend opens new vistas for ready-to-serve dairy products which would ride piggyback on the fast food revolution sweeping the urban India.India, with her sizable dairy industry growing rapidly and on the path ofmodernization, would have a place in the sun of prosperity for many decades tocome. The one index to the statement is the fact that the projected total milk outputover the next 15 years (1995-2010) would exceed 1457.6 million tonnes which istwice the total production of the past 15 years!Penetration of milk productsWestern table spreads such as butter, margarine and jams are not very popular inIndia. All India penetration of butter/ margarine is only 4%. This is also largelyrepresented by urban areas, where penetration is higher at 9%. In rural areas,butter/ margarine have penetrated in 2.1% of households only. The use of theseproducts in the large metros is higher, with penetration at 15%.Penetration of cheese is almost nil in rural areas and negligible in the urban areas.Per capita consumption even among the cheese-consuming households is a poor2.4kg pa as compared to over 20kg in USA. The lower penetration is due topeculiar food habits, relatively expensive products and also non-availability inmany parts of the country. Butter, margarine and cheese products are mainlymanufactured by organized sector.Similarly, penetration of ghee is highest in medium sized towns at 37.2%compared to 31.7% in all urban areas and 21.3% in all rural areas. The all Indiapenetration of ghee is 24.1%. In relative terms, penetration of ghee is significantlyhigher in North and West, which are milk surplus regions. North accounts for 57%of ghee consumption and West for 23%, South & East together account for thebalance 20%. A large part of ghee is made at home and by small/ cottage industryfrom milk. The relative share of branded products in this category is very low ataround 1-2%.
  10. 10. Milk powder and condensed milk have not been able to garner any significantconsumer acceptance in India as indicated by a very low 4.7% penetration. Thepenetration is higher at 8.1% in urban areas and lower at 3.5% in rural areas.Within urban areas, it is relatively higher in medium sized towns at 8.5% comparedto 7.7% in a large metros.Market Size And GrowthMarket size for milk (sold in loose/ packaged form) is estimated to be 36mn MTvalued at Rs470bn. The market is currently growing at round 4% pa in volumeterms. The milk surplus states in India are Uttar Pradesh, Punjab, Haryana,Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. Themanufacturing of milk products is concentrated in these milk surplus States. Thetop 6 states viz. Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Tamil Naduand Gujarat together account for 58% of national production.Milk production grew by a mere 1% pa between 1947 and 1970. Since the early70s, under Operation Flood, production growth increased significantly averagingover 5% pa.About 75% of milk is consumed at the household level which is not a part ofcommercial dairy industry. Loose milk has a larger market in India as it isperceived to be fresh by most consumers. In reality however, it poses a higher riskof adulteration and contamination.The production of milk products, i.e. milk products including infant milk food,malted food, condensed milk & cheese stood at 3.07 lakh MT in 1999. Productionof milk powder including infant milk-food has risen to 2.25 lakh MT in 1999,whereas that of malted food is at 65000 MT. Cheese and condensed milkproduction stands at 5000 and 11000 MT respectively in the same year.(Source: Annual Report 1999-2000, DFPI)Major PlayersThe packaged milk segment is dominated by the dairy cooperatives. Gujarat Co-operative Milk Marketing Federation (GCMMF) is the largest player. All otherlocal dairy cooperatives have their local brands (For e.g. Gokul, Warana inMaharashtra, Saras in Rajasthan, Verka in Punjab, Vijaya in Andhra Pradesh,Aavin in Tamil Nadu, etc). Other private players include J K Dairy, Heritage
  11. 11. Foods, Indiana Dairy, Dairy Specialties, etc. Amrut Industries, once a leadingplayer in the sector has turned bankrupt and is facing liquidation.Packaging TechnologyMilk was initially sold door-to-door by the local milkman. When the dairy co-operatives initially started marketing branded milk, it was sold in glass bottlessealed with foil. Over the years, several developments in packaging media havetaken place. In the early 80s, plastic pouches replaced the bottles. Plastic pouchesmade transportation and storage very convenient, besides reducing costs. Milkpacked in plastic pouches/bottles have a shelf life of just 1-2 days , that too only ifrefrigerated. In 1996, Tetra Packs were introduced in India. Tetra Packs are asepticlaminate packs made of aluminum, paper, board and plastic. Milk stored in tetrapacks and treated under Ultra High Temperature (UHT) technique can be storedfor four months without refrigeration. Most of the dairy co-operatives in AndhraPradesh, Tamil Nadu, Punjab and Rajasthan sell milk in tetra packs. However tetrapacked milk is costlier by Rs5-7 compared to plastic pouches. In 1999-00 Nestlelaunched its UHT milk. Amul too re-launched its Amul Taaza brand of UHT milk.The UHT milk market is expected to grow at a rate of more than 10-12% incoming years.Export PotentialIndia has the potential to become one of the leading players in milk and milkproduct exports. Locational advantage : India is located amidst major milk deficitcountries in Asia and Africa. Major importers of milk and milk products areBangladesh, China, Hong Kong, Singapore, Thailand, Malaysia, Philippines,Japan, UAE, Oman and other gulf countries, all located close to India.Low Cost Of Production : Milk production is scale insensitive and labourintensive. Due to low labour cost, cost of production of milk is significantly lowerin India.Concerns in export competitiveness areQuality : Significant investment has to be made in milk procurement, equipments,chilling and refrigeration facilities. Also, training has to be imparted to improve thequality to bring it up to international standards.Productivity : To have an exportable surplus in the long-term and also to maintaincost competitiveness, it is imperative to improve productivity of Indian cattle.
  12. 12. There is a vast market for the export of traditional milk products such as ghee,paneer, shrikhand, rasgolas and other ethnic sweets to the large number of Indiansscattered all over the worldIndias exports of milk products Description 1995-96 1996-97 1997-98 (Quantity, M T.: Value, Rs. Quantity Value Quantity Value Quantity Value million) Skimmed milk 4,638.62 3,35.32 282.70 19.64 5.00 0.375 powder Milk and Milk 8.27 2.019 111.37 4.27 11.00 2.02 Food for babies Milk cream 332.23 28.04 1.00 0.084 - - Sweetened 41.73 2.84 9.22 0.97 60.39 7.22 condensed milk Whey 78.46 3.75 11.50 1.01 6.00 0.342 Ghee/Butter/Butter 7,895.08 431.1 299.97 19.2 4,352.08 2,38.95 oil Cheese (a) Fresh 0.10 0.013 - - - - (b) Processed 5.67 1.20 2.1 0.375 22.10 2.19 (c) Other 66.64 8.35 36.78 0.69 24.84 4.55 TOTAL - 8,72.7 - 52.4 - 2,55.6What does the Indian Dairy Industry has to Offer to Foreign Investors?India is a land of opportunity for investors looking for new and expanding markets.Dairy food processing holds immense potential for high returns. Growth prospectsin the dairy food sector are termed healthy, according to various studies on thesubject.The basic infrastructural elements for a successful enterprise are in place. Key elements of free market system raw material (milk) availability an established infrastructure of technology
  13. 13. supporting manpowerAn entrepreneurs participation is likely to provide attractive returns on theinvestment in a fast growing market such as India, along with an export potential inthe Middle East, Singapore, Malaysia, Indonesia, Korea, Thailand, Hong Kong andother countries in the region.Among several areas of potential participation by NRIs and foreign investors, thefollowing list outlines a few promising opportunities:Biotechnology: Dairy cattle breeding of the finest buffaloes and hybrid cows Milk yield increase with recombinant somatotropin Recombinant chymosin, acceptable to vegetarian consumers Dairy cultures, probiotics, dairy biologics, enzymes and coloring materials for food processing Fermentation derived foods and industrial products alcohol, citric acid, lysine, flavor preparations, etc. Biopreservative ingredients based on dairy fermentation, viz., Nisin, pediococcin, acidophilin, bulgarican contained in dairy powders.Dairy/food processing equipment:Potential exists for manufacturing and marketing of cost competitive foodprocessing machinery of world-class quality.Food packaging equipment:Opportunities lie in the manufacturing of both machinery and packaging materialsthat help develop brand loyalty and a clear edge in the marketing of dairy foods.Distribution channels:For refrigerated and frozen food distribution, a world class cold chain would helpin providing quality assurance to the consumers around the region.Retailing:There is scope for standardizing and upgrading food retailing in majormetropolitan cities to meet the shopping needs of a vast middle class. This area
  14. 14. includes grocery stores of European and North American quality, warehousing anddistribution.Product development: Dairy foods can be manufactured and packaged for export to countries where Indian food enjoys basic acceptance. The manufacturing may be carried out in contract plants in India. An option to market the products in collaboration with local establishments or entrepreneurs can also be explored. Products exhibiting potential include typical indigenous dairy foods either not available in foreign countries or products whose authenticity may be questionable. Gulabjamuns, Burfi, Peda, Rasagollas, and a host of other Indian sweets have good business prospects. Products typically foreign to India but indigenous to other countries could also be developed for export. Such products can be manufactured in retail package sizes and could be produced from milk of sheep, goats and camel. Certain products are characteristically produced from milk of a particular species. For example, Feta cheese is used in significant tonnage, in Iran. Sheep milk is traditionally used for authentic Feta cheese. Accordingly, Indias goat and sheep herds can be utilized for the manufacture of such authentic products.Ingredient manufacture:Export markets for commodities like dry milk, condensed milk, ghee and certaincheese varieties are well established. These items are utilized as ingredients inforeign countries. These markets can be expanded to include value-addedingredients like aseptically packaged cheese sauce and dehydrated cheese powders. Cheese sauce: Canned cheese sauce is made from real cheese to which milk, whey, modified food starch, vegetable oil, colorings and spices may be added. Cheese sauce is useful in kitchens for the preparation of omelet, sandwiches, entrees, and soups. In addition, cheese sauce is used as a topping on potatoes and vegetables and may be incorporated in pasta dishes. Cheese powders: Cheese powders are formulated for dusting or smearing of popular snacks like potato chips, crackers, etc. They impart flavor and may be blended with spices.
  15. 15. With the globalization of food items, an opportunity should open up for foodservice and institutional markets.Technology-driven manufacturing units:These plants would fulfil an essential need by providing a centralized andspecialized facility for hire by the units which cannot justify capital investment butdo need such services. Potential areas for state-of-the-art contract-pack units mayconceivably specialize in cheese slicing, or dicing line, cheese packaging, butterprinting, and aseptic packaged fluid products.Training centers for continuing education:NRIs could set up technology transfer and updating centers for conductingseminars and workshops - catering to the needs of workers at all levels of the dairyindustry. Here technical, marketing and management topics can be offered toensure that the manpower continues to acquire the latest know-how of theirrespective fields.The entrepreneurs need powerful tools to implement their plans. Appropriateinvestment and involvement by NRIs can serve as a catalyst for Indias dairy foodindustry leading to exploration of business potential in domestic and export trade.Risk factors must be identified and managed by in-depth study of chosen areas sothat chances of rewards are maximized under the current liberalization climate.Indian (traditional) Milk ProductsThere are a large variety of traditional Indian milk products such asMakkhan - unsalted butter.Ghee - butter oil prepared by heat clarification, for longer shelf life.Kheer - a sweet mix of boiled milk, sugar and rice.Basundi - milk and sugar boiled down till it thickens.Rabri - sweetened cream.Dahi - a type of curd.Lassi - curd mixed with water and sugar/ salt.Channa/Paneer - milk mixed with lactic acid to coagulate.Khoa - evaporated milk, used as a base to produce sweet meats.
  16. 16. The market for indigenous based milk food products is difficult to estimate as mostof these products are manufactured at home or in small cottage industries cateringto local areas.Consumers while purchasing dairy products look for freshness, quality, taste andtexture, variety and convenience. Products like Dahi and sweets like Kheer,Basundi, Rabri are perishable products with a shelf life of less than a day. Theseproducts are therefore manufactured and sold by local milk and sweet shops. Thereare several such small shops within the vicinity of residential areas. Consumerloyalty is built by consistent quality, taste and freshness. There are severalsweetmeat shops, which have built a strong brand franchise, and have severalbranches located in various parts of a city.Branding Of Traditional Milk ProductsAmong the traditional milk products, ghee is the only product, which is currentlymarketed, in branded form. main ghee brands are Sagar, MilkMan (Britannia),Amul (GCMMF), Aarey (Mafco Ltd), Vijaya (AP Dairy Development CooperativeFederation), Verka ( Punjab Dairy Cooperative), Everyday (Nestle) and FarmFresh (Wockhardt).With increasing urbanization and changing consumer preferences, there ispossibility of large scale manufacture of indigenous milk products also. Theequipments in milk manufacturing have versatility and can be adapted for severalproducts. For instance, equipments used to manufacture yogurt also can be adaptedfor large scale production of Indian curd products (dahi and lassi). Significantresearch work has been done on dairy equipments under the aegis of NDDB.Mafco Limited sells Lassi under the Aarey brand and flavoured milk under theEnergee franchise (in the Western region, mainly in Mumbai). Britannia haslaunched flavored milk in various flavors in tetra packs.GCMMF has also made a beginning in branding of other traditional milk productswith the launch of packaged Paneer under the Amul brand. It has also created anew umbrella brand "Amul Mithaee", for a range of ethnic Indian sweets that areproposed to be launched The first new product Amul Mithaee Gulabjamun hasalready been launched in major Indian markets.Western Milk Products
  17. 17. Western milk products such as butter, cheese, yogurt have gained popularity in theIndian market only during the last few years. However consumption has beenexpanding with increasing urbanization.ButterMost Indians prefer to use home made white butter (makkhan) for reasons of tasteand affordability. Most of the branded butter is sold in the towns and cities. Themajor brands are Amul, Vijaya, Sagar, Nandini and Aarey. Amul is the leadingnational brand while the other players have greater shares in their local markets.The latest entrant in the butter market has been Britannia. Britannia has theadvantages of a wide distribution reach and a strong brand recall. Priced at par withthe Amul brand, it is expected to give stiff competition to the existing players. In1999-00 the butter production is estimated at 4 lakh MT of this only 45K MT is inthe white form used for table purposes rest all is in the yellow form.CheeseThe present market for cheese in India is estimated at about 9,000 tonnes and isgrowing at the rate of about 15% per annum. Cheese is mainly consumed in theurban areas. The four metro cities alone account for more than 50% ofconsumption . Mumbai is the largest market (accounting for 30% of cheese sold inthe country), followed by Delhi (20%). Calcutta (7%) and Chennai (6%). Mumbaihas a larger number of domestic consumers, compared to Delhi where the bulkinstitutional segment (mainly hotels) is larger.Demand for various types of cheese in the Indian market Type of cheese % of total consumption Processed 50 Cheese spread 30 Mozzarella 10 Flavoured/Spiced 5 Others 5
  18. 18. The major players are Amul, Britannia, and Dabon International dominating themarket. Other major brands were Vijaya, Verka and Nandini (all brands of variousregional dairy cooperatives) and Vadilal. The heavy advertising and promotionsbeing undertaken by these new entrants is expected to lead to strong 20% growthin the segment. Amul has also become more aggressive with launch of newvariants such as Mozzarella cheese (used in Pizza), cheese powder, etc.The entry of new players and increased marketing activity is expected to expandthe market. All the major players are expanding their capacitiesCapacity expansion in Cheese Company Brands State Capacity Dynamix Group Manufactures for Maharashtra 35 tons per Britannia day GCMMF Amul Gujarat 20 tons per day APDDCF Vijaya Andhra 10 tons per Pradesh dayMilk PowderMilk powder are mainly of 2 types Whole milk powder Skimmed milk powderWhole milk powder contains fat, as distinguished from skimmed milk powder,which is produced by removing fat from milk solids. Skimmed milk powder ispreferred by diet conscious consumers. Dairy whiteners contain more fat thanskimmed milk powder but less compared to whole milk powder. Dairy whitenersare popular milk substitute for making tea, coffee etc. The penetration of theseproducts in milk abundant regions is driven by convenience and non perishablenature (longer shelf life) of the product.
  19. 19. Dairy sector of advanced nations export milk products with a subsidy of $ 1000 pertonne with a level of subsidy more than 60 % of the price of milk powder producedin India, this has led to large scale imports of milk powder both in whole andskimmed form. To protect the domestic sector from these subsidized imports thecentral government has recently increased the basic import duty on all imports ofmilk powder more than 10000 MT to 60% from 15%. For imports less than 10000MT the basic customs duty has been left unchanged at 15%.In 1999-00 India is estimated to have imported about 18,000 tonnes of milkpowder against a total estimated production of 2.40 Lakh MTs. In 2000-01 India isexpected to export 10000 MT of skimmed milk powder due to rise in internationalprices to $2300 per MT from last years levels of $1400 per MT. Theseexpectations are based on the strong demand from Russia, East Asia and LatinAmerica, and also on tightening of supply in EU, which accounts for 75% of theannual global Skimmed Milk Powder exports.Major PlayersMilk Powder/Dairy Whiteners : Major skimmed milk brands are Sagar (GCMMF)and Nandini (Karnataka Milk Federation), Amul Full Cream milk powder is awhole milk powder brand.Leading brands in the dairy whitener segment are Nestles Everyday, GCMMFsAmulya, Dalmia Industrys Sapan, Kwality Dairy Indias KreamKountry,Wockhardts Farm Fresh and Britannias MilkMan Dairy Whitener.Condensed MilkThe condensed milk market has grown from 9000 MT in 1998 to 11000 MT in1999. Condensed milk is a popular ingredient used in home-made sweets andcakes. Nestles Milkmaid is the leading brand with more than 55% market share.The only other competitor is GCMMFs Amul.Value addition in milk powder - Infant FoodsNestle is the market leader in the segment. This is a category where brand loyaltiesare very strong as mothers want the best for their babies. Heinz is the only othersignificant competitor to Nestle in this segment. Nestles Cerelac and Nestumtogether have around 80% market share and Heinzs Farex has close to 18% share.Wockhardt is a relatively new entrant with its First Food brand. Wockhardt alsoproposes to launch a new baby food Easum containing moong (moong is one of the
  20. 20. easily digestible pulses). The Easum brand will directly compete with NestlesNestum (made from rice).In infant formula also Nestles Lactogen formula and Lactogen standard formulaare the leading brands with around 75% market share. Other brands are HeinzsLactodex Farex, Wockhardts Raptakos, and Amuls AmulsprayRegulatory FrameworkThe dairy industry was de-licensed in 1991 with a view to encourage privateinvestment and flow of capital and new technology in the segment. Although de-licensing attracted a large number of players, concerns on issues like excesscapacity, sale of contaminated/ substandard quality of milk etc induced theGovernment to promulgate the MMPO (Milk and Milk Products Order) in 1992.Milk and Milk Products Order (MMPO) regulates milk and milk productsproduction in the country. The order requires no permission for units handling lessthan 10,000 litres of liquid milk per day or milk solids up to 500 tpa. MMPOprescribes State registration to plants producing between 10,000 to 75,000 litres ofmilk per day or manufacturing milk products containing between 500 to 3,750tonnes of milk solids per year. Plants producing over 75,000 litres per day or morethan 3,750 tonnes per year of milk solids have to be registered with the CentralGovernment. The stringent regulations, government controls and licensingrequirements for new capacities have restricted large Indian and MNC playersfrom making significant investments in this product category. Most of the privatesector players have restricted themselves to manufacture of value added milkproducts like baby food, dairy whiteners, condensed milk etc.All the milk products except malted foods are covered in the category of industriesfor which foreign equity participation up to 51% is automatically allowed. Icecream, which was earlier reserved for manufacturing in the small-scale sector, hasnow been de-reserved. As such, no license is required for setting up of large-scaleproduction facilities for manufacture of ice cream.Subsequent to de-canalization, exports of some milk based products are freelyallowed provided these units comply with the compulsory inspection requirementsof concerned agencies like: National Dairy Development Board, Export InspectionCouncil etc. Bureau of Indian standards has prescribed the necessary standards foralmost all milk-based products, which are to be adhered to by the industry.Proposal to Amend the MMPO
  21. 21. A proposal to raise the exemption limit for compulsory registration of dairy plants,from the present 10,000 litres a day to 20,000 litres, is being considered by theAnimal Husbandry Department. The 75,000-litre limit is likely to be raised eitherto 100,000 litres or 125,000 litres in the amended order. The new order would alsodo away with the provision for re-registration.Amuls secret of successThe system succeeded mainly because it provides an assured market atremunerative prices for producers milk besides acting as a channel to market theproduction enhancement package. Whats more, it does not disturb the agro-systemof the farmers. It also enables the consumer an access to high quality milk and milkproducts. Contrary to the traditional system, when the profit of the business wascornered by the middlemen, the system ensured that the profit goes to theparticipants for their socio-economic upliftment and common good.Looking back on the path traversed by Amul, the following features make it apattern and model for emulation elsewhere. Amul has been able to: Produce an appropriate blend of the policy makers farmers board of management and the professionals: each group appreciating its roles and limitations Bring at the command of the rural milk producers the best of the technology and harness its fruit for betterment Provide a support system to the milk producers without disturbing their agro-economic systems Plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers and Even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, Amul is an example par excellence, of an intervention for rural change.The Union looks after policy formulation, processing and marketing of milk,provision of technical inputs to enhance milk yield of animals, the artificialinsemination service, veterinary care, better feeds and the like - all through thevillage societies.The village society also facilitates the implementation of various productionenhancement and member education programs undertaken by the Union. The staff
  22. 22. of the village societies have been trained to undertake the veterinary first-aid andthe artificial insemination activities on their own.Amuls success: A model for other districts to follow.Amuls success led to the creation of similar structures of milk producers in otherdistricts of Gujarat. They drew on Amuls experience in project planning andexecution. Thus the Anand Pattern was followed not just in Kaira district but inMehsana, Sabarkantha, Banaskantha, Baroda and Surat districts also. Even beforethe Dairy Board of India was born, farmers and their leaders carried out empiricaltests of the hypotheses that explained Amuls success. In these districts, milkproducers and their leaders experienced significant commonalties and found easyand effortless ways to adapt Amuls gameplan to their respective areas. This led tothe Creation of the National Dairy Development Board with the clear mandate ofreplicating the Anand pattern in other parts of the country. Initially the pattern wasfollowed for the dairy sector but at a later stage oilseeds, fruit and vegetables, salt,and tree sectors also benefited from its success.GCMMF: An OverviewGujarat Cooperative Milk Marketing Federation (GCMMF) is Indias largest foodproducts marketing organization. It is a state level apex body of milk cooperativesin Gujarat which aims to provide remunerative returns to the farmers and alsoserve the interest of consumers by providing quality products which are good valuefor money.Members: 12 district cooperative milk producers UnionNo. of Producer Members: 2.12 millionNo. of Village Societies: 10,411Total Milk handling capacity: 6.1 million litres per dayMilk collection (Total - 1999-00): 1.59 billion litresMilk collection (Daily Average 4.47 million litres1999-00):
  23. 23. Milk Drying Capacity: 450 metric Tons per dayCattle feed manufacturing Capacity: 1450 Mts per daySales Turnover Rs (million) US $ (in million)1994-95 11140 3551995-96 13790 4001996-97 15540 4501997-98 18840 4551998-99 22192 4931999-00 22185 493Major dairy products manufacturersSome of the major dairy products manufacturers in the country:Company Brands Major ProductsNestle India Milkmaid,Cerelac, Sweetened condensed milk,Limited Lactogen, Milo, malted foods, milk powder Everyday and Dairy whitenerMilkfood Milkfood Ghee, ice cream, and otherLimited milk productsSmithKline Horlicks, Maltova, Malted Milkfood, ghee, butter,Beecham Viva powdered milk, milk fluid andLimited other milk based baby foods.Indodan Indana Condensed milk, skimmedIndustries milk powder, whole milkLimited powder, dairy milk whitener, chilled and processed milkGujarat Co- Amul Butter, cheese and other milkoperative productsmilkMarketing
  24. 24. FederationLimitedH.J. Heinz Farex, Complan, Infant Milkfood, maltedLimited Glactose, Bonniemix, Milkfood VitamilkBritannia Milkman Flavoured milk, cheese, Milk Powder, GheeCadbury Bournvita Malted foodFuture ProspectsIndia is the worlds highest milk producer and all set to become the worlds largestfood factory. In celebration, Indian Dairy sector is now ready to invite NRIs andForeign investors to find this country a place for the mammoth investment projects.Be it investors, researchers, entrepreneurs, or the merely curious – Indian Dairysector has something for everyone.Milk production is relatively efficient way of converting vegetable material intoanimal food. Dairy cows buffaloes goats and sheep can eat fodder and crop byproducts which are not eaten by humans. Yet the loss of nutrients energy andequipment required in milk handling inevitably make milk comparativelyexpensive food. Also if dairying is to play its part in rural development policies ,the price to milk producers has to be remunerative. In a situation of increasedinternational prices, low availabilities of food aid and foreign exchange constraints,large scale subsidization of milk conception will be difficult in the majority ofdeveloping countries.Hence in the foreseeable future, in most of developing countries milk and milkproducts will not play the same roll in nutrition as in the affluent societies ofdeveloped countries. Effective demand will come mainly from middle and highincome consumers in urban areas.There are ways to mitigate the effects of unequal distribution of incomes. In Cubawhere the Government attaches high priority to milk in its food and nutritionpolicy, all pre-school children receive a daily ration of almost a litre of milk fat thereduced price. Cheap milk and milk products are made available to certain othervulnerable groups, by milk products outside the rationing system are sold price
  25. 25. which is well above the cost level. Until recently, most fresh milk in the big cities of China was a reserved for infants and hospitals, but with the increase in supply, rationing has been relaxed. In other countries dairy industries have attempted to reach lower income consumers by variation of compositional quality or packaging and distribution methods or blending milk in vegetable ingredients in formula foods for vulnerable groups. For instance, pricing of products rich in butter fat or in more luxury packaging above cost level so as to enable sales of high protein milk products at a some what a reduced price has been widely practiced in developing countries. This policies need to be brought in Indian Dairy scenario. The indian dairy industry overview - Series 1 www.slideshare.net/.../the-indian-dairy-industry-overview-series-1-1... 2 Jan 2012 – An Overview of the Indian Dairy Industry & Segments within. business.mapsofindia.com › milk-co-operatives www.socialsciences-ejournal.org/4.6.Parameswara%20Reddy.pdf (growth of dairy industry)HEADLINES: INDIAN DAIRY INDUSTRY
  26. 26. More than 10 million dairy farmers belong to 96,000 local dairy Size of the Industry cooperatives, who sell their product to one of 170 milk producers’ cooperative unions who in turn are supported by 15 state cooperative Geographical Delhi, Punjab, Mumbai, Gujarat, Surat, Lucknow, Bihar, Hyderabad distribution Output per annum Growing 5 % per annum Market The industry contributes about Rs 1,15,970 to the national economy Capitalization HistoryIndia is the highest milk producer in the entire globe. India iswell known as the ‘Oyster’ of the global dairy industry, withopportunities galore for the entrepreneurs globally. It might bedream for any nation in the world to capitalize on the largest andfastest growing milk and mil products market. The dairyindustry in India has been witnessing rapid growth withliberalization. As the economy provides good opportunities forMNCs and foreign investors to release the full potential of thisindustry. The main objective of the Indian Dairy Industry is tomanage the national resources in a manner to enhance milkproduction and upgrade milk processing using innovativetechnologies.The crossbred technology in the Indian Dairy Industry has further augmented with the viabilityof the dairy units by increasing the milk production per animal. Then subsequently milkproduction has also increased at an exponential rate while the benefits of an increase in milkproduction also reached the consumers from a relatively lower increase in the price of milk. Thefavorable price environment for milk producers for the Dairy Industry in India howeverappeared to have weakened during the 90s, a decline in the real price of milk being noticed
  27. 27. after the year 1992. And then slowly regained it is glory after 1992 to till now.In India dairying from very much earlier is regarded as an instrument for social and economicdevelopment. The country’s milk supply comes from millions of small producers, who aredispersed throughout the rural areas. All these farmers maintain an average herd of one or twomilch animals, comprising cows and/or buffaloes. Mostly ample labour and a small land baseencourage farmers to practice dairying as an occupation subsidiary to agriculture. As incomefrom crop production is seasonal instead dairying provides a stable which is a year-roundincome and also an important economic incentive for the small farmer. Brief Introduction India had tremendous milk production in 40 years and has become the world’s largest milk-producing nation with a gross output of 84.6 million tons in 2001. The Indian Dairy Industry has achieved this strength of a producer-owned and professionally-managed cooperative system, despite the facts that a majority of dairy farmers are illiterate and run small, marginal operations and for many farmers, selling milk is their sole source of income. More than 10 million dairy farmers belong to 96,000 local dairy cooperatives, who sell their products to one of 170 milk producers’ cooperative unions who in turn are supported by 15 state cooperative milk marketing federations.In India dairy business has been practiced as rural cottage industry over the years. Semi-commercial dairy started with the establishment of military dairy farms and co-operative milkunions throughout the country towards the end of the 19th century. Since Independence thisIndustry has made rapid progress. A large number of modern milk and milk product factorieshave since been established.The organized dairies in India have been successfully engaged inthe routine commercial production of pasteurized bottled milk for Indian dairy products.The growth of Indian Dairy Industry during the last three decades has been impressive, at morethan 5% per annum; and in the 90s the country has emerged as the largest producer of milk.This is not a small achievement when we consider the fact that dairying in India is largelystringent that farmers in general keep dairy animals in proportion to their free crop and also areavailable for family labor with little or no purchased inputs and a minimum of marketedoutputs. The existence of restrictive trade policy milk in the Diary Industry and the emergenceof Amul type cooperatives have changed the dairy farming practices in the country. Farmershave gained the favorable price for their milk and for their production which was essentially a
  28. 28. self-reliant one is which is now being transformed into a commercial proposition.In India Milk production is dominated by small and marginal land-holding farmers and also bylandless labourers who in aggregate own 70% of the national milch animal herd. And as thecrop production on 78% of the agricultural land still depends on rain, which is prone to bothdrought and floods, rendering agricultural income is very much uncertain for most of thefarmers. Dairying, as a subsidiary source of income and occupation, is real relief to most of thefarmers in the society. Usually one or two milch animals enable the farmers to generatesufficient income to break the vicious subsistence agricultural-debt cycle.The Operation Flood which is the successful Indian dairy development programmed hasanalyzed that how food aid can be utilized as an investment in building the type of institutionalinfrastructure that can bring about national dairy development. Programmes like this, withsimilar policy orientations, may prove to be appropriate to dairy development in in India.India in the early 1950s was commercially importing around 55000 tonnes of milk powderannually to meet the urban milk demand. Most of the significant developments in dairying havetaken place in India in this century only. Indias Milk Product Mix Fluid Milk 46.0% Ghee 27.5% Butter 6.5% Curd 7.0% Khoa (Partially Dehydrated 6.5% Condensed Milk) Milk Powders, including IMF 3.5% Paneer & Chhana (Cottage Cheese) 2.0% Others, including Cream, Ice Cream 1.0% Total contribution to the economy/ sales
  29. 29. The Indian Dairy Industry engages in the production and processing of milk & cream. Thisindustry is involved in the manufacture of various dairy products like cheese, curd, yoghurt etc.The Indian Dairy Industry specializes in the procurement, production, processing, storage anddistribution of dairy products. India as nation stands first in its share of dairy production in theinternational scenario. The industry contributes about Rs 1,15,970 to the national economy. Employment opportunitiesThe Indian Diary industry which is in the developing stage provides gainful employment to avast majority of the rural households. It employs about 8.47 million people on yearly basis outof which 71% are women.Jobs in Indian dairy industry are mainly in the fields of production and processing of dairyproducts. An individual with minimum of 60% marks who has bachelor’s degree course in thedairy technology can easily be availing an opportunity to work in this industry. For thegraduation course in Dairy technology one has to qualify the All India Entrance Test that isaffiliated to the Indian Council of Agricultural Research. After that the person can continue withhis masters in dairy technology. Jobs would be for the following positions. Dairy Scientists: The main job of the dairy scientists is to deal with collection of milk and taking care of the high yielding variety of animals. Dairy Technologists: the work of Dairy technology requires procurement officers who take the responsibility of collecting milk from farmers, milk booths ad cattle-rearers. This particular procurement officer should well understand the latest technology that is applicable in maintaining the quality of milk of the process of transporting it to the desired location. Dairy Engineers: dairy engineers are usually appointed is to set up and maintain dairy plants. Marketing Personnel: These individuals deal with the sale and marketing of milk together with milk products. Amuls success story
  30. 30. Amuls success had huge impact in the creation of same structureof milk producers in other districts of Gujarat initially. Amulsexperience was driving force in project planning and execution.The ‘Anand Pattern was followed in Kaira district, Mehsana,Sabarkantha, Banaskantha, Baroda and Surat districts. As evenbefore the setting up of the Dairy Board of India, farmers andtheir leaders carried out various tests of the hypotheses thatexplained Amuls success. All through these districts, milkproducers and their leaders experienced significant commonaltiesand found easy, effortless ways to adapt Amuls gameplan to theirrespective areas. This eventually led to the Creation of theNational Dairy Development Board with the clear mandate ofreplicating the Anand pattern in other parts of the country.Initially this pattern was followed for the dairy Industry but atlater stage oilseeds, fruit and vegetables, salt, and tree sectors alsobenefited from its success. Latest developments Indian Dairy Industry is the largest milk producer all over the world, around 100 million MTIndian Dairy Industries value of output amounted to Rs. 1179 billion in 2004-05 which approximately equals combined output of paddy and wheat. With 1/5th of the world’s bovine population In India the Milch animals constitutes 45% indigenous cattle, 55 % buffaloes, and 10% cross bred cowsIntensive Dairy Development Programmed (IDDP): The Schemes, modified under thisprogrammes are on the basis of the recommendation of the evaluation studies which werelaunched during Eighth Plan period and is being continued through out the Eleventh Plan withan outlay of Rs. 32.49 core for 2009-10.Strengthening Infrastructure for Quality and Clean Milk Production (CMP): this is acentrally sponsored scheme which was launched in October 2003, which had the main objectiveof improving the quality of raw milk produced at the every village level in the India.Dairy Venture Capital Fund- this is introduced in the Tenth Fiver Year Plan to bring aboutstructural changes in unorganized sector, which would measure like milk processing at village
  31. 31. level, marketing of pasteurized milk in a cost effective manner, quality or the up gradation oftraditional technology to handle commercial scale using modern equipments and managementskills.Updated: Jan 2011Indian Industries Aluminium industry, Cement industry, Construction industry, Copper industry, Dairy industry, Diamond industry, Fashion industry, Fertilizer industry, FilmClassified industry, Granite industry, Health care industry, Jewelleryunder RED category industry, Mining industry, Oil industry, Paint industry, Paper industry, Power industry, Printing industry, Rubber industry, Silk industry,Soap industry, Steel industry, Sugar industry, Textile industry, Tabacco industry, Zinc industry Automobile industry, Cotton industry, Hotel industry, JuteClassified industry, Pharmaceutical industry, Tractor industry, Weavingunder ORANGE category industry Advertising industry, Agricultural industry, Aviation industry, Banking industry,Biotechnology industry, Biscuit industry, Chocolate industry, Coir industry, Cosmetic industry, Cottage industry, Electronic industry, Food ProcessingClassified industry, Furniture industry, Garment industry, Insuranceunder GREEN category industry, IT industry, Leather industry, Music industry, Mutual fund industry, Pearl industry, Plastic industry, Poultry industry, Railway industry, Real estate industry, Shipping industry, Solar industry