India is the largest producer of milk in the world. Despite being the world’s largest producer, the dairy sector is by and large in the primitive stage of development and modernization. Dairying in the recent decades has been considered as a vital component in the diversification of agriculture and it has progressively been receiving increased emphasis in the recent years. There is growing realization that promotion of dairying not only contributes towards national health building, but also creates substantial employment opportunities. Dairying has been considered as one of the activities aimed at alleviating the poverty and unemployment especially in the rural areas in the rain-fed and drought-prone regions. In India, about three-fourth of the population live in rural areas and about 38% of them are poor. Therefore, among these people, as well as the large vegetarian segment of the country’s population, dairy products provide a critical source of nutrition and animal protein to millions of people in India. Milk serves as a major source of dietary energy, high-quality protein and fat. It can make a significant contribution to meeting the required nutrient intakes of calcium, magnesium, selenium, riboflavin, vitamin B12 and pantothenic acid. Milk from some animal species can also be a source of zinc and vitamins A, C, D and B6. Bioavailability of some nutrients in milk, for example calcium, is high compared with that in other foods in the diet. Milk and milk-derived products like curd, butter milk, ghee, lassi etc. form an important part of Indian meal. In India, about 46 per cent of the produced milk is retained for home consumption, while 54 per cent is disposed-off to various agencies (Gupta, 2007). A large part of Indian population including 70.2 million rural households, primarily having small and marginal farmers and landless labourers, are connected directly or indirectly with the dairy sector. Farm households derive triple benefits from dairy sector in the forms of nutritive food, supplementary income and productive employment for family labour. India is the world’s largest milk producer, with 22% of global production, followed by the United States of America, Pakistan, Brazil and China. Dairying accounts for more than two-thirds of the value of total livestock output and is evidencing a consistent growth in milk production. Milk production in the country increased from about 21 million tonnes in 1970–71 to about 146.3 million tonnes in 2014–15, and the per capita milk availability increased from 112 grams in 1970–71 to 322 grams in 2014–15 (GoI 2016). Correspondingly, the share of milk and milk products in monthly per capita household food expenditures increased from about 12% in 1983 to about 18% in 2011–12 (GoI 2013). Value chain analysis describes the activities within and around an organization and relates them to an analysis of the competitive strength of the organization.

1. Value Chain Analysis of
Milk
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Credit Seminar Presentation
on
Presented by
Shekhar Sumit
MBA (AB) Part-I

2. Flow of Presentation
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• What is value chain analysis?
• Global Dairy Sector
• Indian Dairy Sector
• Core functions and activities in fluid milk value chain
• Economics of milk value chain
• Structure of milk cooperatives in India
• Trend analysis of milk production and availability in
India
• Top milk producing states in India
• Indian startups in milk value chain
• Constraints and opportunities
• Conclusion
• References

3. What is Value Chain Analysis?
• The term ‘value chain’ was coined by
Michael Porter in 1985
• Value chain is a set of activities that
are performed to design, produce,
market, deliver and support a product
• Value chain analysis describes the
activities within and around an
organization, and relates them to an
analysis of the competitive strength of
the organization
• It ensures that the final consumer
gets value in terms of right product,
right price and at right place
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Source: www.techtarget.com/searchcio/definition/value-chain
Porter’s Value Chain

4. Global Dairy Sector
India
21%
Other
43%
USA
11%
Pakistan
6%
China
4%
Brazil
4%
Germany
4%
Russia
4%
France
3%
Share of top milk producing
countries in global milk production
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Source: FAO (2021)
• Global milk production reached nearly
906 million tonnes in 2020
• New Zealand, United States and
European Union are the major
exporters of milk
• Major milk producing countries include
India, USA, Pakistan, China, Brazil,
Germany, France and Russia
• China, Germany, Netherlands, Belgium
and Italy are the major importers of milk

5. Indian Dairy Sector
• India is the largest producer of milk in the
world
• India’s annual milk output in 2020-21 was
209.96 mn tons
• India accounts for 21 % of the global milk
production
• Organized sector accounts for only 34 %
of the total milk production
• Around 48 % of the milk is retained for
self and local consumption
• Major export destinations include Egypt,
UAE, Bhutan, Turkey and Bangladesh
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6. Core Functions & Activities in Fluid Milk Value
Chain
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Input Supply
Animal Feed
Genetics
Drugs
Production
Rearing
Feeding
Milking
Raw Milk
Marketing
Collection
Refrigeration
Transportation
Processing
Pasteurization
Packaging
Quality
Assessment
Distribution
& Retailing
Distribution
Retailing
Quality
Assessment
Consumption
Consumption
Feedback
Source: Kitaw, et.al,
(2012)

7. Economics of Milk Value Chain
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Economics of value chains of different types of milk of Belgaum Co-operative Dairy Plant
Source: Murgod, et.al, (2016)

8. Structure of Milk Cooperatives in India
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Three-tier structure of milk cooperatives in India (Anand Pattern)
Source: Sharma,
V. P. (2015)

9. Trend Analysis of Milk Production and
Availability in India
Source: DAHD (2021-22)
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Milk production and per capita availability in India

10. Top Milk Producing States in India
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Top 10 states Milk Production ('000 tonnes)
Uttar Pradesh 31863.91
Rajasthan 25573.09
Madhya Pradesh 17108.96
Gujarat 15292.35
Andhra Pradesh 15263.1
Punjab 13347.56
Maharashtra 12024.26
Haryana 11734.72
Bihar 10480.33
Karnataka 9031.49
Uttar Pradesh
20%
Rajasthan
16%
Madhya Pradesh
11%
Gujarat
9%
Andhra Pradesh
9%
Punjab
8%
Maharashtra
7%
Haryana
7%
Bihar
7%
Karnataka
6%
Share of top 10 milk
producing states in domestic milk production
Source: https://www.indiastat.com/table/agriculture/state-wise-milk-production-india-2012-2013-2019-20/440093
Top 10 milk producing states in India (in tonnes)

11. Indian Startups in Milk Value Chain
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Supply Tracking Cold Chain E-commerce Consultancy
Genetics
Farm
Management
Automation
Source: https://www.pashudhanpraharee.com/how-digital-start-ups-are-transforming-indian-dairy-farming/

12. Constraints & Opportunities
• Low Artificial Insemination coverage
• Highly unorganized milk value chain
• Losses due to improper handling of milk
• Few semen preservation facilities
• Improper feed given to the cattle
• Shortage of veterinary technicians
• Inadequate chilling and processing
facilities
• Low milk yield per animal
• Round the year demand of milk and milk
products
• Increased inclination towards processed
and packaged dairy products in urban
areas
• Developments in packaging solutions
• New product development in value
added dairy products viz. cheese,
smoothies, flavored milk, custard yogurt
• Upward projection of milk consumption
(OECD-FAO 2022)
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Constraints Opportunities

13. Conclusion
• Unorganized dairy sector should be
organized
• Need to focus on high value dairy
products for export to South Asian and
Gulf countries
• Capacity building through collectivization
• More focus towards increasing yield per
animal
• Robust dairy infrastructure should be built
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14. References (1/2)
• Kitaw, G., Ayalew, L., Feyisa, F., Kebede, G., Getachew, L., Duncan, A.J., & Thorpe, W. (2012).
Liquid milk and feed value chain analysis in Wolmera District, Ethiopia.
• Murgod, Rajani & Biradar, Nagaratna & Angadi, J & Mundinamani, S. (2016). Fodder inclusive
value chain analysis of milk in organized sector of Karnataka. Range Management and
Agroforestry. 37. 233-238.
• State-wise Milk Production in India (2012-13 to 2019-20). Retrieved July 1st, 2022, from
https://www.indiastat.com/table/agriculture/state-wise-milk-production-india-2012-2013-2019-
20/440093
• Say cheese, says the organised dairy sector. Retrieved June 30th,2022, from
https://www.thehindubusinessline.com/specials/india-file/say-cheese-says-the-organised-dairy-
sector/article32662834.ece
• Dairy Sector. Retrieved July 2nd,2022, from https://foodprocessingindia.gov.in/sectors/Dairy
• OECD/FAO (2022), OECD-FAO Agricultural Outlook 2022-2031, OECD Publishing. Paris,
https://doi.org/10.1787/f1b0b29c-en
• USAID/KAVES (2015), USAID-KAVES Dairy Value Chain Analysis 2015, Fintrac.Inc, Nairobi
• Department of Animal Husbandry and Dairying (2022), Annual Report 2021-2022. New Delhi
• FAO. 2021. World Food and Agriculture - Statistical Yearbook 2021. Rome.
https://doi.org/10.4060/cb4477en
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15. References (2/2)
• Gulati, A. Ganguly, & K. Wardhan, H.(2022). Agricultural Value Chains in India. Springer
Singapore.
• How Digital Start-Ups Are Transforming Indian Dairy Farming. Retrieved July 3rd, 2022, from
https://www.pashudhanpraharee.com/leading-dairy-startups-in-india/
• Top Milk Imports by Country. Retrieved June 30th, 2022, from
https://www.worldstopexports.com/international-markets-for-imported-milk-by-country/
• The Anand Pattern. Retrieved July 1st, 2022, from https://www.nddb.coop/about/genesis/pattern
• Sharma, V. P. (2015). Determinants of small milk producers’ participation in organized dairy value
chains: Evidence from India. Agricultural Economics Research Review, 28(347-2016-17180),
247-261.
• Value Chain Analysis. Retrieved June 25th, 2022, from
https://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp
• Value Chain. Retrieved June 24th, 2022, from
https://www.techtarget.com/searchcio/definition/value-chain
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