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SEMINAR-II
Indian Dairy Industry: Present Status and Future prospects
Vasanth Kumar, C.
PALB – 3104
Sr. M.Sc. (Agril Economics)
Major advisor
Dr . D. Sreenivasa Murthy
Principal Scientist, IIHR, Bengaluru
DEPARTMENT OF AGRICULTURAL ECONOMICS
UAS, GKVK, BENGALURU.
2
Flow of Seminar
 Global Overview of Dairy Industry
 Overview of Indian Dairy Industry
 Structure of Indian Dairy Industry
 Dairy cooperatives at Glance
 Trade performance of India's Dairy Industry
 Indian Dairy Industry: Growth Drivers & Key Challenges
 Future Prospects
 Conclusion
3
• World milk production - Increased > 50
% during last 3 decades
• 482 million tones in 1982 to 780.3
million tonnes in 2013.
• Highest milk surplus countries: New
Zealand, USA, Germany, France, Australia
and Ireland.
• Highest milk deficits countries: China,
Italy, Russian Federation, Mexico, Algeria
and Indonesia.
• Number of households engaged : > 150
million households.
MILK – WORLD SCENARIO
• India (17%) 1
• U. S. 2
• China 3
• Pakistan 4
• Russia 5
• Germany 6
• Brazil 7
• France 8
• New Zealand 9
• U. K. 10
Table 1:
Rank –Production
Source: Authors representation based on FAO report and other various reports.
4
Fig 1: WORLD TOP MILK PRODUCING COUNTRIES
(in Million Tonnes)
Source: Authors representation based on FAO report and other various reports.
.
5
India's milk production is equal
to that of whole EU by 2021
(in Million Tonnes)
Source: Authors representation based on faostat.fao.org/.
2013-14
6
Fig 2: WORLD-TOP MILK CONSUMING COUNTRIES
Global Consumption increasing faster than Population growth...
• Global consumption of protein increased from 3.7 to 5.4 lakh tonnes per day - CAGR of
2% .
• Global population increased from 5.4 to 7.0 billion - CAGR of 1% .
• Increasing proportions of this growth is from animal protein
• Meat - 2.9 % • Dairy – 0.5 % increase
• Vegetables, soy and fruit – 2% increase
• Cereals - decreased 6.2%
Demand for animal proteins likely to continue to
increase faster than other categories
Source: FAOSTAT, PwC Analysis
7
Fig 3 :
• Price volatility is likely to remain in the near future.
• Thin volumes of global milk trade .
• Few players dominate global market.
Prices of dairy
products remain high
despite increased
production due to
increasing demand
and higher cost of
production.
Global dairy sector - Price trends
8
Fig 4 :
Cost of production(US $/
100 Kg)
Country
> 20 ≤ 30 Argentina, Pakistan, Vietnam, Indonesia , Chile (Small
farms), China (small farms).
> 30 ≤ 40 Estonia, Czech Republic, Brazil, Bangladesh,
Thailand, Poland , India and New Zealand.
> 40 ≤50 Spain, Denmark, Ireland, UK, USA, Germany(large
Farms) and Neither land(Large farms) and Israel.
> 50 ≤60 Austria, France, Sweden, China, Neither land Small
farms) .
> 60 ≤ 120 Switzerland, Norway, Finland, Canada and
Germany(small Farms)
Source: IFCN Dairy Report 2011
Table 2: Cost of Production of Milk
9
 Largest producer in the world (>17%)- 137.7 mt in 2013-14.
 India’s share in livestock population in the world
 15% of the total livestock
 57.3 % of total buffaloes (105 million)and 14.7 % (200
million) of total cattle.
 Share in India’s GDP
 3.6% (13.7 % agriculture)
 secondary source of income for 70 million rural households
engaged in dairying.
 Growth rate of milk production : 3.5%
 Consumer demand rate : 5%.
 4.38 million women members in dairy cooperatives across
the country as on march 2014.
MILK – Indian Scenario
Source : Indiastat.com , NDDB and Ministry of Animal Husbandry.
10
17
20 22
31.6
53.9
80.6
92.5
116.4
121.8
127.9
132.4
137.7
0
20
40
60
80
100
120
140
160
1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2004-05 2009-10 2010-11 2011-12 2012-13 2013-14
( Million tonnes)
Year
Fig 5: Trend in Milk production in India
Source : Author’s Representation based on FAO and NDDB . 11
Table 3: Trends in average annual growth rates of milk
1950-51 to 2010-11
Year Average annual milk growth rate
1950-51 to 1960-61 1.64
1960-61 to 1973-74 1.15
1973-74 to 1980-81 4.51
1980-81 to 1990-91 5.48
1990-91 to 2000-01 4.11
2000-01 to 2010-11 4.15
Source: Authors Compilation based on FPI report 2011 12
• Small and marginal farmers own 33 % of land and about 60 percent of
female cattle and buffaloes.
• Some 75 % of rural households own, on average, two to four animals.
• Dairying is a part of the farming system, not a separate enterprise.
• Feed is mostly residual from crops, whereas cow dung is important for
manure.
• Dairying provides a source of regular income, whereas income from
agriculture is seasonal.
• About a one third of rural incomes are dependent upon dairying.
• Livestock is a security asset to be sold in times of crisis.
Characteristics of India’s dairy farming and its relevance to
inclusive growth
13
SWOT Analysis of Indian Dairy Industry
Strength
 Largest milk producer in the world.
 A huge base of around 11 million farmers.
 Traditional emphasis on consumption.
Weakness
 Poor feeding practices.
 Poor access to institutional
credit.
 Lack of cold storage facilities.
Opportunities
 Elastic demand; economic growth will
spur demand.
 Increasing preference for branded dairy
products.
 Growing focus on health and nutrients
in urban market.
Threat
 Nearly 80 per cent of the
Indian dairy industry is
unorganized.
 Removal of import duty has
led to the threat of dumping.
14
State
Fig 6 : Top 10 Milk Producing states
2013-14
Source : Author’s Representation based on India stat and NDDB .
15
Milk Production in 000’ Tonnes
Top 7 Milk producing states contributes more
than 65% of Milk production.
UP – 18%
AP & Rajasthan – 9% each.
Punjab & Gujarat – 8% each.
MP & Maharashtra – 7%
Karnataka 5 %
16
Fig 7 : Top Milk production states in India
Table 4 : Average Yield of Milk
(kg/day)
Indigenous
cow
2.36
Exotic/
Crossbreed
7.02
Buffalo 4.80
Goat 0.43
• Bovine population – about 115 million
• Indigenous cows - for 40% of milch population
but only 24% production.
• Buffalo milk - 55% of production
• Average daily milk yield/ animal – 4.4
litres/animal .
• Wet animals – 69.3% (increased by about 12%
over the last decade)
Source: DAHD, ICAR, PwC analysis
Milk yield by Animal type
40
14
46
24
21
55
0 20 40 60 80 100 120
Indigen
ous cow
Crossbre
d
Buffalo
milch populaton
Milk production
Percentage contribution 17
Fig 8 :
Fig 9: Trend of Per Capita Availability of Milk in India
Per
Capita
Availibility
(gms/day)
Source : Author’s Representation based on NDDB and Ministry of animal husbandry.
130 126
112
128
176
217
233
273
281
290 296 302
0
50
100
150
200
250
300
350
1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2004-05 2009-10 2010-11 2011-12 2012-13 2013-14
Milk represents 17.5 % of global
beverage consumption
Per
Capita
Availibility
(gms/day) gms/day
18
world average - 294 gms/day
38.93
47.94
46.11 47.09
50.09
51.83
59.50
62.05 62.17
65.19
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
1987-88 1993-94 1999-00 2004-05 2009-10
lit/Year
Year
2013-14
Source: NSSO, MOSPI
Rural Urban
Fig 10: Milk Consumption in India
Litre per capita per annum
19
20
Table 5 : Share of Expenditure on Milk and Milk products in Total
Monthly per Capita Consumer Expenditure
Item
1987-88 1993-94 1999-2000 2004-05 2012-13
Rural
Milk and Milk
Products 8.6 9.3 10.1 10.6 11.3
Cereals and Pulses
30.1 27.6 24.1 20.37 18.9
Total Food 63.8 62.1 59.4 53.3 51.7
Total Non-food 36.2 37.9 40.6 46.7 48.3
Total Exp. 100.0 (158) 100.0 (286) 100.0 (436) 100.0 (579) 100.0 (836)
Urban
Milk and Milk
products 9.3 8.6 7.8 7.6 7.2
Cereals and Pulses 18.4 16.8 15.2 13.6 11.6
Total Food 55.9 53.9 48.1 42.0 39.3
Total Non-food 44.1 46.1 51.9 58.0 60.7
Total Exp. 100.0 (250) 100.0 (464) 100.0 (855) 100.0 (1104) 100.0 (1463)
Values in the parenthesis indicate expenditure in Rs per month.
Source : NSSO, Household Consumer Expenditure in India, Government of India, New Delhi, various reports.
(Per cent)
Fig 11: Structure of Indian Dairy Industry
Indian Milk Production(137.7 MT
)
Unorganized Sector~110 MT
(80%)
Organized Sector ~28 MT (20 %)
[ Private Dairies-532,
Cooperatives-254
Government-46]
Retained or sold
at rural level
~(41%)
Liquid Milk
(13.5%)
Value added
products (6.5%)
Loose milk sold
in urban areas
~ (17%)
Value added
products{mostly
traditional}
(22%)
Shifts from unorganized to the organized sector
Source – Authors representation based on Ministry of Agriculture, Economic Survey of India, Rabobank and Technopak
analysis, NDDB annual report 2013-14.
21
22
Fig 12: Supply chain of Indian Dairy Industry
– Largest agricultural programme in the world using food aid
for development.
– Transformed the face of India’s dairy industry through
organising farmers into cooperatives.
Operation Flood
20.5 22.3
31.3
41.2
52.5
62
79.4
92.5
116.4
137.7
0
20
40
60
80
100
120
140
160
1968-69 1973-74 1979-80 1984-85 1989-90 1994-95 1999-00 2004-05 2009-10 2013-14
Source : Author’s Representation based on NDDB reports.
23
Fig 13
• The bedrock of Operation Flood has been village milk
producers’ cooperatives, which
• procure milk
• provide inputs and services,
• making modern management and technology
available to members.
• Operation Flood’s objectives included:
• Increase milk production (“a flood of milk”)
• Augment rural incomes
• Reasonable prices for consumers
• Programme Implementation
Operation Flood
Strategy
24
1. Making India the largest producer of milk and milk products,
and hence is also called the White Revolution of India.
2. Followed the Indian Green Revolution and helped alleviating
poverty by offering gainful employment, and also providing
access to better nutrition.
3. Operation Flood has helped dairy farmers direct their own
development, placing control of the resources they create in
their own hands.
4. Reducing seasonal and regional price variations and ensure
and ensure fair market prices.
Achievements of Operation Flood
25
Indian dairy sector has evolved from rags to riches
-Per capita milk
availability-132g/day
-Milk rationing and
scarcity
-Dependent on import
-High intermediation
White revolution
-Per capita milk
availability-302 g/day
-17% of global output
-Net exporter
-Increased share of
producers share in
consumer price
• Cooperative dairying
• countrywide milk grid –
linking producers to
consumers
• Cutting out middle men
• Strengthening
production,
procurement,
infrastructure and
technology transfer
1940’s
Made dairy farming India’s largest self-sustainable rural employment generator making
the country #1 in milk production.
2013
26
Dairy Cooperatives at a Glance
27
Cooperative Revolution in India
Dairy Cooperative
Network
 Includes 177 milk unions, operate over 346 districts covers
1,33,349 villages owned by around 13.9 million farmers
Milk production  Increased from 21.2 in 1968-69 to 137.7 million MT in
2013-14
 Per capita availability increased from 112 gms/day in 1968-
69 to 309 gms/day in 2013-14
Marketing  in 2013-14 average daily cooperative milk marketing stood
at 220.4 lakh litres with average annual growth rate of 6.1%
compounded annually over 5 years.
Innovation  Bulk vending- saving money and the environment.
 Market travels to deficit areas carried by innovative rail and
road milk tankers.
 Automatic milk collection unit(AMCU) and Bulk milk cooler
(BMC) at grass root level. Preserve quality and reduce post
procurement losses.
28
Source: Authors representation based on NDDB report 2013-14
29
Fig 14 : Dairy Cooperative Societies(in Numbers)
Fig 15 : Producer Members (in Million)
1.747
7.482
10.738
14.722 15.115 15.459
0
2
4
6
8
10
12
14
16
18
1980-81 1990-91 2000-01 2010-11 2012-13 2013-14
Source: Authors representation based on NDDB report 2013-14
30
Fig 16: Milk Procurement (in million kilograms Per Day)
Fig 17 : Liquid Milk Marketing (in million litres Per Day)
THE SUCCESS STORY
31
AMUL INTRODUCTION
 More than 60 products.
 Exported to more than 20 countries.
 Founded in 1946. “AMUL Pattern” in co-
operative sector.
 National Dairy Development Board White
Revolution
 IRMA GCMMF - One brand
32
Members: 13 district cooperative milk producers'
Union
No. of Producer Members: 2.79 million
No. of Village Societies: 13,328
Total Milk handling capacity: 11.22 million litres per day
Milk collection (Total - 2013-14): 3.42 billion litres
Milk collection (Daily Average 2013-14): 9.4 million litres
Milk Drying Capacity: 626 Mts. per day
Cattle feed manufacturing Capacity: 3500 Mts. per day
33
Table 6 : Snapshot of AMUL
Specifically, AMUL has been able to
• Produce an appropriate blend of the policy makers comprising of farmers
and professionals with each group appreciating its role and limitations;
• Bring at the command of the rural milk producers the best of the
technology and harness its benefits for the betterment of members;
• 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
• Despite growth in the scale of operations, it has remained with the smallest
producer members. 34
Product Range Brand Name
Liquid Milk (nine varieties)
Milk Powders (five varieties)
Butter
Ghee (two varieties)
Bread Spread
Cheese (three varieties)
Cocoa Products (two varieties)
Sweets (three varieties)
Ice Cream (several varieties)
Condensed Milk
Edible Oil (nine varieties)
Mineral Water
Fruit Drinks
Panel E: Number of Brands
Liquid Milk: AMUL, SAGAR
Milk Powders: Amulspray,
AMUL, SAGAR, Amulspree,
Amulya
Cocoa Products: AMUL,
Nutramul
Edible Oils: Dhara, Lokdhara
Mineral Water: Jal Dhara
Fruit Drinks: Safal
35
Trade performance of India's Dairy Industry
36
(Source: GTIS, Technopak analysis, 2013)
India processes less than
20% of the total milk
produced into tradable
products.
Export volumes reached 70,790 metric tons in 2012-13
Fig 18: Indian Dairy Exports by Product Types
37
(in US $ Million)
Fig 19: India’s Dairy Trade
Source: NDDB report 2013-14
38
MAJOR GOVERNMENT INITIATIVES IN DAIRY FARMING
39
 Improve the entire dairy supply chain by providing financial
aids and technical support.
 Pattern of assistance is 100% grant in aid with a maximum
allocation of Rs 300 lakhs /district.
 A 70 % loan and 30% basis of funding is provided for over
20000 LPD milk processing capacity.
 Milk chilling capacity of 18.49 lakh litres per day and
processing capacity of 23.96 lakh litres per day have been
created under this scheme.
Intensive Dairy Development Scheme
40
 To generate self-employment and provide infrastructure to
unorganized dairy sector for making improvement in quality and to
help increasing the commercial viability of these activities.
 Aims to promote ventures in the dairy sector.
 Assistance is provided to bankable projects with 50% interest free
loan component.
Dairy Venture Capital Fund Scheme
41
 Aims to increase the milk production to about 180 million tones by
2021-22.
 Enhancing milk production in major milk producing areas, and
strengthening and expanding infrastructure for production process.
 This plan also proposes to bring 65% of the surplus milk produced
under the organized sector for procurement as against the present
30%.
National Dairy Plan
42
 To promote clean milk production and creation of
necessary infrastructure for it.
 Pattern of funding is in the ratio of 75:25 for purchase
and installation of bulk milk coolers at village level.
 Achievement : About 30,468 farmers trained, 1368
no. of bulk milk coolers with total chilling capacity of
21.05 lakhs LPD were installed and 884 existing
laboratories have strengthened.
Strengthening Infrastructure and Clean Milk
Production Programme
43
Indian Dairy Industry: Growth Drivers & Key
Challenges
44
Population Growth,
Urbanization and
Growing income
levels.
Technical
Innovation
Fast Changing
Food habits
Growth drivers of Indian dairy Industry
 Population Growth
 Economic Growth
 Rapid Urbanization
 Rising Income levels
 Technical Innovation in milk Products
processing.
 Fast changing food habits and value added
products.
45
Fig 20
Key Challenges of Indian dairy Industry
Small Holder Level
 increasing pressure on land resources for cultivation.
 Lack of good quality animal feed.
 Lack of animal health care facilities.
 Low genetic potentiality of animals.
 Lack of chilling capacities
 High production costs.
Collection Level
 Milk base mainly consisting of small holders.
 .Involvement of too many intermediaries.
 Lack of infrastructure.
 Manipulation of quality of milk by farmers.
Processing Level
 Seasonality of production and fluctuating supply.
 .Absence of quality standards.
 Adulteration and foods safety.
 Lack of trained and skilled workers.
46
Key Challenges of Indian dairy Industry
Storage and
Logistics level
 Lack of cold storage facilities.
 Gap in cold chain and transport facilities
.
Co-operative Level
 Less number of member farmers.
 Lower participation in the decision making process.
 Low prices of milk.
 Inefficient services.
 Insufficient infrastructure.
.
Marketing challenges  Majority of the market is still organized.
 Acceptability of the customer base.
 Less penetration to the rural market.
 Lack of transparent milk pricing system.
.
47
Prospects of Indian Dairy industry
48
 Increasing GDP
 Government welfare programmes like NREGA
 Increasing Urbanization
 Emphasis on Healthy Eating
 Shift : CEREALS
Increasing Demand of Milk & Dairy Products
 Projected demand for milk :about 200 million tonnes by
2021-22
 Milk production is increasing by 3 million tonnes annually
Must henceforth increase by 6 million tonnes annually
49
• National Dairy Plan to double milk production
• Increase in milk production by increasing productivity of
our animals
 scientific approach to feeding and breeding
• Increase of Organized sector’s share of marketable
surplus
 from 30 percent to 60 percent
 improve milk handling & product quality
• Encouragement of milk producer to produce more milk
 Increasing income from sale of milk
 Value added product
……..to meet the growing demand
50
51
1. Increased milk production :
 Highest bovine population in the world.
 tremendous potential to further strengthen India's position in the world
dairy market.
 demand for livestock products will increase substantially.
2. . Export Potential :
 Milk and milk products have emerged as the largest agricultural commodity
 India has the potential to become one of the leading players in milk and milk product
crore in exports.
 Largest exporter of skimmed milk 583 million dollar in 2012-13.
 leading players are Amul, Nestle, Britannia and Mother Dairy.
3. Employment opportunities:
 Dairy sector is the major source of income for an estimated 27.6 million
people. 65 to 70% are small, marginal and land-less farmers.
 pro-poor sectors with any positive development
4. Nutrient supply
5. Low greenhouse gas potential of milk
 Milk production is more environment-friendly when compared to meat
production.
 per unit production mutton emits 11.9 times as much GHG as milk with the
net GHG for mutton being 482.5 vs. 29.2 g for milk. (Pathak et al, 2012)
52
AMUL type cooperatives
• impressive trends in milk production .
• restrictive trade policy for milk products.
• milk production has grown at an exponential rate .
• Farmers receiving a favorable price for their milk and the milk production system.
• self-contained one, is now being transformed into a commercial proposition.
• Public private partnerships
53
Fig 21: world milk Yield
(Tonnes/head)
Source: Authors representation based on FAO report
54
Table 7:Key players in the Dairy industry in India
Key players Brand Turnover Rs crore
(2012-13)
GCMMF Amul 8007
Nestle India Nestle 1641
Punjab state cooperative Verka 1150
Hatsun Agro Anun, komatha 1141
Britania industries limited Britania 1083
Kwality Kwality walls 1054
Heritage foods Heritage gold 900
Modern dairy Modern dairy 445
ADF food Ashoka 102
Himalaya international Himalaya fresh 69
55
56
Conclusion:
 Dairy has a lot of potential to improve rural incomes, nutrition and
women empowerment, and hence is a very critical area for investment.
 A well-developed industry will enable millions of farmers to capitalize
on the emerging opportunities and make a significant impact on rural
incomes.
 On the flip side, weak efforts towards dairy development also can have a
significant but negative impact on the dairy industry.
 The growth rate has been sluggish over the past few years.
“Eight hours for dairy, Eight hours for family and Eight
hours for sleep”
- Dr. Verghese Kurien
57

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  • 1. 1
  • 2. SEMINAR-II Indian Dairy Industry: Present Status and Future prospects Vasanth Kumar, C. PALB – 3104 Sr. M.Sc. (Agril Economics) Major advisor Dr . D. Sreenivasa Murthy Principal Scientist, IIHR, Bengaluru DEPARTMENT OF AGRICULTURAL ECONOMICS UAS, GKVK, BENGALURU. 2
  • 3. Flow of Seminar  Global Overview of Dairy Industry  Overview of Indian Dairy Industry  Structure of Indian Dairy Industry  Dairy cooperatives at Glance  Trade performance of India's Dairy Industry  Indian Dairy Industry: Growth Drivers & Key Challenges  Future Prospects  Conclusion 3
  • 4. • World milk production - Increased > 50 % during last 3 decades • 482 million tones in 1982 to 780.3 million tonnes in 2013. • Highest milk surplus countries: New Zealand, USA, Germany, France, Australia and Ireland. • Highest milk deficits countries: China, Italy, Russian Federation, Mexico, Algeria and Indonesia. • Number of households engaged : > 150 million households. MILK – WORLD SCENARIO • India (17%) 1 • U. S. 2 • China 3 • Pakistan 4 • Russia 5 • Germany 6 • Brazil 7 • France 8 • New Zealand 9 • U. K. 10 Table 1: Rank –Production Source: Authors representation based on FAO report and other various reports. 4
  • 5. Fig 1: WORLD TOP MILK PRODUCING COUNTRIES (in Million Tonnes) Source: Authors representation based on FAO report and other various reports. . 5 India's milk production is equal to that of whole EU by 2021
  • 6. (in Million Tonnes) Source: Authors representation based on faostat.fao.org/. 2013-14 6 Fig 2: WORLD-TOP MILK CONSUMING COUNTRIES
  • 7. Global Consumption increasing faster than Population growth... • Global consumption of protein increased from 3.7 to 5.4 lakh tonnes per day - CAGR of 2% . • Global population increased from 5.4 to 7.0 billion - CAGR of 1% . • Increasing proportions of this growth is from animal protein • Meat - 2.9 % • Dairy – 0.5 % increase • Vegetables, soy and fruit – 2% increase • Cereals - decreased 6.2% Demand for animal proteins likely to continue to increase faster than other categories Source: FAOSTAT, PwC Analysis 7 Fig 3 :
  • 8. • Price volatility is likely to remain in the near future. • Thin volumes of global milk trade . • Few players dominate global market. Prices of dairy products remain high despite increased production due to increasing demand and higher cost of production. Global dairy sector - Price trends 8 Fig 4 :
  • 9. Cost of production(US $/ 100 Kg) Country > 20 ≤ 30 Argentina, Pakistan, Vietnam, Indonesia , Chile (Small farms), China (small farms). > 30 ≤ 40 Estonia, Czech Republic, Brazil, Bangladesh, Thailand, Poland , India and New Zealand. > 40 ≤50 Spain, Denmark, Ireland, UK, USA, Germany(large Farms) and Neither land(Large farms) and Israel. > 50 ≤60 Austria, France, Sweden, China, Neither land Small farms) . > 60 ≤ 120 Switzerland, Norway, Finland, Canada and Germany(small Farms) Source: IFCN Dairy Report 2011 Table 2: Cost of Production of Milk 9
  • 10.  Largest producer in the world (>17%)- 137.7 mt in 2013-14.  India’s share in livestock population in the world  15% of the total livestock  57.3 % of total buffaloes (105 million)and 14.7 % (200 million) of total cattle.  Share in India’s GDP  3.6% (13.7 % agriculture)  secondary source of income for 70 million rural households engaged in dairying.  Growth rate of milk production : 3.5%  Consumer demand rate : 5%.  4.38 million women members in dairy cooperatives across the country as on march 2014. MILK – Indian Scenario Source : Indiastat.com , NDDB and Ministry of Animal Husbandry. 10
  • 11. 17 20 22 31.6 53.9 80.6 92.5 116.4 121.8 127.9 132.4 137.7 0 20 40 60 80 100 120 140 160 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2004-05 2009-10 2010-11 2011-12 2012-13 2013-14 ( Million tonnes) Year Fig 5: Trend in Milk production in India Source : Author’s Representation based on FAO and NDDB . 11
  • 12. Table 3: Trends in average annual growth rates of milk 1950-51 to 2010-11 Year Average annual milk growth rate 1950-51 to 1960-61 1.64 1960-61 to 1973-74 1.15 1973-74 to 1980-81 4.51 1980-81 to 1990-91 5.48 1990-91 to 2000-01 4.11 2000-01 to 2010-11 4.15 Source: Authors Compilation based on FPI report 2011 12
  • 13. • Small and marginal farmers own 33 % of land and about 60 percent of female cattle and buffaloes. • Some 75 % of rural households own, on average, two to four animals. • Dairying is a part of the farming system, not a separate enterprise. • Feed is mostly residual from crops, whereas cow dung is important for manure. • Dairying provides a source of regular income, whereas income from agriculture is seasonal. • About a one third of rural incomes are dependent upon dairying. • Livestock is a security asset to be sold in times of crisis. Characteristics of India’s dairy farming and its relevance to inclusive growth 13
  • 14. SWOT Analysis of Indian Dairy Industry Strength  Largest milk producer in the world.  A huge base of around 11 million farmers.  Traditional emphasis on consumption. Weakness  Poor feeding practices.  Poor access to institutional credit.  Lack of cold storage facilities. Opportunities  Elastic demand; economic growth will spur demand.  Increasing preference for branded dairy products.  Growing focus on health and nutrients in urban market. Threat  Nearly 80 per cent of the Indian dairy industry is unorganized.  Removal of import duty has led to the threat of dumping. 14
  • 15. State Fig 6 : Top 10 Milk Producing states 2013-14 Source : Author’s Representation based on India stat and NDDB . 15 Milk Production in 000’ Tonnes Top 7 Milk producing states contributes more than 65% of Milk production.
  • 16. UP – 18% AP & Rajasthan – 9% each. Punjab & Gujarat – 8% each. MP & Maharashtra – 7% Karnataka 5 % 16 Fig 7 : Top Milk production states in India
  • 17. Table 4 : Average Yield of Milk (kg/day) Indigenous cow 2.36 Exotic/ Crossbreed 7.02 Buffalo 4.80 Goat 0.43 • Bovine population – about 115 million • Indigenous cows - for 40% of milch population but only 24% production. • Buffalo milk - 55% of production • Average daily milk yield/ animal – 4.4 litres/animal . • Wet animals – 69.3% (increased by about 12% over the last decade) Source: DAHD, ICAR, PwC analysis Milk yield by Animal type 40 14 46 24 21 55 0 20 40 60 80 100 120 Indigen ous cow Crossbre d Buffalo milch populaton Milk production Percentage contribution 17 Fig 8 :
  • 18. Fig 9: Trend of Per Capita Availability of Milk in India Per Capita Availibility (gms/day) Source : Author’s Representation based on NDDB and Ministry of animal husbandry. 130 126 112 128 176 217 233 273 281 290 296 302 0 50 100 150 200 250 300 350 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2004-05 2009-10 2010-11 2011-12 2012-13 2013-14 Milk represents 17.5 % of global beverage consumption Per Capita Availibility (gms/day) gms/day 18 world average - 294 gms/day
  • 19. 38.93 47.94 46.11 47.09 50.09 51.83 59.50 62.05 62.17 65.19 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 1987-88 1993-94 1999-00 2004-05 2009-10 lit/Year Year 2013-14 Source: NSSO, MOSPI Rural Urban Fig 10: Milk Consumption in India Litre per capita per annum 19
  • 20. 20 Table 5 : Share of Expenditure on Milk and Milk products in Total Monthly per Capita Consumer Expenditure Item 1987-88 1993-94 1999-2000 2004-05 2012-13 Rural Milk and Milk Products 8.6 9.3 10.1 10.6 11.3 Cereals and Pulses 30.1 27.6 24.1 20.37 18.9 Total Food 63.8 62.1 59.4 53.3 51.7 Total Non-food 36.2 37.9 40.6 46.7 48.3 Total Exp. 100.0 (158) 100.0 (286) 100.0 (436) 100.0 (579) 100.0 (836) Urban Milk and Milk products 9.3 8.6 7.8 7.6 7.2 Cereals and Pulses 18.4 16.8 15.2 13.6 11.6 Total Food 55.9 53.9 48.1 42.0 39.3 Total Non-food 44.1 46.1 51.9 58.0 60.7 Total Exp. 100.0 (250) 100.0 (464) 100.0 (855) 100.0 (1104) 100.0 (1463) Values in the parenthesis indicate expenditure in Rs per month. Source : NSSO, Household Consumer Expenditure in India, Government of India, New Delhi, various reports. (Per cent)
  • 21. Fig 11: Structure of Indian Dairy Industry Indian Milk Production(137.7 MT ) Unorganized Sector~110 MT (80%) Organized Sector ~28 MT (20 %) [ Private Dairies-532, Cooperatives-254 Government-46] Retained or sold at rural level ~(41%) Liquid Milk (13.5%) Value added products (6.5%) Loose milk sold in urban areas ~ (17%) Value added products{mostly traditional} (22%) Shifts from unorganized to the organized sector Source – Authors representation based on Ministry of Agriculture, Economic Survey of India, Rabobank and Technopak analysis, NDDB annual report 2013-14. 21
  • 22. 22 Fig 12: Supply chain of Indian Dairy Industry
  • 23. – Largest agricultural programme in the world using food aid for development. – Transformed the face of India’s dairy industry through organising farmers into cooperatives. Operation Flood 20.5 22.3 31.3 41.2 52.5 62 79.4 92.5 116.4 137.7 0 20 40 60 80 100 120 140 160 1968-69 1973-74 1979-80 1984-85 1989-90 1994-95 1999-00 2004-05 2009-10 2013-14 Source : Author’s Representation based on NDDB reports. 23 Fig 13
  • 24. • The bedrock of Operation Flood has been village milk producers’ cooperatives, which • procure milk • provide inputs and services, • making modern management and technology available to members. • Operation Flood’s objectives included: • Increase milk production (“a flood of milk”) • Augment rural incomes • Reasonable prices for consumers • Programme Implementation Operation Flood Strategy 24
  • 25. 1. Making India the largest producer of milk and milk products, and hence is also called the White Revolution of India. 2. Followed the Indian Green Revolution and helped alleviating poverty by offering gainful employment, and also providing access to better nutrition. 3. Operation Flood has helped dairy farmers direct their own development, placing control of the resources they create in their own hands. 4. Reducing seasonal and regional price variations and ensure and ensure fair market prices. Achievements of Operation Flood 25
  • 26. Indian dairy sector has evolved from rags to riches -Per capita milk availability-132g/day -Milk rationing and scarcity -Dependent on import -High intermediation White revolution -Per capita milk availability-302 g/day -17% of global output -Net exporter -Increased share of producers share in consumer price • Cooperative dairying • countrywide milk grid – linking producers to consumers • Cutting out middle men • Strengthening production, procurement, infrastructure and technology transfer 1940’s Made dairy farming India’s largest self-sustainable rural employment generator making the country #1 in milk production. 2013 26
  • 27. Dairy Cooperatives at a Glance 27
  • 28. Cooperative Revolution in India Dairy Cooperative Network  Includes 177 milk unions, operate over 346 districts covers 1,33,349 villages owned by around 13.9 million farmers Milk production  Increased from 21.2 in 1968-69 to 137.7 million MT in 2013-14  Per capita availability increased from 112 gms/day in 1968- 69 to 309 gms/day in 2013-14 Marketing  in 2013-14 average daily cooperative milk marketing stood at 220.4 lakh litres with average annual growth rate of 6.1% compounded annually over 5 years. Innovation  Bulk vending- saving money and the environment.  Market travels to deficit areas carried by innovative rail and road milk tankers.  Automatic milk collection unit(AMCU) and Bulk milk cooler (BMC) at grass root level. Preserve quality and reduce post procurement losses. 28
  • 29. Source: Authors representation based on NDDB report 2013-14 29 Fig 14 : Dairy Cooperative Societies(in Numbers) Fig 15 : Producer Members (in Million) 1.747 7.482 10.738 14.722 15.115 15.459 0 2 4 6 8 10 12 14 16 18 1980-81 1990-91 2000-01 2010-11 2012-13 2013-14
  • 30. Source: Authors representation based on NDDB report 2013-14 30 Fig 16: Milk Procurement (in million kilograms Per Day) Fig 17 : Liquid Milk Marketing (in million litres Per Day)
  • 32. AMUL INTRODUCTION  More than 60 products.  Exported to more than 20 countries.  Founded in 1946. “AMUL Pattern” in co- operative sector.  National Dairy Development Board White Revolution  IRMA GCMMF - One brand 32
  • 33. Members: 13 district cooperative milk producers' Union No. of Producer Members: 2.79 million No. of Village Societies: 13,328 Total Milk handling capacity: 11.22 million litres per day Milk collection (Total - 2013-14): 3.42 billion litres Milk collection (Daily Average 2013-14): 9.4 million litres Milk Drying Capacity: 626 Mts. per day Cattle feed manufacturing Capacity: 3500 Mts. per day 33 Table 6 : Snapshot of AMUL
  • 34. Specifically, AMUL has been able to • Produce an appropriate blend of the policy makers comprising of farmers and professionals with each group appreciating its role and limitations; • Bring at the command of the rural milk producers the best of the technology and harness its benefits for the betterment of members; • 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 • Despite growth in the scale of operations, it has remained with the smallest producer members. 34
  • 35. Product Range Brand Name Liquid Milk (nine varieties) Milk Powders (five varieties) Butter Ghee (two varieties) Bread Spread Cheese (three varieties) Cocoa Products (two varieties) Sweets (three varieties) Ice Cream (several varieties) Condensed Milk Edible Oil (nine varieties) Mineral Water Fruit Drinks Panel E: Number of Brands Liquid Milk: AMUL, SAGAR Milk Powders: Amulspray, AMUL, SAGAR, Amulspree, Amulya Cocoa Products: AMUL, Nutramul Edible Oils: Dhara, Lokdhara Mineral Water: Jal Dhara Fruit Drinks: Safal 35
  • 36. Trade performance of India's Dairy Industry 36
  • 37. (Source: GTIS, Technopak analysis, 2013) India processes less than 20% of the total milk produced into tradable products. Export volumes reached 70,790 metric tons in 2012-13 Fig 18: Indian Dairy Exports by Product Types 37
  • 38. (in US $ Million) Fig 19: India’s Dairy Trade Source: NDDB report 2013-14 38
  • 39. MAJOR GOVERNMENT INITIATIVES IN DAIRY FARMING 39
  • 40.  Improve the entire dairy supply chain by providing financial aids and technical support.  Pattern of assistance is 100% grant in aid with a maximum allocation of Rs 300 lakhs /district.  A 70 % loan and 30% basis of funding is provided for over 20000 LPD milk processing capacity.  Milk chilling capacity of 18.49 lakh litres per day and processing capacity of 23.96 lakh litres per day have been created under this scheme. Intensive Dairy Development Scheme 40
  • 41.  To generate self-employment and provide infrastructure to unorganized dairy sector for making improvement in quality and to help increasing the commercial viability of these activities.  Aims to promote ventures in the dairy sector.  Assistance is provided to bankable projects with 50% interest free loan component. Dairy Venture Capital Fund Scheme 41
  • 42.  Aims to increase the milk production to about 180 million tones by 2021-22.  Enhancing milk production in major milk producing areas, and strengthening and expanding infrastructure for production process.  This plan also proposes to bring 65% of the surplus milk produced under the organized sector for procurement as against the present 30%. National Dairy Plan 42
  • 43.  To promote clean milk production and creation of necessary infrastructure for it.  Pattern of funding is in the ratio of 75:25 for purchase and installation of bulk milk coolers at village level.  Achievement : About 30,468 farmers trained, 1368 no. of bulk milk coolers with total chilling capacity of 21.05 lakhs LPD were installed and 884 existing laboratories have strengthened. Strengthening Infrastructure and Clean Milk Production Programme 43
  • 44. Indian Dairy Industry: Growth Drivers & Key Challenges 44
  • 45. Population Growth, Urbanization and Growing income levels. Technical Innovation Fast Changing Food habits Growth drivers of Indian dairy Industry  Population Growth  Economic Growth  Rapid Urbanization  Rising Income levels  Technical Innovation in milk Products processing.  Fast changing food habits and value added products. 45 Fig 20
  • 46. Key Challenges of Indian dairy Industry Small Holder Level  increasing pressure on land resources for cultivation.  Lack of good quality animal feed.  Lack of animal health care facilities.  Low genetic potentiality of animals.  Lack of chilling capacities  High production costs. Collection Level  Milk base mainly consisting of small holders.  .Involvement of too many intermediaries.  Lack of infrastructure.  Manipulation of quality of milk by farmers. Processing Level  Seasonality of production and fluctuating supply.  .Absence of quality standards.  Adulteration and foods safety.  Lack of trained and skilled workers. 46
  • 47. Key Challenges of Indian dairy Industry Storage and Logistics level  Lack of cold storage facilities.  Gap in cold chain and transport facilities . Co-operative Level  Less number of member farmers.  Lower participation in the decision making process.  Low prices of milk.  Inefficient services.  Insufficient infrastructure. . Marketing challenges  Majority of the market is still organized.  Acceptability of the customer base.  Less penetration to the rural market.  Lack of transparent milk pricing system. . 47
  • 48. Prospects of Indian Dairy industry 48
  • 49.  Increasing GDP  Government welfare programmes like NREGA  Increasing Urbanization  Emphasis on Healthy Eating  Shift : CEREALS Increasing Demand of Milk & Dairy Products  Projected demand for milk :about 200 million tonnes by 2021-22  Milk production is increasing by 3 million tonnes annually Must henceforth increase by 6 million tonnes annually 49
  • 50. • National Dairy Plan to double milk production • Increase in milk production by increasing productivity of our animals  scientific approach to feeding and breeding • Increase of Organized sector’s share of marketable surplus  from 30 percent to 60 percent  improve milk handling & product quality • Encouragement of milk producer to produce more milk  Increasing income from sale of milk  Value added product ……..to meet the growing demand 50
  • 51. 51 1. Increased milk production :  Highest bovine population in the world.  tremendous potential to further strengthen India's position in the world dairy market.  demand for livestock products will increase substantially. 2. . Export Potential :  Milk and milk products have emerged as the largest agricultural commodity  India has the potential to become one of the leading players in milk and milk product crore in exports.  Largest exporter of skimmed milk 583 million dollar in 2012-13.  leading players are Amul, Nestle, Britannia and Mother Dairy.
  • 52. 3. Employment opportunities:  Dairy sector is the major source of income for an estimated 27.6 million people. 65 to 70% are small, marginal and land-less farmers.  pro-poor sectors with any positive development 4. Nutrient supply 5. Low greenhouse gas potential of milk  Milk production is more environment-friendly when compared to meat production.  per unit production mutton emits 11.9 times as much GHG as milk with the net GHG for mutton being 482.5 vs. 29.2 g for milk. (Pathak et al, 2012) 52
  • 53. AMUL type cooperatives • impressive trends in milk production . • restrictive trade policy for milk products. • milk production has grown at an exponential rate . • Farmers receiving a favorable price for their milk and the milk production system. • self-contained one, is now being transformed into a commercial proposition. • Public private partnerships 53
  • 54. Fig 21: world milk Yield (Tonnes/head) Source: Authors representation based on FAO report 54
  • 55. Table 7:Key players in the Dairy industry in India Key players Brand Turnover Rs crore (2012-13) GCMMF Amul 8007 Nestle India Nestle 1641 Punjab state cooperative Verka 1150 Hatsun Agro Anun, komatha 1141 Britania industries limited Britania 1083 Kwality Kwality walls 1054 Heritage foods Heritage gold 900 Modern dairy Modern dairy 445 ADF food Ashoka 102 Himalaya international Himalaya fresh 69 55
  • 56. 56 Conclusion:  Dairy has a lot of potential to improve rural incomes, nutrition and women empowerment, and hence is a very critical area for investment.  A well-developed industry will enable millions of farmers to capitalize on the emerging opportunities and make a significant impact on rural incomes.  On the flip side, weak efforts towards dairy development also can have a significant but negative impact on the dairy industry.  The growth rate has been sluggish over the past few years.
  • 57. “Eight hours for dairy, Eight hours for family and Eight hours for sleep” - Dr. Verghese Kurien 57