1

Seminar script

On

“CURRENT STATUS, OPPORTUNITIES AND

CONSTRAINTS OF INDIAN DAIRY INDUSTRY”

Course no. : ABM-591

Speaker:

Rathod Krishna

(MBA in Agri-Business student)

(Reg. No. – J4-01320-2014)

Adviser:

Prof. H. Y. Maheta

(Assistant Professor)

Submitted to:

Prof. H. Y. Maheta

(Seminar convener, PGIABM)

P.G. Institute of Agri-Business Management

Junagadh Agricultural University,

Junagadh-362001

2

Table of contents

No. Particulars Page No.

1. Introduction 3

2. History 3

3. Structure of Indian dairy industry 7

4. Distribution of milk in India 8

5. Supply chain of milk 8

6. Categorization of the dairy products 9

7. Current status of Indian dairy industry 11

8. Opportunities of Indian dairy industry 15

9. Constraints of Indian dairy industry 18

10. Solutions for constraints 21

11. SWOT analysis of Indian dairy industry 25

12. Conclusion 26

13. References 27

3

CURRENT STATUS, OPPORTUNITIES AND CONSTRAINTS OF INDIAN

DAIRY INDUSTRY

INTRODUCTION

The Indian dairy industry has been through an evaluation right from the British era till

today. It has come a long way over the years from a milk production volume of 55.7 million tons

in 1991-1991-92 to 127.3 million tons in 2012. Today, the Indian Dairy industry stands at the top

of dairy industry in the world. The operation flood program promoted and implemented by the

National Dairy Development Board (NDDB) has been instrumental in bringing about a white

revolution in India. Changing lifestyle, feeding habits and urban culture has somewhat effected

the transition of the Indian dairy Industry into a more of a demand driven, highly diversified and

exciting business proposition. The country accounts for more than 15 per cent of world’s total

milk production and is also the world’s largest consumer base of dairy products, consuming

almost all of its own milk production. Dairying has been regarded as one of the activities that

could contribute to alleviating the poverty and unemployment especially in the drought‐prone

and rain‐fed areas. In India, about three‐fourth of the population live in rural areas and about 38

per cent 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. Despite the increase in production, a demand supply gap

has become imminent in the dairy industry due to the changing consumption habits, dynamic

demographic patterns, and the rapid urbanization of rural India. This means that there is an

urgent need for the growth rate of the dairy sector to match the rapidly growing Indian economy.

(Kumar and Prabhakar,2011).

HISTORY

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 milk

unions throughout the country towards the end of the 19th century. Since Independence this

Industry has made rapid progress. A large number of modern milk and milk product factories

have since been established. The organized dairies in India have been successfully engaged in

the routine commercial production of pasteurized bottled milk for Indian dairy products. The

Operation Flood which is the successful Indian dairy development programmed has analyzed

that how food aid can be utilized as an investment in building the type of institutional

infrastructure that can bring about national dairy development. Programs like this, with similar

policy orientations, may prove to be appropriate to dairy development in India. India in the early

1950's was commercially importing around 55000 tons of milk powder annually to meet the

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urban milk demand. Most of the significant developments in dairying have taken place in India

in this century only.

Operation Flood

It is one of the world's largest rural development programmes. It is launched in 1970.

Operation Flood has helped dairy farmers direct their own development, placing control of the

resources they create in their own hands. A National Milk Grid links milk producers throughout

India with consumers in over 700 towns and cities, reducing seasonal and regional price

variations while ensuring that the producer gets fair market prices in a transparent manner on a

regular basis. The bedrock of Operation Flood has been village milk producers' cooperatives,

which procure milk and provide inputs and services, making modern management and

technology available to members. Increase in milk production, augment rural incomes,

reasonable prices for consumer is the main objectives of operation flood program.

Program Implementation of operation flood

Operation Flood was implemented in three phases.

Phase I (1970-1980)

Phase II (1981-1985)

Phase III (1985-1996)

Phase I: Phase I (1970-80) was financed by the sale of skimmed milk powder and butter oil

gifted by the European Union then EEC through the World Food Program. NDDB

planned the program and negotiated the details of EEC assistance. During its first

phase, Operation Flood linked 18 of India's premier milk sheds with consumers in

India's four major metropolitan cities: Delhi, Mumbai, Kolkata and Chennai.

Phase II: Operation Flood's Phase II (1981-85) increased the milk sheds from 18 to 136; 290

urban markets expanded the outlets for milk. By the end of 1985, a self-sustaining

system of 43,000 village cooperatives covering 4.25 million milk producers had

become a reality. Domestic milk powder production increased from 22,000 tons in the

pre-project year to 140,000 tons by 1989, all of the increase coming from dairies set

up under Operation Flood. In this way EEC gifts and World Bank loan helped to

promote self-reliance. Direct marketing of milk by producers' cooperatives increased

by several million liters in a day.

Phase III: Phase III (1985-96) enabled dairy cooperatives to expand and strengthen the

infrastructure required to procure and market increasing volumes of milk. Veterinary

first aid health care services, feed and artificial insemination services for cooperative

members were extended, along with intensified member education.

Operation Flood's Phase III consolidated India's dairy cooperative movement, adding 30,000 new

dairy cooperatives to the 42,000 existing societies organized during Phase II. Milk sheds peaked

to 173 in 198889 with the numbers of women members and Women's Dairy Cooperative

Societies increasing significantly. Phase III gave increased emphasis to research and

development in animal health and animal nutrition. Innovations like vaccine for Theileriosis,

bypass protein feed and urea-molasses mineral blocks, all contributed to the enhanced

productivity of milch animals. From the outset, Operation Flood was conceived and implemented

5

as much more than a dairy program. Rather, dairying was seen as an instrument of development,

generating employment and regular incomes for millions of rural people. "Operation Flood can

be viewed as a twenty year experiment confirming the Rural Development Vision"

Top 10 countries in livestock production (million stock)

Country Cattle Buffalo Goat

Brazil 202 - -

India 175 105 126

U.S.A. 96 - -

China 83 23 149

Argentina 51 - -

Ethiopia 49 - 22

Sudan 41 - 43

Mexico 33 - -

Pakistan 32 29 57

Australia 27 - -

Nepal - 4.5 -

Source: Anonymous, 2009

In 2009 India was leading in buffalo production. India had second rank in cattle

production after Brazil and also in second position in production of goat after china. India had

more population of cattle, buffalo and goat which is beneficial and profitable for India. But the

overall production of livestock was very low in all over the world.

Trend of total livestock population in India

Year 1992 1997 2003 2007 2012

Number of animals in („000) 4,70,860 4,85,385 4,85,002 5,29,698 5,12,057

Source: Das, 2014

In 1992 the number of animals in India was no.4,70,860. In the year of 2012 it is raised

up to no. 5,12,057. That means it is raised by no. 41,197. In the time duration between 1992-

1997 it was increase by 14,525 no. Between 1997-2003 it was decrease by no. 383. In between

2003-2007 it is increase by no. 44,696.

Total livestock in India in 2007 and 2012

All India livestock census

Year Cattle Buffalo Goat

2007 1,99,075 1,05,342 1,40,537

2012 1,90,904 1,08,702 1,35,173

Source: Das, 2014

Country Cattle Buffalo Goat

Egypt - 4.1 -

Philippines - 3.3 -

Myanmar - 2.9 -

Vietnam - 2.9 -

Indonesia - 1.9 15

Thailand - 1.7 -

Bangladesh - - 56

Nigeria - - 54

Iran - - 25

Mongolia - - 20

6

In 2007 the population of cattle in India was no. 1,99,075. In 2012 it is reached up to no.

1,90,904. The population of buffalo was no. 1,05,342 in the year 2007 which is reached up to no.

1,08,702 in 2012. And in 2007 the population of gat was no. 1,40,537. It is reached up to no.

1,35,173 in 2012.

State-wise livestock population (% share)

State Cattle Buffalo Goat

M. P. 10.27 7.53 5.93

U. P. 10.24 28.17 11.53

West Bengal 8.65 - 8.51

Maharashtra 8.11 5.15 6.24

Rajasthan 6.98 11.94 16.03

Bihar 6.41 6.96 8.99

Odisha 6.09 4.82 4.82

Assam 5.4 4.56 4.56

Gujarat 5.23 9.55 3.67

Chhattisgarh 5.14 - 2.39

Andhra Pradesh 5.03 9.77 6.71

Tamilnadu 4.62 - 6.02

Jharkhand 4.57 - 4.87

Karnataka 4.98 3.19 3.55

Haryana - 5.6 -

Punjab - 4.75 -

other state 8.28 7.38 6.18

Source: Das, 2014

In 2014 the population of cattle is more in M.P., U.P., West Bengal and Maharashtra as

compared to other states. While lowest in Tamilnadu, Jarkhand and Karnataka. The population of

buffalo is highest in U.P., Rajasthan, Gujarat and Andra Pradesh respectively and lowest in

Karnataka, Punjab, Assam and Odisha. Rajasthan, U.P. and West Bengal have more goat

population as compared to other states. Chhatish grah, Karnataka, Gujarat, Assam, Odisha and

Jharkhand have lowest population of goat.

Dairy co-operative societies in India

Year 1980-81 1990-91 2000-01 2011-12 2012-13

Number of dairy cooperatives 13,284 63,415 96,206 1,48,965 1,55,634

Source: NDDB annual report, 2013

In the year 1980-81 the number of dairy co-operative society in India was 13,284. Which

is reached up to no. 1,55,634 in year 2012-13. In between 1980-81 to 1990-91 it was increased

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by no. 50,131. During 1990-91 to 2000-01 it was increased by no. 32,791. Between the year

2001-01 to 2011-12 it was increased by no. 52,759.

Spread of dairy co-operative societies in India (in numbers)

Direction 1980-81 1990-91 2000-01 2011-12 2012-13

North 2,676 22,126 31,977 54,692 54,802

East 702 4,364 7,113 18,176 21,834

West 5,957 18,580 32,446 43,978 44,970

South 3,949 18,345 24,670 32,119 34,028

Source: NDDB annual report, 2014

In the year 1980-81 the spread of dairy industry in north, east, west, south was no.2,676,

no.702, no. 5,957, no. 3,949 respectively. This is reached up to no. 54,802, no. 21,834, no.

44,970, no. 34,028 respectively in year 2012-13. The development of dairy co-operatives is in

increase day by day. There is much progressive growth in north and west side of India as

compared to south and north side of India.

Structure of Indian dairy industry

Indian dairy industry has two sectors. One is organized sector and other is unorganized

sector. The portion of unorganized sector is more than he organized sector. The portion of

organized sector is 20 percent. And the portion of unorganized sector is 80 percent. The private

dairies, co-operatives are examples of organized sector. Milk vendor is the example of

unorganized sector.

Local dairy cooperatives

Local dairy cooperatives State

Amul Gujarat

Warana Maharashtra

Verka Punjab

Vijaya Andhra Pradesh

Aavin Tamilnadu

Milma Kerala

Saras Rajasthan

parag Utter Pradesh

Source: Anonymous, 2013

Amul is the leading co-operative in Gujarat. There are other co-operatives like Amul that

is Milma in Kerala, Aavin in Tamilnadu, Parag in U.P., Warana in Maharashtra, Saras in

Rajasthan, Verka in Panjab, Vijaya in Andhra Pradesh.

8

Distribution of milk in India

The total milk which are producing in villages are divided into two part. First part is

consumed in village itself and the portion of it is 48 percent. And the remaining 52 percent are

sold in urban areas out of 70 percent of that is handled by unorganized sector, 16 percent is

handled by co-operative sector and remaining 14 percent is handled by organized sector.

Supply chain in India

The supply chain of milk and dairy products is very much complex. Farmers directly sold

the milk to milk co-operatives, private dairies, urban vendors or private traders. These four

directly sold it to urban consumers or directly sold it for business consumption to hotels.

Milk produced in villages

Milk consumed in villages (48%)

Surplus milk flowing into urban areas (52%)

Handled by unorganized sector(70%)

Handled by cooperative sector(16%)

Handled by private organized

sector(14%)

9

Key players of Indian dairy industry

Key players Brand Turnover rs. crore(2009-10)

GCMMF Amul 8,007

Nestle, India Nestle 1,641

Panjab state cooperatives Verka 1,150

Hatsun agro Anun, Komatha, Hatsun curd 1,141

Kwality Kwality Walls 1,054

Parag milk food Parag 550

Modern dairy Modern dairy 445

Rajasthan state co-operaive Saras 300

Vadilal industries Vadilal 189

Himalaya international Himalaya fresh (Paneer) 69

Source: Anonymous, 2013

The table shows some players of Indian dairy industry in which Amul holds first rank

with around 8000 rs. Crore turnover in the year 2009-10. The lowest holder of turnover is

Himalaya international with the turnover of 69 rs. Crore in 2009-10. Nestle, Panjab state co-

operatives, Hatsun Agro, Kwality also has progressive growth around 1,000 to 1500 rs. Crore as

compared to Parag milk food, Modern dairy, Rajasthan state-cooperatives and Vadilal industries

whose turnover is less than 1,000 rs. Crore.

Categorization of the dairy products

There are two categories of dairy products. From raw milk we are producing liquid milk

and value added products. Skim milk, toned milk, UHT milk, low milk, whole milk are included

in liquid milk. Value added items divided into two categories, first is traditional items and

second is non-traditional items. Variety of milk in different flavor like chocolate, venila,

strawberry, pistaflavour is examples of flavored milk. Examples of traditional value added items

are Ghee, Butter, Yogurt, Basundi, Burfi etc.

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Market share of milk and milk products

Source: Anonymous, 2013

Liquid milk covers highest market share. It covers 73 percent of total market share. While

curd, cheese, Flavored milk, Panner covers 1 percent each market share. Milk powder and Ghee

have 8 percent each proportion of total market share. And the remaining 4 percent and 3 percent

is covered by Ice-cream and Butter.

Demand condition

Market size and growth of Indian dairy industry is increase due to increase in per capita

consumption of milk and milk products.

Consumption pattern of urban consumers are changed. Most of the urban consumer

prefers packaged goods and processed food items. But there are also some people who

give priority to freshness of milk and they prefer fresh and unpackaged milk.

The awareness on the quality of products is increasing but in very small proportion of

population.

Urban consumers easily purchase new products as compared to rural consumers.

Now, consumers have variety of dairy products so it affects the demand of dairy industry

of India.

73%8%

8%

4% 3%1%

1%

1%

1%

LIQUID MILK

MILK POWDER

GHEE

ICE-CREAM

BUTTER

CURD

CHEESE

FLAVOURED MILK

PANEER

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CURRENT STATUS OF INDIAN DAIRY INDUSTRY

Top ten countries in milk production (2011)

Sr. no. Country Milk production (MT)

1 European Union-27 140.62

2 India 121.30

3 United States 88.77

4 China 31.78

5 Russian Federation 31.20

6 Brazil 30.85

7 New Zealand 18.05

8 Mexico 11.23

9 Argentina 11.07

10 Ukraine 10.81

In 2011 India holds second rank in milk production with 121.30 MT. The European

Union-27 holds first rank in the milk production with 140.62 MT and Ukraine holds 10th

rank

with 10.81 MT. The United States, china, Russian Federation, Brazil, New Zealand, Mexico,

Argentina holds 3rd

, 4th

, 5th

, 6th

, 7th

, 8th

, and 9th

rank respectively. But currently India is at the first

position in milk production.

Milk production in India

Year 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Production (MT) 97.1 102.6 107.9 112.2 116.4 121.8 127.9 132.4

Per capita

availability (gm/day)

241 251 260 266 273 281 290 301

In 2005-06 milk production was 97.1 MT and the per capita availability is 241 gm per

day. In 2013-14 the production is reached up to 132.4 MT and the per capita availability is

reached up to 301 gm per day. The production and per capita availability is in increasing rate.

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Top 7 states in milk production

Source: Sanjay, 2012

In 2012 the Uttar Pradesh is the highest milk producing state after Andhra Pradesh and

Rajasthan which holds 2nd

rank. Punjab and Gujarat holds 3rd

rank, while Maharashtra and

Madhya Pradesh holds 4th

and 5th

rank respectively. These all states contribute more than 65

percent of milk production in 2012.

State wise Estimates of milk production („000 tons)

State 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

U.P. 17356 18094 18861 19537 20203 21031 22556 23330

Rajasthan 8713 10309 11377 11931 12330 13234 13512 13946

Andhra Pradesh 7624 7938 8925 9570 10429 11203 12088 12762

Gujarat 6960 7533 7911 8386 8844 9321 9817 10315

Punjab 8909 9168 9282 9387 9389 9423 9551 9714

Maharashtra 6769 6978 7210 7455 7679 8044 8469 8734

Madhya Pradesh 6283 6374 6572 6855 7167 7514 8149 8838

All India 97066 102580 107934 112183 116425 121848 127904 132431

This table shows milk production of top 7 states of India. The milk production in U.P.

was 17,356 tons, which is increasing till 2012-13 around 23,330 tons. In 2005-06 the production

of milk of Rajasthan is around 8,734 tons, it is reached up to 13,946 tons in 2012-13. Madhya

Pradesh was producing 6,283 tons milk, which is increasing till 2012-13 around 8,838 tons. And

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the total milk production of India in 2005-06 is 97,066 tons, which is reached up to 1,32,431 tons

in the year 2012-13.

Total dairy export from India („000 tons)

Product 2006 2007 2008 2009 2010 2011

Cheese 1526 1603 1552 1692 1881 1954

Butter 819 781 725 803 762 742

SMP 1093 1060 1114 1208 1377 1618

WMP 1638 1519 1699 1819 1912 2044

In 2006 the export of cheese is 1,526 tons which has been increase in 2011 at 1,954 tons.

In 2006 the export of butter is 819 tons which has been increase in 2011 at 742 tons. In 2006 the

export of whole milk powder is 1,093 tons which has been increase in 2011 at 1,618 tons. In

2006 the export of whole milk powder is 1,638 tons which has been increase in 2011 at 2,044

tons. The export of whole milk powder is more than the other items and the export of butter is

lowest than other items.

Indian dairy exports in International market

Sr. no. Country 2013-2014

Quantity Value

1 Bangladesh 31,482.15 63,742.17

2 Egypt 14,002.28 30,795.07

3 U.A.E. 12,713.20 30,566.25

4 Algeria 10,242.75 20,263.97

5 Yemen Republic 8,959.52 20,181.41

6 Pakistan 9,565.56 20,130.79

7 Saudi Arabia 8,458.73 18,685.65

8 Malaysia 7,120.11 15,466.56

9 Syria 5,276.50 11,739.79

10 Singapore 6,151.70 8,973.54

total 1,13,972.50 2,40,545.20

India’s major market for export of dairy products are Bangladesh, Egypt, U.A.E.,

Algeria, Yemen Republic, Pakistan, Saudi Arabia, Malaysia, Syria, and Singapore. In 2013-14

the total value of export to Bangladesh is rs. 63,742.17. the total value of export to Egypt is rs.

30,795.07. the total value of export to U.A.E is rs. 30,566.25. the total value of export to Algeria

is rs. 20,263.97. the total value of export to Yemen Republic is rs. 20,181.41. the total value of

export to Pakistan is rs. 20,130.79. the total value of export to Saudi Arabia is rs. 18,685.65. the

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total value of export to Malaysia is rs. 15,466.56. the total value of export to Syria is rs.

11,739.79. the total value of export to Singapore is rs. 8,973.54.

International market for Indian dairy exports

Sr.

no.

Country 2010-11 2011-12 2012-13

Qty(MT) Value(lakh) Qty(MT) Value(lakh) Qty(MT) Value(lakh)

1 Bangladesh 4,979.66 6,492.05 68.21 17,869.63 17,869.63 25,910.72

2 Egypt Arab Republic 3,647.35 6,643.98 807.34 11,260.74 11,260.74 17,906.48

3 United Arab Emirates 5,845.35 9,479.37 4,036.08 7,026.47 7,026.47 14,281.75

4 Singapore 2,560.66 1,969.75 2,597.16 5,682.56 5,682.56 6,930.47

5 Iran 48.16 58.05 0.00 3,965.09 3,965.09 6,789.28

6 Pakistan 1,444.48 2,145.33 0.00 4,247.76 4,247.76 6,644.10

7 Other Countries 16,445.48 24,555.13 14,000.80 20,649.25 20,649.25 35,036.92

The total value of export to Bangladesh is rs. 6,492.05, Which is reached up to rs.

25,910.72 in the year 2012-13. The total value of export to Egypt Arab Republic is rs. 6,643.98,

Which is reached up to rs. 17,906.48 in the year 2012-13. The total value of export to United

Arab Emirates is rs. 9,479.37, Which is reached up to rs. 14,281.75 in the year 2012-13. The

total value of export to Singapore is rs. 1,969.75, Which is reached up to rs. 6,930.47 in the year

2012-13. The total value of export to Iran is rs. 58.05, Which is reached up to rs. 6,789.28 in the

year 2012-13. The total value of export to Pakistan is rs. 2,145.33, Which is reached up to rs.

35,036.92 in the year 2012-13.

Countries for sourcing India‟s dairy imports

Sr.

no.

Country 2010-11 2011-12 2012-13

Qty(MT) Value(lakh) Qty(MT) Value(lakh) Qty(MT) Value(lakh)

1 New Zealand 30,570.07 51,722.35 21,059.48 41,297.72 771.15 2,793.70

2 France 1,737.71 1,927.01 13,973.85 23,258.70 1,869.79 2,487.64

3 Denmark 751.92 1,572.91 762.34 1,699.60 832.88 1,990.45

4 U.S.A. 669.07 1,111.21 1,143.45 2,246.60 449.01 1,983.88

5 Italy 165.23 694.51 1,077.91 2,326.26 294.29 1,452.00

6 Netherland 448.51 1,063.43 422.95 1,352.84 320.79 1,401.60

7 U.K. 1,986.49 1,251.52 2,094.69 1,511.28 921.80 1,074.24

8 Nepal 697.81 887.79 590.70 1,000.86 402.96 818.61

9 Spain 78.00 78..28 324.26 618.56 149.08 521.87

10 China 52.10 89.06 2,367.78 4,221.18 256.60 432.00

11 Other Countries 17,147.69 21,842.46 26,882.50 40,859.54 1,151.08 1,700.18

Total 54,334.60

82,240.53 70,699.91 1,20,393.14 7,419.43 16,656.17

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The total value of import from Bangladesh is rs. 6,492.05 and rs. 25,910.72 in the year

2012-13. The total value of import form France is rs. 1,927.01 and rs. 2,487.64 in the year 2012-

13. And the lowest value of import in 2010-11 and 2012-13 is from China.

OPPORTUNITIES OF INDIAN DAIRY INDUSTRY

Large market and investment opportunities:

India has large market and investment opportunity in dairy industry which is still

not competitive and has enough possibilities for higher profit on investment. The

private sector investment is less than the cooperative and government investment

in milk processing and distribution. The food processing segment has shown

highly positive performance for all food processing companies. This sector has

minimal effect of economic slowdown.

Increasing quality of available milk for processing:

The milk production in India has currently been growing with more than 7%

annual growth rate. The dairy industry data demonstrate that the pattern will be

continuing in future as well. It has provided more surplus milk with farmer for

processing and manufacturing diversified dairy product mix. Less than one-fifth

of the milk produced is processed in India, compared with a world average of

over 50 percent. Investors and consumers have more opportunities to make

investment for their interests. An NDDB road map group developed a plan under

which India’s milk production is projected to rise 170MT per year by 2022.

Increasing income level of consumer:

Consumer demand will also shift with rising incomes and changing tastes, the

market for milk products, for instance, is now growing rapidly. The per capita

income has treble in India during last one decade. The growth has not been

restricted to urban India, as the per capita income in rural India has grown by 50

percent in past 10 years. This phenomenal growth has provided a great

opportunity for dairy industry. This trend is likely to continue in future as well.

Therefore, dairy industry would explore this opportunity for its own phenomenal

growth.

Changing life style and preference for milk and milk products:

Fast changing life style in India has created new interest in milk and milk

products. India is largest milk and milk products consumer in the world. India has

large numbers of vegetarian consumers who find milk and milk products as major

sources of protein. An estimated demand for milk would likely to be

approximately 180 million tons in 2021-22.

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Increasing number of adult consumers:

The adult proportion of Indian population is likely to rise at approximately 20

percent decadal growth rate during coming decade. Therefore, relative numbers of

adult milk and milk products consumers are projected to increase by 2020. The

population below 15 years of age (currently 35 percent) is projected to decline to

28 percent by 2016 as shown in table 3.6. The population in the age group 15 -59

years (currently 58 percent) is projected to increase to nearly 64 percent by 2016.

The age group of 60 plus years is projected to increase from the current levels of 7

percent to nearly 9 percent by 2016.

Untapped indigenous milk products market:

Dairy industry has been unable to tap the full potential of Indian dairy products

market. Indigenous milk products segment presents numerous opportunities for

innovation and marketing. There are certain products like Chhach, Lassi and

Dahi, which were never marketed products in India. However, they were part of

culture and every house hold practices. The last one decade has revolutionized

this sector. Therefore, the sector presents open opportunities.

Low cost manpower and employment generation:

Employment is major issue for each economy in the world when economic

recession and slow down has affected almost each of them. However, India

provides very low cost efficient human resource that is an opportunity for the

sector. Food processing m dairy sector leads to significant employment

generation, not only directly but across the supply chain in production of raw

milk, storage milk and milk products, and distribution and sale of the dairy

products to consumers.

Greater awareness to explore to global trends:

India has more grater market possibilities in export of dairy products. India can

explore its global trends by adding new items like whole milk powder, skimmed

milk powder, cheese, butter, etc.

Availability of raw material:

India is the highest milk producer in all over the world. Population of milch

animals like cow and buffalo is also high. India ranks first in stock of buffalo and

second in cow and goat. And because of this the raw milk is easily available in

large quantity.

Employment opportunities:

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

17

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.

Milk received from oilseed crops:

Some food crops are used for production of milk. In India Coconut, groundnut

and soybean are mostly use in production of milk after milch animals. The market

of soybean milk is more than coconut milk and groundnut milk. The process of

milk production of soybean and groundnut are same. Generally five to six steps

for making these type of milk

Process of soybean milk: six steps for making soybean milk

Step 1- ingredients: you need about 125 g whole soya beans to make 1

liter of soymilk.

Step 2- soaking and dehulling: clean soybeans and soak them in water

for 10-16 hours. And removing hulls.

Step 3- heating: heating the soybeans will destroy enzymes which are

responsible for the development of beany flavor.

Step 4- grinding: grind the soked soybeans and one liter water in a

blender. Sieve the mixture through a cheese cloth and recover the

soymilk.

Step 5- boiling: heat soymilk for five to ten minutes. After cooling,

soymilk is ready and can kept in the fridge for another 3 days.

Step 6- flavoring: the soymilk can be drunk as such but can be

improved by adding some salt.

The process of groundnut milk is as same as soybean milk. But in coconut, no

need for soaking of coconut pieces and the remaining process are same. The cost

of coconut milk is high than groundnut milk and soybean milk respectively.

Because the process of making coconut milk is more harder than groundnut milk

and soybean milk.

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CONSTRAINTS OF INDIAN DAIRY INDUSTRY

Situational constraints:

Shortage of green fodder area

The three major sources of fodder supply are crop residues, cultivated

fodder and fodder from common property resources like forests,

permanent pastures and grazing lands.

The area of forest is decreasing due to deforestation. Because of

deforestation the fodder source for animal is reducing.

Due to increase in population, basic need of house is increasing and

because of this the area of green fodder reduces day by day.

Lack of clean water for management activities of animal

Dairy farmers not use clean water for management activities of animal and

because of this the chance of disease in animal is increase which is badly

affecting the quality of milk.

Lack of preservation facility for milk

Lack of preservation facilities for milk at village level reduces the quality

of milk. The quality of dairy products also reduces and not able to

compete in international market.

Technological constraints:

Milking issues

Labourers or technicians in dairy farms and industries are working with

poor technical knowhow on dairying and processing. Mostly they are

uneducated and due to this they are poorly paid.

Poor quality of products is obtained due to more labour involvement in the

processing.

The equipments available are heavy in weight and thereby ergonomic

problem arises.

As the milking is drudgery oriented, milking machine is need of the hour

for better quality.

Milking in the rural is scattered and therefore milk collection to a common

place for processing and distribution are not easy because of poor

transport facility.

Milk handling issues

During the milking direct contact of fingers, hands etc., with leads to

artificial contamination of milk at the milking place itself.

Improper cleaning of milk cans due to lack of knowledge on the quality

adversely affect the milk quality.

Using public transport for milk handling also affect the milk quality

because of uncertainty.

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Inadequate bulk milk coolers available in the milking area leads to

spoilage of milk.

Frequent power cut also disturb the efficiency of bulk milk coolers even if

it is available in the milking area.

Issues in dairy plants

Electricity problems very often affect the efficiency of the equipment

Depleting fossil fuel is always a threat to the dairy industry

Poor technical knowhow leads to inefficient use of equipments and

machines

Energy inefficiency is caused due to leakages in steam lines and improper

use of steam.

The heat wasted through exhaust in the boilers affect the efficiency of

boiler.

Constraints in promoting exports of dairy products from India:

Despite a phenomenal growth in milk production, dairy exports from India face a

number of challenges that may be summarized as follows:

Low productivity

Despite being the largest milk producer in terms of absolute quantity,

India’s average milk yield per cattle remains much lower compared to

developing and even many developed countries.

Lack of modern technologies

The small size of milch animal holding in India makes it difficult to adopt

mechanized system of milking, cooling and chilled-storage which hampers

the efforts to improve quality at the farm production stage.

Lack of necessary physical infrastructure like, connectivity,

communication, testing, and certifying labs, cold chain facilities, absence

of international standard is also acting as a deterrent in export of dairy

products.

Improper management of dairy animal management practices

Breeding, husbandry, housing, feeding, health, record keeping is most

important national dairy code which support the sustainable dairy

development. If it is not properly maintain than production and quality of

milk will be decreased.

Foot and mouth disease outbreaks in India are a major concern for

developed countries which prevents exports of dairy products from India

to these countries.

Unawareness of GMP and GLP

Milk production in the country is scattered and carried out in villages in

unhygienic conditions which is a major bottleneck for the export of dairy

products. Livestock farmer do not know good manufacturing practices and

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processing industries are not strictly adhering to good laboratory practices

which needs to be corrected for the benefit of farming communality.

Due to the small scale of production units, the farmers are not able to

implement the GMP and GLP practices apart from losing the economics

of scale which normally happens as the scale of production.

Constraints in providing dairy extension services:

The major constraints faced by most of the public extension agencies in providing

the dairy extension services are given below

Lack of adequate extension specialists who providing breeding and health care

services.

Lack of separate cadre of extension personnel for “education” activities.

Lack of adequate Para-extension personnel at field level.

Changing farming system coupled with lack of germane technologies.

Shortage of convincible, appropriate field oriented problem solving technology.

Less skill development of field extension functionaries in technology transfer.

Lack of institutional coordination among developmental organizations for dairy

development.

Lack of priority, adequate policy, financial support and infrastructure

development.

Constraints of market structure:

Competitive structure

The demand for quality dairy products is rising and production is also

increasing in many developing countries. But a country like India that is

striving with several problems is hardly able to meet these demands due to

high cost of production, The countries which are expected to benefit most

from any increase in world demand for dairy products are those which

have low cost of production.

Lack of good Governance

There is no specific minimum support price of the milk in the system,

which makes it unremunerated for the farmers. In turn, the farmers not

being able to get fair and remunerative prices for the milk often tend to

give adulterated milk at the collection centers harming the society as a

whole.

Lack of standardization for dairy products, Marketing chain capacity and

efficiency, Distribution channels, how market signals are conveyed or distorted

are one of the constraints of Indian dairy industry.

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SOLUTION FOR CONSTRAINTS

Sustainable dairy development:

For sustainable dairy development in the future three major elements are

highly critical, viz, animal husbandry and veterinary services, fodder and feed

resources development and dairy entrepreneurship development through milk

processing. The livestock and veterinary extension system focus on “dairy

production” where as dairy processing aspects of grossly neglected. The

veterinary universities and ICAR institutes, KVKs needs to focus on skill

development of field extension functionaries for effective dairy service at the field

level. The feed and fodder resources need to be developed in a more systematic

manner in collaboration with the state agriculture departments.

Complaint Redressal System:

Objectives:

Provide essential inputs to enhance milk production, feed and fodder

production, cross breeding programs, veterinary aid and take up dairy

development programs to help them manage their own 9,200 cooperatives.

Development of infrastructure for processing of milk and manufacture of

dairy products and quality milk and milk productions.

Integrate dairy development with overall rural development efforts and

provide greater employment to the rural poor.

Process of complaint Redressal system:

1. Receiving the complaints and maintaining a database

There are four resources for the customers to complain about their

problem with Vijaya milk or milk product. Which are as under…

Managing director’s number

Office number of AAPDDCF

Online submission of complaints

Toll-free number 1100

General flow of complaint Redressal system

Apart from all these source, 18 zonal inspectors are distributed in the

twin cities, working under five area manager.

All the complaints received through different channels are maintained

as a spreadsheet in the Managing Director’s mail id.

2. Resolving the complaint in 24 hours

The complaint received from the above sources will be informed

by the marketing department to the concerned departmental heads for

attending the complaint. And in turn the departmental head will inform the

marketing department about the action taken by them.

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3. Collecting feedback from the complainant within 24 hours

Marketing director personally visits the field twice a week early in the

morning along with department heads of production, quality control and

marketing.

He randomly verifies the complaints by interacting directly with the

customers and vendors. Further he also assesses the possibility of

increasing the market share of Vijaya during his visit and takes

appropriate steps.

Benefit of complaint Redressal system:

Direct feedback from the customers

Identification of recurring problems about Vijaya milk

Building accountability and enduring transparency in the organization

Building confidence among the customers

Establishment of Community Cattle Care Centre wherein dairy animals can be

grouped in one place, proper animal health care including artificial insemination can also

be ensured. Milking machines, bulk milk cooler can also be installed and large quantity

of milk can be handled. Mechanized dairy farm is also possible.

Increase in number of milking machines at farm. So the milking process becomes

speedier. It takes less time as compared to hand operation. Milking machine takes hardly

5 to 10 minutes for milking of 25 liter milk. So it is beneficial to farmer.

Recruiting skilled person: Exploring the possibilities of producing and recruiting the

skilled person can solve labour oriented problems.

Improving efficiency of can: exploring possibilities of designing double jacketed milk

cans to have coolant inside can improve efficiency of can. If milking is done using

milking machine then the pasteurization can be avoided through this.

Development of dairy processing equipments: development of efficient coolant

through nanotechnology can retain the lower temperature. A small quantity of coolant

may be sufficient to keep the milk below 4’c.

Development of energy efficient devices in the dairy industry through nanotechnology

can save lot of energy used at present. Exploring the possibility of using solar water

heater for preheating in the boiler. The sensible heat required for heating the water upto

100’c can be obtained through the solar water heater system. Thereby the energy spent in

this area can be saved.

Exploring possibility of using retort pouches for UHT milk.

Retrospective management of dairy herd:

Optimum milk production is achieved when the general health, particularly the

reproductive performance of dairy animals, is good.

Sound knowledge of reproductive system ensures proper fertility and lesser

calving interval, thereby enhancing productivity.

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The active collaboration of herd manager, farm owner and veterinarian is required

for managing fertility to optimum level.

The role of veterinary gynecologist is especially important as she/he takes care of

the welfare and treatment of animal’s reproductive system leading to greater

reproductive efficiency.

Fodder development program:

Green fodder is an economic source of nutrients. The use of truthfully labeled

fodder seeds can enhance green fodder production by 50%.

Dry fodder: Despite perennial deficiency of dry fodder in certain areas, crop

residues are wasted in surplus areas. This valuable biomass can be secured,

enriched and densified for use in fodder deficit areas.

The above changes can be brought about by providing the following measures:

Support to farmers engaged in fodder seed production by arranging supply of

breeders seed.

Setting up seed processing plants for production of truthfully labeled fodder seeds

Silage making demonstrations

Demonstration of mowers for securing crop residues

Setting up straw densification plants after enrichment with deficient nutrients

Strengthening and expanding milk production system at village level

It is important to expand coverage to enable milk producers to have greater

market access by creating village level infrastructure for milk collection.

Bulk milk coolers, AMUCUs, DPMCUs, milk cans, weighting and testing

equipments should be brought in order to provide greater market access, there

should be introduction of transparent and fair operations using IT-based solutions.

Attention is required to be put on inclusive growth with focus on women and

small holders. Training and capacity building of stakeholders is also desired.

Training and capacity building under NDP-1

About 20lakh milk producer, village level functionaries and officials will be

trained/ oriented in 14 states.

NDDB has training facilities at Anand and regional training centers at Anand and

regional training centers at Siliguri, Jalandhar and Erode. Offices of NDDB at

Mumbai, Kolkata and Bangaluru are being equipped to undertake training

programs.

Training programs are also conducted at village and union level as per

requirement.

Selected persons from EIAs will also be provided training/exposure abroad in the

field of animal breeding and animal nutrition.

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Governments efforts and initiatives for upgrading dairy industry in India

National Dairy Development Plans:

The National Dairy Plan was approved in February 2012 with a financial

outlay of 416 million dollars (more than 20 billion rupees), and implementation

period of six years from 2011-17 to meet the projected national demand of 150

million tons of milk from domestic production. The first phase of the plan was

focused on 14 major milk producing states: Andhra Pradesh, Bihar, Gujarat,

Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab,

Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal. In India, these states

account for over 90 percent of total milk production, 87 percent of the total

buffalo population, and 98 percent of total forage production.

Its initiatives include:

Increasing productivity through scientific breeding and nutrition

Strengthening village based milk procurement systems

Project management and learning

Intensive dairy development program:

IDDP program is implemented by the state dairy federations/district milk unions

with the following six objectives:

Increase milk production by providing technical inputs services

Procurement, processing and marketing of milk in a cost effective manner

Ensure remunerative prices to milk producers

Generate additional employment opportunities

Improve the social, nutritional and economic status of residents of

comparatively more disadvantaged areas.

Strengthening of infrastructure:

Strengthening of infrastructure is one of the basic requirements for quality

& clean milk production. This program is being implemented through the state

government by district cooperative milk unions/state level milk federations. The

objectives of the program can be summed up as under:

Build infrastructure to ensure milk quality from producer to consumer

Improve milking practices at the farmer level

Build awareness on the importance of clean milk production amongst

producers

Assistant to cooperatives:

The GOI seeks to revitalize underperforming dairy cooperative unions at

the district level and cooperative federations at the State level. The program is

being implemented by the concerned district cooperative milk unions/state dairy

federations in this concern.

The national mission for protein supplements:

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This mission was launched by GOI in Indian Financial Year 2011-12 with

an allocation of more than USD 65 million.

This mission undertakes activities to promote animal based protein

production through livestock development, dairy farming, piggeries, goat

rearing and fisheries in selected areas of the country. With the

announcement of the NDP, the mission was strengthened and continued in

Indian Financial Year 2013-14.

Thus the above paragraphs spread light on the several activities and program

undertaken by the GOI in order to make remarkable changes in the productivity of

the dairy sector of India. The significant achievements in the dairy sector of India are

the sustainable, systematic and intensive efforts made by the GoI. There is no doubt

that there is tremendous scope for the growth of the dairy industry in the coming

years to be witnessed

SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY

Strengths:

Demand profile of Indian people is absolutely optimistic.

Margin on the milk and milk products are quite reasonable, even on packed liquid

milk.

Increasing availability of indigenously manufactured equipment.

New food safety and standard law

Product mix of dairy industry is flexible. Indian dairy industry can add new products

with balancing equipments

The raw material of dairy industry is easily available in India. Presently, more than

8o% of milk produced is flowing into the unorganized sector, which requires proper

channelization.

Weaknesses:

Milk is perishable item. Pasteurization has overcome this weakness partially. UHT

gives milk long life. Surely, many new processes will follow to improve milk quality

and extend its shelf life.

There is little control over milk yield.

Lack of good dairy practices.

Weak financial services.

Low dairy plant efficiency.

Low milk productivity and poor veterinary services.

Woes of bed roads and inadequate transportation facility make milk procurement

problematic.

Seasonal fluctuations in milk production pattern.

So many newcomers entering this industry, competition is being tougher day by day.

Opportunities:

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There is a phenomenal scope for innovations in product development, packaging and

presentation.

Indian dairy industry can improve market potential area by introduce value-added

products like shrikhand, ice-creams, panner, flavored milk, dairy sweets, etc. addition

in cultured items like yoghurt and cheese.

Employment generation.

Large market investment opportunities.

Increase in the quality of available milk for processing.

Export potential increase tremendously.

Increase income level of consumer.

Changing lifestyle and preference for dairy products.

Increase the number of adult customers.

Milk received from different agriculture crops like soybean, peanut, coconut.

Threats:

practices by farmers at farm.

Uncontrolled use of antibiotics and medicines on milch animals.

Poor microbiological quality of milk.

Unfriendly WTO regime and imports from other countries.

Drought and flood.

More proportion of milk vendor, the un-organized sector.

CONCLUSION

There is no doubt that there is tremendous scope for the growth of the dairy

industry in the new millennium. The dairy industry in India has been on a steady path of

progression since Indian independence. It has grown from producing 17 million tons of milk

in 1951 to producing 127.3 million tons in 2012. Today, India is one of the largest milk

producing countries in the world. Currently, the Indian dairy market is growing at an annual

rate of 7 per cent and the Compound Annual Growth Rate (CAGR) is 16 percent, it is

anticipated to reach USD 118 billion in 2017. Strong demand for dairy products is

opportunity for India. The Indian dairy industry is all set to experience high growth rates in

the next five years. Further Indian Dairy Sector is now all set ready to invite foreign

investments as well by proving that India is a well set and established market for Dairy

business. So one can surely say, be it an investor, a researcher, or A businessman, Indian

Dairy Sector surely has something for everyone. Thus we can say that, we have done so far

and we can surely do better in coming future.

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