Indian_Dairy_Industry_Present_Status_and.ppt

DAIRY

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
milliontonnes 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 proteinincreased 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.
Pricesofdairy
productsremainhigh
despiteincreased
productiondueto
increasingdemand
andhighercostof
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(smallfarms).
> 30 ≤ 40 Estonia,CzechRepublic,Brazil,Bangladesh,
Thailand,Poland,IndiaandNewZealand.
> 40 ≤50 Spain,Denmark,Ireland,UK,USA,Germany(large
Farms)andNeitherland(Largefarms)andIsrael.
> 50 ≤60 Austria,France,Sweden,China,NeitherlandSmall
farms).
> 60 ≤ 120 Switzerland,Norway,Finland,Canadaand
Germany(smallFarms)
Source: IFCN Dairy Report 2011
Table 2: Cost of Production of Milk
9

10. Largestproducerintheworld(>17%)-137.7mtin2013-14.
India’sshareinlivestockpopulationintheworld
15%ofthetotallivestock
57.3%oftotalbuffaloes(105million)and14.7%(200
million)oftotalcattle.
ShareinIndia’sGDP
3.6%(13.7%agriculture)
secondarysourceofincomefor70millionruralhouseholds
engagedindairying.
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
1950-511960-611970-711980-811990-912000-012004-052009-102010-112011-122012-132013-14
( Million tonnes)
Year
Fig 5: Trend in Milk production in India
Source :Author’s Representation based onFAO 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 to1973-74 1.15
1973-74to 1980-81 4.51
1980-81 to 1990-91 5.48
1990-91 to 2000-01 4.11
2000-01to 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
Largestmilkproducerintheworld.
Ahugebaseofaround11millionfarmers.
Traditionalemphasisonconsumption.
Weakness
Poorfeedingpractices.
Pooraccesstoinstitutional
credit.
Lackofcoldstoragefacilities.
Opportunities
Elasticdemand;economicgrowthwill
spurdemand.
Increasingpreferenceforbrandeddairy
products.
Growingfocusonhealthandnutrients
inurbanmarket.
Threat
Nearly80percentofthe
Indiandairyindustryis
unorganized.
Removalofimportdutyhas
ledtothethreatofdumping.
14

15. State
Fig 6 : Top 10 Milk Producing states
2013-14
Source :Author’s Representation based onIndia 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: AverageYield 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 type40
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 onNDDB 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
1950-511960-611970-711980-811990-912000-012004-052009-102010-112011-122012-132013-14
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
Litreper 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
20.522.3
31.3
41.2
52.5
62
79.4
92.5
116.4
137.7
0
20
40
60
80
100
120
140
160
1968-691973-741979-801984-851989-901994-951999-002004-052009-102013-14
Source :Author’s Representation based onNDDB 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
•Cooperativedairying
•countrywidemilkgrid–
linkingproducersto
consumers
•Cuttingoutmiddlemen
•Strengthening
production,
procurement,
infrastructureand
technologytransfer
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,operateover 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 millionMT in
2013-14
Per capita availability increased from 112 gms/day in 1968-
69 to 309 gms/day in 2013-14
Marketing in 2013-14average daily cooperative milk marketing stood
at 220.4 lakh litreswith average annual growth rate of 6.1%
compounded annually over 5 years.
Innovation Bulk vending-saving moneyand 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)

31. THE SUCCESS STORY
31

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 makerscomprising 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. Improvetheentiredairysupplychainbyprovidingfinancial
aidsandtechnicalsupport.
Patternofassistanceis100%grantinaidwithamaximum
allocationofRs300lakhs/district.
A70%loanand30%basisoffundingisprovidedforover
20000LPDmilkprocessingcapacity.
Milkchillingcapacityof18.49lakhlitresperdayand
processingcapacityof23.96lakhlitresperdayhavebeen
createdunderthisscheme.
Intensive Dairy Development Scheme
40

41. Togenerateself-employmentandprovideinfrastructureto
unorganizeddairysectorformakingimprovementinqualityandto
helpincreasingthecommercialviabilityoftheseactivities.
Aimstopromoteventuresinthedairysector.
Assistanceisprovidedtobankableprojectswith50%interestfree
loancomponent.
Dairy Venture Capital Fund Scheme
41

42. Aimstoincreasethemilkproductiontoabout180milliontonesby
2021-22.
Enhancingmilkproductioninmajormilkproducingareas,and
strengtheningandexpandinginfrastructureforproductionprocess.
Thisplanalsoproposestobring65%ofthesurplusmilkproduced
undertheorganizedsectorforprocurementasagainstthepresent
30%.
National Dairy Plan
42

43. Topromotecleanmilkproductionandcreationof
necessaryinfrastructureforit.
Patternoffundingisintheratioof75:25forpurchase
andinstallationofbulkmilkcoolersatvillagelevel.
Achievement:About30,468farmerstrained,1368
no.ofbulkmilkcoolerswithtotalchillingcapacityof
21.05lakhsLPDwereinstalledand884existing
laboratorieshavestrengthened.
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
InnovationFast 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 tonnesby
2021-22
Milk production is increasing by 3 million tonnesannually
Must henceforth increase by 6 million tonnesannually
49

50. •National Dairy Plan to doublemilk 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. (Pathaket 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 TurnoverRs crore
(2012-13)
GCMMF Amul 8007
Nestle India Nestle 1641
Punjab state cooperative Verka 1150
HatsunAgro Anun, komatha 1141
Britaniaindustries limited Britania 1083
Kwality Kwalitywalls 1054
Heritagefoods 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