1. milk industry in india

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Milk industry InIndia

Mohammad Ashraf PalProf/chief scientistDivision of LPT,FVSc & AH


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India ranks first in milk production with total

volume of 115 million tons.Driven by steady population growth and

rising income, milk consumption continues torise in India.

World milk production declined by 2 percent in the last three years, according to FAOestimates, Indian production has increasedby 4 per cent. The milk production in Indiaaccounts for more than 13% of the totalworld output and 57% of total Asia'sproduction. The top five milk producingnations in the world are India ,USA, Russia,Germany and France


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Rural households consume almost 50percent of total milk production.

The remaining 50 percent is sold in thedomestic market.Of the share of milk sold in the domestic

market, almost 50 percent is consumed in

fluid form, 35 percent is consumed astraditional products (cheese, yoghurt andmilk based sweets), and 15 percent isconsumed for the production of butter, ghee,

milk powder and other processed dairyproducts (including baby foods, ice cream,whey powder, casein, and milk albumin).


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Most dairy products are consumed in thefresh form and only a small quantity isprocessed for value addition.In recent years, however, the market for

branded processed food products hasexpanded. Although only around 2 per cent food isprocessed in India, still the highest

processing happens in the dairy sector,where 50 per cent of the total produce isprocessed, of which only 13 per cent isprocessed by the organised sector.


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Historical DevelopmentsPre-Independence Period

Ancient India - Era of plentyGolden sparrow was plucked feather byfeather & era of plenty waned graduallyForeign rule-Britishers- deterioration.1891-population dependent on agriculture-61%1950----------------------------------75%

Agricultural production 24% [1901-1941]It took four decades to usher into era of

green revolution to mitigate deterioration


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Organized dairying started in a small waywith the establishment of military dairy

farms & creameries-oldest at Allahbad(1918)

Some private dairies [M/S Keventers,

Polson's]encouraged to process milk primarily for

British Army

Imperial Institute of AH&D-1923 atBangalore to impart training to acquirecompetence in the operation of modern dairyplant.


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Post-independence period

At partition [1947 ] India was said to be leftwith a small number of milch animals

Best milch animals rested with westernPunjab (Pakistan)

5- year developmental programmes(schemes)

1-4th KVS-covered 729 villages

3-6th ICDP-covered 122 districts .


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Task was uphill-as millions of C&B had to be reached

Adequate qualified manpower and valid statistics was

not available . Upon evaluation of KVS & ICDP-results were suggestive

of failure.Reasons:KVS implementation in small & scattered areas Covered an inadequate population Inefficient technical inputs Lack of marketing facilities

ICDP Half of the projects were non-starters In others progress of activity was variable because of

non implementation of detailed model planned at thebeginning.

Projects undertaken without proper survey.


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Programme content got diluted due to frequentfinancial cuts.Contact with beneficiaries was at para vet.levelLack of integration with fodder development andmilk marketing agencies

The milk sub-committee of standing parliamentary

committee on Agriculture [1950] recommendedmonopolization of milk supply and distributionthrough milk control boards city milk supplyschemes-evolvedDairy Plants Set up in metros-processing ~200,000lpd.supported by large milk colonies around

But failed because :Farmers preferred to sell milk directly toconsumers who paid comparatively more than MSS


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Govt took strict measures against cattle owners

They decided to quit the colony

Started settling in cities

Cost of milk production

Quality animals ended up in slaughter houses

Genetic decimation of good quality milk animals

Small diary plants ( 10,000-20000 lpd) established


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Number rose to ~100;1960

Did not Succeed Because:

Source of milk was variable

Traders sold milk directly to consumers andgave to schemes only in glut

During lean supply would stop or priceswould rise

MSS could not increase the price of milk

Rationing and utilization foreign SMP & BO


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Reconstituted/recombined milk supply Primary producer discouraged as they did

not get the remunerative prices. Low financial returns lack of proper feeding and management Reduced milk yield Anti dairy cycle


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During the first 25 years of independencemilk production Increased insignificantly(17-21 MMT; 1951-1970)

Rate of population growth highercompared to milk productionper capita availability 133g to 107 g/day from1951-1970

Kaira Dist of Gujarat-struggle againstexploitation by traders/middlemeneg.Polson dairies etc.Rationale-remunerative prices were not

paidFarmers organized themselves into co-operativesBeginning of KDCMPU--- Famous AMUL

brand of dairy products.


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Anand pattern cooperative Concept

Village Cooperative Society

(Primary Producer basic member)

Elect 9- member management committee with achairman amongst them

[ Collection, testing, payment ]

Confederate District level milk union (Storage)

Unite to form state level milk federation[ procure, transport, process & market]

Profits earned ploughed back to farmers as bonuspayment

Farmers encouraged to Keep more animals, providebetter management

Increased milk production


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Significant to note that compared to

other places in India ICDP succeeded in

KairaSalient indicators of success:Small holding viableMonthly income

Productivity Age at first calving Intercalving period Per capita milk availability Partial employment to youth & women


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Operation Flood

The transition of the Indian milk industry from a situation of net importto that of surplus has been led by theefforts of NDDBs Operation Floodprogramme under the aegis of theformer Chairman of the board Dr.

Kurien.L B Shastri visited Gujarat (Oct. 1964)Spent a night in one of the villages inKaira to see for himself the silentrevolution being brought about by Milk Coop. Movement & concluded:Cooperatives were the onlymechanism that could cause Socio-economic emancipation & improve the

Land-Animal Productivity


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Creation of NDDB (1965 )-twin objectives:Study the concepts, implementation,

strengths and weakness of the projectsimplemented in the pastEffective utilization of the EEC aid

OF-I (1970-81)SMP- 126,000 MTBO- 42,000 MT

Fund generated- Rs.116.40 croresused for the development of 27 ruralmilk sheds in 10 states.


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OF II- (1981-86)

NMG instituted-linking 136 rural milk sheds in 22 states & UT

World Bank credit-$ 150 mSMP-218000 mt

BO - 76000 mt


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OF III-(1987-1995) Aimed at consolidation of earlier gains

WB credit loan- $ 360mSMP 75000 MTBO 25000 MT

Fund generated- Rs. 227.7 crores206.3 crores by NDDBcovered 170 milk sheds

Organizing 70,000 primary dairy coop.Societies


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Technology Mission

KVS,ICDP,MSS Failed - Lack of integration Co-op integrated vertically- increased

production TM instituted primarily to encourage

integration between variousagencies/Deptt. In the state

Objectives:~Search ,identify, adapt & apply Technology

in various fields for increased production

~ Mission identified the gaps likefunctional,educational,infrastructural,legislative, trainings etc.

~Provide bridge funds to obtain desiredresults


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WTOEconomic Liberalization Era

~ Delicencing(1991)~ MMPO (1992)~ Subsidies/Export incentives to western &

American Farmers~ Difficulties for Indian Exporters in the

international market


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R&D A Spate of Programs during Last 6

decades~Cross breeding~ETT/MOET~Frozen semen Technology~AICRP-To evolve a breed suitable to

local conditions/tracts~Bilateral assistance programs

IS,ID,INZ,IA~Nandini(Kerala) Stabilized local breed

through use of frozen semen and fielddata for improvement

~Karan-Swiss & Karan Fries-NDRI


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Constraints & future policy1.Low productivity: 80% cattle & 60%

buffaloNon-descript low milk yield

2. Very large number ruminantsconstitute a sizable proportion of totalLivestock load

3. Feed/ fodder scarcity: Consume 90% of the already scarce feed and fodderresources

4. Animal health problem:~Many diseases claimed to have been

eradicated/controlled are still rampantin India~Recurrent devastating epidemics

hamper livestock production


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~ Animal losses Increased + denying India'saccess to lucrative global market

5. Free vet-services: over-whelming involvementof Govt. In delivering free services compromised quality and accountability

~improvement needed on the lines of livestock

Dev.Board, kerala- AI paid +field data utilizedfor improvement6. Breeding at random:~use of unselected bulls for AI no genetic

progress~ Poor quality services with


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7. Demand for high yielding animals near bigcities Negative selection pressure on sps.

Perish after current lactation

genetic drain

best genotypes destroyed8.Absence of a well conceived Extension

support system in the livestock sector hasseriously undermined the pace of development in the sector under different 5- year plans. This needs to be viewedSeriously.

9. Socio- cultural compulsion Negativeinfluence


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No culling of unproductive adult cattleLarge numbers lingering in the pop n , 30%

not fit for breedingReforms needed to permit alternate use of males & unproductive females.Relentless growth of cattle population farbeyond land capacity can be a majorcause of environmental degradation.Well focussed policy attention is needed

for optimum exploitation of potential for

enhanced milk production, livelihoodgeneration and poverty alleviation.Projected Demand growth @ 7% p.agrowth rate @ 4.5%

(1990),5.7%(1997)


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Salient features:1 Failure of crossbreeding programmers to evolve

a breed suitable to the local conditions/ tracts

ETT-failed to make an impact-calves tofarmers not available at affordable prices .

Uncontrolled growth in animal number

Progressively depleting common propertyresources.

Grossly inadequate feed and fodder resources.

Farming practices unfriendly to theenvironment

Demand Growth Rate@ 7% Vs milk production rate @ 4.5%

N ti l P j t F C ttl & B ff l B di g


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National Project For Cattle & Buffalo Breeding(NPCBB,2000)

Two phases of five years each with an allocation of 400 crores for the first phase for geneticupgradation of C&B

OBJECTIVES:Improved AI services at farmers doorsteps

Organized breeding of all breedable femaleanimals using high quality semen/bullsImprovement of genetic quality of indigenousC&B

Prevention of breed deterioration & extinction of Important indigenous breeds


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Year Grams per day

2000-01 2202005-06 2412008-09 250

Per capita availability of milk

Source: Department of Animal Husbandry and dairying


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Dairy StatisticsParticulars J&K India (millions)

Cattle Pop n 3,084,000 185.18

Buffalo Pop n 1,039,000 97.92

Total Pop n 4,123,000 283.1

Milk Production(MT)

1.51 115

PCA(g/day)363 250


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Strength WeaknessLargest milk producerin the world

A huge base of around11 million farmersTraditional emphasis onconsumption

Poor feeding practices

Poor access toinstitutional creditLack of cold storagefacilities

Opportunity ThreatElastic demand; economicgrowth will spur demandIncreasing preference for

branded dairy productsGrowing focus on healthand nutrients in urbanmarket

Nearly 80 per cent of theIndian dairy industry isunorganized

Removal of import dutyhas led to the threat of dumping

SWOT Analysis

E gi g D i M k t


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Emerging Dairy MarketsFood service institutional market: It is growingat double the rate of consumer marketDefense market: An important growing marketfor quality products at reasonable pricesIngredients market: A boom is forecast in themarket of dairy products used as raw material inpharmaceutical and allied industries

Parlour market: The increasing away-from-home consumption trend opens new vistas forready-to-serve dairy products which would takecredit on the fast food revolution sweeping theurban India.

Major dairy products manufacturers


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Company Brands Major Products

Nestle IndiaLimited

Milkmaid,Cerelac, Lactogen,Milo, Everyday

Sweetened condensed milk, maltedfoods, milk powder and Dairy whitener

Milkfood Limited Milkfood Ghee, ice cream, and other milk products

SmithKlineBeecham Limited

Horlicks, Maltova, Viva Malted Milkfood, ghee, butter,powdered milk, milk fluid and other

milk based baby foods.Indodan

IndustriesLimited

Indana Condensed milk, skimmed milk powder,whole milk powder, dairy milk

whitener, chilled and processed milk Gujarat Co-

operative milkMarketing

FederationLimited

Amul Butter, cheese and other milk products

H.J. HeinzLimited

Farex, Complan, Glactose,Bonniemix, Vitamilk

Infant Milkfood, malted Milkfood

Britannia Milkman Flavoured milk, cheese, Milk Powder,Ghee

Cadbury Bournvita Malted food

Major dairy products manufacturers


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Main Players

Milk products - Amul, Britannia, Vijaya, Verka and Vadilal

Cheese products- Amul, Britannia, Dabur (Le Bon)are the leading players. Other prominent players

include Verka, Nandini, Vijaya and Vadilal

Dairy Whiteners - Nestle, Amul, Britannia,Dynamix Diary, Sterling Agro, Haryana Milk Foods,Mohan Food, Modern Dairy, K Dairy


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Success

factors

Concerns Demand

drivers

Liquid milk SourcingDistribution

Financialdistress of co-

operatives

Packaging insmaller units

Packagedmilk

Technology Small marketsize

ConvenienceHealthconcerns

Milk products BrandingRefrigeration Inadequateinfrastructure Increase inper capitaincome

Infant milk EducationMarketing

Poorpenetration

Changingfood habits

Critical issues


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Regulatory changes

Dairy sector was de-licensed in 1991

No industrial license is required for dairy industryForeign equity participation permitted to theextent of 51 per cent in dairy processing sectorExcise duty on dairy machinery has been fullywaived off

Key legislations:

Milk and Milk Products Order 1992: Withfollowing controls

Collection areas/milk sheds specified Processing capacity fixedRevised MMPO in 2002: Controls stand

withdrawn


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The production, distribution and supply of milk products are controlled by the Milk and Milk

Products Order, 1992.The order sets sanitary requirements for dairies,machinery, and premises, and includes qualitycontrol, certification, packing, marking andlabeling standards for milk and milk products.

The Infant Milk Substitutes, Feeding Bottles andInfant Foods (Regulation of Production, Supplyand Distribution) Act, 1992 and Rules 1993


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Thank You

1. milk industry in india

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