indian case study

Managing Uncertainties in Dairy Sector

Indian Case Study

Rahul Kumar, MD , Amul Dairy , Anand

CLFMA Symposium, Kolkata 14th September 2012

Dr. Verghese Kurien 1921 - 2012

• Largest Producer of Milk

- 2011-12 : 121 MMT/Global 750 MMT

• Largest Agriculture Crop

• Rice : 95 MMT, Wheat: 80 MMT

• Gross Value of Dairy Produce : 75 billion US$

• Avg. Growth Rate : 5%

• Largest share of Agri GDP

Indian Dairy Sector Highlights

0

20

40

60

80

100

120

17 20 21.2

23.231.6

53.9

66.370.8

74.378.1 84

8891 94

101

121 181 203

MMT

1970’s : Operation Flood I 30 Years : 4 times 1990

• 1970’s Operation Flood • 1970 – 2000 : 20 MMT to 80 MMT • Massive Infrastructure created by Cooperatives • Most efficient Agri/Rural Development Program

Indian Dairy Sector Highlights

We CAN do it

Indian Dairy Sector

Indian Dairy Sector Highlights

• 20 % of World bovine population

• Low Productivity : 1100 Kg/Year

(World Avg. 2038 Kg/Year)

• Huge Number of unproductive animals, Poor nutritious & low genetic potential

• Social impact / Rural income model / Pro-poor

• Lack of business oriented approach

• Milk demand in India going to 200 MMT by 2020 • 121 – 200 in next 8 Years • Yearly increment 10 MMT • 2011/12 : 1208 Million : : 2016-17 : 1283 Million • Rising Income Level – More Food Demand • Competition for Land

– Agri Vs Dairy – Milk Demand Income Elastic – Growth in Population / Consumer Income / Farmer Income – High Growth rate for Dairy.

What is Certain

What is Certain

6.5 Billion 9 Billion Food Demand 100%

India : Food Trend

89

76

13.6 13.5

71

125

108

13 16

181

207

173

14 23

203

119

92

15.6 19.5

166

Rice Wheat Coarse Cerals Pulses Milk

Current & Projected Food Production Vs Demand in 2010

2000 2020(BCS) 2020(Demand)

Uncertainties

Uncertainties

Belgium to Jantar Mantar

Uncertainties • Challenges

- Input / Production / Processing / Market

• Huge pressure on Milk Production

120 – 200 MMT in 2020

• Road map to Reach

- Low Input / Low Output not workable

• Under the Low Input System Farmers minimize cattle feed rations and inputs to inexpensive green fodder and agricultural crop residues. We can’t afford to waste our precious protein resources for live stock.

Uncertainties

• Productivity • Great leap required

• 45% indigenous cattle, 55% buffaloes & 10% cross bred cows

• AI coverage very poor, performance not up to mark 3.5 Avg.

• Lack of extension / Awareness level / Poor feeding / Management

Uncertainties

• Availability & cost of feed an issue

- DORB: Jan’12: `4000/July’12 :`10500

• Breeding / Feeding / Disease

• No Institutional Credit

• Is Dairying Agriculture ???

• Fight: Food Vs Fodder

Uncertainties

• Farmers : Milk Producers & Milk Consumers with crops as Priority

• Limitations of feed resources bot in quantity & quality

• Lack of availability to Vet System / Medicine / Vaccinations / Doctors

• Lack of proper handling & processing of milk (30% being processed)

Anticipated Deficit in % in Fodder & Feed Demand

• Government Policies towards Dairying

• Long term strategic policy • Control (export of Cattle Feed Raw Materials) • Priority • Market Price Control • Investment Road/Power / Infrastructure • Regeneration of Pasture land • Research support • Manpower for Dairy Sector • Increase in farmer income should be isolated with inflation

Uncertainties

Uncertainties

• Un-remunerative prices to farmers

• Availability of labour force

Man Vs Machine : Cost Competitiveness

• Research : Rumen Efficiency • Climate change & Environmental Issues

• Food Vs Fuel

• No inventory balancing of Dairy Products

Managing Uncertainties Amul Experience

Managing Uncertainties Amul Experience

• Performance of Gujarat Cooperatives : Amul

• Amul Pattern / Model

• 247 Lit ----- 12 Million

(1946) (2012)

• Unorganized --- State of the art production system

Creating Institutions : Networking

Managing Uncertainties Amul Experience

• People’s Institutions at Villages

• Technology & Quality Systems at Grass Root

• Transparent System

• Ownership of farmers 2.5 billion US$

• Investment in State-of-the-art Plants

• Cattle Feed Design Centre

• AI Intervention : 1970s

• Farmers at core of the business

• Production – Marketing Link

• Brand Building : 99% branded consumer products

• Productivity Enhancement Programme

• Clean Milk Production (95% BMC Milk)

Managing Uncertainties Amul Experience

• Innovation in Cattle Feed / Large Acceptance

• Maximum Returns to Farmers (75-80% Consumer Realization)

• Huge concentrated feed capacity creation

• Use of I.T. to bring farmers closer

• Financial Inclusion

Managing Uncertainties Amul Experience

Ration Balancing Programme

Managing Uncertainties Amul Experience

Managing Uncertainties Amul Experience

Urgent Need to Expand Organized Sector

Market Segmentation

Farmer-centric Approach

Cooperative Education Programme

Progressive Farming Calf Rearing

Dairying to Next Generation

Managing Uncertainties Amul Experience

Animals treated: 85,335

Managing Uncertainties Amul Experience

Preserving Environment

AI To Retail

Managing Uncertainties Amul Experience

Conclusion • Uncertainties are Certain • Focused Planning with Long Term Approach must • Farmers must be the core • Production Market Customer link is important

• Research / Feed Security / Rumen Efficiency / Disease Management / Productivity / Inventory Management

• Government Policies / Working closer for long term strategy • Private Sector to play vital role while keeping Farmers at the centre of the business

And finally…

“We have traversed a path that few have dared to. We are continuing on a path that still fewer have the courage to follow. We must pursue a path that even fewer can dream to pursue.

Yet, we must, we hold in trust the aims and aspirations of millions of our countrymen.”

Dr V. Kurien

THANK YOU

rahul@amuldairy.com