milk industry in india

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Milk industry In India

Dr Mohammad Ashraf Pal

Prof/chief scientistDivision of LPT,FVSc & AH,SKUAST-Kashmir

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Milk production in India was 140 million tonnes (2013-14) and ranked first in the world.

Driven by steady population growth and rising income, milk consumption continues to rise in India ( PCA~290g/day, slightly above world average).

World milk production declined by 2 per cent in the last three years, (FAO estimates)

Indian production has increased by ~4 %.The milk production in India accounts for more

than 13% of the total world output and 57% of total Asia's production.

The top five milk producing nations in the world are India ,USA, Russia, Germany and France

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Rural households consume almost 50 percent of total milk production.

The remaining 50 percent is sold in the domestic market.

Of the share of milk sold in the domestic market, almost 50 percent is consumed in fluid form 35 percent is consumed as traditional products (Paneer, ghee ,curds and milk based sweets), and 15 percent is consumed for the production of butter, cheese, milk powder and other processed dairy products like baby foods, ice cream, whey powder, casein, and milk albumin.

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Most dairy products are consumed in the fresh form and only a small quantity is processed for value addition.

In recent years, however, the market for branded processed food products has expanded.

Although only around 2 per cent food is processed in India, still the highest processing happens in the dairy sector, where 50 per cent of the total produce is processed, of which only 13 per cent is processed by the organised sector.

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Historical Developments

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Ancient India - Era of plentyEra of plenty waned graduallyDeterioration ascribed to the Foreign rule

(Britishers), some indicative facts of which are:

• 1891-population dependent on agriculture-61%

• 1950-population dependent on agriculture-75%

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

green revolution to counter deterioration in food production

Pre-Independence Period

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Organized dairying started in a small way with the establishment of military dairy farms & creameries(oldest at Allahbad, 1918)

Some private dairies [M/S Keventers, Polson's] were encouraged to process milk primarily for use by British Army

Imperial Institute of AH&D was established in 1923 at Bangalore to impart training to acquire competence in the operation of modern dairy plant.

Later shifted to Karnal and renamed as NDRI

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At partition [1947 ] India was said to be left with a lesser number of milch animals

The Best milch animals rested with western Punjab (Pakistan)

5-year developmental programmes (schemes)

1-4th → KVS-covered 729 villages3-6th → ICDP-covered 122 districts

Post-Independence Period

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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

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Reasons Attributed to the failure of KVS• implementation in small & scattered areas • Covered an inadequate population • Inefficient technical inputs • Lack of marketing facilitiesReasons Attributed to the failure of ICDP• Half of the projects were non-starters• In others progress of activity was variable

because of non –implementation of detailed model planned at the beginning

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• Programme content got diluted due to

frequent financial cuts• Contact with beneficiaries was at para

vet.level• Lack of integration with fodder

development and milk marketing agencies

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Standing parliamentary committee on Agriculture (1950)

The milk sub-committee of standing parliamentary committee on Agriculture [1950] recommendations:

MMonopolization of milk supply and distribution through milk control boards

Evolution of city milk supply schemesDairy Plants Set up in metros-processing

~200,000 lpd Supported by large milk colonies around-

milk sheds

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Failed because :• Farmers preferred to sell milk directly to

consumers who paid comparatively more than MSS

• 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

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~ 100 small diary plants (cap.10,000-20,000 lpd) were established up till 1960 which also failed because :

Source of milk was variable Traders sold milk directly to consumers

and gave to schemes only when surplous

During lean supply would stop or prices would rise

MSS could not increase the price of milk Resorting to rationing and utilization of

foreign (EEC food aid) SMP & BO

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Reconstituted/recombined milk supplied at cheaper price

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

Anti dairy cycle

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Anti dairy cycle………

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During the first 25 years of independence milk production increased insignificantly (17-21 MT; 1951-1970)

Rate of population growth higher compared to milk production

Per capita availability ↓ 133g to 107 g/day during 1951-1970

Struggle against exploitation by traders , middlemen etc.began in Kaira Dist. of Gujarat

Rationale-remunerative prices were not paid

Farmers organized themselves into co-operatives

Beginning of KDCMPU---Famous “AMUL” brand of dairy products.

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Anand pattern cooperative Concept Village level Cooperative Dairy Society Primary Producer basic member Elect 9- member management committee

with a chairman amongst them Main Function-Collection, testing, payment District level milk union Village Cooperative Dairy Societies

confederate to form District level milk union Main Function-Storage State level milk federation District level milk unions Unite to form SLMF Main job-procurement,transport,processing & marketing

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Salient featuresProfits earned are ploughed back to

farmers as bonus payment Farmers are encouraged to Keep more

animals, provide better management etcNet Result-Increased milk production Compared to other places in India ICDP succeeded

in Kaira & salient indicators of success include: Small holding viable Monthly income↑ Productivity↑ Age at first calving↓ Intercalving period↓ Per capita milk availability↑ Partial employment to youth & women

Anand pattern cooperative ConceptVillage level Cooperative Dairy

Society Primary Producer basic

member Elect 9- member management

committee with a chairman amongst them

Main Function-Collection, testing, payment

District level milk union Village Cooperative Dairy

Societies confederate to form District level milk union

Main Function-Storage

State level milk federation District level milk unions Unite to form SLMF Main job-procurement, transport, processing & marketing

Salient features Profits earned are

ploughed back to farmers as bonus payment

Farmers are encouraged to Keep more animals, provide better management etc

Net Result-Increased milk production

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Anand pattern cooperative Pyramid

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Operation Operation FloodFlood

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Operation flood, also referred to as “White Revolution” was a massive project implemented by Government of India for developing dairy industry in the country.

It has helped dairy farmers, direct their own development, placing control of the resources they create in their own hands.

Producers linked throughout India via National Milk Grid with consumers in over 700 towns and cities, reducing seasonal and regional price variations while ensuring that the producer gets a suitable share of the price consumers pay.

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The transition of the Indian milk industry from a situation of net import to that of surplus has been led by the efforts of NDDB’s Operation Flood programme under the aegis of the former Chairman of the board Dr.Verghese Kurien.

L B Shastri visited Gujarat (Oct. 1964) Spent a night in one of the villages in Kaira to see for himself the silent revolution being brought about by Milk Cooperatives and concluded:

” Cooperatives were the only mechanism that could cause Socio-economic emancipation & improve the Land-Animal Productivity”

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NDDB Created in 1965 With twin NDDB Created in 1965 With twin objectives:objectives:

Study the concepts, implementation, strengths and weakness of the projects implemented in the past

Effective utilization of the EEC aid

National Dairy Development Board

Operation Flood-PhasesOperation Flood-PhasesOF-I (1970-81) EEC aid:• SMP- 126,000 T• BO- 42,000 T• Fund generated-Rs.116.40

crores used for the development of 27 rural milk sheds in 10 states.

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

earlier gains WB credit loan- $ 360m SMP– 75000 T BO – 25000 T Fund generated- Rs. 227.7

crores 206.3 crores by NDDB covered 170 milk sheds Organizing 70,000 primary

dairy coop. Societies

OF II- (1981-86) NMG instituted-linking 136

rural milk sheds in 22 states & UT

World Bank credit-$ 150 m SMP-218000 T BO - 76000 T

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• As per World bank expert opinion,for an initial investment of Rs 200 crores in Operation flood II,the net return/year to rural economy has been Rs.2400 crore.

• No other major development programme all over the world has matched this inut:output ratio.

Operation FloodOperation Flood

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KVS,ICDP,MSS Failed - Lack of integration ::Co-op integrated vertically resulting in

increased productionTM instituted primarily to encourage

integration between various agencies/Deptt. In the state

Objectives:Search ,identify, adapt & apply Technology

in various fields for increased productionMission identified the gaps like functional,

educational,infrastructural, legislative, trainings etc.

Provide bridge funds to obtain desired results

Technology Mission

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Economic Liberalization Era De-licencing (1991) MMPO (1992)Due to Huge Subsidies/Export incentives

being offered to western & American Farmers India is put at disadvantage

Difficult competitive scenario for Indian Exporters in the international market because of the lack of such subsidies.

WTO

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A Spate of Programs during Last 6 decades:Cross breeding ETT/MOETFrozen semen TechnologyAICRP-To evolve a breed suitable to local

conditions/tractsBilateral assistance programs –IS,ID,INZ,IANandini(Kerala) stabilized local breed

through use of frozen semen and field data for improvement

Karan-Swiss & Karan Fries- developed at NDRI

R & D

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

OBJECTIVES: Improved AI services at farmers’ doorstepsOrganized breeding of all breedable female

animals using high quality semen/bulls Improvement of genetic quality of

indigenous C&BPrevention of breed deterioration &

extinction of Important indigenous breeds

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

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An allocation of Rs.2242 crores for the first phase in 14 states

OBJECTIVES:Help increase productivity of milch

animalsProvide rural milk producers with better

access to marketsHelp meeting projected milk demand via

strengthening and expanding village level infrastructure for milk procurement

National Dairy Plan (NDP,2012-17)

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Low productivity: 80% cattle & 60% buffalo are non-descript low milk yield

Very large number ruminants constitute a sizable proportion of total Livestock load

Feed/ fodder scarcity: Consume 90% of the already scarce feed and fodder resources

Animal health problems-consequences: ~Many diseases claimed to have been

eradicated/controlled are still rampant in India

~Recurrent devastating epidemics hamper livestock production

~Animal losses Increased ~Denying India's access to lucrative global market

Constraints & future policy

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Free vet-services: ~over-whelming involvement of Govt. in delivering free

services compromised quality and accountability ~improvement needed on the lines of livestock

Dev.Board, kerala- AI paid +field data utilized for improvement

Breeding at random: ~use of unselected bulls for AI no genetic

progress ~ Poor quality services with<10% conception rate ,

poor coverage & zero genetic improvement puts a ’?’ on huge investment on breeding programs


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Demand for high yielding animals near big cities puts a negative selection pressure on species- Perish after current lactation- genetic drain- best genotypes are destroyed

Absence of a well conceived Extension support system in the livestock sector has seriously undermined the pace of development in the sector under different 5-year plans. This needs to be viewed Seriously.

Socio- cultural compulsion- negative influence ~ Culling of unproductive adult cattle

~ Large numbers lingering in the population

~ 30% not fit for breeding


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~Reforms are needed to permit alternate use of males & unproductive females.

~Relentless growth of cattle population far beyond land capacity can be a major cause of environmental degradation.

~ Well focused policy attention is needed for optimum exploitation of potential for enhanced milk production, livelihood generation and poverty alleviation.

Projected Demand growth @ 7% p.a against current growth rate @ 4.5%-Rationalization required


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Failure of crossbreeding programmes to evolve a breed suitable to the local conditions/ tracts

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

Uncontrolled growth in animal numbers Progressively depleting common property

resources Grossly inadequate feed and fodder resources Farming practices unfriendly to environment Demand Growth Rate@ 7% Vs milk production

rate @ 4.5% irrational

Salient concerns

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Particulars J&K (Lakhs)

India (millions)

Cattle Population 31.185 210.82Buffalo Population 7.704 112.42Total Population 38.889 323.24

Milk Production (mt)

1.61 140

PCA(g/day) 378 290

Dairy Statistics

Per capita availability of milkYear Grams per day

2000-01 220

2005-06 241

2008-09 250

2013-14 290

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Source: Department of Animal Husbandry and dairying(National Average)

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Strength Weakness Largest milk producer in

the world A huge base of around

13 million farmers,1.3 Lakh VLCS,176 DLCS,22 SMMF

Traditional emphasis on consumption

Poor feeding practices Poor access to

institutional credit Lack of cold storage

facilities

Opportunity Threat•Elastic demand; economic growth will spur demand •Increasing preference for branded dairy products•Growing focus on health and nutrients in urban market

•Nearly 80 per cent of the Indian dairy industry is unorganized •Removal of import duty has led to the threat of dumping

SWOT Analysis

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• Defense market: An important growing market for quality products at reasonable prices

• Ingredients market: A boom is forecast in the market of dairy products used as raw material in pharmaceutical and allied industries

• Parlour market: The increasing away-from-home consumption trend opens new vistas for ready-to-serve dairy products which would take credit on the fast food revolution sweeping the urban India.

• Food service institutional market: It is growing at double the rate of consumer market

Emerging Dairy markets

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Company Brands Major ProductsNestle India

LimitedMilkmaid,Cerelac,

Lactogen, Milo, EverydaySweetened condensed milk, malted

foods, milk powder and Dairy whitener

Milkfood Limited

MilkfoodGhee, ice cream, and other milk

productsSmithKline

Beecham Limited Horlicks, Maltova, VivaMalted Milkfood, ghee, butter,

powdered milk, milk fluid and other milk based baby foods.

Indodan Industries Limited Indana

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

milk whitener, chilled and processed milk

Gujarat Co-operative milk

Marketing Federation

Limited

AmulButter, cheese and other milk

products

H.J. Heinz Limited Farex, Complan, Glactose,

Bonniemix, VitamilkInfant Milkfood, malted Milkfood

Britannia Milkman Flavoured milk, cheese, Milk Powder, Ghee

Cadbury Bournvita Malted food

Major dairy products manufacturers

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Success factors

Concerns Demand drivers

Liquid milk •Sourcing •Distribution

•Financial distress of co-operatives

•Packaging in smaller units

Packaged milk

•Technology •Small market size

•Convenience•Health concerns

Milk products

•Branding•Refrigeration

•Inadequate infrastructure

• Increase in per capita income

Infant milk •Education•Marketing

•Poor penetration

•Changing food habits•Career wives

Critical issues

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• Dairy sector was de-licensed in 1991• No industrial license is required for dairy industry • Foreign equity participation permitted to the extent of

51 per cent in dairy processing sector• Excise duty on dairy machinery has been fully waived

offKey legislations:• Milk and Milk Products Order 1992:Exercised under

ECA with following controls:• – Collection areas/milk sheds specified• – Processing capacity fixed (10,000-75000 lpd)• Revised MMPO in 2002: Controls stand withdrawn

Regulations

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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 quality control, certification, packing, marking and labeling standards for milk and milk products.

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

Regulations

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FSSA(2006)• Consolidation of laws related to food including

milk • To establish FSSAI for laying down science based

standards for food • To regulate their

manufacture,storage ,distribution,import in order to ensure availability of safe and wholesome food for human consumption

Regulations

Dairy cooperative NetworkNDDB has established a network of dairy

cooperatives in which there are ~15.6 million dairy farmers1.6 Lakh village –level DCS210 milk cooperative unions procuring 40 million litres of milk per dayHas initiated implementation of National

Dairy Plan Pahse I with the objective of:Increasing milk production

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15.6 million dairy farmers1.6 Lakh village –level DCS210 milk cooperative unions procuring 40 million litres of milk per dayHas initiated implementation of National Dairy Plan

Pahse I with the objective of: Increasing milk production through improved productivity By providing access to organized processing sector for

more and more milk producers • Pahse II (2019-20) : Focus on strengthening milk

processing capacity of cooperatives

NDDB,Nov.,2015

NDDB has established a network of dairy cooperatives in which there are ~