Milk industry In India

Mohammad Ashraf Pal Prof/chief scientist Division of LPT,FVSc & AH

India ranks first in milk production with total volume of 115 million tons. Driven by steady population growth and rising income, milk consumption continues to rise in India. World milk production declined by 2 per cent in the last three years, according to FAO estimates, Indian production has increased by 4 per cent. 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

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 (cheese, yoghurt and milk based sweets), and 15 percent is consumed for the production of butter, ghee, milk powder and other processed dairy products (including baby foods, ice cream, whey powder, casein, and milk albumin).

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.

Historical Developments Pre-Independence Period

Ancient India - Era of plenty Golden sparrow was plucked feather by feather & era of plenty waned gradually Foreign rule-Britishers- deterioration. 1891-population dependent on agriculture61% 1950----------------------------------75% Agricultural production 24% [1901-1941] It took four decades to usher into era of green revolution to mitigate deterioration

 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] encouraged to process milk primarily for British Army Imperial Institute of AH&D-1923 at Bangalore to impart training to acquire competence in the operation of modern dairy plant.

Post-independence period
At partition [1947 ] India was said to be left with a small number of milch animals Best milch animals rested with western Punjab (Pakistan)

5- year developmental programmes (schemes)

1-4th KVS-covered 729 villages 3-6th ICDP-covered 122 districts .

 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 the beginning. Projects undertaken without proper survey.

 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
The milk sub-committee of standing parliamentary committee on Agriculture [1950] recommended monopolization of milk supply and distribution through milk control boards city milk supply schemes-evolved Dairy Plants Set up in metros-processing ~200,000 lpd. supported by large milk colonies around But 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 Small diary plants ( 10,000-20000 lpd) established

Number rose to ~100;1960

Did not Succeed Because:

Source of milk was variable

Traders sold milk directly to consumers and gave to schemes only in glut During lean supply would stop or prices would rise MSS could not increase the price of milk Rationing and utilization foreign SMP & BO

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

 During the first 25 years of independence milk production Increased insignificantly (17-21 MMT; 1951-1970) Rate of population growth higher compared to milk production per capita availability 133g to 107 g/day from
1951-1970

Kaira Dist of Gujarat-struggle against exploitation by traders/middlemen eg.Polson dairies etc. Rationale-remunerative prices were not paid Farmers organized themselves into cooperatives Beginning of KDCMPU---Famous AMUL brand of dairy products.

Anand pattern cooperative Concept

Village Cooperative Society

(Primary Producer basic member)

Elect 9- member management committee with a chairman amongst them [Collection, testing, payment] Confederate District level milk union (Storage) [ procure, transport, process & market] Unite to form state level milk federation

Profits earned ploughed back to farmers as bonus payment Farmers encouraged to Keep more animals, provide better management Increased milk production

Significant to note that compared to other places in India ICDP succeeded in Kaira Salient indicators of success: Small holding viable Monthly income Productivity Age at first calving Intercalving period Per capita milk availability Partial employment to youth & women

Operation Flood
The transition of the Indian milk industry from a situation of net import to that of surplus has been led by the efforts of NDDBs Operation Flood programme under the aegis of the former Chairman of the board Dr. 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 Coop. Movement & concluded: Cooperatives were the only mechanism that could cause Socioeconomic emancipation & improve the Land-Animal Productivity

Creation of NDDB (1965)-twin objectives: Study the concepts, implementation, strengths and weakness of the projects implemented in the past Effective utilization of the EEC aid
OF-I (1970-81) SMP- 126,000 MT BO- 42,000 MT Fund generated- Rs.116.40 crores used for the development of 27 rural milk sheds in 10 states.

OF II- (1981-86) NMG instituted-linking 136 rural milk sheds in 22 states & UT World Bank credit-$ 150 m

SMP-218000 mt
BO - 76000 mt

OF III-(1987-1995) Aimed at consolidation of earlier gains WB credit loan- $ 360m SMP 75000 MT BO 25000 MT Fund generated- Rs. 227.7 crores 206.3 crores by NDDB covered 170 milk sheds Organizing 70,000 primary dairy coop. Societies

KVS,ICDP,MSS Failed - Lack of integration Co-op integrated vertically- increased production TM instituted primarily to encourage integration between various agencies/Deptt. In the state Objectives: ~Search ,identify, adapt & apply Technology in various fields for increased production ~ Mission identified the gaps like functional,educational,infrastructural, legislative, trainings etc. ~Provide bridge funds to obtain desired results

Technology Mission

WTO Economic Liberalization Era ~ Delicencing(1991) ~ MMPO (1992) ~ Subsidies/Export incentives to western & American Farmers ~ Difficulties for Indian Exporters in the international market

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 field data for improvement ~Karan-Swiss & Karan Fries-NDRI

Constraints & future policy 1.Low productivity: 80% cattle & 60% buffalo Non-descript low milk yield

2. Very large number ruminants constitute a sizable proportion of total Livestock load 3. Feed/ fodder scarcity: Consume 90% of the already scarce feed and fodder resources 4. Animal health problem: ~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 5. 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 6. Breeding at random: ~use of unselected bulls for AI no genetic progress ~ Poor quality services with<10% conception rate , poor coverage & zero genetic improvement ? on huge investment on breeding programs

7. Demand for high yielding animals near big cities Negative selection pressure on sps. Perish after current lactation genetic drain best genotypes destroyed 8.Absence of a well conceived Extension support system in the livestock sector has seriously undermined the pace of development in the sector under different 5year plans. This needs to be viewed Seriously. 9. Socio- cultural compulsion Negative influence

No culling of unproductive adult cattle Large numbers lingering in the popn ,30% not fit for breeding Reforms 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 focussed policy attention is needed for optimum exploitation of potential for enhanced milk production, livelihood generation and poverty alleviation. Projected Demand growth @ 7% p.a growth rate @ 4.5% (1990),5.7%(1997)<3%(2000)

Salient features: 1 Failure of crossbreeding programmers 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 number Progressively resources. depleting common property

Grossly inadequate feed and fodder resources. Farming practices environment unfriendly 7% to Vs the milk

Demand Growth Rate@ production rate @ 4.5%

 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 genetic upgradation of C&B OBJECTIVES: Improved AI services at farmers doorsteps Organized breeding of all breedable female animals using high quality semen/bulls Improvement of genetic quality of indigenous C&B Prevention of breed deterioration & extinction of Important indigenous breeds

Per capita availability of milk

Year 2000-01 2005-06 2008-09

Grams per day 220 241 250

Source: Department of Animal Husbandry and dairying

Dairy Statistics
Particulars Cattle Popn Buffalo Popn J&K 3,084,000 1,039,000 India (millions) 185.18 97.92

Total Popn

4,123,000 1.51

283.1 115

Milk Production (MT)

363 PCA(g/day) 250

SWOT Analysis Strength Weakness

Largest milk producer in the world A huge base of around 11 million farmers Traditional emphasis on consumption Opportunity Elastic demand; economic growth will spur demand Increasing preference for branded dairy products Growing focus on health and nutrients in urban market Poor feeding practices Poor access to institutional credit Lack of cold storage facilities Threat Nearly 80 per cent of the Indian dairy industry is unorganized Removal of import duty has led to the threat of dumping

Emerging Dairy Markets

Food service institutional market: It is growing at double the rate of consumer market 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-fromhome consumption trend opens new vistas for ready-to-serve dairy products which would take credit on the fast food revolution sweeping the urban India.

Major dairy products manufacturers

Company Brands Major Products Nestle India Milkmaid,Cerelac, Lactogen, Sweetened condensed milk, malted Limited Milo, Everyday foods, milk powder and Dairy whitener Milkfood Limited Milkfood Ghee, ice cream, and other milk products SmithKline Horlicks, Maltova, Viva Malted Milkfood, ghee, butter, Beecham Limited powdered milk, milk fluid and other milk based baby foods. Indodan Indana Condensed milk, skimmed milk powder, Industries whole milk powder, dairy milk Limited whitener, chilled and processed milk Gujarat CoAmul Butter, cheese and other milk products operative milk Marketing Federation Limited H.J. Heinz Limited Britannia Cadbury Farex, Complan, Glactose, Bonniemix, Vitamilk Milkman Bournvita Infant Milkfood, malted Milkfood Flavoured milk, cheese, Milk Powder, Ghee Malted food

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

Critical issues
Success factors Liquid milk
Sourcing Distribution Technology

Concerns

Demand drivers

Financial Packaging in distress of co- smaller units operatives

Packaged milk

Milk products Infant milk

Small market Convenience size Health concerns Branding Inadequate Increase in Refrigeration infrastructure per capita income Education Poor Changing Marketing penetration food habits

Regulatory changes
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 off Key legislations: Milk and Milk Products Order 1992: With following controls Collection areas/milk sheds specified Processing capacity fixed Revised MMPO in 2002: Controls stand withdrawn

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

Thank You