Dairy Sector

• Presentations By:

– Harsh Udesh Bhat (MBA-9)

– Nitika Gupta (MBA-15)
– Rajat Rekhi (MBA-24)
– Payal Gandotra (MBA-21)
“Amritam Vai gvam khriramityah
tridshadhip, tasmad dadatim yo
dhenumamatrim sa Praychhti”. 

Source: Mahabharatha
Failure is never Final and
Success never Ends
- Kurien
History Dairy
• Phase 1st
– After Independence.
– Govt. monopolized through Milk Control board
– Import of powdered milk.
• Phase 2nd
– Operation Flood
– 4th Year Plan
– Exponential Trend
Continued..
• Phase 3rd
– Globalize World
– Trade Liberalization
– Policied Changes
Sector Distribution
• Unorganized
– Constitutes 80% of the market.
– Comprises of Pvt. Organizations
– Local milk vendors, Wholesalers, retailers,
Producer Themselves.
• Organized
– Constitutes remaining 20%.
– Comprises Government and Cooperatives,
Unorganized Vs Organized
• Pricing Policy
– Fat Content / liter (Cooperative)
– Simply / liter of milk. (Private)

• Payment Policy
– Weekly Payment (Cooperatives)
– Daily payment (Private)
 Dairy Products
• Milk • Cheese
– Cream – Curds
– Milk Powder – Cottage Cheese
– Condensed Milk – Quark
– Evaporated Milk • Casein
• Butter • Ice Cream
– Butter Milk
• Makkhan
– Ghee
• Khoa
 Dairy Animals
• Generally
– Cows
– Buffalos

• Occasionally
– Goats India World
– Sheep's
Buffalo Milk 54% 11.6%
– Yaks
– Camels Cow Milk 42% 85%
– Horses
Others 4% 3.4%

Source: Amul India 2002 Report

Penetration of milk products

Butter, margarine and jams are not very popular in India. All India
penetration of butter/ margarine is only 4%.

Penetration of Cheese is almost nil in rural areas and negligible in the

urban areas. Per capita consumption even among the cheese-consuming
households is a poor 2.4kg pa as compared to over 20kg in USA.

Similarly, Penetration of Ghee is highest in medium sized towns at

37.2% compared to 31.7% in all urban areas and 21.3% in all rural areas.

Milk powder and Condensed milk have not been able to garner any
significant consumer acceptance in India as indicated by a very low 4.7%
penetration.
Operation Flood (OFP)
• OF-1
– 1970-71 to 1980-81
• OF-2
– 1981-82 to 1984-85
• OF-3
– 1985-86 to April 1996
OF Objectives
• Make each OF City restructure and
capture a commanding share of its market.
• To identify and satisfy the needs of milk
consumers and producers.
• To facilitate long term investment in
dairying.
• To supply adequate workforce for the
project.
Milk Marketing
• More than 67% of dairy animals are owned by
marginal and small farmers.
• The concept originated in Operation flood and
has turned out to be Boon for the Sector.
• GCMMF (Gujarat Co-operative Milk Marketing
Federation) incorporated in 1973 is the largest
Milk Marketing body in the country with annual
turnover of Rs. 22 billion
Milk Marketting

Source: Annual dairy report 1997

 Constraints in Milk Marketing
• Inadequate basic Infrastructure for
Production Inputs.
• Inadequate infrastructure for Procurement,
Transportation, Processing and Marketing
of Milk.
• Lack of Professional Management.
• Animals are fed with residual Crop which
have very low Opportunity cost.
 INSIGHT ABOUT
INDIAN DAIRY INDUSTRY

Nitika Gupta
DAIRY SECTOR IN FIGURES
REACH
THE DAIRY COOPERATIVE NETWORK (AS ON MARCH 2007)
• Processed and marketed by 170 Milk Producers' Cooperative Unions, which
federate into 15 State Cooperative Milk Marketing Federations.
• Includes 170 milk unions , operates in over 346 districts
• Covers around 1,17,575 village level societies
• Is owned by around 12.4 million farmer members of which 3.2 millions are
women.

MARKETING
• Annual growth has averaged about 5.8 per cent compounded over the last five
years.
• Dairy Cooperatives now market milk in all metros, major cities and more than
800 towns/cities.
• During the last decade, the daily milk supply to each 1000 urban consumers has
increased from 17.5 to 58.8 litres.
DAIRY
DAIRY SECTOR
SECTOR IN
IN FIGURES
FIGURES
INNOVATION

• Bulk-vending - saving money and the environment.

• Milk travels as far as 2,200 kilometers 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.
DAIRY SECTOR IN FIGURES
MACRO IMPACT

• The annual value of India's milk production amounts

to about Rs. 1,020 billion in 2005-06.

• Dairy cooperatives generate employment opportunities

for around 12.4 million farm families.

• Livestock contributes about 27 per cent to the GDP

from agriculture.
 Milk Production
120 108
94.5
figures in mn tonnes

100
86

80 74.3

60

31.6 production
40
17 20
20

0
1950 1960 1990 1997 2000 2005 2007
Time frame
PER CAPITA AVAILABILITY OF
MILK
DAIRY WHEEL

Growth drivers Growth inhibitors

• Potential to consume • Low genetic potential

• Strong co-operative • Low milk yield
effort • Feeding practices
REGIONAL CONTRIBUTION
TO MILK PRODUCTION
STATEWISE SHARE
OF MILK PRODUCTION
MILK CONSUMPTION
PATTERN
western
products, 7%
liquid milk, 46% liquid milk

traditional
products

western
products

traditional
products, 47%
GLOBAL SCENARIO

• While world milk production declined by 2 per

cent in the last three years, 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.
EXPORT POTENTIAL
LOCATIONAL ADVANTAGE :

India is located amidst major milk deficit countries in Asia and Africa.

Major importers of milk and milk products are Bangladesh, China, Hong
Kong, Singapore, Thailand, Malaysia, Philippines, Japan, UAE, Oman and
other gulf countries, all located close to India.

LOW COST OF PRODUCTION :

Due to low labour cost, cost of production of milk is significantly lower in
India.

Only 6% of the total world output is traded world over.

Exports are dominated by US, New Zealand, European Union, Australia etc.
Vast market for the export of traditional milk products such as ghee, paneer,
shrikhand, rasgolas and other ethnic sweets to the large number of Indians
scattered all over the world
What Indian Dairy Industry Has To Offer
To Foreign Investors?
• Biotechnology
• Dairy / food processing equipment
• Food packaging equipment
• Distribution channels
• Retailing
• Product development
• Ingredient manufacture
• Technology-driven units
• Training centres for education
 Objectives of dairy development
• Meeting the growing
demand for milk.
• Contribute to indian
economy.
• Produce draft power and
dung for agriculture.
• Conserve biodiversity and
environment.
• Provide substantial
livelihood to rural poor.
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REPORT
This report provides a brief overview of the dairy
equipment market in India, focusing on the import
market with an assessment of market trends.
• The Indian dairy equipment sector provides a
growing market characterized by a few major
players. The dairy equipment sector has been
growing at an average annual rate of 10-15% for
the last few years.
• The urban population with their increasing
purchasing power drives the demand for dairy
food products in India.
 Market trends
• The organized sector for the manufacturing of dairy
machinery consists of about 20 major players who
undertake jobs on a turnkey basis.
• Imports of dairy equipment currently constitute less
than 10% of the total market, with the major
suppliers being Germany, France, Holland, Sweden,
Austria, and the U.S. India allows entry of dairy
machinery without any restrictions..
• The Indian domestic machinery market is not
yet developed in machinery related to feeding
systems, UHT plants, reverse osmosis, ultra
filtration, and packing machines for cheese,
butter and ice-cream.
 Competition
• U.S. dairy machinery suppliers coming into India can
expect to face competition from established players as
well as from a large number of small players in the
unorganized sector..
• Major players such as Alfa Laval, Filtron Engineers,
Indian Dairy Machinery Company Ltd. (IDMC) and a
large number of small companies with a localized
presence mainly dominate the domestic market for dairy
equipment.
• IDMC is a wholly owned subsidiary of the National
Dairy Development Board (NDDB). IDMC was
originally established as a pre-project assembling unit to
supply equipment for NDDB but soon diversified into
manufacturing equipment for the dairy sector.
 Market entry
• The increasing emphasis on export of processed dairy
items from India and increasing milk production in the
country are important factors that have provided
substantial stimulus to the dairy machinery industry in
India.
• With this, the need for adopting superior technology
dairy processing and packaging machinery to ensure
quality has become very important for Indian dairy food
producers. .
• The cost of equipment and low running cost remain one
of the primary factors that influence the sale of dairy
equipment.
 Livestock development-
constraints
• Non availability of superior quality
breeding bulls.
• Shortage of fodder resources.
• Absence of conservation strategy for
indigeneous breeds.
• Lack of coordination between different
agencies engaged.
• Poor extention services to motivate small
farmers.
 Problems of poor farmers
• Poor quality of animals
• Poor reach and quality of services
• Feed and nutritional deficiencies.
• Poor health status and spread of diseases.
• Lack of technical guidance
• Weak marketting network.
• Inadequate credit facilities
 Strategy for dairy development
• Genetic improvement
 Conservation of selected native breed.
 Efficient breeding and health care services
at door steps
 Emerging market trends
• 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-from-
home consumption trend opens new vistas for
ready-to-serve dairy products which would ride
piggyback on the fast food revolution sweeping
the urban India.
 Conclusion
• Today, India is 'The Oyster' of the global dairy
industry. It offers opportunities galore to
entrepreneurs worldwide, who wish to capitalize
on one of the world's largest and fastest growing
markets for milk and milk products. A bagful of
'pearls' awaits the international dairy processor
in India. The Indian dairy industry is rapidly
growing, trying to keep pace with the galloping
progress around the world.
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