1. 1

2. CONTENTS TO BE DISCUSSED
• Introduction
• World Scenario
• Indian Scenario
• Production of Indian dairy industry
• Structure of Indian dairy Sector
• Export of dairy industry
• Demand for milk and milk products
• Quality issues and standards
• Recent developments and future prospects of industry
• Major challenges to the dairy industry
• Suggestion
• Conclusion
• References
2

3.  Introduction
• Dairy Industry in India had a long historical tradition..
• World 2nd largest milk producer.
• White revolution in 1975.
• Asia produces 57% of the World’s total dairy production.
• India produces 17% of the World’s total dairy production.
3

4. Conti…..
• The milk products are ghee, butter, cheese, ice cream, milk powder.
• 75% of rural households own an average, two to four animals.
• Dairy is a part of the farming system.
• Dairy provides a source of regular income.
• About one third of rural incomes are dependent upon dairy.
4

5. World Scenario
 The annual world trade in milk products (excluding intra-EU)
amounts to 33 million tonnes, valued at US$ 10 billion.
 6 to 7% of the world milk production is traded internationally.
 The bulk of the world dairy trade is in cheese, butter and
powders. A growing shift towards cheese is expected in the
near future.
 Two dynamic products with a substantial projected growth in
the coming years are yoghurt and dessert.
5source: dairyfarmguide.com/scenario-of-dairy-production

6. Conti…
 The international dairy trade is dominated by four players - EU, New
Zealand, Australia and USA - which together account for 85% of all
exports.
 New Zealand and Australia export as much as 80 and 50% of their
milk production respectively. The Asia-Pacific region has been and
will remain a net milk importer in the foreseeable future.
 It accounts for the bulk of milk powder imports and half of the
imports of condensed and evaporated milk. In contrast, most cheese
imports go from developing countries to developed countries such as
Japan and the United States. 6

7. Indian Scenario
• Annual Milk Production(2012-13)132.4 Million Tones.
• Annual Export Volume (2012‐13) 28,937 Lakh Rs.
• Share of world dairy production (2012-13) is 17%.
• Number of milk producers cooperative unions are 170.
• Number of local dairy cooperatives are 96,000.
• Number of state cooperatives are 15.
7

8. Conti…….
• Per capita consumption (Drinking milk): 276g/day.
• Estimated dairy farmers in organized sector are 35%.
• 65% of dairy produce is consumed by un-organized sector.
• Dairy industry workforce 75 million women and 15 million men.
• Growth rate- 5.0%.
Source: GoI, PwC analysis 2012-13.
8

9. Production of Indian dairy industry
97
102
107
112
116
122
128
132.4
0
20
40
60
80
100
120
140
160
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Million Tones
9Source: NDDB 2013

10. 10
State 2012 2013 % Growth
Uttar Pradesh 21031 22556 4%
Rajasthan 13234 13512 7%
Andhra Pradesh 11203 12088 7%
Gujarat 9321 9817 5%
Punjab 9423 9551 0%
Maharashtra
8044 8469 5%
Madhya Pradesh
7514 8149 5%
Source: NDDB 2013
Milk Production(major states) (000tones)

11. 11

12. Structure of Indian dairy Sector
Indian Dairy Industry
Organized
(20%) - Formal
Private Dairies
(532) – Nestle,
Smith Kline etc.
Cooperatives
Societies(254) Government (46)
Unorganized
(80%) – Informal i.e. village
vendors, local Halwais, small-
scale Pvt. Dairiesetc.
12Source: Global Agribusiness & Food Processing Summit’12

13. Export of dairy industry
13Source:- FAO Agricultural Outlook 2010-2020
44%
23%
12%
8%
3%
3%
2% 5%
Skim milk powders
Milk Fats and oils
Butter
Whole Milk Powders
Cheese and Fermednted
Products
Processed Cheese
Conc. & Not Conc. Sweetened
Other Dairy Products

14. International market for Indian dairy
export
14
Source: FAO Agricultural Outlook 2010-2020
18%
14%
8%
6%
6%5%
4%
4%
3%
3%
29%
UAE
Bangladesh
Nepal
Philippines
Egypt
Yemen
Saudi Arabia
Singapore
Morocco
Oman
Others

15. Export Of Dairy Products (in Qty)
MT
0
20000
40000
60000
80000
100000
2008-09 2009-10 2010-11 2011-12 2012-13
70149 34376 37432 25638 87824
MT
15
Source: APEDA 2012-13

16. Export Of Dairy Products(in value)
0
50000
100000
150000
2008-09
2009-10
2010-11
2011-12
2012-13
98089
40264 54800
28937
141209
Rs.In Lakhs
16
Source-APEDA,2012-2013

17. Demand for milk and milk products
 Household sector
 Drinking milk
 Conversion into milk products (Curd, butter, lassi, ghee for family use)
 Unorganized sector – for urban milk marketing and production of mithai
and traditional products
 Organized sector – processes milk into pasteurized liquid milk and largely
western products
 Demand for milk and dairy products is its income – elastic nature that is
demand increases with a growth in the per capita income of the people
17

18. Milk Production, processing, scenario
 India has unique pattern of production, processing &
consumption of milk
 35 % of milk produced in India is processed
13 million tonnes – organized sector (Large scale dairy
plants)
22 million tonnes – unorganized sector (halwaiis,
vendors etc.)
18

19. Conti….
 70 million rural household engaged in milk production (11
million farmers – 0.1 million village co-operative with 110
farmers / society)
 20 million employed in livestock sector (11 million – principal
& 9 million – subsidiary)
 50 – 50 milk consumed between urban and non-urban areas.
19

20.  Conti…….
 Organized dairy industry (Co-op milk processors) – 60 %
market share (Co-op dairy process 90 % collected milk as
liquid v/s only 20 % by private dairies rest processed into
other dairy products with a focus on value – added products.
20

21.  Conti…..
 Product wise Consumption Pattern
– 50 % liquid milk
– 35 % traditional products
– 15 % - butter, milk powder and other western type food
– Now a days, increasing demand for ethnic food – flavored
milk, Dahi, Lassi, paneer, kheer (value – added traditional
dairy products)
21

22. Disposition of Indian milk production, 2012-13
Point of production to consumption as fresh milk or
processed milk products
22
Household
Entered National Exchange Economy
25 % 75 %
Middleman
Pvt. Milk trader
Direct sale

23. Quality issues and standards
• Overtime the demand for milk and its processed products is set to
increase both domestically and internationally.
• With the consumers becoming very discerning about the quality of
products and the importers setting very tough standards to be met,
the extent to which this market can be captured by the Indian
industry depends upon the extent to which quality value products
can be delivered both in India and abroad.
23

24. Conti......
• The Food and Agricultural Department under the BIS (Bureau of
Industrial Standards) has set a total of 1,851 standards.
• Adoptions of BIS standards are Voluntary, however, milk powder
(evaporated & condensed milk, infant milk substitutes,
complementary foods – mandatory)
• The Bureau of Industrial Standards has formulated and revised
standards and guidelines for
 Dairy Products
 Dairy Equipments
 Testing Methods
 Production Processes 24

25. Conti......
• The BIS has set testing standards for determination of:
 Moisture
 Fat
 Total Solids
 Protein
 Ash
 Lactic Acid
 Sucrose Content
 Titrable Acidity
 Phosphorus and Citric Acid Content in Cheese Products
25

26. Conti......
• These standards are based on international standards and are revised from time
to time in keeping with technological advances in instrumentation.
• This standard guides the production processes of milk and milk products
including processing, storage and distribution to ensure the supply of clean and
safe milk to consumers.
• This includes standards for:
 Buildings where the milk is received, processed, bottled, stored and where
equipment is cleaned and sterilized.
 Surroundings and Waste Disposal.
 Personnel Health and Cleanliness.
26

27. Recent developments and future
prospects of industry
• Due to perishable nature of milk only 7 % of world production is traded
(excluding intra-EU trade).
• The European Union played a dominant role in world trade but its share has
been declining in the recent years on the back of reduction of subsidies.
• India has two distinct competitive advantages, which can be leveraged to
enhance exports:
 Low/farm gate prices (only NZ, Australia and Argentina – 10 % of
global milk production has slightly lower farm gate prices than India
 Proximity to milk deficit markets – SE Asia and south Asia
27

28. Conti…….
• However, India has not able to capitalize these advantages and also not able
to compete in global markets mainly due to:
 Low quality and hygiene standards
 Lack of experience and information
 Significant growth in domestic consumption leading to limited surplus for
exports.
• As the market opens up, consumption trends associated with the large
importing markets will increasingly influence the world trade.
28

29. Conti…
• Whole milk powder and cheese along with butter and skimmed milk
powder are likely to become largely traded products.
• This will present a vast potential for the export of dairy products by
India because the cost of milk production in India is very low as
compared to other countries.
• Most of the dairy plants in the Government, Cooperatives and
Private Sector produce almost similar dairy products like varieties of
milk, butter, ghee, skimmed milk powder and whole milk powder.
Source: www.fnbnews.com 29

30. Major challenges to the dairy industry
• Challenges related with production – small and marginal
farmers – prime stakeholders of entire value chain deprived of
minimum resources of land, labour, capital etc.
Inadequate feeding of animals – increasing pressure for food
crop than fodder; lack of financial support for concentrate.
Low genetic potential of animals – crossbreeding (less
exotic gene); no record keeping – chances of IB(intra
breeding)
30

31. Conti……
Exploitation of farmers – non co-op member exploited; delayed
dues
More disease incidence – non co-op member – no animal health
coverage – rely on quacks and traditional conventional treatment
31

32. Conti……..
• Challenges at the Co-operative Level
Less number of member farmers – informal channel of milk sale
Lower participation in the decision making process – govt.
interference
Losses – poor management at village co-op leads to heavy lost –
faith lost
Low prices of milk – benchmark price by co-op forces others too
Inefficient services – quality feed, germplasm and vet services
32

33. Conti……..
• Issues and challenges for Marketing
 Milk base mainly consisting of small holders – collecting milk from
each twice daily; waiting for deposit
 Involvement of too many intermediaries – loose quality; volume
 Absence of a screening system – zoonotic, adulteration,
contaminants – spoilage of entire batch if one can goes
undetected.
33

34. Conti…..
 Gaps in information – Era of IT, dairy sector unorganised ; no record
keeping; zoonotic disease – no back tracking
 Lack of Infrastructure – chilling plants and bulk coolers to prevent
spoilage
 Manipulation of the quality of milk by the farmers – get fair price –
add fat, vegetable fat, starch to alter fat and solid content of milk
34

35.  Conti….
• Issues and challenges at the Processing Level
 Seasonality of production and fluctuating supply – India tropical
country – summer dry; cooler – flush season; fluctuation
 Absence quality standards – bars export into foreign market
 Adulteration and Food safety – cheap substitution of SMP(standard
manufacturing practices) with below standard substances which is
hazardous to health. Purity and wholesomeness.
35

36. Conti……..
• Issues & challenges with supply Chain
• 50 % rural & 50 % Urban (domestic market) – 50 % fluid milk; 35
% traditional product (paneer cheese, yoghurt, milk based sweets)
and 15 % consumed for production of butter, ghee, milk powder and
other processed dairy products (baby foods, ice cream, whey
powder, casein, milk albumin).
36

37. Conti……..
• Organized dairy sector consumes 15 % of total milk production
(liquid milk, butter, cheese and milk powder)
• Unorganized sector (80 % dairy market through milkman from
producer) dominated for traditional products eg. Cheese – 22000
MT by organized sector; Sweets.
37

38. Conti………
• Policy issues
 Majority of the Market is still unorganized – competes with
organised market in relation to price
 Acceptability of the Consumer base – not purchasing from organised
sector due to high price (due to processing); mindset to purchase
fresh whole milk from milkman
 Less penetration to the rural Market – organised sector sale in urban
 Lack of transparent milk pricing System
38

39.  Conti…..
• Infrastructural issues
 Lack of chilling capacities – less yielding and less no. – distant
place for deposit milk otherwise wastage due to perishable nature
 Storage and Logistics Level – requires immediate cooling to prevent
spoilage and contamination
 Gap in the cold chain and transport facilities
• Human resource issues – lack of trained and skilled workers to
handle safe & hygenic milk production
39

40.  Suggestion
 Strengthen economic viability of dairy farms by interventions on the
input side as well as ensuring more fair farmer prices.
 Increase the link between rural production areas and urban
markets.
 Focus on strengthening the indigenous breed to help significantly
enhance productivity.
 Ensure availability of quality medicines by strengthening regulatory
framework for quality.
 Focus on quality issues even in the informal channel by training
traders and by enforcing food quality regulations
40

41. Conti…..
 Develop infrastructure and training for clean milk production.
 Support a fair playing field for the private sector.
 Bring about changes in cooperatives to make them true representatives of
farmers instead of functioning as parastatals.
 Support to dairying as an enterprise to encourage commercial dairy
farming and encourage production and productivity by extension and
breed development.
 Enhance packaged milk distribution in more areas.
 Strengthen dairy farmer cooperatives to enable farmers to get a higher
price for milk.
41

42. Conclusion
• Milk and milk products are not only a valued source of
nutrition and provide income and employment to a large
section of Indian population.
• Several years of strategic planning and effective programme
implementation by Government and public sector agencies
have ensured that India emerges as a leading producer of milk
in the world.
• Dairy scientists and entrepreneurs should adopt a holistic
approach to product development encompassing new
dimensions of value addition, newer processing know-how, to
meet the international quality and safety standards
42

43. References
• Chawla Anil (September 2009). “Milk and Dairy Products in India- Production,
Consumption and Exports”. Retrieved from
http://www.hindustanstudies.com/files/dairysept09tocintro.pdf
• Gyan Research and Analytics Pvt. Ltd., 2013
• http://www.nddb.org/English/Statistics/Pages/Milk-Production-States.aspx
• http://agriexchange.apeda.gov.in/product_profile/exp_f_india.aspx?categorycod
=0404
• Ingavale Deepa (September 2013). “A Study Of International Trade Of Indian
Dairy Industry” Indian Journal Of Applied Research Vol No. 1 Issue No. 12.
Retrieved from www.theglobaljournals.com/ijar/file.php?val=NzA1.
• Joshi R.M (2011).“Promoting Dairy Exports From India: Emerging Challenges
And Strategic Reference”. Retrieved from
http://www.npcindia.gov.in/web%20page/7%20Paper.pdf
• www.fnbnews.com
• Global Agribusiness & Food Processing Summit’12
43

44.  Conti…..
• Karmakar K.G. and Banerjee G.D. (2006) “For Private circulation
Opportunities And Challenges in The Indian Dairy Industry”.Retrievedfrom
http://www.nabard.org/fileupload/DataBank/TechnicalDigest/ContentEngli
sh/issue9td-6.pdf
• Punjabi M.(2012). “ Dairy consultant New Delhi India: Increasing demand
challenges the dairy sector”. Retrieved from
http://www.fao.org/docrep/011/i0588e/I0588E05.htm
• Sunjay V. S.(6 November 2012). “FICCI – Food 360 • An overview of the
Dairy Sector in India - PwC”. Retrieved from
http://www.ficcifood360.in/pdfs/day2-2013/dairy/Pre-
lunch/2.Mr.Sunjay,PWC.pdf
• www.ifcndairy.org. IFCN Dairy Report 2013
• http://www.dairyfarmguide.com/scenario-of-dairy-production-0100.html
44