1. Milk Industry In India

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Milk industry In India:

Milk industry In India Mohammad Ashraf Pal Prof/chief scientist Division of LPT,FVSc & AH

Slide 2:

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

Slide 3:

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).

Slide 4:

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.

Slide 5:

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 agriculture-61% 1950----------------------------------75% Agricultural production ↓ 24% [1901-1941] It took four decades to usher into era of green revolution→ to mitigate deterioration

Slide 6:

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.

Slide 7:

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 .

Slide 8:

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.

Slide 9:

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

Slide 10:

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

Slide 11:

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

Slide 12:

Reconstituted/recombined milk supply ↓ Primary producer discouraged as they did not get the remunerative prices. ↓ Low financial returns ↓ lack of proper f eeding and management ↓ Reduced milk yield ↓ Anti dairy cycle

Slide 13:

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

Slide 14:

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) Unite to form → state level milk federation [ procure, transport, process & market] Profits earned ploughed back to farmers as bonus payment ↓ Farmers encouraged to Keep more animals, provide better management Increased milk production

Slide 15:

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

Slide 16:

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 NDDB’s 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 Socio-economic emancipation & improve the Land-Animal Productivity

Slide 17:

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.

Slide 18:

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

Slide 19:

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

Slide 20:

Technology Mission 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

Slide 21:

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

Slide 22:

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

Slide 23:

Constraints & future policy 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

Slide 24:

~ 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

Slide 25:

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 5-year plans. This needs to be viewed Seriously. 9. Socio- cultural compulsion  Negative influence

Slide 26:

No culling of unproductive adult cattle Large numbers lingering in the pop n , 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)

Slide 27:

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 depleting common property resources. Grossly inadequate feed and fodder resources. Farming practices unfriendly to the environment Demand Growth Rate@ 7% Vs milk production rate @ 4.5 %

Slide 28:

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

Slide 29:

Year Grams per day 2000-01 220 2005-06 241 2008-09 250 Per capita availability of milk Source: Department of Animal Husbandry and dairying

Dairy Statistics:

Dairy Statistics Particulars J&K India (millions) Cattle Pop n 3,084,000 185.18 Buffalo Pop n 1,039,000 97.92 Total Pop n 4,123,000 283.1 Milk Production (MT) 1.51 115 PCA(g/day) 363 250

Slide 31:

Strength Weakness Largest milk producer in the world A huge base of around 11 million farmers 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

Slide 32:

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-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.

Slide 33:

Company Brands Major Products Nestle India Limited Milkmaid,Cerelac , Lactogen , Milo, Everyday Sweetened condensed milk, malted foods, milk powder and Dairy whitener Milkfood Limited Milkfood Ghee, ice cream, and other milk products SmithKline Beecham Limited Horlicks , Maltova , Viva Malted 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 Amul Butter, cheese and other milk products H.J. Heinz Limited Farex , Complan , Glactose , Bonniemix , Vitamilk Infant Milkfood , malted Milkfood Britannia Milkman Flavoured milk, cheese, Milk Powder, Ghee Cadbury Bournvita Malted food Major dairy products manufacturers

Slide 34:

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

Slide 35:

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 Critical issues

Slide 36:

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

Slide 37:

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

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