Grass To Glass: Dairy Sector Offers Substantial Growth Opportunities And Challenges!

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Millions of Indian households hinge on a healthy glass of milk each day to make up for the dietary need. In fact, the massive vegetarian class in the country, children or a sick one entirely depend on milk for nutrition without pondering much on from where and how the glass full of milk reaches them. Because it is easy to pick up a pouch of milk from a nearby shop or mostly home delivered every morning by local milkman. A glass of milk is not just milking a bovine and receiving delivery at doorstep. Producing and supplying milk to 1.25 billion people of India is  much more than a herculean task even after being the world’s largest milk producing nation!

However, the journey from being a milk deprived nation to become the numero uno producer has not been easy. Larger share of credit for this achievement goes to the co-operative dairy movement which multiplied under the Operation Flood Programme (1970-96).

 

Dr. Verghese Kurien – Father of the White Revolution lead the Operation Flood programme under National Dairy Development Board chasing a dream of Billion Litre Idea. The legend overcame all imaginable hurdles (monetary and operational) to replicate the Anand Model of dairy across the country. Operation Flood till date remains the world’s largest agricultural dairy development programme. Also known as the White Revolution, this programme carried forward the co-operative model and stirred rural India into a hub of economic activities centered on dairy products and cattle. Milkman of India Dr. Kurien’s effort found amplification and subsequent popularization among the rural masses. This was prominently highlighted after the release of the hindi feature film “Manthan” taking encouragement from his life time endeavours in the 70s era. The film’s plot was based around rural empowerment, when a young veterinary surgeon who joined hands with a social worker to set up a local milk cooperative in a village in Gujarat. The fictionalised narrative unfolds several issues but core of it was to inspire villagers to play a proactive and profitable role in milk industry with sterling performances from the late Smita Patil, Nasruddin Shah and Girish Karnad in the lead cast. The film was later became an integral part of co-operative dairy movement and motivated lakhs of Indian farmers to join Anand Model of co-operative dairy farming.

 

While the co-operative sector dominates the collection and supply of milk, private sector is not too far behind.  After opening up this sector to private players in 1992, gradually private sector has picked up momentum and today accounts for nearly 48% share in the organised milk collection and processing sector. It has been a remarkable success of the private sector considering the logistic challenges involved in milk collection. It is predicted that private dairies may surge ahead of the co-operative sector’s share by 2020. Milk and milk product market in India remain attractive because of lower per capita availability despite of being the largest producer.

India’s average per capita availability of milk is 355 gm per year which is far lower than global average (Refer to Statistics at page 11). However, except the north Indian states, in all other states per capita milk availability is well below the national average.

The north eastern states have acute milk scarcity and eastern states of India are well known milk deprived region. Thus, it opens up opportunity for further growth in milk production and consumption in the country. However, the utter complexity of the market brings challenges to the private sector players and unorganised milk collection and supplying sector still have largest share of the market. However, this unorganised sector is stuck to basic products like milk and value added products like curd, ghee and khowa.

So, the local milkman or doodhwalla would remain important part of the milk supply chain in village and semi urban localities with a share of 75% of the market share. The rich urban consumers would drive the growth of value added milk products but a pure glass of milk would remain the staple nutrition supplement. This 5,49,587 crore industry (in 2015-16) is expected to grow at around 16% annually and more players would be joining the sector in coming years.

Milk production in India is expected to remain scattered as it is going to remain a source of livelihood for millions of villagers while organised private dairies would gain further foothold with large investments flowing into this sector.

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