In India, dairy business has been practiced as rural cottage industry over the years. It is regarded as an instrument for social and economic development.
There are more than 10 million dairy farmers who belong to 96,000 local dairy co-operatives who sell their product to one of 170 milk producers' co-operative unions who in turn are supported by 15 state co-operatives. The countrys milk supply comes from these millions of small producers dispersed throughout the rural areas. All these small producers are mainly farmers maintaining an average flock of 1 or 2 mulching animals, comprising cows and / or buffaloes. Ample labour and a small land base encourage farmers to practice dairying as an occupation subsidiary to agriculture.
Income from crop production is seasonal whereas dairying provides a stable year round income and also an important incentive for the farmers despite the facts, majority of them were illiterate running small, marginal operations. Many farmers selling milk is sole source of income. Semi-commercial dairy started with the establishment of military dairy farms and co-operative milk unions throughout the country towards the end of 19th century. The crossbred technology in Indian dairy industry has further augmented with the viability of the dairy units by increasing the milk production per animal. Then subsequently milk production has also increased at an exponential rate while the benefits of an increase in milk production also reached to farmers. Since then industry has made rapid progress, by introduction of large number of modern milk and milk product factories.
India's approximate milk products mix consists, fluid-milk 46%, ghee 27%, butter 6%, curd 7%, khoa 6%, milk powders 4%, and paneer, cheese and ice cream 4%.
growth
India has been the leading producer and consumer of dairy products worldwide since 1998 with a remarkable growth. Dairy activities form an essential part of the agri-Indian economy, serving as an important source of employment and income. India also has the largest bovine population in the world. However, the milk production per animal is significantly low as compared to the other major dairy producers. Nearly all the dairy produce is consumed domestically. Hence Indian dairy industry holds tremendous potential for value-addition and overall development. According to the latest report by IMARC Group on Dairy Industry in India-2020 the dairy market in India reached a value of Rs 10,527billion in 2019.
Along with offering profitable business opportunities, the dairy industry in India serves as a tool of socio-economic development. Keeping this in view, the Government of India has introduced various schemes and initiatives aimed at the development of the dairy sector in particular and country as general e.g., the National Dairy Programme (Phase-I) aims to improve cattle productivity increasing the production of milk expanding and strengthening the rural milk procurement infrastructure and provide greater market access to the farmers. On the other hand, the private participation in the Indian dairy sector has also increased over the past few years. Both national and international players also entered in the dairy industry, attracted by the size and potential of the Indian market. The focus is being given to value-added products such as cheese, yogurt and probiotic drinks. They are also introducing innovative products keeping in mind the specific requirements of the Indian consumers. These players are also improving their milk procurement network which is further facilitating the development of the dairy industry in India. Thus, the market is expected to reach a value of Rs 25,491 billion by 2025, exhibiting a CAGR of around 16% during 2020-2025.
Extensive research
The IMARC study is the result of an extensive research of the Indian dairy industry that draws upon a comprehensive analysis of every major dairy segment in India. The report is based both on secondary research and multiple waves of qualitative primary research.
In India, the co-operatives and private dairies have access to only 20% of the milk produced. Approximately, 34% of the milk is sold in the unorganised market while 46% is consumed locally. This is in comparison to most of the developed nations where almost 90% of the surplus milk passes through the organised sector.
The Indian ice cream industry is one of the fastest growing segments of the dairy or food processing industry. Currently the ice cream market in India is estimated to be over Rs 4,000 crore, and is growing at a rate of 15-20% year-on-year. It is projected that by 2019, the market will reach a value of approximately Rs 6,198 crore.
ice cream industry is mostly regional and there is a multitude of brands focussing on only one or two districts or in some case only one state. There are very few national brands and the major reason behind slow growth of the smaller players is the high perishability of ice cream products.
Currently growing at 12-15% annually, the future prospect of India's ice cream market is promising for manufacturers, suppliers and retailers. While a number of regional players have already started expanding, the entry of new players has further intensified the struggle to get a bigger market share. The small and medium ice cream manufacturers in India are now being able to enhance their product range, volumes and profitability by utilising the more affordable small equipment.
Cheese market
It is expected that the Asia-Pacific cheese market will double its present size of US$8.3 billion to reach approximately US$15.5 billion by the year 2021. India and China are the two countries in this region with a fast growing cheese market.
Analysts believe that the cheese sector in India is set for rapid growth. Utilising the benefits of an integrated sales and distribution system and employing diversified sourcing is the way forward in the sector. The value-added dairy industry segment is expected to attract investments and entry of new players in the coming years. Players are emphasising on offering the consumer better quality differentiated products. Consumers are looking for more and healthier dairy options and introducing such cheese options will see traction in the market. It has been projected that the Indian cheese market will grow at a CAGR of approximately 31% during 2020, in terms of sales values.
has been estimated that all key players including Amul, Nestle, Mother Dairy, Parag, Danone and Britannia have been strengthening their marketing strategies. It may not be impossible to these market leaders to reach the total dairy sector turnover to Rs 60,000 crore, creating jobs over 10 million in very near future which will be a healthy sign for Indian agri economy.
(The author is hon director of Indian Institute of Naturopathy, Mumbai. He can be contacted at drprakashk5@hotmail.com)