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Innovations in dairy industry - Tracking trends & more
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Tuesday, 16 January, 2018, 08 : 00 AM [IST]
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Ritu Meebisht
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India has shown immense transformation from being a milk-deficit nation with only 17 billion litre of milk production in the 1950s, to the largest milk-producing country in the world with nearly 160 billion litre in 2016-17.
Accounting for more than 25% of the total global milk production, the dairy industry in India not only plays a vital role in the national economy, but also in the socioeconomic development of millions of rural households.
The increasing demand from the burgeoning middle class has largely contributed to the increased production in the country. Some of the factors that have been proactive in maintaining this include entrance of numerous private players and various government initiatives towards the development of the industry like new generation cooperatives.
With the country’s population growing at an alarming rate and the majority being vegetarian, India has also become the world’s largest consumer of milk. In 2016-17, the total milk consumption in India reached a volume of 154 million metric tonne.
According to IMARC Group, the milk consumption in India is projected to surpass the production in the coming years on account of numerous factors such as firming economic growth, increasing population, growing per capita consumption of milk, and rising urbanisation and evolution of the dairy industry. The milk consumption in India is expected to increase at 6% year on year, reaching around 234 million metric tonne by the end of 2025.
Despite its huge livestock and having managed to attain numero uno position in milk production across the world, the Indian dairy industry lags far behind its global counterparts in terms of milk productivity per cattle, technological advancement, market organisation and prosperity of dairy farmers. This can be attributed to several factors which not only affect the milk productivity of cows but also restrict the overall growth and development of the Indian dairy industry.
Some of the factors
• Milk Spoilage; • Low Yield Animals; • Milk Quality and Procurement; • Feed Quality; • Lack of Proper Veterinary Services, and Training and Education.
In order to overcome these challenges, the Indian dairy industry needs to keep pace with the recent trends in milk processing. The emphasis should also be given to continued productivity growth both at the farm and processor level, economic survival, consumer tastes and preferences, socioeconomic changes and enhanced purchasing power.
In 2014, the government launched Jan Dhan Yojana, a scheme which aims at bringing the entire country under a financial framework through various services like availability of basic savings bank account and access to need-based credit and remittances facilities. In addition, technology-based newer payment platforms have also enabled immediate funds transfer to remote users.
This, in turn, has ensured that the dairy farmers get compensation on the same day, unlike the delays in physical settlement systems.
Apart from the initiatives taken by the government, the private companies and co-operatives have also put in efforts towards the development of the dairy industry at the village level. The following are the two case studies done by IMARC Group which highlight the ongoing developments in the Indian dairy industry:
Case Study 1
Technology Changed the Face of Milk Procurement
As per the inputs shared by Jaswant Kalsi, procurement head at Heritage Foods Ltd (earlier Reliance Dairy), the company started operations in Northern India about five years ago. It faced a number of challenges during the procurement of milk as the market already had prominent players who had set up vast milk collection networks.
After a lot of research, they realised, the majority of the milk which was being procured by companies followed traditional methods for milk testing at the time of collection. There were no proper methods available for testing SNF content in that part of the country. It was done only through lactometers which involved a cumbersome and time-consuming process. Furthermore, the trapped air reduced the fat and SNF content while testing the milk. This led to unsatisfied farmers, as they were not getting the fair share for the quality of milk.
In order to address the above-mentioned challenges, the company brought transparency in the operations through integrated electronic milk collection system at the village level. The company researched and imported an equipment called Ekomilk Analyser, an automatic milk payment system with milk price synchronisation, from Bulgaria to test not just the fat and SNF content, but also many other parameters of milk. This system not only saved quality milk suppliers from exploitation, it also assisted in instantly calculating the price to be paid to the farmers, thereby, helping in faster and accurate payments.
Another step taken by the company was the introduction of ultrasound vibrators which remove the trapped air, thus, preventing the milk fat and SNF content from getting affected while testing. The entire integrated system along with a weighing scale is connected to a centralised server where details of each and every milk supplier is maintained along with the quality and quantity of milk supplied on a particular date.
Apart from this, the company also encouraged local rural youth to join the company and trained them for milk collection; started selling cattle feeds to the farmers; and provided orientation on new systems to them. There is no denial in the fact that to overcome these challenges, the company invested huge amounts of money in expensive equipment and other utilities such as power backup, computer, printer, UPS, and batteries.
These steps proved to be attractive for farmers supplying quality milk, thus, helping Heritage Foods collect about 2.5 lakh litre of milk per day from zero in a highly competitive environment.
Case Study 2
Working with Farmers Improved Milk Procurement
From collecting about 2.5 lakh litre to about 9.5 lakh litre per day in a span of five years, CP Milk and Products Pvt. Ltd (Gyan Dairy) has reduced its dependence on middlemen. While the company had the first movers advantage, it has also been able to keep the competition away from poaching into their more than 90,000 farmers. According to managing director Jai Agarwal, this growth can be attributed to the socioeconomic model developed by the company for the farmers’ association. The company has put key emphasis over the last five years on:
- Building Strong Relationships with Farmers: The company has laid its entire focus on creating and building stronger relationships with the farmers. The company through its milk collection agent provides fodder seeds to the farmers helping them grow quality feed for the cattle and also ensures timely disbursement of all dues. This ensures that the company maintains good relations with the farmers facilitating continued milk supply.
- Vaccination and Animal Extension Facilities: Currently, it provides vaccination and animal extension facilities which cover around 70% of the villages it is active in. Apart from this, the company has a dedicated helpline number for farmers wherein they can register their complaints regarding their cattle and the doctor will get in touch or visit them. The company also focusses on quality breeding by providing AI facilities to its farmers.
- Financial Support: The company recently signed a tri-party agreement with a well-known nationalised bank to help the farmers get an approval for a loan of Rs 2.5 crore. This support would help the farmers to invest in new cattle and quality fodder, thereby, strengthening the relationship with the company.
(The author is business analyst, IMARC Group)
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