|
|
|
You can get e-magazine links on WhatsApp. Click here
|
|
|
|
|
|
Indian Dairy Vision 2030: Growth opportunities for dairy sector - way ahead
|
|
Tuesday, 04 November, 2014, 08 : 00 AM [IST]
|
|
Kuldeep Sharma
|
|
fiogf49gjkf0d India is set to become the world’s most populated country by 2030 with around 1.53 billion people and more than 19% of world’s population by the same time.
The country, housing currently approximately 18% of world population, is growing at the rate of 1.3% annually, but has only 7.3% of global arable land and faces a huge challenge ahead for its agricultural sector to feed these extra mouths.
This task becomes more challenging against issues such as climate change and natural resource constraints (water and soil foot print) and reduction in cultivable land in the wake of magnums of unplanned urbanisation. There is clearly a massive challenge facing the Indian industry.
Considerable opportunities
With global populations set to rise from 7 billion today, to 8 billion by 2030 and 9 billion by 2050, opportunities for Indian food producers to respond to this growing market place are considerable. FAO has analysed global dairy trends as far as 2050. Their analysis predicts that as incomes rise, people generally prefer to spend a higher share of their food budget on animal protein, so meat and dairy consumption tends to grow faster than that of food crops. As a result, the past three decades have seen buoyant growth in the consumption of livestock products, especially in newly industrialising countries and emerging markets.
Post-white revolution, the Indian dairy industry has shown constant growth in milk production as well as per capita milk availability, i.e., 51.4 million tonne in 1990 to about 127 million tonne in 2011-12 and 291 gm/day respectively. Few reports suggest that with current growth rate of approximately 3%-4%, it is thought to grow to 185 million tonne and become a $24 billion (Rs 1,44,000 crore) organised industry by 2020 and $140 billion (Rs 8,40,000 crore) including the unorganised sector. However our research considers the same production levels by 2022-23 itself. Even such volumes could only be attained if the system wakes up and begins to act fast on the new context being suggested by us by focussing on farmers’ groups, societies and associations rather than individuals.
Surge in GDP, PPP
Based on extrapolations of mega Indian economic story and analysis of domestic growth, India will shoot ahead of Japan in mid 2030s to become the world’s third biggest economy. Consequently a huge surge in GDP (gross domestic product) and PPP (public-private partnership) is expected, reflecting in enhanced protein consumption in the form of dairy products in India. During the next few years, till 2030, the demand for dairy products is expected to grow at a rate of 9%-12% and industry at a rate of 4-5%. Clearly, the Indian industry will struggle to maintain 100% self-sufficiency due to huge local demand, between 160 to 170 million tonne of milk that would be required by 2030. The industry will have to overhaul to meet ends. With the potential to accommodate imports with home produced dairy products, the Indian industry will present to be a very lucrative market.
Pressure of urbanisation
Net area sown has not grown in proportion to the rate of growth of population. There could be marked decline in the area allocated for pastures and animal grazing from 7% to 6% by 2020 and with the increased pressure of urbanisation and modified land bills it could further reduce to below 5% by 2030. The land for green fodder production will only grow from 5 to 6% by 2030 if strong measures to induce contract farming or focus on commercial fodder production by corporate for captive or group usage are not taken up. The compound feed market is also underserved and the installed capacity is only 10% of the expected total demand of around 60 million MT per annum at current levels. A lot of investments need to be directed towards building this capacity as well as to incentivise and subsidise cattle feed manufacturers to set up mineral mix plants as well. This will ensure better nutrition to the animal, over and above the feed for health.
The current deficit for green fodder, dry fodder and concentrates is 63%, 24% and 76% (2010 data) respectively, which means that even at today’s demand level for milk production there is a need to double up the land for fodder growing and pasture feed lots for dairy. There has been large gap in production of medicines and vaccines for the animal industry.
A robust plan to raise the current home-delivered AI (Artificial Insemination) levels for animal breeding from around 20% to 80% need to be implemented. Farmers in interiors are perceptually not ready to accept AI as a technique for their animal breeding. It puts more pressure on the system to develop large-scale capacity building programmes at community level over and above looking out for establishing bull breeding farms or semen production.
Biggest impediment
Male calves and stray bulls of poor pedigree are considered to be the biggest impediment to the sustainability of the Indian dairy industry. Both these categories put a lot of pressure on limited resources therefore some pragmatic solution by using latest technologies like sexed semen and injection-based sterilisation could be evaluated and implemented. The same problems could also be better handled through a community-led approach rather than an individual farmer focus.
From 2009 to 2014, the middle class in Africa grew by three times from 120 to 330 million and by six times from 500 million to 3.2 billion. This trend is yet to bloom fully and this booming economy and expanding cash-rich middle-class, would mean a lucrative and very incentivising market. This would make India a hotspot of globally competitive and compliant dairy destination.
The dairy industry would witness further consolidation of organised dairy structure to an impressive 35% by that time. Post-2020’s industry will see increased dominance and importance of “A” class global brands and emergence of “private labels” meaning Indian dairy industry would be under pressure to become globally competitive at all stages of the supply chain.
Efficiency and effectiveness
Customer maturity along with FSSAI (Food Safety and Standards Authority of India) norms and adaptations of newer versions of food quality norms like FSMA (FDA - Food Safety Modernisation Act) would coerce the industry to improve efficiency and effectiveness and where possible, benchmark their performance. The year 2030 will see the apotheosis of the long-sighted dream of becoming a global giant in the international dairy market with Indian companies positioning themselves in the hall of fame of global dairy arena. In 2030, it would be rather a surprise to not to see mega dairy brands like Fonterra, Avonmore, Campina, and Alra when you walk in to a store even in tier 2 and 3 level cities and towns.
IAI Vision 2030 is second in series of the white papers published by Suruchi Consultants in association with PCSL (Pixie Consulting Solutions Ltd). In Dec 2011, the first edition of white paper i.e. Vision 2020 of the Indian Dairy Industry was launched and deliberated. It was accepted very well by the public, private, research and academia.
‘Reimagine’ dairying in India
Vision 2030 is an attempt to ‘‘reimagine’ dairying in India for the perspective of 2030.’ “Mass production is production by masses” has been the mantra behind Indian context of agricultural development and a strong conviction of Mahatma Gandhi. Since Independence, most of our policies for the agriculture sector have been an outcome of this context.
Dairy comes under fragmented industry as per the definition of uber-guru-on-strategy Michael Porter, which means local requirements have to be met through local supplies as the production is scattered and available locally. The strategy for dairy development till date lies with decentralising the production and centralising the processing and marketing.
In this model, with individual focus to a farmer or even a village level society, scaling is difficult. The only strategy to counter this state is by building economies of scale at all levels of business by developing a critical mass. Indian dairy production comes majorly from small and marginal farmers with an average animal holding of 2-4 animals. Barring very few areas in the country where dairy is not considered as the main occupation at household level, it may be perceived as a pocket money business for the homemaker or pastime activity for the elderly at home. The farmer also keeps a major part of nutritional milk for his family at home. Cost of production is imputed as the input to animals are either assortment of agriculture residues or by grazing at community owned pastures land. In such cases though a religious commitment to animal is visible but business wisdom to grow the business is missing, or in other words, in the whole model sustainability is missing. In this vision document, we propose to set a new context while ‘reimagining’ dairying in India.
Sustainable production is production by progressive communities
Research shows that now only a radical change in our national policy-making could bring about the required growth in milk production by 2030 such that supply meets demand. It requires a scale orientation and development of critical mass at all levels of the value chain for cost-effective interventions and investments. The industry does not have time to pursue uninterested farmer with an indifferent generation “Y” to identify himself with animal rearing. However much better results at a faster pace could be achieved by focussing on existing dairy communities in the form of societies or associations or by developing dairy clusters of various stakeholders in the dairy value chain.
A progressive community not only brings in scale to the business but also brings in necessary commitment to grow and build a professional model attractive enough for young generation to become part of it. In the later part of the report, we will offer a blue print of an implementation plan to further support our vision statement.
5 I model
The research has also brought out a 5 I model consisting of Identification, Inventorisation, Integration, Institutionalisation and Investment as a mantra for developing a national level strategy to meet the humongous demand for milk and milk products through sustainable dairying in India through community mobilisation which paves the way for an all-round instutionlisation of the dairy industry.
Fig 1 Suruchi 5 I Model for dairy development in India
Fig 2 Suruchi institutionalisation model Source: Indian Dairy Vision 2030
The dairy institutionalisation model works on a farm to table model for the dairy industry. Covering key and crucial parts of value chain, fixing the responsibilities for delivery of quality product as well as recognising and assimilating the players in four pillars. The four pillars in the model act as interface between two levels of value chain.
The ultimate aim of 5 I model is to develop a robust registration system for farm, farmers and animals. This should further be augmented by recording or inventorising the practices being used by the farmers for animal rearing, feeding and breeding. The whole value chain should be clustered around these practices. Separate Institutions should be built up cutting across the value chain on feeding, breeding, health, quality and so on and the investments should flow through these institutions to the right area of gap within the value chain.
(The author is chief thinking officer, Suruchi Consultants, Noida) (Excerpted from a report. The complete document can be downloaded from www.suruchiconsultants.com or by sending request at info@suruchiconsultants.com)
|
|
|
|
|
|
|
|
|
|