MILK PRODUCTION MANAGEMENT & DAIRY DEVELOPMENT

Module 16. Dairy manufacturing sector, its status and problems

Lesson 30
MILK PRODUCT MANUFACTURE IN PRIVATE AND ORGANIZED SECTORS AND IMPORT SUBSTITUTIONS IN DAIRY PRODUCTS

30.1 Introduction

This chapter describes/gives details about milk production, consumption, export and import of milk and milk products of India.

30.2 Data of Indian Dairy Industry

India’s milk production in 2009-2010 was 112.5 million tones. Although India is largest milk producing country in the world, it still has milk demand supply gap due to higher milk demand from consumer’s particularly growing middle class. In India, milk production is growing at 4% while consumer demand is growing at 8%. To meet this demand, Indian dairy industry is taking several steps. For example the National Dairy Plan initiated by NDDB is aimed at increasing production potential of milch animals.

Indian Dairy Sector is unique as it lay emphasis on both Cow and Buffalo milk. Buffalo contribute to around 55% of milk and rest is produced from indigenous and crossbreeds cows.

It is estimated that 40-50% of Indian dairy farmers are associated with organized sector. It is estimated that approximately 65% of milk in India is consumed (in liquid or other forms) on farm by the unorganized sector consisting of local milk vendor, wholesaler, retailers and produces themselves.

The following table shows the distribution/consumption pattern of India’s dairy industry in 2009.

Table 30.1 India’s milk utilization pattern -2009

Fluid Milk	46.0%
Ghee(clarified butter)	27.5%
Butter	6.5%
Yogurt	7.0%
Khoa(partially dehydrated condensed milk)	6.5%
Milk powder	3.5%
Panner (cottage cheese)	2.0%
Others, including Cream. Ice Cream	1.0%
Source: Industry estimates

The following chart shows the distribution network of organized and unorganized Dairy sector of India

Fig. 30.1 the distribution channel in Indian dairy industry

Both organized and unorganized channels coexist in the market The betterment of transportation and infrastructure would further strengthen the distribution network and make it more efficient in coming times.

30.3 India's Dairy Export and Import Data

Due to higher demand supply gap at local level, India generally exports very small proportion of its total production. If price and regional demand conditions creates a favorable demand from neighbor countries then, some times, India exports non fat dry milk and butter. India regularly exports products like casein. India’s import export data are shown in following figures.

(Source: Global Trade Information Services database (GTIS))

Fig. 30.2 India: share of dairy products imports, 2009

(Source: Global Trade Information Services database (GTIS))

Fig. 30.3 India: share of sairy products pxports, 2009

Note: HS 0401=Milk and cream, not concentrated nor containing added sugar or other sweetening matter

HS 0402= Milk and cream, concentrated or containing added sugar or other sweetening matter

HS 0403= Buttermilk, curdled milk and cream, yogurt, and others

HS 0404=Whey

HS 0405= Butter and other fats and oils derived from milk, dairy spreads

HS 0406= Cheese and curd

HS 3501= Casein, caseinates and casein derivatives

HS 170211=Lactose and lactose syrup containing by weight 99% or more lactose , expressed as anhydrous lactose calculated on dry matter.

HS 21050000= Ice cream and other edible ice, whether or not containing cocoa

(Source: Global Trade Information Services database (GTIS))

Fig. 30.4 Country wise export of Indian dairy products

Figure 1 shows India’s imports of dairy products in 2009. Butter and other dairy derived fats constituted around 50 percent of total dairy imports in volume terms during CY2009, followed by lactose (33 percent), and milk powder (8 percent). Import of milk and milk products is permitted without any quantitative limitations, although tariff rate quotas apply and import permits are required. In 2010, within-quota duty-free imports of milk powder and butter oil were allowed due to concerns that a possible deficient monsoon would lead to a difficult lean season (April-August) and further drive up prices. Quantities of NFDM imported above the assigned quota of 30,000 tons attract a basic duty of 60 percent while imports of butter oil above the assigned quota of 15,000 tons attract a basic duty of 40 percent.

India exports various categories of milk products including milk powders, baby foods, butter and other fats, casein, milk and cream, cheese, and whey products. Figure 2 shows that milk powders and baby food exports constituted more than 40 percent of the total dairy exports in volume terms during CY 2009, followed by casein, milk and cream, butter and other fats, and other processed dairy products. India exported around 50 percent of its total dairy products shipments to Bangladesh, the United States, U.A.E, and Singapore during CY 2009. Figure 3 also provides a comparative account of country-wise exports of Indian dairy products in 2009 vis-a-vis 2008. India’s dairy exports fell by around 60 percent in 2009 over the previous year (by volume). Exports shrank for almost all the major export destinations for India‟s milk and milk products in 2009 due to high domestic demand.

Milk and milk product order (1992) regulates the functioning of dairy plants in India. The following table shows the number of dairy plants registered under MMPO(1992)-As on 31st March, 2006.

Table 30.2 Numbers of dairy plants, state wise, registered under MMPO(1992) -As on 31st March, 2006

** includes Government Milk Scheme, Government Dairies and Mother Dairies.

(Source: Dairy Division, DAH&DF, M/O Agriculture.)

The table 30.2 shows the top dairy players in India in 2004-2005 in co-operative, public and multinational forms. It indicates that GCMMF is largest co-operative dairy organization functioning in the country.

Table 30.3 Major dairy plants in India in 2004-2005

Organization	Estimated Dairy sales (Rs million)	Capacity million litres/day (Number of plants)	Key markets	Brands	Ownership
GCMMF	28.941/5.4	6.6	National	Amul, extensions	Cooperative
Nestle	1,000		National	Nestle, extensions	Multinational
Mother Dairy	9,000	2	National for milk products: delhi, Mumbai and Hyderabad for liquid milk	Mother dairy extensions	Cooperative
Hatsun Agro	4,550	1	Tamilnadu, Andra Pradesh, Karnataka, Kerala, Kolkatta	Arokya, Arun, Delight, Komatha, Santosa	Public
Dynamix Dairy	3,000	1	Contract manufacturing		Private
Britannia	3,000	Outsource	National	Milkman	Private
Heritage	2,660	0.5	Andra Pradesh, Tamilnadu, Karnataka, Kerala, Kolkata	Heritage	Public
Visakha Dairy	2,400	0.3	Coastal Districts of Andhra Pradesh and Hydrebad	Visakha	Cooperative
Creamline Dairy	1,600	0.43	Tamilnadu, andra Paradesh, Karnataka, Kerala, Nagpur	Jersey	Private
Metro dairy	1,500	0.35	West Bengal Metro	Metro	Public