Entrepreneurship development and Industrial Consultancy

Module 4. Overview of dairy industry

Lesson 16
OVERVIEW OF DAIRY INPUT INDUSTRY OPPORTUNITIES FOR ENTREPRENEURS

16.1 Introduction

Since the beginning of civilization, milk is considered as an important food item. For vegetarians, it is an important source of protein rich diet. India is largest milk producing country in the world with production of 112 million tonnes of milk in the year 2009-10. In globalized era, milk economy is transforming from a subsistence activity to commercial activity. This unit discusses the opportunities for entrepreneurs in dairy sector.

In India, required infrastructure for a successful enterprise exists. It includes sufficient raw material availability in the form of milk, an established infrastructure of technology and supporting manpower, and free market economy after delicensing of dairy sector in 1991. An entrepreneur’s participation will definitely ensure attractive return on investment in fast growing market in India as well as for exports. The following is an illustrative promising entrepreneurial opportunities.

16.2 Farming System

16.2.1 Dairy farming is now a commercial activity

In the states where milk production is higher viz., Punjab, Gujarat, Rajasthan, Haryana, Maharastra etc, many progressive farmers (Milk producers) have established dairy farms with better quality of dairy animals, increase in herd size for farm, better quality of dairy animals, machine milking, scientific breeding policy, feeding high quality feed and fodder. High tech dairy farms producing better quality milk so as to manufacture value added milk products for growing health conscious urban market as well as exports provide good entrepreneurial opportunity.

16.2.2 Organic farming and biotechnology

New research findings in the field of biotechnology coupled with growing demand for organic products provide exciting opportunity for establishing organic dairy farms. Biotechnology helps in developing finest dairy breeds, dairy cultures, probiotics, enzymes and colouring materials for production of different dairy products.

16.2.3 Processing and packaging equipments for dairy plants

Opportunities exist for manufacturing modern more efficient dairy processing and packaging machinery of world class quality.

16.2.4 Product manufacturing

With growing demand of variety of milk products, potential exist for manufacturing world class western as well as traditional products. Vast potential also exists for manufacturing specific products for people suffering from certain diseases. e.g. diabetes, hypertension, obesity etc.

16.2.5 Distribution & retailing

Milk products being perishable products require refrigerated storage. For maintaining a cold chain involving bulk coolers, chilling centers, cold stores, refrigerated vehicles are required. With growing Indian economy and increase in purchasing power of Indian consumers, there is growth of big retail outlets for dairy and food items. Thus there exists opportunities for entrepreneurial pursuit in this field.

16.2.6 Specific dairy markets

India’s dairy market is characterized like a multilayered pyramid structure with the base made up of huge market for low cost milk. Narrow tip of the top consist of small different markets for western type milk products. There exist following dairy market entrepreneurial opportunities.

a) Food service institutional market: This is growing at higher rate (approximately double) than consumer market.

b) Defense market: This is an important segment for supplying quality products at reasonable price.

c) A boom is forecasted in the market of dairy products used as raw material in pharmaceutical and allied industries.

d) Parlor market: The growing ‘away from home’ consumption trend opens new vistas for ready to serve dairy products.

e) Sweet market: There is a huge export market of Indian milk based Sweets. Many Indians live abroad especially in USA, UK, Australia, New Zealand etc. This non resident Indians segment provides potential for supplying traditional Indian sweets.

16.2.7 Animal husbandry business opportunities

As the prices of high yielding dairy animals are increasing, the milk producer is interested in obtaining professional animal health care services to improve productivity of dairy animal. This gave rise to several entrepreneurial opportunities in dairy segment. Nutritionally improved crop residues and dry fodder apart from cattle feed and urea molasses bricks are in demand. Interested entrepreneurs can establish small business on these lines. Production and sale of compacted fodder from surplus to deficit areas, breeding of cross bred and graded buffaloes also provide entrepreneurial opportunities.

Private on farm veterinary first aid and insemination services are increasingly used by progressive milk producers. With increased use of private veterinary practices, the demand is rising for instruments and equipments for surgery, artificial insemination and related services, vaccines, veterinary pharmaceuticals including feed supplements and growth promoters. The use of herbal and Ayurvedic formulations for disease control and as feed supplements/ additives is increasing giving entrepreneurial opportunities.

16.2.8 Organized vs. Unorganized dairy-sectors

The Indian dairy industry is divided into two broad sectors,

(i) Organized
(ii) Unorganized

The organized sector includes cooperatives, private, government registered with MMPO 1992. The unorganized sector includes number of small and/or seasonal milk producers/ trades / halwaies not registered with MMPO 1992. The organized dairy sector handles only 30% of total marketable surplus milk and hence there is huge scope for entrepreneurs.