Entrepreneurship development and Industrial Consultancy

Module 4. Overview of dairy industry

Lesson 17
CHARACTERISTICS OF INDIAN DAIRY PROCESSING AND EXPORT INDUSTRY

17.1 Introduction

Indian dairy industry possesses unique style of production, processing, marketing and consumption of milk. Milk production is scattered among large number of individual milk producers living in villages. These milk producers keep one or more dairy animals. These milk producers may be members of co-operative dairy set up and supply their milk to village cooperative dairy society. Those who are not associated with any cooperative set up, sell their milk to private traders.

17.2 Production

Although India is largest milk producing country in the world, the problem areas in production are:

a) Low productivity of milch animals.

b) Lack of quality control and monitoring mechanism.

India possess largest number of milch animals but their productivity in terms of milk output is very low. This requires appropriate policy measures viz., improved breeding programme, maximum use of artificial insemination; balance feeding, implementing disease control programme etc.

The bacteriological quality of raw milk is also poor. Due to existence of unhygienic conditions at the place of milking and then improper subsequent storage conditions give rise to very high bacterial count. Thus bacteriologically, the quality of milk in India is very poor compared to developed and western nations. This acts as a draw back on export front.

The major reason for this condition is lack of awareness among milk producers and lack of incentives for clean milk production. By arranging requisite training programmes for milk producers and providing incentives in the form of higher milk price, and technology up gradation in collection and storing raw milk will help to improve quality of milk.

17.3 Processing

Of the total milk produced only about 35 percent is processed. The share of organized sector is less compared to unorganized sector. The organized sector comprises of dairy processing plants owned by cooperatives and private business. The unorganized sector comprises of halwaies and milk vendors. As only limited amount of milk is processes and handled by organized sector, there exists a vast growth potential. After deliciensing of dairy sector, the milk processing capacity has grown at 4 percent. More number of plants has come up in private sector as compared to cooperative set up. Problematic issues on processing front include seasonal and regional imbalances and limited flexibility to change product mix, lack of commercialization and government taxation.

17.4 Export

Although India is largest milk producing country in the world, it is minor player in world dairy market. Export of dairy products from India is negligible and there is need based occasional import in small quantities. Indian milk producer does not receive any subsidy. Thus in post WTO world there is possibility that Indian milk products cannot compete with those from many developed nations which dominate global dairy market. In liberalized WTO era, export opportunities are unavailable to Indian dairy establishments and they are getting ready to face the emerging challenge by meeting international standards and other non tariff barriers.

Problems/issues in Dairy Export
The major problem faced for exploring Dairy Products include,

(i) Poor microbiological quality of milk.

(ii) Domestic support provided by OECD Countries to their dairy sector.

(iii) High level of market prices supports subsidies.

(iv) Impregnable market due to high tariffs and pay to – sanitary (sps) norms.