Milk Production by species in India, 2004-2019

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Source: Gira compilations, estimates and forecasts based on FAO data

Relative importance of milk from cows vs. buffalo

  • India and Pakistan are the only countries where buffalo milk wins over cow’s milk.
  • Indian (and Pakistani) buffaloes are well adapted as dairy animals and often yield more milk than cows
  • and also due to buffaloes’ value as slaughter animals.
  • Consumers prefer buffalo milk due to its high fat content and also because tea made with buffalo milk is considered better.
  • Dairy processing units purchase buffalo and cow milk on the basis of: fat % and solids-not-fat %. The two milks are then mixed.
  • Packaged milk is sold without differentiating whether it is from cow or buffalo.
  • Cow milk production is growing somewhat faster than buffalo milk, due to improved breeds of cows being adopted.

Cow & Buffalo Milk Production – Growth is from herd numbers; very low yields improving slowly

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India is the second largest milk producer in the world

  • Yet it has some of the lowest milk yields (& only growing at a modest 2% p.a.)
  • Growth predominantly from herd increases, with expected strong future growth

Per capita equivalent milk consumption is around 119 litres – rising at 6 liters every year (and in spite of a population that has itself grown 15% in the last 10 years)

  • Up from 83 litres in 2004; and probably rising to 145 litres by 2019.
Milk
Average Milk Yields, 2004-2019f

Milk Supply Circuits From Village to City – essentially an “artisanal” supply chain

A major part of the problem is that “commercial” milk is often milk which is simply surplus to rural requirements and serves to ensure a modest cash income to otherwise subsistence farmers

  • Thus making improvements in husbandry, milk quality, yields etc. very difficult to implement

Nationally, milk production is seen more as a way of keeping tens of millions (possibly up to 75 mio) of farmers on the land than as the basis of a national industry

  • Hence consolidation and increasing herd sizes is seen by some politicians as a threat to rural employment

Only 17% of all milk produced –around 26 billion kilos –goes through organised commercial channels

  • 51% of which via cooperatives, 49% via private companies
  • Around 70 billion kilos –is sold by very small private distributors or used for manufacturing milk products
  • And the rest (about 54 billion kilos) is consumed locally, in the rural areas. In all, well over 82% of all milk is distributed/consumed in the “informal sector”.

The Cooperative Milk Production & Collection System

A heavy structure, but one that has brought progress

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dairy cooperative society model

“The Indian dairy research and outreach structure has focused on generating a little bit more milk from a whole lot of cows” (University of Wisconsin).

The cooperative supply model illustrated above was successfully implemented in Gujarat state,

  • but has apparently not met with great success elsewhere, in spite of being supported by Government.

The cooperatives of Gujarat adopted the brand name “Amul” for their dairy products, and it has become one of India’s best known brands.
In fact it is a whole chain of cooperative structures in one integrated unit, reflecting the origins and the aims of the cooperative movement wherever it originated.

The criticism leveled against it is that the many levels of decision and investment are vulnerable to administrative dysfunction and political intervention. Nonetheless, the essence of the “Anand” model has also effectively been adopted by the private sector.

During 2014-15, Amul’s intake of milk was about 5.42 milion tons,fractionally down on 2013-14.

Milk
dairy cooperative society model

Private Sector Milk Production & Collection System Only with comprehensive aid from dairies can farmers supply quality milk

As in many other developing countries, quality milk production in sufficient volumes can only be ensured in India if the dairy processor (coop or private) itself reaches right up the supply chain to assist and encourage farmers to improve their activities.

This involves first and foremost paying a higher price for better quality milk, but also providing the necessary inputs and material infrastructure.

Given Government resistance to imports in the sector, the hands-on solution is the only way for modern dairies to obtain the milk they need.

Nestlé India Ltd. is a good case study of a private sector company with foreign ownership doing business in India the “Indian” way.

  • Relationship with India dates back to 1912, when it began trading as The Nestlé Anglo-Swiss Condensed Milk Company (Export) Limited.
  • Set up its first factory in India at Moga, Punjab in 1961. 8 manufacturing facilities to cover every part of India and 4 branch offices spread across the country. R&D Centre at Manesar, Haryana became operational in 2012
  • Supplier base has grown from 4,600 farmers providing 2 000 tons of milk to110,000 farmers from 2,815 village collection centers collecting more than 300,000 tons.
  • Field camps have helped many farmers improve their farming practices and milk quality.
  • Over 60,000 village women across Punjab, Haryana and Rajasthan benefitted from Village Women Dairy Development Programme by the end of December, 2014
  • Set up over 100 sanitation facilities in schools benefiting more than 36,500 girl students.
  • Introduced local tree-planting programmes.
  • Funds a tuberculosis clinic.

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Source : Gira2015

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