The battle for India’s milk market

In March 2024, issues modified. Kumar, 37 years outdated, enrolled with Akshayakalpa Farm & Meals, an natural dairy enterprise to provide milk. After some handholding from the corporate, his herd and feed administration practices improved dramatically. Right now, he has 9 cows that yield 75 litres of milk a day. The milk additionally has larger whole stable content material, a sign of higher high quality, which ensures a greater value.

Kumar says he makes a revenue of ₹18,000 per thirty days from his dairy farm now. “I need to add one other 5 cows and ultimately take the milk output to 200 litres,” he instructed Mint, as he readied his cows for milking on a Saturday night.

Kumar’s turnaround story is a rarity. India has 80 million dairy farmers and solely a fraction of them have embraced change. Others nonetheless comply with primitive administration practices, endure from poor yield and see little revenue.

Operation Flood, launched in 1970, remodeled India from a milk poor nation to at least one that’s self-sufficient. In 2024-25, India produced 248 million tonnes of milk and consumed 243 million tonnes.

“Operation Flood additionally made India the biggest producer of milk on the planet accounting for 26% of the worldwide output,” mentioned R.S. Sodhi, president, Indian Dairy Affiliation (IDA) and the previous managing director of Gujarat Co-operative Milk Advertising and marketing Federation, which owns the Amul model. However, that operation didn’t impart effectivity.

The famed co-operative mannequin provided livelihood to hundreds of thousands of farmers with one or two cows every. It gave them a supply of supplementary revenue and improved their financial standing. Nevertheless it created a fragmented dairy farming sector that was inefficient. Whereas India has the biggest variety of cows and buffaloes on the planet—numbering over 61 million— the milk yield per cow is one-eighth of what’s realised within the US, New Zealand or Australia, in accordance with a research by IMARC Group, a worldwide market analysis firm.

Low yield makes your complete worth chain uncompetitive. Vegetation overseas that produce value-added milk merchandise, corresponding to flavoured milk, cheese, butter and milk powder, profit from enormous economies of scale. “We aren’t any match for them,” mentioned Ok. Rathnam, chief government officer (CEO) of Milky Mist Dairy, a large private dairy company.

This explains why the Indian authorities, regardless of huge strain from the US, is resisting any tariff concession right here—India and the US are negotiating a commerce pact however India’s unwillingness to open up the agriculture and dairy sectors have develop into a sticking level. Removing of safety proper now will lead to a flood of imports that might trigger social upheaval, ultimately hitting India’s self-sufficiency in milk.

The large query although is that if India’s dairy sector may be reformed, going forward.

Measurement issues

India’s dairy construction is exclusive. Like we talked about earlier, it has over 80 million farmers producing 248 million tonnes of milk. Of the overall milk produced, solely 54% is on the market for advertising and marketing as the remaining is consumed by the farmers themselves. Of the 54% accessible, about 70% is dealt with by the unorganized sector (neighbourhood milk man who aggregates milk and distributes domestically) and the stability by the organized sector, which is co-operatives and personal gamers.

Each state has a co-operative that collects the milk and processes/distributes it below their very own model. In Gujarat, it’s Amul. Then there’s Nandini (Karnataka), Aavin (Tamil Nadu), Verka (Punjab) and Sudha (Bihar) to call a number of. Lately, non-public firms corresponding to Parag Milk Meals, Hatsun Agro Product, Heritage Foods, Milky Mist Dairy, Dodla Dairy and plenty of extra have grown in dimension. They too procure from the farmers.

The litany of woes is lengthy.

First is the herd dimension. “Within the US, the common herd dimension is 300. In India, it’s simply three to 4 cows,” mentioned Sashi Kumar, founder & CEO, Akshayakalpa.

Secondly, most farmers within the nation deal with dairy as a ‘facet enterprise’, to complement their agricultural revenue. “They don’t comply with any fashionable practices relating to herd and feed administration,” he added.

Third, think about the kind of cow farmers want to purchase. “To optimize milk yield, one wants to purchase the fitting cattle for the fitting agro-climatic situation,” mentioned M.P. Veeramani, an government at Akshayakalpa. In scorching climates, nation cows do higher however farmers find yourself shopping for Holstein Friesian (HF) breed or HF cross, which generally provides higher yield solely in temperate climates.

Massive home, good eating regimen

As soon as the cattle are purchased, they should be housed correctly. The shed needs to be designed for temperature management and hygiene. “After milking, the udder pores stay open. The animal might get contaminated in a unclean shed. As soon as an infection units in, they take months to recuperate and milk output drops,” Veeramani mentioned.

Additionally, the shed must be large enough for the animal to maneuver round. Tying up the cow is dangerous follow. “In the event you tie the animal, it will get burdened, leading to low milk output,” he additional mentioned. Within the US, there are giant grazing lands the place animals roam freely and feed on the grass. In India, with little place to let the animals graze, most farmers tie them up in soiled sheds for the entire day.

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Herd administration aside, meals consumption may be very vital as animal well being has a direct bearing on milk yield. As a thumb rule, 450 grams of compounded cattle feed is required for each litre of milk. A balanced eating regimen together with dietary supplements corresponding to calcium, nutritional vitamins and minerals are wanted for physique metabolism and milk manufacturing. Most Indian farmers simply feed the animal paddy straw. “Straw simply fills the animal’s abdomen and produces cow dung however not milk,” the chief identified.

One other problem is breeding. In its lifetime of 12 years, a cattle can lactate seven occasions. Cows ship milk solely after they get pregnant and ship the calf. Pure breeding is unpredictable and it is very important undertake good synthetic insemination practices to impregnate the cow. Not many farmers go for it. They miss the breeding cycle, impacting milk output.

The India attraction

Whereas India’s milk manufacturing play is weak, its consumption story is robust. Its 1.45 billion individuals eat 98% of the milk the nation produces. This demand for milk is just anticipated to develop sharply with financial progress, which would go away extra disposable revenue within the palms of the individuals.

Different progress triggers embody a big working inhabitants that prefers ready-to-eat dairy merchandise, altering consumption patterns (shift away from cereals to dairy merchandise) and a big vegetarian inhabitants that sees milk as an necessary supply of protein.

India’s milk consumption, in accordance with IMARC, is predicted to rise by 100 million tonnes to 331 million tonnes within the subsequent decade.

“It’s not shocking that the world desires entry to the largest and quickest rising dairy market,” mentioned IDA’s Sodhi. “The home demand within the US and New Zealand is flat whereas manufacturing is growing. They desperately want a market.”

Name for defense

Dairy gamers give three causes for not opening up the sector.

Within the US, the dairy sector is an trade. Alternatively, in India, there are over 80 million small farmers. “It’s trade vs livelihood,” Sodhi mentioned.

Second, India’s inhabitants is predicted to whole 1.65 billion by 2047. Demand for dairy merchandise will proceed to rise sharply. It’s thus vital that India stays self-sufficient in milk. “Permitting responsibility free imports will see flooding of low cost merchandise. It will damage milk procurement. Farmers will shift away from the dairy sector. It will compromise India’s self-sufficiency and milk costs will begin rising,” Milky Mist’s Rathnam mentioned.

Sodhi recalled an analogous state of affairs. “Within the mid-Nineties, India allowed a small portion of edible oil to be imported. Low cost imports got here in and Indian farmers stopped rising oil seeds and at the moment, we import 65% of our wants,” he mentioned.

Third, whereas Amul stands out as the solely strong pan-Indian brand, India has many regional manufacturers which command a robust model loyalty. Any overseas model coming into India may have no selection however to undercut the market to achieve share. Corporations corresponding to Lactalis, Danone and Fonterra have surplus capability and deep pockets to disrupt Indian firms.

Consultants, nevertheless, argue that the safety mustn’t are available in the way in which of reforming the sector.

IVF wanted

All we have to do is to get extra from much less. In different phrases, get extra milk from fewer cows,” mentioned Rathnam.

Akshayakalpa’s Sashi Kumar says by ‘extension providers’, the common yield of cows that his firm procures milk from has risen to 4,000 kg per animal per yr from 1,500 kg earlier. However that’s nonetheless 3 times decrease than 12,000 kg ranges within the US and New Zealand.

Extension providers train farmers good dairy farming practices.

As well as, higher authorities help, which at the moment is predominantly subsidies oriented, could also be required. IDA’s Sodhi additionally referred to as for larger budgetary allocation for the dairy sector according to its contribution. The dairy sector contributes 31% to the agricultural gross home product (GDP) however the allocation made is simply 4%, he added.

Globally, numerous significance is given to the progeny throughout breeding. Good progeny results in larger milk output. Additionally, sex-sorted semen ensures feminine calves which will increase milk output in the long term. “A cow can conceive solely every year however IVF (In Vitro Fertilization) know-how can be utilized to take a sex-sorted semen from a very good progeny and impregnate dry cows. That approach, we are able to create a big pool of excessive yielding feminine calves,” Sodhi mentioned.

Efforts, he added, must be made to make infertile cows (virtually 25% of all feminine cows) fertile. “If that’s achieved, milk output will enhance by 15%,” he mentioned.

Globally, numerous significance is given to the progeny throughout breeding. Good progeny results in larger milk output. Additionally, sex-sorted semen ensures feminine calves which will increase milk output in the long term.

If milk yield will increase, India’s dairy sector will develop into extra aggressive as it is going to additionally profit from economies of scale. Exports, that are starting to make a mark in a small approach, can speed up. As per authorities knowledge, export of milk and cream, butter, ghee and butter oil has doubled within the final three years in quantity phrases. Bangladesh, United Arab Emirates and different West Asian international locations are huge importers of Indian dairy merchandise for now.

“Three years in the past, Indian exports occurred at break-even value ranges. Now, Indian manufacturers are starting to get good margins. It’s clear proof that they’re turning into aggressive in a market dominated by international manufacturers. India is ready to develop into a primary participant within the international dairy sector,” mentioned Mukesh Saxena, senior analyst, India Rankings & Analysis. Amul, Mom Dairy and Britannia Industries are a number of the main exporters.

Most significantly, Indian farmers should perceive that dairy is a worthwhile enterprise by itself—and never only a supply of supplementary revenue. This consciousness is but to sink in.

D. Raja of Velur village, in Chengalpattu district of Tamil Nadu, understands this higher than anybody. Regardless of making a revenue of ₹20,000 per thirty days by adopting fashionable dairy administration practices, he’s preventing a battle inside his household.

“His father nonetheless believes rising paddy must be the primary supply of revenue and is in opposition to increasing the dairy enterprise,” Akshayakalpa’s Veeramani mentioned. “This, regardless of dairy making more cash.”