Horticulture पशुपालन

Challenges and Opportunities of Dairy Sector of India

Dairy Sector of India

Today is 1st June, We observe today, world milk day globally. The Day provides an opportunity to focus attention on milk and to publicise activities connected with milk and the milk industry. The fact that many countries choose to do this on the same day lends additional importance to individual national celebrations and shows that milk is a global food. I want to highlight some facts which shows the importance of the dairy sector in the national economy as well as focus on the main constraints or bottleneck of this industry in India.

Indian dairy sector

Importance of World Milk Day:-

Importance of the World Milk Day lies in the fact that it celebrates the value of milk in our lives; milk is the first food item with which a child is fed immediately after birth. It is the first food for almost all the creatures in the world.
This shows the importance of milk. It has been proved in several scientific studies that milk contains almost all nutrients our body needs such as calcium, potassium, phosphorus, iodine, protein, and vitamins.

But apart from milk’s nutritional values, the Day is also observed to signify the importance of milk industry and dairy activities in people’s livelihood and national economy. Millions of people all over the world are working in dairy industries and their livelihood is dependent on milk or milk products. Thus, the Day also recognizes the efforts of people engaged in milk industry in producing milk in such quantities so as to fulfill ever-increasing demands of milk.


India is the seventh-largest country by area, the second-most populous country (with over 1.2 billion people), and the most populous democracy in the world. During 2015 India was the seventh largest economy by nominal GDP (now it has become 4th ) and third largest by purchasing power parity. The Indian economy is one of the fastest growing globally with an impressive growth rate of 7.1% in 2016. India is a federal republic governed under a parliamentary system and consists of 29 states and 7 union territories. Agriculture in India dates back to Indus valley civilization era.

Today India stands second in the world in terms of farm output. India owns the world’s second largest arable lands after the USA. The contribution of Indian agriculture (together with forestry and fisheries) in total national GDP is 17.1%. With the advent of an evolving service industry, the contribution of agriculture to India’s GDP has declined, yet it plays a significant role in the overall socio-economic fabric of India, as more than 58% of its population is dependent upon agriculture for their livelihoods.

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The most basic feature of Indian dairy sector is that it is still predominantly unorganized. Of the total milk produced in India, only 18-20% is channelized via the organized sector. The unorganized sector is yet to participate in the modern processing infrastructure.

However, there is a gradual and steady shift in positive direction because of favorable “consumption dynamics” led by increasing demand for packaged milk and value-added products. Despite being largest producer and consumer of milk, India’s per capita dairy consumption levels are significantly lower than developed countries. India is neither an active importer nor an active exporter in Milk sector. Most of the produced milk is consumed domestically; despite that the eastern part of the country is milk deficient and thus, the industry is to remain demand driven for a long term.

The main challenges faced by the dairy industry are in sourcing and logistics. This is because procurement of the fresh milk is the most crucial element of this business. It is not feasible to procure milk beyond a 200 kilometers radius; because of the perishability of the product. Another challenge is low productivity and yield. For example, New Zealand has three times more productivity than India. The cold storage and supply chain infrastructure bottlenecks are ubiquitous in entire farm sector in India. There is a need to develop these infrastructure facilities at least at tier-3 centers.

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Livestock is emerging an important sector in the economy of India and plays an important role in the socio-economic development of the country. The contribution of dairying sector to the national income is invaluable.

This sector provides insurance against crop failures. This sector helps in increasing the crop production by providing the drag power, organic manure and cash income on a regular basis. Although India ranked first in milk production the productivity of milk in rural areas is very less.

Lack of technological dairy information sources is one of the reasons for low milk production for the farmers of rural areas. The major occupation of the rural people is agriculture and livestock rearing and thus is the major source of income and employment. Dairy sector not only generates income and employment among the farmers but also supplements the varied nutritional requirements of the individual. Livestock rearing is an integral part of rural India.

India is the largest cattle producer in the world and has large animal diversity and is first in buffalo while second in goat production in the world.13 percent of world’s cattle population and 57 percent of world’s buffalo population is found in India

Animals contribute to climate change as they produce methane and carbon dioxide gases but a changing climate is adversely affecting the livestock production and reproduction. There is need to reduce the adverse impact of climate change on the production and reproduction of animals and this is possible through the identification of proper feeds to the animals. Also, there is need to have bulk coolers, refrigeration systems and also to develop the organized markets in the rural areas which further can help in rural development.

The focus should be given to small dairy farmers who lack availability of nutritious feed, timely institutional credits, fodder availability in offseasons of the year, timely quality veterinary care etc. Superior breeds of animals are not available in the rural areas. The rural areas can purchase the superior breeds of animals if institutional credit is provided to them.

There is need to have a proper linkage between the scientist, extension workers, and farmers. The research in livestock production should be according to the socio-economic conditions of the farmers. The major hindrances in dairy sector are animal diseases, lack of fodder and nutritious feed, lack of market access, technical guidelines etc. Attention should be given to these aspects. Dairy technologies should be made by the scientists according to the socio-economic, size of dairy farm, the market approach of the farmers and also the agro-ecological conditions of the region.

The cost of animal production should be reduced for the benefits of dairy farmers. In order to encourage the dairy sector in India, more milk societies should be established in rural India.

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Despite the exponential growth of the dairy industry, India is still facing challenges of poor milk quality, low yield, lack of infrastructure and a fragmented production. A number of infrastructure related bottlenecks are still present in both back-end and front-end supply chain. There are many Opportunities And Challenges in The Indian Dairy Industry.

Dairy products are a major source of cheap and nutritious food to millions of people in India and the only acceptable source of animal protein for a large vegetarian segment of the Indian population, particularly among the landless, small and marginal farmers and women. Dairying has been considered as one of the activities aimed at alleviating the poverty and unemployment, especially in the rural areas in the rain-fed and drought-prone regions. In India, about three-fourths of the population live in rural areas and about 38% of them are poor.

Some challenges are mentioned here:-

Breeding infrastructure and genetics:-

The success of Indian dairy was mostly due to rising number of animals not productivity. When the resources are limited, it is imperative to increase the productivity per animal. There is a high demand for good animal genetics, breeding infrastructure and advance breeding methods such as artificial insemination, embryo transfer etc.

Animal feed and fodder:-

There is an acute and ever-growing shortage of green fodder and good quality feed. Growing trend of high breed animals is creating a huge demand for good quality feed and fodder to cater the dietary requirement of milking animals. Also in order to avoid many health and nutrition-related complications, a prophylactic approach is driving the use of feed pre-mixes.

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Animal health:-

Good healthcare and animal disease diagnostic solutions are• required to address the gap. As above high yielding animals demand extra care and over the years this trend is driving the animal health segment.

Farm mechanization:-

Despite being the country of 1.2 Billion population, there is growing shortage and cost of labor. Farm mechanization is being welcomed by farmers to address the situation.

Cold chain infrastructure:-

There is a lack of required infrastructure of chilling plants and bulk coolers to prevent contamination and spoilage at the village level. This segment is bound to see growth opportunities as the government and private sector is investing heavily in it in order to secure sufficient procurements.

Power availability:-

Many chilling plants suffer due to a shortage of electricity• and do not run optimally leading to poor quality and shelf life of milk. The opportunity within this segment could be solar powered milk chillers.

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Quality testing infrastructure and trained workforce:-

Adequate quality testing infrastructure is not available at milk collection centers. The problem is compounded by the lack of trained manpower to undertake quality testing. At the consumer end, the demand for safe food is emerging fast and thus creating high opportunity.

Processing equipment and food ingredients:-

Growing consumer awareness• and shifting lifestyle are forcing processors to move towards the product innovation and thus a growing demand for high-quality equipment and various food ingredients.

Key Areas of Concern in the Dairy Industry:-

  1. Competitiveness, cost of production, the productivity of animals etc. The demand for quality dairy products is rising and production is also increasing in many developing countries. The countries which are expected to benefit most from an increase in world demand for dairy products are those which have a low cost of production. Therefore, in order to increase the competitiveness of Indian dairy industry, efforts should be made to reduce the cost of production. Increasing productivity of animals, better health care and breeding facilities and management of dairy animals can reduce the cost of milk production. The Government and dairy industry can play a vital role in this direction.
  2. Production, processing and marketing infrastructure If India has to emerge as an exporting country, it is imperative that we should develop proper production, processing, and marketing infrastructure, which is capable of meeting international quality requirements. A comprehensive strategy for producing quality and safe dairy products should be formulated with suitable legal backup.
  3. Focus on buffalo milk-based specialty Dairy industry in India is also unique with regard to availability of a large proportion of buffalo milk. Thus, India can focus on buffalo milk-based specialty products, like Mozzarella cheese, tailored to meet the needs of the target consumers.
  4. Import of value-added products and export of lower value products With the trade liberalization, despite the attempts of Indian companies to develop their product range, it could well be that in the future, more value-added products will be imported and lower value products will be exported. The industry has to prepare themselves to meet the challenges.

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On account of a growing middle class, rising prosperity, changing food habits and level of awareness, the demand of milk and milk products is certainly going to increase on a rapid pace in the Indian market. The future of Indian dairy depends highly upon its ability to improve the backward chain integration and on the growth and competitiveness of emerging dairy sectors.

An increasing magnitude of milk processing capacity is going to put a lot at stake on the procurement of quality milk. In such scenario, there will be a lot of processors investing in developing the backward chain as well as to create cold chain infrastructure. The approach is likely to bring more farmers in the reach of the organized sector.

These developments will drive the entire chain rapidly and are already resulting in a lot of progress. In fact, India’s expanding cooperative and private sector milk-processing enterprises are gradually becoming active in facilitating changes in the current small-scale structure of dairy production, improved animal feeding practices, and gains in productivity and marketing. A lot of innovation is taking place at consumer-end and thus the requirement of new technology, machinery, packaging solutions, food diagnostics and food ingredients is increasing.

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About the author

Rajesh Kumar Singh

I am a Veterinary Doctor presently working as vet officer in Jharkhand gov.
, graduated in 2000, from Veterinary College-BHUBANESWAR. Since October-2000 to 20O6 I have worked for Poultry Industry of India. During my job period, I have worked for, VENKYS Group, SAGUNA Group Coimbatore & JAPFA Group.
I work as a freelance consultant for integrated poultry, dairy, sheep n goat farms ... I prepare project reports also for bank loan purpose.
Email - rajeshsinghvet@gmail.com
Mob- 9431309542