Dairy to India
Trends and opportunities
India is the largest milk producing country in the world, with production 156 million tonnes of milk produced in 2015-16. Only 15 per cent of milk production is processed by the organised sector (milk cooperatives and private processors).
As the demand for value-added milk products grows (the market catered to by the organised milk processing sector), there will be significant demand for milk production. The weak link in ensuring India’s future self-sufficiency in liquid milk is the national average of milk yield per animal - around 1000 litres per animal per year.
Dairy farming in India is witnessing significant change and there are a number of opportunities for Australian services and technologies in this sector.
While the backbone of milk production in India is the cooperative system, aggregating millions of small holding dairy farmers (the national stock average is two to three animals per farmer), the sector is seeing a rapid growth in commercial feedlot/barn fed dairy farms (50 to 2000 animal farms), driven by the entry of private sector players such as progressive farmer associations, entrepreneurs and corporates.
The dairy sector is moving from a low input-low output dairy production model, to a medium to high input-high output model. The focus of the dairy industry is now on improving milk yield per animal, as the animal to land ratio has reached saturation, as well as improvements to milk quality standardisation and processing.
This change is driven by the increasing market demand for milk, growing at an average seven per cent annually while milk production has stagnated at four per cent per year-on-year.
The dairy industry in India is faced with a number of challenges in achieving its milk security: including:
- The need to improve dairy cattle genetics due to current poor levels of fertility. India is short of frozen semen by close to 60 million doses each year.
- There is poor quality and varietal issues with fodder, silage and feed solutions. Industry estimates put shortage in green fodder by 60 per cent.
- There is an absence of appropriately skilled manpower to support the growth of commercial dairy farms. There are no professional farm managers in India. Veterinarians are doubling up as farm managers.
- Currently there is poor or non-existent support services for animal care, disease control and management.
The state of Punjab in North India continues to lead in milk production followed by the states of Haryana, Rajasthan, Himachal Pradesh and Gujarat.
India is home to the largest livestock population in the world with over 250 million cows and buffaloes. Industry stakeholders acknowledge that the land to animal ratio has reached saturation and there is little room to continue with the current approach of increasing herd size to increase milk volumes. The focus is therefore to move towards improving the yield per animal.
In this context, India has embarked on a dairy development initiative at a national scale, titled the National Dairy Plan, with an investment of over A$400 million. The focus is to enhance milch animal productivity through improved genetics and feed. Expertise in genetic improvement and selective breeding, animal care, health and housing, nutrition (fodder/grass types and silage) form the core deliverables of this development plan.
According to the Indian National Dairy Research Institute, the future of Indian dairy lies in adopting an intensive input – high output model of dairy farming. This is echoed by industry think tanks such as the agribusiness division of YES Bank (FASAR) and industry chambers such as the Associated Chambers of Commerce India (ASSOCHAM), which foresee integrated commercial dairy farms as a supplementary model to the existing cooperative system. This will address the widening gap between demand and supply of milk in the country.
Opportunities for integration include:
- large scale dairy farms
- a hub and spoke model consisting of satellite farms feeding into one anchor farm
- a group of progressive dairy farmers supplying to one central milk processor through a symbiotic arrangement
- a community dairy system under a cooperative producer company with shared ownership of animal housing, breeding, feeding and milking.
The underlying principle of these models is economies of scale through large herd management.
Opportunities for Australian dairy industry in India include export of:
- management skills, technologies and services for feedlot dairy farms: training of farm managers and farm hands, cattle nutrition, breeding, rearing, fertility and disease management, veterinary skills and services, milk quality and safety
- cattle nutrition: fodder seeds, hay and allied products, feed formulation
- dairy cattle genetics.
There is a significant growth in the establishment of modern commercial dairy farms across India. These modern dairy farms are located within a hundred kilometre radius of major urban centres. Their marketing pitch is unadulterated, hygienic, quality milk, with some taking a step further, to guarantee pure cow milk. The businesses supply direct from the farm to the customer’s door step with the milk priced at a premium. The revenue model is low volume – high margins, up to 40 per cent over existing milk products in the mark (through introducing efficiencies in the supply chain, and reducing distribution and marketing overheads).
The owners of these intensive dairy farms are progressive farmers, entrepreneurs and corporates. Herd sizes on these farms range from 300 to 2,000 animals. Many of these ventures have plans to replicate their farm operation across other major Indian cities, adopting a model of standalone operations for each geography.
The impact of rapid growth in this model is significant, as a lack of capacity and capability within the industry to cater and support this expansion could have major financial impacts on existing ventures. Additionally, as the urban demand for quality milk from these farms is already outstripping the supply, it places pressure on operators to expand quickly.
Limitations restricting further expansion of the sector include lack of industry specific skilled human resource, (i.e. the absence of dairy farm managers), deficit in supply of green fodder – industry estimates peg the national average deficit to over 40 per cent. Consultants in India are primarily dairy technologists, or representatives of international equipment manufacturers such as DeLaval and Westfalia rather than professionals with relevant expertise and experience in farm production, e.g. farm managers, nutritionists.
There is limited awareness about Australian dairy capabilities in India. Stakeholders in the Indian dairy sector are more exposed to the dairy sector in North America, Western Europe (Holland, Germany) and Israel.
Imported cattle genetics, semen and breeding bulls are pre-dominantly from Canada and Western Europe.
NDDB has a partnership with the Wageningen University, Holland for short term training programs on dairy production and management, for extension officers and management officials from the state milk marketing federations.
Israel's Agency for International Development Cooperation (MASHAV) and the State Government of Haryana in India signed an agreement in 2015 for setting up an Indo-Israeli Centre of Excellence in Dairy. According to industry news, the centre of excellence is aimed at training farmers about Israel's technology on raising the productivity of dairy sector in India.
Tariffs, regulations and customs
- As agriculture related product trading has the potential to affect the biosecurity of a country, India’s import regulations for agriculture products (animal and plant) are governed by a number of agencies.
- Animal products imports are regulated by the Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture and Farmers Welfare, Government of India.
- Import of plant products are regulated by the Indian Plant Quarantine Authority. Unprocessed plant products new to the country would require a Pest Risk Analysis prior to grant of import permit.
- Australia has a protocol with India for export of frozen semen and frozen (in-vivo) embryos for dairy cattle.
Links and industry contacts
Directorate of Plant Protection, Quarantine & Storage, Government of India
Indian import regulations for livestock (Ref: Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture, Government of India)
National Dairy Development Board
National Dairy Plan I
Progressive Dairy Farmers' Association Punjab
Progressive Dairy Farmers’ Association Tamil Nadu
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