Dairying in India

01 March 2017

• Milk production by masses and

not mass production

• Dairying acts as an insurance for

the farmers in case of failure of

crop

• Offers relatively stable stream of

round the year income, ensuring

continuous cash flow

• While the share of agriculture in

GDP is declining, the same for

Livestock remains almost

constant

Indian dairying is based on

the “low input - low output”

model

2

Socio-economic aspects

• 85% percent of India’s farmers are marginal or small. They own only 45 percent of farm land and almost 75 percent of bovines

• Animal holding has been found to be more equitable as compared to land holding

• Studies shows that families owning milch animals in rural areas consume almost three times more milk than the families which are not into dairying

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bovine No. of

Operational

holdings

Operated

area

75%85%

45%

15%10%

24%

8% 4%

21%

2%1%

11%

Marginal+Small Semi Medium Medium Large

Source: Agriculture Census 2011 3

• Generates 5-6% of total rural

employment

• Major source of rural

employment, especially women

employment

• Subsidiary income- contributes

about 12% of rural household

income

• Dairying an instrument for rural

prosperity & change with

gender inclusion

Dairying as a livelihood in India

4

Female bovine ownership in India

1 animal

39%

2 animals

31%

3 animals

14%

4 animals

8%

4+ animals

8%

5

Source of income for rural households

• According to “Situation Assessment Survey”, the livestock sector contributes

significantly to rural income

– About 26 % in case of the poorest households

– Overall it contributes to about 12% of rural income

<= 0.01

(ha)Upto 1 1.01-2.0 2.01-4.0 4.01-10.0 10+ (ha) All sizes

Non-farm business 10 10 8 5 4 4 8

Animal farming 26 14 11 11 8 6 12

Cultivation 1 30 57 69 78 86 48

Wages/ Salaries 64 47 24 15 10 3 32

0%

20%

40%

60%

80%

100%

6

India’s share in global milk production

14.1%

14.0%

14.0%14.4%

14.7%

15.0%

15.7%

15.9%

16.3%

16.8%

16.7%17.4%

17.9%

18.3%

12%

13%

14%

15%

16%

17%

18%

19%

20%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

7

Growth in milk production CAGR%

World 2.2% (2000 to 2015)

India 4.5% (2000-01 to 2015-16)

Milk Production - India

31.6

53.9

80.6

121.8

155.5

0

20

40

60

80

100

120

140

160

180

1980-81 1990-91 2000-01 2010-11 2015-16

Milk production

2.232.67

4.12

6.74

0

1

2

3

4

5

6

7

8

80-81 to

90-91

90-91 to

00-01

00-01 to

10-11

10-11 to

15-16

Average annual increase in

milk production - million

tonnes

8

India : milk production volume and growth

• World’s largest milk producer

– From 17 Million MT in 1951-52 to 156 Million

MT in 2015-16

– From deficit to self sufficiency

• Over last 15 years

– Milk production growing @ 4.5%

– Per capita availability growing @ 2.8%

• Average annual incremental volume for last 5

years over 6 million tonnes

• Rising share in global milk production

• Increasing contribution of milk to economy

• Rising share of productivity in production

9

Milk’s contribution to economy

• Value of milk output ( ₹ 4923

billion) in India is now more than

the combined value of Paddy ( ₹

2310 billion) & Wheat ₹ 1296

billion )

• Livestock contributes about 25%

of agriculture & allied GDP

• Milk accounts for about 65% of

total value of output from

livestock

90-

91

00-

01

10-

11

14-

15

Milk 282 964 2638 4923

Paddy 253 656 1523 2310

Wheat 151 438 1028 1296

0

1000

2000

3000

4000

5000

6000

Value of output : Rs billion

at nominal prices

10

Milk consumed/ used

in production areas itself

1960 lakh kg/day ~ 46%

Surplus milk sold from

production areas

2300 lakh kg/day ~ 54%

Domestic milk production

4260 lakh kg/ day

Surplus handled by:

Unorganised SectorOrganised Sector

(Coop + Private)

1416 lakh kg/ day 884 (442+442) lakh kg/ day

~ 62% of surplus ~ 38% of surplus

11

% Household reported milk consumption

62

6668

71

767879

80

8385 85 85

50

55

60

65

70

75

80

85

90

87-88 93-94 99-2K 04-05 09-10 11-12

Rural

Urban

Source: Consumer Expenditure Surveys, NSSO, GoI12

Share of milk in food basket

15% 15% 15% 16%19%

63%59%

55% 54%

49%

18% 18% 19% 19% 20%

55%

48%

43% 41%39%

0%

10%

20%

30%

40%

50%

60%

70%

1993-94 1999-2K 2004-05 2009-10 2011-12

Rural

Urban

Rural

Urban

Source: Consumer Expenditure Surveys, NSSO, Govt. of India

% Food expenditure to total monthly household expenditure

% Milk expenditure to food expenditure

13

Factors influencing milk demand

Rising disposable income

Urbanization

Changing food habits

Rising population

Export opportunities

Demand

Drivers

14

Urbanisation

216

286

377

626

26%

28%

31%

42%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

100

200

300

400

500

600

700

1991 2001 2011 2030

Urb

an

izati

on r

ate

(%

)

Urb

an

popula

tion

(m

illi

on

Nos.)

Urban Population Urbanization rate

250

15

Growth in per capita income

16

Indian Dairy Market

According to IMARC estimates of

Indian Dairy market for 2014:

• Estimated dairy market size

was INR 5,030 billion (84

billion US$)

• Liquid milk accounts for 52% of

total dairy market, followed by

Ghee (12%)

• Indian dairy market was

dominated by Unorganized

sector (80%)

• Market grew at 15% during

2010-2014, expected to reach

values worth INR 11,543 billion

(US$ 192 billion) till 2020* UHT milk, Buttermilk, Flavoured milk, Lassi, Cheese, Probiotic Dairy

Products, Flavoured & frozen yoghurt

(in billion INR)

Category Sale: 2014Projected sale:

2020

Liquid milk (A) 2621 6068

Dairy products (B) 2408 5475

- Ghee 618 1367

- Khoa 456 949

- Dairy sweets 383 893

- Paneer 293 654

- Curd 216 493

- Butter 168 382

- Ice cream 89 220

- Dairy whitener 54 114

- Skimmed Milk Powder 50 113

- Others* 81 290

Total(A + B) 5030 11543

17

Challenges for small holder dairy sector

Farm level challenges

• Low Productivity of Indian bovine

• Imbalanced feeding to animals

• Access of milk producers to organised sector

Processing & marketing level challenges

• Lack of transport infrastructure, cold chain facilities and refrigerated vehicles

restrict reach of quality dairy products to larger markets

• Large number of small & medium Milk Cooperatives which require immediate

expansion / up-gradation of their milk processing facility

• Maintaining profitable growth with pressure of rising input cost

• Ensuring quality of milk and milk product remains an issue due to high

presence of unorganized sector18

Thank you

19