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Infrastructure needs to keep up with India’s dairy production gains

By RJ Whitehead , 23-Apr-2014

Infrastructure needs to keep up with India’s dairy production gains

Milk production in the world’s biggest dairy producing country continues to grow quickly, with India seeing an increase of around 19% in the five years from 2006 to 2010.

According to a study by the Associated Chambers of Commerce and Industry of India (Assocham), milk production crossed the 120m tonne mark in 2010 even though per-capita milk availability in India, at 252g per person per day falls below the global average of 279g.

The state of Andhra Pradesh recorded the highest growth in terms of both milk production and per-capita availability with a growth rates of over 41% and about 36% respectively during study period. However, AP still ranked third in terms of milk production with over 1.1m tonnes of milk produced annually.

Rajasthan, at 28%, Kerala (24.8%), Karnataka (24%) and Gujarat (23.7%) make up the top five states for growth in milk production.

Supply chain woes

But with increasing productivity comes the need for an enhanced supply chain, Assocham noted.

It is imperative for India’s dairy industry to streamline its value chain processes and integrate the smallholder dairy producers into the processing value chain in order to improve the overall performance of the industry, more so as they possess inherent strengths like low production costs, lower liabilities and limited liquidity risk,” said the study.

Moreover, a lack of knowledge and technical know-how, poor access to support services, limited access to credit and poor milk quality also limit the ability of smallholder dairy producers to take advantage of market opportunities.

“Growing at a compounded annual growth rate of over 4%, milk production in India is expected to rise to about 177m tonnes by 2019-2020, and that would help in meeting the projected demand of 150m tonnes by 2016-17, which has been envisaged in National Dairy Plan phase one,” said DS Rawat, national secretary general of Assocham.

The increase in the income level of average Indians is being accompanied by a change in their food baskets as the monthly per-capita consumption expenditure on milk and milk products in both rural and urban areas has grown significantly at about 92% and 72% respectively.

Production pockets

Uttar Pradesh commands highest share of over 17% in total milk production, followed by Rajasthan (11%), Andhra Pradesh (9%), Punjab and Gujarat (8% each). The top five states have a combined share of over 53%.

Concentration of milk production in some pockets, together with the high cost of transportation, has led to rising disparity among states in terms of per-capita milk availability,” the study added.

It also warned of the urgent need to build up strategies to increase competitiveness in all segments of dairy chain. “For promotion of the dairy sector in India, emphasis now needs to be more on how to involve and encourage the village population into proactively adopting dairy industry as a viable alternative to the agricultural activity.”

The chamber advised producers to strengthen the economic viability of dairy farms, increase the link between rural production areas and urban markets and adopt packaging to meet the needs of the poor as part of a long-term growth strategy for the dairy sector.