1

Project on-

Index Sr.No. Topic 1 2 ! % 5 + $ ' 1. Indian Dairy Industry- In the news Indian Dairy Industry- A Profile Indian Dairy Industry- "ac#ground Production of &il# in India (orld)s &a*or &il# producers ,-port Potential for Indian Dairy Products India)s e-ports of &il# products (hat does the Indian Dairy Industry has to /ffer to 0oreign In1estors2 Strategies and 3eco&&endations for Increasing ,-ports "i4liography Page No. 5 $ ' ' 1. 11 12 1+ 1

Indian Dairy Industry- In the news

India eyes larger e-ports for &il# products. India5 the world)s largest &il# producer5 is gearing up to capitali6e on the rising glo4al prices of &il# products while o1erco&ing nontariff trade 4arriers in de1eloped nations with 7uality certification. !

The re1i1al of the su&&er &onsoon5 which accounts for $. percent of the rainfall in the country5 has further i&pro1ed prospects for the Indian dairy sector. 8India)s dairy sector has 4een recording four to fi1e percent annual growth as against the glo4al a1erage of around one percent. The &onsoon this year should help India record another good year in dairy sector58 said 3. S. Sodhi5 general &anager 9&ar#eting: of ;u*arat <ooperati1e =il# =ar#eting 0ederation 9;<==0:. The largest Indian e-porter in the cooperati1e sector5 ;<==0 under the A&ul 4rand is eyeing good opportunity this year. 8(ith the (orld Trade /rganisation rules 4eing i&ple&ented 4y de1eloped countries5 there has 4een so&e reduction in su4sidies leading to a rise in glo4al prices. The e-port &ar#et is 4eginning to loo# &ore lucrati1e. In the co&ing &onths5 we would 4e a4le to e-port &ore58 Sodhi told IANS. 8This year the glo4al price of &il# powder is al&ost dou4le that of last year ha1ing risen fro& >15%..->155.. a tonne of s#i& &il# power to >251.. a tonne5 which is 3s.25 a #g e-tra. ?ast year the do&estic de&and was &ore5 so we turned down so&e e-port orders. "ut this year the production has grown58 said Sodhi. 0ro& around 3s.+.. &illion of e-ports last year5 ;<==0 is e-pecting 8not less than 3s.1 4illion worth of e-ports in 2..%-.58. In the e-port &ar#et5 India)s dairy products are sold &ainly in South Asia 9"angladesh5 Sri ?an#a: and the =iddle ,ast5 while so&e 7uantities are lso sold in the @S and other de1eloped countries. S#i& &il# powder5 whole &il# powder5 cheese and 4utter fat are &a*or dairy co&&odities that are internationally traded. Due to high tariff 4arrier in ,urope and the @S coupled with stringent sanitary and phytosanitary &easures5 including ani&al health and residues of conta&inants5 India has not 4een a4le to fully capitalise on her e-port co&petiti1eness5 said Ani&esh "aner*ee5 president of the Indian Dairy Association. 8To o1erco&e the non-tariff trade 4arriers5 India has de1eloped its own certification standard and under the ,-port Inspection <ouncil has set in the &echanis& for sur&ounting the entry le1el 4arriers58 said "aner*ee. The e&phasis on &il# 7uality and shift towards &echanisation and processing has seen a steady increase in Indian e-ports5 which has risen fro& 25! $.2% tonnes 1alued at 3s.1!!.' &illion in 1'' -'$ to 2%5 %.1! tonnes 1alued at 3s.1.$2 4illion.

8In 2..!-.%5 India)s &il# products e-ports further rose to around !.5... tonnes. (ith the reduction in su4sidies and international prices going up5 Indian products are 4eco&ing 1ery co&petiti1e58 said "aner*ee. 8In ter&s of 1olu&e of &il# produced in India5 the e-ports constitute an insignificant proportion of less than half a percent of national production58 said state-owned National Dairy De1elop&ent "oard 9NDD":5 which o1erseas the operations of the cooperati1e sector. This is essentially 4ecause of the increasing do&estic de&and for &il# and &il# products caused 4y rising inco&e5 ur4anisation and high-inco&e elasticity. (ith India)s &il# production reaching $$ &illion tonnes5 the per capita a1aila4ility of &il# in the country has increased fro& 1. gra&s in 1' . to 22+ gra&s in 2..%. This year India)s &il# production is e-pected to reach '1 &illion tonnes with the spectre of drought dissipating. 8The co&petiti1e ad1antage of &il# production in India is fairly good. This is despite the fact that &il# production is dispersed and pursued alongside crop production. There is enough fund flow in &il# processing sector these days as cooperati1es are gearing up to face glo4al co&petition of 7uality dairy products58 the NDD" said.

Indian Dairy Industry- A Profile

Today5 India is )The /yster) of the glo4al dairy industry. It offers opportunities galore to entrepreneurs worldwide5 who wish to capitali6e on one of the world)s largest and fastest growing &ar#ets for &il# and &il# products. A 4agful of )pearls) awaits the international

dairy processor in India. The Indian dairy industry is rapidly growing5 trying to #eep pace with the galloping progress around the world. As he e-pands his o1erseas operations to India any profita4le options await hi&. Ae &ay transfer technology5 sign *oint 1entures or use India as a sourcing center for regional e-ports. The li4erali6ation of the Indian econo&y 4ec#ons to =N<)s and foreign in1estors ali#e. IndiaBs dairy sector is e-pected to triple its production in the ne-t 1. years in 1iew of e-panding potential for e-port to ,urope and the (est. =oreo1er with (T/ regulations e-pected to co&e into force in co&ing years all the de1eloped countries which are a&ong 4ig e-porters today would ha1e to withdraw the support and su4sidy to their do&estic &il# products sector. Also India today is the lowest cost producer of per litre of &il# in the world5 at 2 cents5 co&pared with the @.S) +! cents5 and CapanBs >2.$ dollars. Also to ta#e ad1antage of this lowest cost of &il# production and increasing production in the country &ultinational co&panies are planning to e-pand their acti1ities here. So&e of these &il# producers ha1e already o4tained 7uality standard certificates fro& the authorities. This will help the& in &ar#eting their products in foreign countries in processed for&. The ur4an &ar#et for &il# products is e-pected to grow at an accelerated pace of around !!D per annu& to around 3s.%!55.. crores 4y year 2..5. This growth is going to co&e fro& the greater e&phasis on the processed foods sector and also 4y increase in the con1ersion of &il# into &il# products. "y 2..55 the 1alue of Indian dairy produce is e-pected to 4e 3s 1.5..5... &illion. Presently the &ar#et is 1alued at around 3s 5..5...&n.

Indian Dairy Industry- Background

India with 1!%&n cows and 125&n 4uffaloes has the largest population of cattle in the world. Total cattle population in the country as on /cto4er).. stood at !1!&n. =ore than

fifty percent of the 4uffaloes and twenty percent of the cattle in the world are found in India and &ost of these are &ilch cows and &ilch 4uffaloes. Indian dairy sector contri4utes the large share in agricultural gross do&estic products. Presently there are around .5... 1illage dairy cooperati1es across the country. The cooperati1e societies are federated into 1 . district &il# producers unions5 which is turn has 22-state cooperati1e dairy federation. =il# production gi1es e&ploy&ent to &ore than 2&n dairy far&ers. In ter&s of total production5 India is the leading producer of &il# in the world followed 4y @SA. The &il# production in 1'''-.. is esti&ated at $&n =T as co&pared to %.5&n =T in the pre1ious year. This production is e-pected to increase to $1&n =T 4y 2...-.1. /f this total produce of $&n cows) &il# constitute !+&n =T while rest is fro& other cattle. (hile world &il# production declined 4y 2 per cent in the last three years5 according to 0A/ esti&ates5 Indian production has increased 4y % per cent. The &il# production in India accounts for &ore than 1!D of the total world output and 5 D of total Asia)s production. The top fi1e &il# producing nations in the world are India5 @SA5 3ussia5 ;er&any and 0rance. Although &il# production has grown at a fast pace during the last three decades 9courtesyE /peration 0lood:5 &il# yield per ani&al is 1ery low. The &ain reasons for the low yield are ?ac# of use of scientific practices in &ugged Inade7uate a1aila4ility of fodder in all seasons. @na1aila4ility of 1eterinary health ser1ices.

Production of milk in India

Production in million MT

90 80 70 60 50 40 30 20 10 0
19 88 -8 9 19 89 19 9 0 90 -9 1 19 91 -9 2 19 92 -9 3 19 93 -9 4 19 94 19 9 5 95 -9 6 19 96 -9 7 19 97 -9 8 19 98 19 9 9 99 -0 0 20 00 -0 1

Years

World's major milk producers

<ountry

1'' -'$

1''$-''

2..%-2..5

India @SA 3ussia ;er&any 0rance 90igures in =illion =T:

1 1 !% 2 2%

%.5 1 !! 2 2%

$+ 5 !' 2' !!

xport Potential for Indian Dairy Products

India has the potential to 4eco&e one of the leading players in &il# and &il# product e-ports. ?ocation ad1antageE India is located a&idst &a*or &il# deficit countries in Asia and Africa. =a*or i&porters of &il# and &il# products are "angladesh5 <hina5 Aong Fong5

Singapore5 Thailand5 =alaysia5 Philippines5 Capan5 @A,5 /&an and other gulf countries5 all located close to India. ?ow <ost of ProductionE =il# production is scale insensiti1e and la4our intensi1e. Due to low la4our cost5 cost of production of &il# is significantly lower in India. <oncerns in e-port co&petiti1eness areE 1: GualityE Significant in1est&ent has to 4e &ade in &il# procure&ent5 e7uip&ents5 chilling and refrigeration facilities. Also5 training has to 4e i&parted to i&pro1e the 7uality to 4ring it up to international standards. 2: Producti1ityE To ha1e an e-porta4le surplus in the long-ter& and also to &aintain cost co&petiti1eness5 it is i&perati1e to i&pro1e producti1ity of Indian cattle. There is a 1ast &ar#et for the e-port of traditional &il# products such as ghee5 paneer5 shri#hand5 rasgolas and other ethnic sweets to the large nu&4er of Indians scattered all o1er the world According to Directorate ;eneral of <o&&ercial Intelligence and Statistics 9D;<IS:5 Fol#ata5 India e-ported dairy products worth @S > !5 &illion in 2..!-.%. Asian &ar#ets are the &a*or destinations for Indian dairy products accounting for nearly one-third of total e-ports. =a*or Asian &ar#ets for Indian dairy products include @A,5 "angladesh5 Nepal5 "hutan5 He&en and Fuwait. =a*or e-port ite&s are &il# and crea& in concentrated for& followed 4y 4utter and fat. India also e-ported dairy ite&s li#e 4utter&il# I curd5 whey5 &il# and crea& not in concentrated for& and cheese5 al4eit negligi4le 1olu&e. IndiaBs e-ports of &il# in concentrated and sweetened for& was 1alued at @S > 2. &illion in 2..2 and accounted for a share of ..15D in AsiaBs total i&ports 9of @S > 1. 4illion:. Si&ilarly5 India e-ported whey 1alued at a4out @S > 1.2 &illion in 2..2 as against the total Asian i&port &ar#et of @S > 2'1 &illion 9..%1D:. Thus5 there are pro&ising opportunities for e-porting dairy products in Asian &ar#ets. As regards e-port potential of fresh &il# and crea& 9containing fat upto +D: to Sri ?an#a5 the study o4ser1ed that the i&port 4y Sri ?an#a was low at @S > ..21 &illion in 2..2. The total e-ports of the sa&e product 4y India to the whole world were also low 1alued at @S > ...$ &illion5 in the sa&e year. (hile IndiaBs e-ports of fresh &il# and crea& to Sri ?an#a was negligi4le5 the i&ports 4y Sri ?an#a ha1e 4een &ainly fro& Australia and New Jealand. Aowe1er5 efforts could 4e &ade to e-port Indian fresh &il# to Sri ?an#a ta#ing cost ad1antages in transportation. '

India's exports of milk products

What does the Indian Dairy Industry has to !ffer to "oreign In#estors$

1.

India is a land of opportunity for in1estors loo#ing for new and e-panding &ar#ets. Dairy food processing holds i&&ense potential for high returns. ;rowth prospects in the dairy food sector are ter&ed healthy5 according to 1arious studies on the su4*ect. The 4asic infrastructural ele&ents for a successful enterprise are in place. Fey ele&ents of free &ar#et syste& 3aw &aterial 9&il#: a1aila4ility An esta4lished infrastructure of technology Supporting &anpower

An entrepreneur)s participation is li#ely to pro1ide attracti1e returns on the in1est&ent in a fast growing &ar#et such as India5 along with an e-port potential in the =iddle ,ast5 Singapore5 =alaysia5 Indonesia5 Forea5 Thailand5 Aong Fong and other countries in the region. A&ong se1eral areas of potential participation 4y N3Is and foreign in1estors5 the following list outlines a few pro&ising opportunitiesE

"iotechnologyE Dairy cattle 4reeding of the finest 4uffaloes and hy4rid cows. =il# yield increase with reco&4inant so&atotropin. 3eco&4inant chy&osin5 accepta4le to 1egetarian consu&ers. Dairy cultures5 pro4iotics5 dairy 4iologics5 en6y&es and coloring &aterials for food processing. 0er&entation deri1ed foods and industrial products alcohol5 citric acid5 lysine5 fla1or preparations5 etc. "iopreser1ati1e ingredients 4ased on dairy fer&entation5 1i6.5 Nisin5 pediococcin5 acidophilin5 4ulgarican contained in dairy powders. DairyIfood processing e7uip&entE Potential e-ists for &anufacturing and &ar#eting of cost co&petiti1e food processing &achinery of world-class 7uality.

11

0ood pac#aging e7uip&entE /pportunities lie in the &anufacturing of 4oth &achinery and pac#aging &aterials that help de1elop 4rand loyalty and a clear edge in the &ar#eting of dairy foods. Distri4ution channelsE 0or refrigerated and fro6en food distri4ution5 a world class cold chain would help in pro1iding 7uality assurance to the consu&ers around the region. 3etailingE There is scope for standardi6ing and upgrading food retailing in &a*or &etropolitan cities to &eet the shopping needs of a 1ast &iddle class. This area includes grocery stores of ,uropean and North A&erican 7uality5 warehousing and distri4ution. Product de1elop&entE Dairy foods can 4e &anufactured and pac#aged for e-port to countries where Indian food en*oys 4asic acceptance. The &anufacturing &ay 4e carried out in contract plants in India. An ption to &ar#et the products in colla4oration with local esta4lish&ents or entrepreneurs can also 4e e-plored. Products e-hi4iting potential include typical indigenous dairy foods either not a1aila4le in foreign countries or products whose authenticity &ay 4e 7uestiona4le. ;ula4*a&uns5 "urfi5 Peda5 3asagollas5 and a host of other Indian sweets ha1e good 4usiness prospects. Products typically foreign to India 4ut indigenous to other countries could also 4e de1eloped for e-port. Such products can 4e &anufactured in retail pac#age si6es and could 4e produced fro& &il# of sheep5 goats and ca&el. <ertain products are characteristically produced fro& &il# of a particular species. 0or e-a&ple5 0eta cheese is used in significant tonnage5 in Iran. Sheep &il# is traditionally used for authentic 0eta cheese. Accordingly5 India)s goat and sheep herds can 4e utili6ed for the &anufacture of such authentic products.

Ingredient &anufactureE

12

,-port &ar#ets for co&&odities li#e dry &il#5 condensed &il#5 ghee and certain cheese 1arieties are well esta4lished. These ite&s are utili6ed as ingredients in foreign countries. These &ar#ets can 4e e-panded to include 1alue-added ingredients li#e aseptically pac#aged cheese sauce and dehydrated cheese powders. <heese sauceE <anned cheese sauce is &ade fro& real cheese to which &il#5 whey5 &odified food starch5 1egeta4le oil5 colorings and spices &ay 4e added. <heese sauce is useful in #itchens for the preparation of o&elet5 sandwiches5 entrees5 and soups. In addition5 cheese sauce is used as a topping on potatoes and 1egeta4les and &ay 4e incorporated in pasta dishes. <heese powdersE <heese powders are for&ulated for dusting or s&earing of popular snac#s li#e potato chips5 crac#ers5 etc. They i&part fla1or and &ay 4e 4lended with spices. (ith the glo4ali6ation of food ite&s5 an opportunity should open up for food ser1ice and institutional &ar#ets. Technology-dri1en &anufacturing unitsE These plants would fulfil an essential need 4y pro1iding a centrali6ed and speciali6ed facility for hire 4y the units which cannot *ustify capital in1est&ent 4ut do need such ser1ices. Potential areas for state-of-the-art contract-pac# units &ay concei1a4ly speciali6e in cheese slicing5 or dicing line5 cheese pac#aging5 4utter printing5 and aseptic pac#aged fluid products. Training centers for continuing educationE N3Is could set up technology transfer and updating centers for conducting se&inars and wor#shops - catering to the needs of wor#ers at all le1els of the dairy industry. Aere technical5 &ar#eting and &anage&ent topics can 4e offered to ensure that the &anpower continues to ac7uire the latest #now-how of their respecti1e fields. The entrepreneurs need powerful tools to i&ple&ent their plans. Appropriate in1est&ent and in1ol1e&ent 4y N3Is can ser1e as a catalyst for India)s dairy food industry leading to e-ploration of usiness potential in do&estic and e-port trade. 3is# factors &ust 4e identified and &anaged 4y in-

1!

depth study of chosen areas so that chances of rewards are &a-i&i6ed under the current li4erali6ation cli&ate.

So&e of the &a*or dairy products &anufacturers in the country

%trategies and &ecommendations for Increasing xports

1%

9"y ,KI= "an#: Aigher professionalis& could 4e i&parted in rearing5 &il#ing as also handling during distri4ution of &il#. ?essons could 4e learnt 4y indi1iduals and s&all dairy far&s fro& the cooperati1e sector5 which has &anaged to i&part so&e a&ount of professionalis& in its operations. Se1eral areas in the dairy industry could 4e strengthened 4y induction of state-of- heart technologies5 transferred fro& other dairy &a*ors of the world. /perational efficiencies are re7uired5 not only to i&pro1e yields 4ut also to reduce waste and &ini&i6ation of losses in fat5 protein during &il# processing.

Bi'liography
15

1: ,-port =ar#eting 4y- Acharya L Cain 2: India ;uide 2..! !: 3"I "ulletin

We'sites
1: www.indiadairy.co& 2: www.e-i&4an#.co& !: www.indiane-press.co&

1+