Since 1998, India’s dairy industry is one of the fastest-growing in the world, with sustained growth in the availability of milk and milk products. The sector contributes almost 50% of the global increase in milk production. As a nation, we are now completely Atamanirbhar in dairy products since we produce enough to fulfill 100% of the country’s demand for milk and dairy products.
A significant part of the rural economy, milk production is an essential source of income for smallholder farmers in the country. The dairy sector plays a crucial role in linking rural households to consumers in the domestic and international markets.
Growing milk processing from 25% to 40% of production
According to reports, India is currently producing 188 million tons of milk and aims to increase milk production to 330 million tons by 2025. The sector has significant growth potential and investment opportunities for the private sector. At present, only 20-25% of milk is processed, and the government’s roadmap for 2025 is to increase this to 40% of the milk produced. Seeing the headroom, the government wants the industry to double its processing capacity from 53.5 million tons to at least 108 million tons by 2025.
Crisis into an opportunity
The country’s dairy industry was facing headwinds before the onset of the Covid-19 pandemic. Initial hiccups came in the form of operational challenges such as transportation of material, shortage of workforce, milk procurement, and workforce restrictions. After the initial glitches, it was able to turn the crisis into an opportunity as the supply and milk consumption rose, helping 1.7 crore farmers.
Amidst the chaos of the pandemic and ensuing lockdowns, a hand full of industries still made a profit, with the Indian dairy industry being one of these. According to reports, the demand for packed milk and other dairy products showed an uptick of 15-20%.
During the lockdown period, Amul procured an additional 35 lakh liters of milk per day, paying an extra Rs 800 crore to the rural milk producers. This was when many industries were shut entirely, and the weakened supply chain severely constrained the milk business. Amul managed to turn this glut in procurement into an opportunity.
The Gujarat Co-operative Milk Marketing Federation (GCMMF), which markets the Amul branded milk and dairy products, reported a 17% increase in turnover to Rs 38,542 crore for the financial year 2019-20. “The group turnover of GCMMF sold under the Amul brand is exceeding Rs 52,000 crores (US$ 7.0 billion). GCMMF aims to achieve a group business turnover of Rs 1 lakh crore by 2024-25,” Amul said in its 46th Annual General Meeting on 18 July 2020.
Dairy infrastructure development fund
On 16 July 2020, Union Minister of Fisheries, Animal Husbandry and Dairying Giriraj Singh launched the Implementation Guidelines for Animal Husbandry Infrastructure Development Fund (AHIDF). The AHIDF aims to improve the country’s capabilities and production capacity, including the processing and packaging of dairy products. At the same time, digital technologies are assisting farmers in investing in input cost efficiency, disease prevention, breed improvement, nutrition requirements, feed cost reduction, quality control, and price realization.
According to Dr R S Sodhi, managing director, GCMMF, the announcement of Rs 15,000 crore Animal Husbandry Infrastructure Development Fund (AHIDF) for the establishment of supply chain and dairy plants for enhancing the dairy and milk processing capacity are very important for the industry. He explains in detail, “This fund can be used to build around 4 to 5 crore liters (40 to 50 million liters) of extra capacity. Extra capacity in the organized dairy sector automatically means more jobs, livelihood for more people, especially in rural India. These extra five crore liters of milk collected and processed by the organized dairy industry will offer a livelihood to approximately 30 lakh people in rural India. This is the need of the hour when hundreds of thousands of people have migrated back to their villages from urban centers.”