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School nutrition programme & monsoons to spur growth
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Tuesday, 16 January, 2018, 08 : 00 AM [IST]
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Nandita Vijay, Bengaluru
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The dairy industry is of the opinion that the government’s move to extend the National School Milk Nutrition programme, which is being run in some states for now, to all states in the near future together with the impact of the good monsoons in 2017 will give a fillip to the business. Of late, there have been technology transfers, fund infusion, joint venture pacts and events that have helped in maximising the country’s milk production and developing value-added products for exports.
On the demand side as well, the situation is buoyant. With the sustained growth of the Indian economy and a consequent rise in the purchasing power during the last two decades, more and more people today are able to afford milk and dairy products. This trend is expected to continue with the sector experiencing a robust growth in demand in the short and medium run. If the impediments in the way of growth and development are left unaddressed, India is likely to face a serious supply-demand mismatch and it may gradually turn into a substantial importer of milk and milk products.
Dairy products
The products from the dairy industry are milk, UHT milk, flavoured milk, curd, flavoured & frozen yoghurts, probiotic products, lassi, buttermilk, butter, ghee, paneer, cheese, khoya, cream, skimmed milk powder, dairy whiteners, sweet condensed milk, ice cream, whey and dairy sweets.
According to Union minister for agriculture and farmers welfare Radha Mohan Singh, India was the oyster of the global dairy industry, with opportunities galore for the entrepreneurs globally. For the last 15 years, India has been the largest producer of milk in the world (which it still is). This phenomenal increase is attributable to the several measures initiated by the Government of India to increase the productivity of livestock.
The country has made efforts to increase the milk production significantly from 137.7 million tonne in 2013-14 to 164 million tonne in 2016-17. In fact, the milk production increased by 18.81 per cent in 2016-17 when compared to 2013-14. Similarly, the per capita availability of milk increased from 307g in 2013-14 to 351g in 2016-17. The annual growth rate of milk production during the period between 2011 and 2014 was four per cent, which increased to six per cent between 2014 and 2017. The annual growth rate of world milk production has increased by two per cent between 2014 and 2017.
Singh stated, recently, “The National Action Plan Vision-2022 is being prepared to fill the gaps in the infrastructure required to handle the increased coverage and milk production, not only to meet the demand of milk and milk products, but also to fulfil the objective of doubling the farmers’ incomes.”
With regard to products, Sarangdhar R Nirmal, chairman, Prabhat Dairy, pointed out, “Combining technology with consumer expectations, we have strived to deliver nothing short of great quality products.”
Emphasising further on quality, Devendra Shah, CMD, Parag Milk Foods, stated that the dairy industry in India was growing and trying to sprint with the developments globally.
Dairy farming is now evolving from just an agrarian way of life to a professionally managed industry. There is considerable fund infusion into the sector. In December 2017, MilkLane, a dairy supply chain company, has raised Rs 27 crore or $4 million in pre-Series A funding from Pioneering Ventures, Schreiber Foods and ultra-high net worth families. The dairy-tech start-up, which controls end-to-end supply chain that ensures high-quality milk to industrial off-takers and consumers, plans to utilise this capital to expand its network of milk collection centres and strengthen its digital and analytics capabilities in the supply chain. In fact MilkLane was founded by Pioneering Ventures, an incubator and accelerator of projects within the Indian agriculture and food supply chain space.
Gaurav Haran, chief operating officer, MilkLane, explained, “We aim to improve India’s dairy supply chain by applying international quality standards in technology and innovation to the first mile of milk.”
In tune with the current robust scenario, Karnataka Milk Federation (KMF) eyes exponential growth as it plans a slew of infrastructure expansions and new product launches to accelerate its growth in revenues.
KMF’s much-raved about brand Nandini with its 62 products and 250 stock keeping units (SKUs) is recognised for its quality, availability and competitive pricing. In the area of liquid milk sales it has captured 75 per cent of the market.
Among the new production plant initiatives are the setting up of cheese cubes and slices besides paneer unit in Chikaballapur which is designed as a fully automated facility to manufacture 20 metric tonne per day. In Bengaluru, its manufacturing facility is expected to produce 20 tonne cheese and paneer a day.
With regards to success, liquid milk, its highest revenue generator, followed by UHT milk, known as GoodLife, have garnered 20-25 per cent growth with 6 lakh litre being sold across India. This, in fact, is equivalent to the sales of Gujarat Co-operative Milk Marketing Federation’s (GCMMF) Amul brand. “While our present capacity is 6 lakh litre, efforts to touch 10 lakh litre are on the anvil,” stated a KMF representative.
Similarly its ice creams are growing at 15 per cent annum. The curds are seen to generate an average 4-5 per cent growth. Its ghee is clocking a growth of 23 to 24 per cent.
“KMF has made market expansion beyond Karnataka and our pan-India foray is expected to yield positive results,” added the KMF representative.
Factors driving growth
Key factors driving the growth of the dairy sector are the Rs 5 subsidy per litre of milk given for milk processing by Karnataka government. This has enabled the dairy farmers to increase revenues. Further the dairy sector is looking up as a lucrative segment in the Indian agri landscape.
KMF is able to grow at around 14 per cent with 20 lakh litre of procurement per day. There is a situation of surplus milk in the market. KMF converts 7 lakh litre into milk powder which is used for school programmes. “The sales of fresh milk pouches in other parts of the country are Mumbai where it sells one lakh litre per day, followed by Hyderabad with 70,000 litre per day and around 20,000 litre in Chennai,” stated the KMF representative.
Since India reported a good monsoon in 2017, all the states in the country have surplus milk. With the leftover milk, KMF produces bulk products of skimmed milk and butter for which it has tapped major buyers like the cooperative societies of West Bengal, Bihar, Jharkhand and Kerala.
There is also a challenge of low international process in dairy products which deters exports by the federation. However it has managed to get substantial export orders from Qatar and Singapore.
Another breakthrough for KMF is the supplies to the Armed Forces. There are huge supplies for whole milk powder, ghee, cheese and butter.
KMF expects that the infrastructure expansion will give a fillip to its export order and its move to tap newer markets. “All our plants are designed for ISO 22000 standards. We also received a Quality Mark certificate through NDDB from the Union government. This symbol of quality for all our products is an assurance of high standards of production,” asserted the representative.
The representative signs off, “Going forward we expect to increase ad revenue generation from the current 15- 18 per cent. The distribution of milk for school programmes across Karnataka on all 5 days of the week provides the much-needed nutritional supplements for students from class I to X. States like Madhya Pradesh, Andhra Pradesh, Telangana and Gujarat are looking to follow the KMF model. It is gathered that the Prime Minister’s Office too is making plans to make milk supply to all government school students a national programme.”
Meanwhile, according to officials from Mukunda Dairy, the dairy sector in the country is expected to triple production over the next decade. The country is the lowest cost producer of milk and this is a major attraction for global dairies.
On a concluding note, Chetan Hanchate, food consultant, stated that milk-based beverages were an important component of growth. The demand is driven by need for nutrition, lack of time to prepare food, making it necessary to gulp down nutritious, yet, tasty milk. He said, “Since we are the largest producer of milk, we are also reporting high consumption.”
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