The Road to India’s Dairy Excellence Dreams

The recently concluded 49th Dairy Industry Conference at Gandhinagar was a congregation and a simultaneous celebration of the Indian Dairy Industry’s best and brightest. After 27 years, Gujarat hosted the annual gathering, which took place from March 16–18, 2023.

The conference was bookended by an inauguration by Shri Parshottam Rupala, Minister of Fisheries, Animal Husbandry and Dairying, and the Indian Dairy Summit in the presence of Union Home and Cooperation Minister Shri Amit Shah. These highest-level policy makers along with the Dairy Industry's top executives celebrated the achievements and laid down the ambitions for dairy’s future. It was apt to the conference’s central theme: ‘India: Dairy To The World: opportunities and Challenges’.

India just celebrated 75 years of independence, and a story of India's development would be lacking without mentioning its dairy industry. The White Revolution, led by Dr Verghese Kurien and many others, pulled our country out of a milk deficit in the 1970s to become the world’s largest milk producer for several years in a row. To say that dairy farming has increased dramatically in India would be an understatement. In rural India, it has evolved from a simple supplement to agriculture to a tool for empowerment.

India currently produces 23% of the world’s milk, and Shri Amit Shah presented a goal of India producing 33% of the milk in the next 10 years. It certainly is not a challenging goal. In the last 10 years, while the world’s milk production has grown at a rate of around 1-2%, India’s milk production has grown at a rate of 5%. The quantity of production is hardly a challenge, but the quality is.

Most of the milk is still sold in unorganized markets where there is very little control or opportunity for further processing and quality standardization. The production by the masses is a hallmark of Indian dairy. Through the cooperative system and the Anand pattern, we have managed to harness the power of small farmers and channel it into the 14,899 billion dollar (IMAARC group report Jan 2023)  industry it is today. But very little of it is exported or even properly processed. If we have set the goal of becoming a dairy to the whole world, merely increasing production will not cut it. We must become equally proficient in milk storage, milk transport, milk processing, and milk marketing. The value-added profile of milk products needs to expand and improve.

Our 220 million metric tons of milk production amount to an average of around 58 crore liters of milk per day. Our current milk processing capacity is around 11 crore liters per day, clearly and vastly insufficient even if utilized 100%. But clearly, the rest of the milk is not consumed raw; it is just processed in the unorganized sector. Around 70% of the milk that is brought for processing and not self-consumed is processed in unorganized markets like local sweet shops, festival requirements, and household production. It is largely unmapped and deregulated, and while it mostly suits the needs of the vast rural and semi-urban Indian population, it has proven to pose health and sanitary concerns.

Similar evidence of the inefficiency of milk utilization is our low dairy export. India’s share in the world dairy trade is negligible. A 2018 NITI Ayog Working Group report says that milk production in India has, since the 1990s, surpassed the overall demand, and the trend continues to this day. Currently, India primarily exports butter, ghee, and milk powder to the Middle East, Bangladesh, and Malaysia. While the leading importer countries are Germany, China, the Netherlands, and France and half of the dairy trade volume is taken up by a variety of cheese products. India does not have a natural advantage for cheese production, but we have our traditional milk products which can be promoted for the Indian Diaspora spread across the world. Promoting our traditional dairy sweets and products would require a heavy investment into improving their shelf life and creating high-level quality standards for them. The process will naturally require strengthening of the backward linkage as well. The quality process will also need to be coupled with strong brand creation for global recognition. 

Clearly, the road ahead points towards increased formalization and standardization of the currently unorganized dairy market. Usually, the industrialization of any product leads to the exploitation of its grassroot workers and producers. In worse cases, it leads to monopolies of companies and erodes the bargaining power of the disenfranchised agricultural input providers. But in the case of milk, we have seen, through its strong cooperative network, that it need not be the norm. We have witnessed the growth of the milk industry that occurred side by side with the increased prosperity of rural milk providers.

During the opening ceremony of the Dairy Industry Conference, Dr. R S Sodhi, president of the Indian Dairy Association, talked about how Gujarat's dairy industry has changed since the last time the conference was held there 27 years ago. While Gujarat is neither the top milk producer nor has the greatest number of milch animals, it has the most dairy farmers in the organised sector, attached to cooperatives and member producer companies. It has enabled Gujarat to be the state with the largest amount of marketable milk procured. 40% of the entire milk procured by cooperatives and member producer companies in the country comes from Gujarat. Gujarat’s cooperatives also own 30% of the entire country’s cold storage capacity.

This success has been clearly achieved through the implementation of innovative techniques and technology in the dairy sector, as well as the establishment of strong partnerships between farmers and cooperatives. The cooperative’s principle of not refusing any milk poured by the member gives the farmer assurance of a steady source of livelihood while the competitive prices offered for milk based on better fat content also provide them incentives to invest in improving the quality of the milk. Increasing quantity as well through increasing breed and feed efficiency cannot be achieved without strong institutional and knowledge support which Gujarat’s dairy farmers receive through their cooperatives.

Gujarat’s cooperative success has been endorsed for decades now. It has been replicated across the states and across the sectors with moderate success. The principles for achieving commercial success while increasing farmers’ welfare are there and so is the evidence proving the principles in practice. Gujarat’s cooperatives need not remain the exception that proves the rule of agricultural exploitation. We have replaced our objectives from upward, unchecked growth with actual sustainable development. While the country moves forward to achieve dairy excellence, the industry cannot forget that it will be built on the back of millions of dairy farmers and the milch animals they consider as a part of their families. To develop long-lasting and sustainable progress in the dairy industry, we will need to invest in better partnerships with dairy farmers and increase the yield of dairy animals evenly across the country. Only by building a strong base with our milk provider that can assure the industry with sufficient quality and quantity of milk, can they then plan for increasing infrastructure, processing, and exporting of dairy products. It is not a linear, one-time process but it is a continuous cycle of each uplifting the other.

The 49th Dairy Industry Conference concluded with myriads of talks about the opportunities and challenges that lie ahead for dairy. Various technological innovations, new markets, policy supports, and research outcomes were discussed among industrialists, academicians, and policy makers. However, we must also keep in mind to include the dairy farmers in this process and take them together with us on the road to India’s dairy excellence.

(Prof. Dr J.B. Prajapati is Chairperson, at Verghese Kurien Centre of Excellence, Institute of Rural Management Anand with 40 years of experience in dairy sector.He is also Chairman of Indian Dairy Association (West Zone) and Harshada Samant is aResearch Fellow at Verghese Kurien Centre of Excellence, Institute ofRural Management Anand with a background in Agribusiness Economics)