Escolar Documentos
Profissional Documentos
Cultura Documentos
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Major share (over 90% of Victorias milk production is used for further processing, whereas in other states bulk of the milk production is consumed as drinking milk. Over 50% of the Victorias processed dairy products are exported. Victoria's dairy industry is internationally competitive because its low input costs pasture-based systems and clean green (environmental) image. Victoria's temperate climate and natural resources enable year round grazing of quality pastures grown using relatively low cost irrigation water or with rainfall alone.
Victoria provides around 51% of the national dairy manufacturing workforce. Major producers such as Fonterra, National Foods, Warrnambool Cheese and Butter Factory, Tatura Milk and Murray Goulburn have established their presence in Victoria. Victorian farmers have adopted new or improved technologies, with milk production increasing by 5% over the past decade.
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Victoria has three key dairy producing regions. These are Gippsland, Northern Victoria and Riverina, and Western Victoria. These are some of Australias most productive dairy regions, with significant manufacturing capacity and irrigation infrastructure. All these areas benefit from inherent advantages of dryland pasture base and relatively reliable seasonal climate.
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Dairy Production
Dairy production in Victoria is dominated by large number of farmer owned dairy farms. The share of corporate owned farms is negligible (less than 2%). The main source of revenue for dairy farmers is from the sale of milk to downstream processors and manufacturers. Farmers have choice of supplying milk to either co-operatives or private dairies. There is a high degree of competition among dairy farms to get supply contracts with the large dairy processors. The existence of dairy cooperatives has limited this competition as farmers do not compete within cooperatives. Co-operatives usually secure supply contracts with manufacturers and supermarket chains. Dairy co-operatives pool the milk of the member farmers and supply it to dairy manufacturers. These co-operatives many times are vertically integrated with cooperative processors. There is no legislative control over the price the milk processing companies pay. Most milk prices are based on milk fat and protein content of the milk. Payment from processors can vary as companies operate a range of incentive / penalty payments related to milk quality, productivity and off-peak supply. As a result of pasture based dairy farming, there is a strong seasonality in Victorian dairy production. The off peak production reduces to as much as 50% of the peak season. The seasonality of production is less pronounced in other states (barring Tasmania) as farmers have been managing calving and feed system to ensure even year-round production.
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There is an increasing trend towards consolidation of the dairy cattle farms in Victoria. As a result, fewer but larger dairy farms are now prominent in Victoria. The trend towards larger, more efficient dairy farms has been driven by the progressive deregulation of the dairy industry, financial pressures with drought conditions and the benefits of economies of scale, technological advances, the ageing of farmers and their children often do not want to take over, and some amount of corporatisation in the dairy industry.
Dairy Processing
The processing sector comprises of diverse set of companies including co-operatives, public, private and multi national companies (MNCs). Even though the influence of private and multi nationals is rapidly increasing, co-operatives account for a sizeable portion of total milk intake. The industry concentration is relatively high as it is dominated by few large players. Some of the key players include: Co-operatives - Murray Goulburn, Dairy Farmers Group Public listed - Warrnambool Cheese and Butter Factory, Bega Cheese, Tatura Milk Industries MNC - Fonterra, Kirin, Parmalat Apart from these players there are many specialised dairy processing farms and cheese manufacturers in Victoria. There is an increasing trend towards further consolidation and corporatisation in the processing industry. Some of the recent deals (e.g. Kirin acquiring National Foods, Fonterra acquiring Nestle's yogurt and dairy dessert business) have increased the industry concentration to a few large players only. These deals are also increasing the presence of private players in the Victorian dairy processing industry. The industry concentration is reflecting the need for efficient production, benefits arising out of economies of scale in processing, distribution and branding. Increasing concentration has also been aided by a mature market and supermarket retailers increasingly seeking national supply, for private label and for branded supply.
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The major private processors have focus on established relationships with suppliers and retailers. The major dairy co-operatives, such as Dairy Farmers and Murray Goulburn are vertically integrated along the production chain.
Dairy Markets
The dairy market is broadly divided into two parts for Victorian dairy players i.e. exports and domestic. The bigger part represents dairy exports. Victorian dairy production far exceeds its consumption and the dairy processors look up to exports market along with meeting domestic demand. About 45-65% (the actual percentage varies from year to year) of Victorias dairy production is exported. The major export markets are South-East Asia, Japan, and Middle East. Wholesalers and manufacturers / processors are key exporters of dairy products from Victoria. The domestic market for dairy processors consists of the following segments Supermarkets like Coles and Woolworths Food processors, e.g. confectionaries, bakeries and food processing units Food service outlets and institutions, e.g. pizza and fast food chains, restaurants, motels, clubs, hospitals, airlines and shipping lines etc Convenience stores (e.g. 7 eleven) and petrol stations The major wholesalers (who are usually major dairy product manufacturers) deliver directly to the major supermarkets or to their wholesale distribution centres. The major wholesalers also deal directly with major fast food franchise outlets. They may also supply bulk quantities of dairy produce to industrial food producers. The smaller and medium size wholesalers focus on servicing the smaller retailers and food service establishments. Smaller wholesalers play an important role in supplying niche products, which have higher search costs. The de-regulation of the dairy industry in 2000 and the improvements in national distribution networks has made wholesale markets geographically distinct from production locations. Due to favourable climate dairy production is concentrated in Victoria; where as wholesale establishments are located in areas of strong final demand. This explains why Victoria accounts for nearly 65% of production but only 26% of wholesale establishments. The share of dairy produce going to the food service sector and smaller retailers such as convenience stores has been increasing, while the shares going to supermarkets has been decreasing. The increase in sales to the food service sector and smaller retailers reflects consumer trends towards eating out and demands for convenience due to increasingly busy lifestyles with more two parent working families, longer working hours etc.
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Unlike many other states in Australia, drinking milk constitutes only a small percentage (usually less than 10%) of the total milk production. Cheese is the largest category of processed dairy product. Victorias contribution is significant to overall Australian cheese production. The predominant variety of cheese is cheddar, though the share of non-cheddar cheese is gradually increasing. Victorian manufacturers produce a range of milk powders. New technology used in the production and use of powders has seen the range of specifications available from Victorian manufacturers expand in line with customers needs. The butter based category has seen introduction of many new products in recent year which include butter and vegetable-oil based dairy blends. These products are easier to spread and lower in saturated fat. The range of fresh dairy products from Victorian dairy processors includes yogurts, dairy desserts, chilled custards and creams, dairy dips and frozen products such as ice-cream. Yogurt has witnessed regular product innovation in the areas of packaging, flavour combinations and the use of probiotic cultures, as well as new products, such as drinking yogurts. Keeping with the requirement of times, Victorian dairy players have also been manufacturing nutraceuticals (e.g. soymilk, calcium caseinate), functional foods, health products and food supplements.
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as of high quality. The Australian dairy products are seen as preferred substitute for filling in the demand gap arising out of any ban imposed on dairy imports (from countries perceived to have witnessed bovine disease outbreak). Victorian dairy manufacturers produce a wide array of dairy products and usually respond to world trade demand. Since the dairy manufacturing industry is fairly concentrated and dominated by large players who have large product portfolio and manufacturing flexibility, the industry has been agile to respond to changing demandsupply and price dynamics in world trade. Victorian industry enjoys very good exposure to world trade and has substantial knowledge on its dynamic. The industry has developed required marketing skills and acquired relevant industry connects that help it to maintain a competitive edge. Trading with markets that impose various tariff and non-tariff barriers and competing with other strong dairy exporting nations have also provided sufficient knowledge to excel in international trade. Victorian dairy players also benefit from proximity from some of the milk deficient regions like Japan and South-East Asia. This proximity, along with FTAs (Free Trade Agreements) and competitive pricing has helped Victorian dairy companies to make significant strides into these markets.
8.5.1. Exports
In recent years, with the production far surpassing the consumption, Australia has been very active in dairy products exports in the world market. The last decade witnessed the shares of total Australian dairy production exported remain in the range of 45-60%. This trend is more prominent in the state of Victoria, which has contributed most to the dairy exports from Australia. As much as 60%-65% of total milk / milk equivalent are exported. This share of exports is much higher than rest of the Australian states, barring Tasmania which also exports a significant percentage of its milk production.
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Victorian dairy players export a wide array of dairy products. It includes commodity products like Skim Milk Powder (SMP), Whole Milk Powder (WMP), butter, cheese, whey products etc, as well as speciality products like speciality cheese, nutritional milk products, infant formulae etc. The key products exported to various countries are cheese (particularly cheddar variety), SMP, and WMP.
Victorias dairy exports are mainly to Asian countries. Japan is the single most important dairy market. Other South East Asian countries and Middle East countries also are significant export destinations. This concentration of exports in Asia/East Asia reflects both Victorias geographic proximity to these markets and the extent to which Australia (and thus Victoria) is excluded from other major markets by direct restrictions or the impact of the export subsidy programs.
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8.5.2. Imports
Victoria imports relatively small quantities of dairy products. New Zealand is the largest exporter of dairy products to Victoria. Cheese is the largest category of product that is imported. Cheese is imported from New Zealand and other European countries. Rest of the import consists of smaller quantities of butter, WMP, SMP, ice cream etc.
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The attractiveness-ability matrix (the matrix mapping the attractiveness of opportunity in Indian dairy industry with the ability of Victorian dairy players to serve these opportunities) presents key opportunity area that Victorian dairy player should focus in India. The equipment / machinery / technology areas (e.g. packaging equipment, capital intensive dairy processing equipment, diagnostics kits for bovine diseases etc) do not provide attractive trade opportunities at this point in time. Victorian dairy players themselves are importers of these equipment / machinery / technology. The second hand equipment market however provides possible trade opportunities, even though the demand for the same is currently low. Products on the other hand show greater trade potential. Both commodity (SMP, WMP, butter oil etc) and specialty (specialty cheese, ice creams, flavoured yogurts etc) dairy products are moderately attractive. Bovine semen export is another opportunity area, though the requirement is intermittent. Victorian dairy players have high ability to serve these demands from India. But they will have to deal with trade barriers and regulatory requirements. Cattle feed products have low attractiveness due to low price points and highly distributed consumer base. Nonetheless, Victorian players have moderate capability to meet cattle feed products requirements from India. Services like dairy extension also require low price points and ability to cater to distributed consumer base. Moreover, it requires knowledge on local conditions. Victorian players are moderately placed to meet these requirements, preferably collaborating with Indian partners. The above analysis indicates four potential areas of trade. The qualifying criterion is Victorian players ability to meet the requirement of Indian industry. These areas are: 1. Universal dairy products - commodity (e.g. SMP, WMP, butter oil etc) 2. Universal dairy products - specialty (e.g. specialty cheese, ice cream, flavoured yogurts etc) 3. Bovine semen - particularly Holstein-Friesian and Jersey varieties 4. Second hand capital intensive processing equipment Apart from the above four areas, Victorian dairy players have moderate ability to meet requirements in India in the following two areas: 1. Cattle feed including UMMB licks and Bypass Protein Feed. 2. Dairy extension services These two areas can also be assessed for trade with India.
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In case of acute shortage (particularly in summer months in India), the government advises agencies like National Dairy Development Board (NDDB) to import SMP under the Tariff Rate Quota (TRQ). NDDB is eligible for importing 10,000 tonnes of SMP at a reduced import duty of 5% under the TRQ. Relationship with NDDB can be useful for SMP exporters. Many large players in Indian food processing industry procure large quantities of commodity products from Indian dairies. Cost of the product and reliable supply are the key factors to tap into requirement of these food processors. Many larger dairies outsource product manufacturing (contract manufacturing) to smaller dairies having idle capacity in India. These smaller dairies are extremely cost competitive. However, the larger dairies are open to contract manufacturing outside India, provided the contract manufacturer is cost competitive and maintains quality.
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Dialogue with private dairy farms who sometimes import bovine semen is useful. The number of such private dairies is few and the requirement is not regular. Relationship with agencies that sell frozen bovine semen like IndiaGen (which is a joint venture of Indian Immunologicals Limited, the wholly owned subsidiary of National Dairy Development Board (NDDB), and US-based Cooperative Resources International) can become a vital route to market. Currently IndiaGen sources frozen semen of exotic, pedigreed US breeds.
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extension services to villagers by real life examples. Adopting villages or few herds on a trial basis can act as a good awareness program. It is important that the dairy extension service provider has adequate local knowledge. Dairy conditions and breeds are not uniform in India and hence local network and know-how will be critical. Many institutions (e.g. National Dairy Research Institute, state and central veterinary colleges), NGOs (e.g. Bharatiya Agro Industries Foundation) and organisations (e.g. NDDB) have existing dairy extension service network. Partnering with these organisations can be a quick way of entering Indian market as these institutions have already existing network, know how and local knowledge. In fact, Australian Centre for International Agricultural Research (ACIAR) has collaborated with few institutes in neighbouring country Pakistan (which has similar dairy industry structure as India) for showcasing the benefits of extension services. Collaborating with co-operatives to leverage on their reach and network can also be a success factor.
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All imported edible / food products would have to meet the conditions of the Prevention of Food Adulteration Act, 1954 (PFA) and Rules, 1955 which are currently applicable to products that are manufactured and sold in India. The Act intends to protect the common consumer against supply of adulterated food and specifies different standards on various articles of food. The standards are of minimum quality level intended for ensuring safety in the consumption of these food items and for safeguarding against harmful impurities, adulteration etc. PFA regulations also deal with labelling requirement, the use of permitted natural and synthetic colours and flavouring agents. The Act also provides for sampling, inspection and confiscation of food items, along with prescribed penalties for violation. Compliance with these conditions is to be ensured before allowing Customs clearance of the consignment. A copy of The Prevention of Food Adulteration Act and Rules can be accessed from Ministry of Health and Family Welfare, Government of India website at http://www.mohfw.nic.in/pfa%20acts%20and%20rules.pdf.
Bovine semen imports to India are still restricted. The objective is to analyse the animal disease status of the exporting country and allow only quality and disease free germplasm into India. The government has guidelines on the import of bovine semen that needs to be adhered to. These health guidelines are related to the status of the country, the state / area or the farm where semen was produced and also the health of the concerned animals. There are also restrictions for the importer of bovine semen. The importer of semen needs to obtain permission from Department of Agriculture, Government of India. They should have information management system set up so as to ensure traceability of the calves born to imported semen. This allows the Government of India to ensure credibility of the importer. The policy also mandates that only the user should be allowed to import semen. This policy is viewed as restrictive by industry experts as India do not have big dairy farms or rich and educated farmers who can avail superior genetics available in other countries. A copy of notification on procedures and conditions for bovine semen import to India can be accesses on Government of India website at http://dahd.nic.in/trade/revised%20draft%20notification.doc As per Director General of Foreign Trade, Government of India notification import of skimmed and whole milk powder, milk food for babies is permitted at concessional rates of customs duty (Tariff Rate Quota or TRQ) for a quantity up to 10,000 Metric Tonne (MT) per year. However, this permission approves only a few organisations that can avail the benefits of concessional rates of customs duty for imports up to 10,000 MT per year. The concessional customs duty is 5% (up to 10,000 MT per year) and is much lower than the regular customs duty (which is 60%) for these products. The organisations that can avail the concessional customs duty for imports up to 10,000 MT per year are:
- National Dairy Development Board(NDDB) - State Trading Corporation(STC) - National Cooperative Dairy Federation (NCDF) - National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED)
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- Minerals and Metals Trading Corporation (MMTC) - Projects & Equipment Corporation of India Limited (PEC)
However, these organisations can import only on behalf of the actual users and are eligible to avail quotas as per request of applicants received. For availing quota, these organisations may make application to EFC (Exim Facilitation Committee) in ANF (Aayaat-Niryaat Form) to DGFT (Directorate General of Foreign Trade). Completed application forms along with prescribed documents must reach on or before 1st March of each financial year preceding to the year of quota. Imports have to be completed before 31st March of financial year i.e. consignments must be cleared by customs authorities before this date. According to industry experts, TRQ creates uneven playing field for import of SMP and WMP.
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11.2.1.
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11.2.2.
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11.2.3.
Cattle Feed
11.2.4.
11.2.5.
11.2.6.
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12.2.1.
The opportunities available in this segment include the following: Introduction of commodity products (like butter, milk powder, dairy whitener, processed cheese etc) in Indian market Export of products like butter oil, SMP, WMP etc to Indian dairy processors and food processors. Route to Market The options available to introduce commodity dairy products to Indian market include: 1. Partnership with Indian dairy manufacturers This is one of the preferred ways of entering the Indian dairy market by foreign players. Foreign companies form Joint Ventures (JV) with Indian dairy / food processors. This reduces time to market, thanks to Indian partners existing infrastructure and distribution networks. Foreign players can also leverage industry knowledge of the local partners and hence mitigate the business risk. The investment required in a joint venture is also less vis--vis setting up wholly owned subsidiaries. However, the process of selecting partners for market entry merits attention and involvement of the executive management. Careful consideration should be made to understand the strategic rationale of the partnership for both parties and the partnership should be forged based on a win-win proposition. Non-aligned or misaligned interests and diverging future business plans sometimes lead to unfruitful alliances. We present below a few illustrative cases of JVs in the Indian dairy industry.
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Case Study of Britannia-Danone Joint Venture Groupe Danone SA, the French food giant (which has market presence in dairy products, water, baby food and medical nutrition globally) forged a Joint Venture with Britannia Industries Ltd., (promoted by the Wadia group) in 1993. Britannia is one of Indias leading food processors and biscuit manufacturers. In recent years, the two partners had issues over Danones independent plans in India. Britannia has sued Danone over its investment in biotech firm Avesthagen without approval from the Indian JV partner5. Britannia also sued Groupe Danone in a Singapore court claiming violation of its intellectual property rights of its Tiger brand (one of Britannias successful brands which contribute approximately 20% to its top line). The Indian group alleged that Danone had registered and used the brand in overseas markets without its consent and had demanded royalty for the same. In a previous development, Danone had sold its global biscuit business to Kraft Foods Inc in 2007 to concentrate on water and dairy products. Moreover, Britannia had joined hand with Fonterra (a New Zealand based dairy giant) to venture into dairy business. So the JV with Britannia has also lost its strategic significance. Danone also ventured independently into launching its bottled water business in India by setting up 100% owned subsidiary. In 2005 it entered a joint venture with Japan's Yakult Honsha to manufacture and market probiotic products in India. In December 2007 the partners launched a probiotic health drink. In April 2009, the Wadia Group bought out all stakes (25.48%) of Danone and the Joint Venture was called off. Industry experts believe this to be a win-win situation for both the companies as the synergy of the JV was lost long ago and both parties can now concentrate on their individual goals and strategies. Please also refer the case study of Britannia New Zealand Foods Pvt. Ltd. in Section 5.5.1.1 Setting up subsidiaries Some foreign companies (e.g. Nestl) have set up subsidiaries in India. Setting up subsidiaries need more commitment from the foreign players. It also requires higher investment and in most cases lead to longer time to market. It is advisable that foreign companies that want to enter Indian dairy sector through subsidiary route should first gain sufficient knowledge of the Indian market through less risky routes (like JVs) and establish a footprint. Foreign companies rarely enter the Indian dairy market through subsidiaries.
Avesthagen is a bio technology firm based out of Bangalore which has interests in preventive nutrition and personalised healthcare. As per Britannia, Danones investment in Avesthagen is violation of Press Note 1, under which a foreign partner of an Indian company needs to obtain its approval before pursuing an independent business in the same area.
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Taking up stakes in Indian dairies Foreign companies can also take up strategic stakes in Indian dairy processors to gain a foothold in the Indian dairy market. The advantage of this route is that foreign players gain quick access to already established set up, procurement network, distribution network and markets. On the flip side, foreign players also need to be prepared for dealing with Indian dairy industrys structural deficiencies (unhygienic milk procurement, contamination etc) and the associated risks.
Case Study of Dynamix Dairy Dynamix dairy is one of Indias progressive dairies and is located in Baramati near Mumbai. The company has a wide array of products and the company undertakes contract manufacturing for some of Indias leading brands. The company witnessed a systematic control of stakes from Schreiber Foods, one of Americas largest cheese manufacturers. The company picked up 8% stake in Dynamix in lieu of supplying the technology for cheese manufacturing. In 2002, it again picked up 11% of stake when Britannia Industries offloaded its stake. In 2003, Schreiber Foods infused debt of INR 10 million (approximately A$ 3.3 million) which was used to swap Dynamixs costly term loans from lending institutions. Schreiber Foods infused some additional equity to secure controlling stakes in 2003. Industry analysts view this investment as Schreiber Foods first material step towards increasing its presence in India and thereby in Asia. Dynamix is also believed to be used as a reliable source of Casein for Schreiber. The route to provide dairy inputs like SMP, WMP, butter oil etc to Indian dairy processors and food processors is direct exports. The key factor for attracting private dairies in India will be cost competitiveness. India itself is a large producer of both milk powder and butter oil and thus there are sufficient options available in India. The duties on these products are also high in order to restrict its import. However, sometimes the price differential of these products in India and Australia can become attractive for Indian dairy players. A potential exporter from Victoria should keep an eye on the prices of these products and keep the channels of communication open with private dairies and food processors. A list of key dairy processors (private as well as cooperatives) / food processors and their contact details has been provided to Victorian Government Business Office (VGBO) by PwC. This list can be obtained from the VGBO on special request. It is expected that milk powder will witness a demand-supply gap in Indian market in the short term. Butter oil can be processes to prepare ghee (a traditional Indian dairy product consumed in large quantities) by the private dairies. The Victorian dairy players can leverage on this opportunity.
12.2.2.
The opportunity for Victorian dairy players in specialty dairy products is export of products like specialty cheese, flavoured yoghurt, premium ice cream etc to India.
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Route to Market The most preferred route for specialty dairy products to enter Indian market is through Importers / Distributors. Victorian players can also explore possibilities of directly exporting to retailers dealing with specialty dairy products. This route to market also makes sense for Victorian players as the quantity of exports are small and the market is still in the nascent stage. The importers / distributors in India have options of sourcing specialty dairy products from countries like Italy, France, UK and Switzerland. These importers / distributors would like the imports from Victoria to be cost competitive with imports from other countries. Steady supply and liberal credit terms can also attract the importers / distributors. However, it is advisable that Victorian dairy players apply caution while dealing with new business partners in India and put in place prudent and secure credit terms. As per industry experts, there have been previous instances of credit default by few Indian importers / distributors to their foreign business partners. A preferred approach should be to start slow and steadily grow the business and partnership. Importers / distributors in India can also help in product promotions like in-store promotions, testing of samples, educating customers on various usages of specialty dairy products. Exporters usually provide necessary help (financial incentives, packing products in small samples etc) to the importers / distributors for promotion of their products. Creation of subsidiaries or Joint Ventures should be considered when the Victorian players reach a critical mass of exports to India and after they have gained significant knowledge about the dynamics of Indian market and its players. A list of key importers / distributors and retailers as well as their contact details has been provided to Victorian Government Business Office (VGBO) by PwC. This list can be obtained from the VGBO on special request. Case Study of Mvenpick Ice Creams Mvenpick the Swiss premium ice cream maker was one of the early entrants to Indias super premium ice-cream market. The company entered India in 2001. The route it took to enter India was through an importer and distributor network. The company imported ice-creams through a company called Frozen Natural Imports and Exports, while its distribution logistics was being handled by Kauser India Ltd. As per initial plans the business focus was to generate revenue by a 50-50 split from retail and institutional sales. The retail business was through franchise partner Devyani Foods Ltd. However, the company called off the franchisee arrangement within a year of its launch. Industry analysts attribute the failure of the franchisee model to very high cost of its ice-cream, which could not generate enough sales. According to company officials the institutional sales was still witnessing a healthy growth6. During this time, the company was also able to set up its wholly owned subsidiary in India. The principle focus of the new entity was to provide consultancy to its importer-distributors in India and its neighbouring countries for Mvenpick products.
Our retail sales have been flat in the past one year, the only saving grace has been sales from hotels and institutions which have been growing at about 40 per cent. Mr Neeraj Jain, Mvenpick Foods South-east Asia General Manager, quoted in the Financial Express dated August 9, 2002.
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In 2003, Nestl acquired the ice-cream business of Mvenpick globally. Nestles Indian arm decided to assist and guide the Mvenpick ice-cream business and make it a separate import business. As a result, the Indian subsidiary of Mvenpick was wound up completely and a Delhi based importer and distributor (Rai and Sons) was appointed as sole importer and distributor of Mvenpick ice-creams in India. However, the business did not grow as expected in following years. In 2008, Mvenpick found a new partner in Hyderabad based Rhapsody Foods & Beverages. With this, the company is making renewed foray into Indian market with a slightly altered business focus. The company has a restrictive distribution strategy this time. The premium all natural Movenpick ice-creams are targeted to be sold at 5-star hotels and upscale outlets such as the Godrej Natures Basket. The distributors believe that the Indian market is now ready for this super-premium ice cream. It is yet to be seen how the company will perform in this segment this time.
12.2.3.
The opportunity for Victorian dairy players is to sell off their capital intensive dairy processing equipment to India based dealers. Route to Market The most suitable route to market is interactions with second hand equipment dealer to identify business opportunities. The name of second hand processing equipment dealer and contact details of its executives has been provided to Victorian Government Business Office (VGBO) by PwC. This list can be obtained from the VGBO on special request. The second hand dairy processing equipment dealer in India deals with capital intensive processing equipment like evaporators, homogenisers, separators, pasteurizers, chillers, bactofuse, clarifiers, continuous butter making machines, cheese machines, vats, silos, tanks, continuous freezers, ice cream machinery etc. The dealer procures equipment which is up to 15-20 years old and reconditions them before selling to Indian buyers. The dealer has previously procured dairy processing equipment from European countries and the US. The rate of the equipment procured from foreign players depends on many factors including the condition of the equipment, market for the equipment in India, degree of reconditioning required, and availability of similar equipment in world market.
12.2.4.
The opportunities for Victorian players include supplying high quality bovine semen for Artificial Insemination to Indian players. Route to Market Bovine semen is a restricted item for imports and has to undergo many regulatory and sanitary checks. As a result only a handful of players in India are in a position to
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import bovine semen from foreign countries. These include some of the government approved institutions (e.g. NDDB) and large private / co-operative dairy farms. The requirements from these institutions are intermittent. The ideal route to market will be to keep the channels of communication open with these organisations and supply bovine semen to address their requirement. Victorian players can leverage the clean and disease free image of their dairy industry for added advantage. Victorian players can also explore possibilities of joining hands with private dairies which run their own collection network for venturing into dairy extension services. Many of the private dairies provide basic extension services to farmers at village level. Interactions with private dairy extension providers can also pave ways for import of bovine semen to India. However, the number of organised private dairy extension service providers is limited. A list of private dairy extension service providers / private dairies and contact details of their executives has been provided to Victorian Government Business Office (VGBO) by PwC. This list can be obtained from the VGBO on special request.
12.3. Victoria Governments Role for Enhancing Trade Ties with Indian Dairy Industry
The Victorian Government has been persistently trying to enhance the level of dairy trade between India and the state of Victoria. Some of following strategies and activities can be useful for further enhancing the dairy trade ties between India and the state of Victoria. Many of these steps have been adopted by other dairy exporting countries in India.
12.3.1.
The Free Trade Agreement between India and Australia is in currently under discussions. A liberal trade regime between Australia and India in the dairy sector can open up doors for much higher level of trade. The Victorian Government should discuss possibilities of lowering the duties and tariffs of dairy imports to India, which will make Australian (and thus Victorian) dairy products competitive with Indias domestic dairy products. Some of the other dairy exporting nations including US are also in the process of negotiating with India on its high import duties7. In recent past, India has agreed on a FTA with some of the SAARC countries for substantially reducing tariff on imported dairy products from these countries. However, these are not dairy exporting nations and thus the FTA is unlikely to impact Indias domestic dairy industry.
US Trade Representative Ron Kirk is expected to discuss the issue of trade barriers for dairy with his Indian counterpart in US-India Trade Policy Forum in late 2009.
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12.3.2.
Trade Promotions
The following trade promotion activities can be carried out to establish Victorian dairy products in the minds of Indian consumers and importers/distributors. Arranging participation of Victorian dairy players in major trade shows and expos in India like Foodpro8 and AAHAR. This can be an excellent platform for Victorian players to showcase their range and meet prospective business partners in India. Arranging meetings and conducting tours of key Indian importers / retailers to Victoria. The delegation of Indian importers and retailers should be encouraged to visit diverse section of Victorias dairy industry to explore all possible avenues of trade. Maintaining database / directory of Victorian dairy players and sharing it with prospective buyers in India. The target market in India should include importers, distributors, specialty retailers, hotels and restaurants, embassies and consulates, food processors, dairy processors. Victorian Government can also procure database of potential Indian buyers and share the information with interested exporters from Victoria. Creating web presence of Victorian dairy offerings in the form of trade portal, where in prospective buyers in India can directly contact with Victorian dairy players. VGBO India can pass on details of some India based trade portals9 to Victorian dairy players as well.
12.3.3.
Cultural Channel
Cultural exchange between India and Victoria / Australia can potentially be an avenue for exploring trade potential. Multi-city food festivals in India can be arranged to showcase the diverse range of Victorian dairy products. The invitees to these food festivals should include chefs of hotels and restaurants, food critiques among other people. Similarly Indian delegation comprising of importers, retailers, food critiques can be invited for food festivals arranged in Victoria. The Indian Diaspora in Victoria, including the large student population can also become ambassadors of Victorian dairy products. Campaigns aimed at them can bring long term benefits for Victorian dairy players. Cultural exchange associations / institutions can be set up to promote Victorian food among other things. Organisations like Maido, Eloquenza and Sopexa have been successful in creating awareness for Japanese, Italian and French food products respectively in India.
A Biennial Food Processing & Food Technology Trade Fair organised by Confederation of Indian Industry (CII). Foodpro 2009 was held from 29th October to 1st November 2009 at Chennai. 9 For example www.indiamart.com, www.alibaba.com.
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13. Appendix
13.1. Appendix 1: Description Key Traditional Indian Milk Products
The phonetics of the traditional Indian milk products are provided within parentheses after the name of the product. Dahi (The-hee): The product obtained from pasteurised or boiled milk by souring, natural or otherwise, by a harmless lactic acid or other bacterial culture. Ghee (Gh-ee, Gh as in ghetto, ee as in meet): The pure clarified fat derived solely from milk or curd or from (cooking) butter or from cream to which no colouring matter or preservative has been added. Kulfi (Cool-fee): The product obtained by freezing a pasteurised mix prepared from milk and or other products derived from milk with the addition of nutritive sweetening agents, e.g. sugar, dextrose, fructose, liquid glucose, dried liquid glucose etc. Shrikhand (Shreik-hund, hund as in hundred): The product obtained from Chakka or Skimmed milk Chakka to which milk fat is added. It may contain fruits, nuts, sugar, cardamom, saffron and other spices. Khoa (Kh-o-aa, Kh as in khan): Khoa is obtained by rapidly evaporating milk in shallow pans to a total solids of about 70 per cent and capable of being preserved as such for several days. It is used as an ingredient in making different kinds of traditional mithais (sweets) such as peda, burfi and gulabjamun. Chhana (Chan-aa, Ch as in chain, a as in America): A product of acid coagulation of hot milk and draining out of whey. It is used in preparing different kinds of sweets such as rasagollas (Bengali sweets). Basundi (Ba-sun-dee): Sweetened condensed milk Paneer (Paw-neer, ee as in heed): Indian version of cottage cheese Lassi / Chhanch (Law-see / Ch-aan-ch, Ch as in chain): Curd based drinks Peda (Pe-da, Pe as in pen, da as in dark): A traditional sweet made from khoa Kaju Pinni (Kaa-joo pin-nee): A traditional milk and cashew nut based sweet Kheer (Kh-eer, Kh as in khan): Traditional Indian sweet dish, made by boiling rice or broken wheat with milk and sugar, and flavoured with cardamoms, raisins, saffron, pistachios or almonds. Chakka (Chuk-kaa, Ch as in chain): A milk based delicacy Mawa (Maa-waa): Dried whole milk Gulab jamun (Goo-lab Jaa-moon, Goo as in good): A popular dessert made of dough consisting mainly of milk solids (often including double cream and flour) in sugar syrup flavoured with cardamom seeds and rosewater or saffron.
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New Delhi - 110 001 Phone: 91-11-2338 7804 Fax: 91-11-2338 6115 Email: jsadd@nic.in Website: http://dahd.nic.in/ 4. Central Board of Excise and Customs Chairman Central Board of Excise and Customs Ministry of Finance North Block New Delhi 110 001 Phone: 91-11-2309 2849 Fax: 91-11-2309 3215 Email: cbecoff@finance.delhi.nic.in Website: http://www.cbec.gov.in/ 5. Prevention of Food Adulteration Act Joint Secretary (PFA) Department of Health Ministry of Health and Family Welfare Nirman Bhawan Maulana Azad Road New Delhi - 110 001 Phone: 91-11-2306 1195 Fax: 91-11-2306 1842 Email: dghs@nb.nic.in Website: www.mohfw.nic.in/pfa.htm 6. The Standards Weights and Measures Act Additional Secretary (Weights and Measures) Department of Consumer Affairs Krishi Bhavan New Delhi - 110 001 Phone: 91-11-2338 3027 Fax: 91-11- 2338 6575 Email: as-ca@fca.nic.in Website: http://fcamin.nic.in/wm_ind.htm 7. Phytosanitary Issues Plant Protection Advisor Directorate of Plant Protection, Quarantine and Storage Ministry of Agriculture N.H. IV Faridabad - 121 001 Haryana Phone: 91-129-241 3985, 91-11-2338 5026 (Delhi Office) Fax: 91-129-241 2125 Email: ppa@nic.in Website: www.plantquarantineindia.org
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8. Registry of Trademarks Office of the Controller General Patents, Designs and Trade Marks Old CGO Building 101 M. Karve Road Mumbai 400 020 Phone: 91-22-2203 5007 Fax: 91-22-2208 9995 Email: cgpdtm@vsnl.net Website: www.ipindia.nic.in
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Central Cattle Breeding Farm, Madras Govt. of West Bengal: Haringhatta Semen Banks Livestock Development Agency - Andhra Pradesh, Kerala, Karnataka, Uttaranchal Directorate of Animal Husbandry - Delhi, Chhattisgarh, Gujarat, Haryana, Madhya Pradesh Cooperative Dairy Federation Limited - Rajasthan, Uttar Pradesh, Haryana Cooperative Milk Producers Federation - Tamil Nadu, Punjab, Karnataka Feeding and Nutrition Godrej Agrovet Ltd Goldmohur Foods and Feeds Ltd KSE Ltd Kaira District Cooperative Milk Producers Union Ltd Kolhapur Zilla Sahakari Dudh Utpadak Sangh Surat District Cooperative Milk Producers Union Ltd National Feed Mills Pioneer Feeds Delux Feed Products (P) Ltd United Feeds Pvt Ltd Fair Feeds B S Animal Feeds Corporation (P) Ltd Animal Feeds Dairies & Chemicals Ltd Uni Cattle & Poultry Feeds Pvt Ltd Coromandel Agro Products & Oils Ltd Encee Feeds Pvt Ltd AVM Cattle & Poultry Feed Mfg Industries Goa State Cooperative Milk Producers Union Ltd Banaskantha Dist Cooperative Milk Producers Union Nandi Cattle Food Nutech Feeds Pvt Ltd Fodder Seed Farms Andhra Pradesh State Seeds Development Corporation Ltd, Hyderabad, Andhra Pradesh BAIF Development Research Foundation, Pune, Maharashtra Central Arid Zone Research Institute, Jodhpur, Rajasthan G B Pant University of Agriculture & Technology, Nainital Government of Karnataka, Hessarghatta Indian Veterinary Research Institute (IVRI) Kaira District Cooperative Milk Producers Union Punjab Agricultural University, Ludhiana Kansal Agro-Tech (P) Ltd, Uttar Pradesh
13.4.2.
Pharmaceuticals and Feed Additives AHP Manufacturing BV (India), Chennai Anichem India Ltd, Vadodara Asian Catalyst & Chemicals, Bangalore
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Avipharma Industries Pvt Ltd, Mumbai Montari Pharmaceuticals Pvt. Ltd., New Delhi Pearl Chemical Industries Pvt Ltd, Calcutta Bhandari Homoeopathic Laboratories, Faridabad. Pashu Pakshi Laboratories, Pune Blue Cross Farma, Hyderabad Veterinary Biological institutions Indian Immunologicals Animal Vaccine Institute, Gandhinagar Institute of Veterinary Biologicals, Guwahati Institute of Animal Health & Veterinary Biologicals, Bangalore Institute of Animal Health & Veterinary Biologicals, Mhow Institute of Veterinary Preventive Medicine, Ranipet, North Arcot Dist. Institute of Animal Health & Veterinary Biologicals
13.4.3.
Milk Co-operatives Andaman & Nicobar Islands Integrated Development Corporation Ltd. (ANIIDCO), Andhra Pradesh Dairy Development Cooperative Federation Ltd. Goa State Cooperative Milk Producers Union Ltd Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF) Haryana Dairy Development Cooperative Federation Ltd. Jammu Cooperative Milk Producers' Federation Ltd. Kerala Cooperative Milk Marketing Federation Ltd. Madhya Pradesh State Cooperative Dairy Federation Limited Manipur State Cooperative Milk Processing & Marketing Federation Ltd. Pondicherry Coop Milk Producers Union Ltd. Tamil Nadu Cooperative Milk Producers Federation Ltd. Private Dairies Fun Foods Pvt Ltd Pure Dairy Farm Products Kwality Dairy India Ltd Indo-Nippon Foods Ltd Morton Confectionery & Milk Products Ltd Kohima Dist Cooperative Milk Producers' Union Ltd Express Dairy Company Ltd Creamline Dairy Products Ltd Kamdhenu Cheese Specialities Ltd SmithKline Beecham Consumer Healthcare Ltd Hatsun Agro Product Ltd Royal Dairy Ltd Classik Casein Anand Dairy Products Ltd Baroda Dairy Dynamix Dairy Ved Ram and Sons Sterling Agro Industries Ltd Nestle India Ltd
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VRS Foods Ltd GRB Dairy Foods Visakha Dairy Nilgiris Dairy Consumables Veterinary Consumables include: Mysore Ammonia Private Ltd Bearing & Mill Stores Salem Steel Plant (Steel Authority of India Ltd) Bombay Machinery Stores Universal Surgicals Dairy Plant Consumables: Ajanta Traders (Regd) Engineering Hindustan Brito-Matics Engineers Pvt Ltd Borosil Glass Works Ltd Continental Enterprises Jupitor Rubber Industries Alweyn Pumps & Systems Pvt Ltd Packaging Material: Hindustan Packaging Co Ltd. Maharashtra Packaging Colour Cartons Limited I T C Limited Essel Packaging Ltd Uniplast
13.4.4.
Dairy Equipment
Dairy Husbandry Equipment IBP Co Ltd Indo Stainless Fabtech Pvt Ltd Asiatic Oxygen & Acetylene Co Ltd Acme Manufacturing Co Ltd Forsberg Agritech (I) Pvt Ltd Garsons Engineers Pvt Ltd Foss Electric India Dairy Processing Equipment: Alfa Lavel Aero Therm Systems Pvt Ltd Larsen & Toubro Ltd Thakor Dairy Machinery Supplies Co Reed Medway Packaging Co of India Pvt Ltd Food & Pharma Specialities Emkay Engineering Works Alfa Laval (India) Ltd Indian Dairy Machinery Co Ltd
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Crompton Greaves Ltd Unicorn Machinery Manufacturers Ltd Khambete Kothari Cans and Allied Products Pvt. Ltd Ashish Engineers Ratan Industries G.R. Polypapers Pvt Ltd Synergy Agro-tech Pvt Ltd Shree additives Searp Swastik enterprises Bansal technocrats Emerson Sri pumps and fittings DIMA SRL Nichrome India Ltd VED engineering SSP Pvt Ltd P.M.S. Engineering (international) services Benny Impex Pvt Ltd PWS Engineers Pvt Ltd Optics technology SST Engineers Cipriani Harrison Valves pvt Ltd Bimal industries JohnsonDiversy
13.4.5.
Adyar Ananda Bhavan Sweets & Snacks, Chennai Asiatic Dary Fruits, Mumbai Gokuldas Mithaiwala, Baroda Gangotree, Bangalore Grand Sweets & Snacks, Chennai Haldiram Products Pvt Ltd, New Delhi K C Das Pvt Ltd, Kolkata Nandhinee, Chennai Brijwasi Foods Pvt Ltd, Mathura Agrawal Foods. Hyderabad Baroda Dairy, Baroda
13.4.6.
Andhra Pradesh Dairy Development Cooperative Federation Ltd, Hyderabad Bihar State Cooperative Milk Producers Federation Ltd, Patna Baroda Dist Coop Milk Producers Union Ltd, Baroda Dairy Taste Ice Cream Industries, Ahmedabad Hatsun Agro Product Ltd, Chennai Hindustan Lever Ltd, Bangalore Mother Dairy, Delhi Kwality Ice Cream Company, New Delhi R P Milkmade Products Pvt Ltd, Agra
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Naturals Ice Cream, Mumbai Nutra Foods (India) Pvt Ltd Vadilal Dairy International Limited, Boisar Vadilal Industries Limited, Gujarat
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