INDUSTRY PROFILE

1.1 WORLD SENARIO

Animal milk has been part of the human diet in many counties across the world since
prehistoric times. Most of the milk for human consumption comes from 5 major Mammals’
spies: cow, buffaloes, sheep, goats and camels. Buffaloes milk production is concentrated in
Asia especially India. Tradition dietary habit, climate and other Natural conditions are
important factors determining production and consumption of milk and dairy products for a
country or region. European countries, Arab nations and South Asia, for example has a long
history of animal milk production and consumption whereas in East Asia and African
countries, milk has been relevant in the diet of the people. Owing to favourable conditions for
dairy farming, New Zealand, Australia. North and South America have become major milk
producing regions. However milk production or dairy farming, is only one link in the value
chain. On a Global basis, only a small percentage of global milk production is consumed in
raw form. In fact in most developed countries, the amount of raw milk used for human
Consumption is only 5 to 10 percentage. More than 90 percentage of the raw milk is
processed into derivative products in these countries. Thus, dairy processing has emerged as a
major industry in itself.

Milk production is expected to shift from high cost to low cost countries, and output growth
will increasingly be located in regions with rising demand for milk and milk products:
continuing a trend evidences in the 1990s. As a result the proportion of world milk
production originating in the developing countries is projected to
increase. While some developing countries are projected to become more active in
export market, the developing countries as a whole would remain substantial net importers of
dairy products.

GLOBAL MILK PRODUCTION

Total world milk production is estimated to grow from 692 million tons in estimated to
grow from 692 million tons in 2010 to 827 million tons in 2020, as 19% increase. 692
million global distribution of milk in 2010, according to the Global Dairy look Report
2012, released in February 2013 by the global farmers.’

The Global Diary outlook report forecast that by 2020 the world annual production of milk
will grow to 827 million tons. Production by geographic region, however, is not expected to
shift significantly.
HIGHLIGHTE OF WORLD MILK PRODUCTION BY 2020

The European Union, EU28 (The 28th member state was actual in July, 2013. India and the
US are the large milk producers, in 2020.

However between, 2010 and 2020:—

 EU—28 share is projected slightly

 Share of India & china are projected to increase
 Share other region or countries are expected to remain equal

Due to worldwide growth in during consumption nearly all countries /regions are projected to
increase absolute projection volumes.

EXPORT OF MILK PRODUCTS

 New Zealand EU -28, Australia and US were the large exporters in 2010
 New Zealand, US. Exports are forecast to increase considerably by 2020.
 Russia and China, and Mexico Where the largest in 2010
 Argentina is expected to become a larger exporter of milk products.

MEGA DIARY FARMERS

U.S dairy farmers produced a record 200 million gallon of’ milk in 2012, due to their ability
to successful manage larger herds and increase per-cow milk production more than half
(57°/o) of milk produced in the U.S come from during farmers managing at least 500 cows.
Milk Production at during farming operation is increasing due to:

 Advantage in equipment
 Access to higher quality feed.

Changes in herd size and management Increased automation of new technology has resulted
in greater efficiency and economy of’ scale at large Diary farms. These advances are making
it harder for smaller, less technology sophisticated farmers to stay competitive. Since 1992
the numbers of licensed farmers has decreased 61 %. Increased herd size around the globe
has given way to the so called mega farmers.

Where herds of a few thousand cows are typical and herds can number in the terms of
thousands. Indian operates one of the largest US mega during Farmers Managing 30000 cows
and Saudi Arabia operate the world largest Mega-during farm with 38000 cows.
TRADE

At the global level import demand for dairy products could reach 51 million tones in
2010. An increase of 12 million tones over the base period, a similar proportional increase to
that seen in the 1990s. This would imply that the proportion of total milk traded would
remain small - 8% of world production.

Approximately 85% of increase in import demand is projected to come from the developing
countries, confirming a trend evident during the 1 990s. While exports of dairy products from
the developing countries are also expected to increase, the projections of consumption and
production suggested that this group of countries as a whole will face a growing trade deficit
in dairy products .While highest growth in import demand is projected for south East Asia;
imports are anticipated to increase in all developing country regions. However very few
developing countries will be net exporters of dairy products in 2010; these would include
Argentina, Chile, Uruguay, and India.

The developed countries are projected to continue to account for the bulk of exports of dairy
products in 2010- three quarters of trade only a slightly smaller portion than at the start of the
1990s, when developed countries accounted for 8% of world exports however a shift in the
relative importance of different regions is foreseen. The proportion of world exports supplied
by New Zealand and Australia are projected to increase substantially, while those originating
in Europe will decrease and the situation in North America will change little. The imports of
developed countries are projected change little.

The imports of developed countries are projected to change little over the projected period.
For the countries in transition, limited growth in milk output and some increase in domestic
demand are expected to inhibit export growth and improvements in domestic processing
capacity should act to curtail import demand.

International prices for dairy products measured by an index grouping the single commodities
traded are not expected to increase in real terms over the next decade. However, it is
anticipated that, even at this price level, there would the enough income growth in importing
to stimulate production for export in low cost milk producing countries.

1.2 INDIAN SCENARIO

India has one of the largest livestock populations in the world. 50% of the buffaloes and 20%
of the cattle in the world are found in India, most of which are milk cows and buffaloes.
Dairy development in India has been acknowledged the world over as one of modem India’s
most successful developmental program. Today, India is the largest milk producing country
in the world. Milk and milk products is rated as one of the most promising sectors which
deserves appreciation in a big way. When the world milk production registered a negative
growth of 2%, India performed much better with 4% growth. The total milk production is
over 72 million tones and the demand for milk is estimated at around 80 million tons. By
2005, the value of Indian dairy produce is expected to be Rs.1, 000,000 million. In the last six
years foreign investment in this sector stood at Rs.3600 million which is about one fourth of
the total investment made in this sector. Manufacture of casein and lactose, largely being
imported presently, has good scope. Exports of milk products have been decimalized. The
milk surplus states in India are Uttar Pradesh, Punja, Hariyana, Raathan, Gujarat,
Maharashtra Andhra Pradesh. Kamataka and Tamil Nadu. The manufacturing of milk
products is concentrated in these milk surplus States. Today, India is the largest milk
producing country in the world. The production of milk products i.e. milk products including
infant milk food, malted food condensed milk & cheese stood at 3.07 lakh tones in 1999
2000. Production of milk-powder including infant milk-food had risen 2.25 lakh tons
in1999—2000, whereas that of malted food k al 65000 tons. Cheese and condensed milk
production stands at 5000 and 11000 ton respectively. Some plants are coming-up to
producing lactose, casein and improved Chees varieties

About the Indian Scenario

“The soul of India lives in its villages”, declared M.K. Gandhi at the beginning of 20th
century. According to the 2011 census of India, 68.84% of Indians (around
833.1 million people) live in 640,867 different villages. This clearly indicates how
important villagers to country as India. Most of our village population has small land
holdings. Therefore agriculture has not been a paying proposition to small marginal farmers.
Dairy industry thus plays a crucial role in our economy. It was in late forties when an
integrated approach for dairy development based on farmers owned milk cooperative was
first adopted at Anand in Gujarat. Later it came to be known as Anand pattern. This system
basically includes milk production. Procurement, processing and marketing through farmers’
cooperatives. Anand pattern has brought social and economic changes in the lives of milk
producers. The Government of India adopted this approach as national model for dairy
development in the mid-sixties and founded the premier institutions NDD (National Dairy
Development Board) and Indian Dairy Corporation for replicating Anand pattern throughout
the country. The whole project under which replication was envisaged was named “Operation
Flood”. The success of Anand Pattern depends on establishing a strong cooperative
infrastructure at the grass root level. This could be further strengthened by making it
economically viable.

A Tribute to Dr. Varghese Kurien, The Milk Man of India

Dr. Varghese Kurien, the man who transformed lives of million people. He is the person who
taught poor famers how to dream high. His presence is immortal for generations. Dr.
Varghese Kurien (26 November 1921 - 9 September 2012) was a renowned Indian social
entrepreneur and is best known as the “Father of the White Revolution”, for his “billion-litre
idea” (Operation Flood) - the world’s largest agricultural development programme.
This transformed India from a milk-deficient nation to the world’s largest milk producer
surpassing the United States of America in 1998, with about 17% of global output in 2010-
11,which in 30 years doubled the milk available to every person. Dairy farming became
India’s largest self-sustaining industry. He made the country self- sufficient in edible oils too
later on, taking the powerful and entrenched oil supplying lobby head-on.

He founded around 30 Institutions of excellence (like AMUL, GCMMF, IRMA, (NDDB)

which are owned, managed by farmers and run by professionals. As the founding chairman of
the Gujarat Co-operative Milk Marketing Federation (GCMMF), Kurien was responsible for
the creation and success of the Arnul brand of dairy products. A key achievement at Amul
was the invention of milk powder processed from buffalo milk (abundant in India), as
opposed to that made from cow- milk, then the major milk producing nations. This led Prime
Minister Lai Bahadur Shastri to appoint him the founder-chairman of NDDB in 1965, to
replicate Amul’s “Anand model” nationwide. He is regarded as one of the greatest
proponents of the cooperative movement in the world, his work having titled millions out of
poverty in India and outside.

Operation Flood

The transition of the Indian milk industry from a situation of net import to that of surplus has
been led by the efforts of National Diary Develpment Board’s Operation Flood Program
under the ages of the former chairman of the board. Dr. Kurien, launched in 1970. Operation
Flood has led to the modernization of lndia sector and created a strong network for
procurement processing and distribution of milk by the co-operative sector. Per capita
availability of milk has increased from 132 gm per day in 1950 to over 220 gm per day in
1998. The main thrust of Operation Flood was to organize dairy cooperatives in the milk shed
areas of the village and to link them to the four Metro cities, which are the main markets for
milk. The efforts undertaken by NDDB have not only led to enhanced production
improvement in methods of processing and development of a strong marketing network, but
have also led to the emergence of dairying as an important source of employment and income
generation the rural areas.

It has also led to an improvement in yields, longer lactation periods, shorter calving intervals,
etc. through the use of modern breeding techniques. Establishment of milk collection centers
and chilling centers has enhanced life of raw milk and enabled minimization of wastage due
to spoilage of milk. Operation Flood has been one of the world’s largest dairy development
programmers and looking at the success achieved in India by adopting the co-operative route,
a few other countries have also replicated the model of India’s Whit Revolution.

Operation Flood’s objectives included:

1. Increase milk production (“a flood of milk”)

2. Augment rural incomes
3. Fair prices for consumers.
Anand pattern diary cooperatives

The foundation of Anand pattern of milk cooperation was laid with organization of the Kaira
District Cooperative ltd at Anand in Gujarat. In this pattern all functions of dairying such as
milk production, procurement, processing and marketing are all controlled by the milk
producers themselves. The structure of Anand Pattern milk cooperatives consist of primary
milk producers’ cooperative societies at the village level, regional cooperative milk
producers’ union at the regional level, and cooperative milk marketing federation at state
level. The village societies are the grass root level units. A panel of elected members from the
base level working as the apex body of this model.

Amnul’s Success: A Model for Other Districts to Follow

Amul’s success led to the creation of similar structures of milk producers in other districts of
Gujarat. They drew on Amul’s experience in project planning and execution. Even before the
Dairy Board of India was born, farmers and their leaders carried out empirical tests of the
hypotheses that explained Amul’s success. In these districts, milk producers and their leaders
experienced significant commonalties and found easy and effortless ways to adapt Amuls
game plan to their respective areas.

This led to the creation of the NDDB with the clear mandate of replicating the Anand Pattern’
in other parts of the country. Initially the pattern was followed for the dairy sector hut at a
later stage. Oilseeds, fruit and vegetables, salt, and tree sectors also benefited from its
success.