1. Current Size of Dairy Industry - Locally World population and per capita consumption of dairy products, 2005, 2008–2016 IMPORTANCE OF DAIRY INDUSTRY TO THE INDIAN ECONOMY Government to strengthen dairy industry to improve farmer income

1. FMCG-
DAIRY PRODUCTS
AKSHAY ANIL –
K06007
CHRISTY XAVIER-
K06035
MATHEWS
JOSEPH- K06053
MUKESH KANNA-
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RIYA ASEEF-
K06071

2. 1. Current Size of Dairy Industry - Locally
• The milk processing industry in India is expected to expand at a
compound annual growth rate (CAGR) of ~14.8% between FY 2018
and FY 2023, and will reach INR 2,458.7 Billion FY 2023.
• Being one of the primary dairy consumables in India, the increase
demand for milk in the country is owed to the increasing population.
• As of FY 2018, ~81.1% of the Indian dairy and milk processing market
was part of the unorganized sector, which produces milk in unhygienic
environments.
• This reduces the overall quality and nutrition levels of the milk
produced.

3. Globally
• Over the past couple millennia there has been an incredible amount
of creativity and innovation when it comes to processing, fermenting,
and consuming dairy products.
• In 2017, the volume of the dairy market worldwide was estimated to
be about 216 metric tons, which is projected to grow to 234 metric
tons by 2021.
• Perhaps unsurprisingly, liquid milk takes up the highest share of the
global dairy market at 54 percent as of 2017, followed by yogurt and
other products.
• As of 2018, India is the leading milk producing country in the world,
accounting for ~19% of the global market share.

4. World population and per capita consumption of
dairy products, 2005, 2008–2016
(source: IDF Bull. 489/2017)

5. Annual increase in dairy demand, 1997–2018
(source: IFCN Conference 2017,
*2017, 2018 IFCN projection)

6. Percentage breakdown of global dairy
consumption, 2016
(source: IDF Bull. 489/2017)

7. 2. TOP 10 DAIRY COMPANIES IN INDIA

8. Contd..

9. Top Manufacturers Operating in the Global
Dairy Industry

10. Contd..

11. 3. Structure of the Industry - India

12. Globally:

13. IMPORTANCE
OF DAIRY
INDUSTRY TO
THE INDIAN
ECONOMY
India is the premier producer as well as the largest consumer worldwide.
Dairying has become an important secondary source of income for
millions of rural families and has assumed a most important role in
providing employment and income generating opportunity.
Milk collection, processing, packaging, distribution and marketing – was
managed within 20% of the marketing cost. That made the farmer earn
more, which incentivized him to produce more.
Dairy sector is the major source of income for an estimated 27.6 million
people. Among these, 65 to 70 per cent are small, marginal farmers and
landless labor. The dairy sector supports around 10 million members /
farmers through one lakh cooperative societies existing in the country.
Contributing about 5.3 per cent to India’s agricultural GDP, milk is a leading
agricultural produce.
The dairy sector in India grew at a rate of 6.4 per cent annually in the last
four years against the global growth rate 1.7 per cent and the aim is to
improve milk productivity

14. The quality of animals is critical in determining its milk productivity and hence overall
production. Currently, low productivity per animal hinders development of the dairy sector.
Despite being the world’s largest milk producer, India’s productivity per animal is very low,
at 987 kg per lactation, compared with the global average of 2 038 kg per lactation.
The low productivity is a result of ineffective cattle and buffalo breeding programmes,
limited extension and management on dairy enterprise development, traditional feeding
practices that are not based on scientific feeding methods, and limited availability and
affordability of quality feed and fodder. In addition, the limited supply of quality animals is
exacerbated by policies limiting interstate movement of animals. Indigenous cattle and
buffalo make up 45 percent of the country’s total milch population, in contrast to the cross-
bred cows at 10 percent.
Animal health and breeding services provision, veterinary infrastructure development and
vaccinations are the responsibility of the state government. These services have
traditionally been provided for free or at a very subsidized rate. In the past few years, there
has been increasing awareness that the state pays heavily to offer these services, which are
easily available to farmers (Ahuja et al.). Consequently, many states have instituted partial
or full-cost recovery fees for providing the services.
FACTOR
CONDITIONS

15. Government
to strengthen
dairy industry
to improve
farmer
income
The government is working on creating additional milk processing infrastructure to double the
dairy farmers’ income by 2022 and meet the future challenges.
For about 15 years, India continues to be the largest producer of milk in the world and likely to
retain its prime position with annual growth rate of 5.53% for last three years as against global
milk production, which is growing at 2.09%.
Indian milk has increased to 163.7 million tonnes in 2016-17 from around 17-22 million tonnes in
the 1960s, said the Agriculture ministry in a press statement.
It increased by 19% during 2016-17 in comparison to 2013-14. It increased the per capita
availability of milk by 14.3% to 351 gram in 2016-17 from 307 gram in 2013-14.
Department of Animal husbandry, dairy and fisheries is working on a National Action Plan Vision
2022 where suitable provisions are being made to build additional milk processing infrastructure
for processing additional volume of milk expected on account of higher production and meeting
the increased demand for value-added products

16. 14. Impact to dairy sector from emerging
trade regime
The two key challenges that arise are:
Balancing
the
interests of
producers
and
consumers
Balancing
the
interests of
the nation
versus
sector

17. The argument for increased trade is often made that such increased trade benefits
producer through higher prices for their produce.
Producers benefit from high prices as long as they are able to secure such high
prices for their produce, they are adversely affected when prices dip
Fluctuations in income can affect their food security
High domestic prices fuelled by global trade and price trends can erode the ability
of consumers to even maintain their existing levels of consumption and increase the
level of food insecurity
While about half of the India’s rural population own milch animals, a much larger
proportion of consumers, both rural and urban, purchase milk.
Balancing the
interests of
producers
and
consumers

18. Enhancing and securing a country’s economic interests often involve
a range of international agreements that could range in scope from
a trade and/or investment to a comprehensive economic
cooperation agreement, which could cover a large number of
sectors (verticals) and areas of cooperation (horizontal).
Trade negotiations at various levels – bilateral, plurilateral or
multilateral involve a strategy of give and take in order to conclude
the agreements.
Balancing
the interests
of the nation
versus sector

19. With the Doha round of negotiations for the WTO agreements yet to be concluded, the need to stimulate economic
growth through enhanced trade and investment has led to India being involved in negotiations on a number of
bilateral/plurilateral/regional free trade/economic cooperation agreements
For the dairy sector, the significant ones are the ones underway with major milk product exporting countries such
as the ones with the EU, New Zealand and Australia
At the national level, the economic interests that are being pursued by India in the proposed Bilateral Trade and
Investment Agreement (BTIA) with EU includes jobs and growth in general and favourable changes in regulations
such as data security and movement of professionals, which are likely to benefit some key sectors of India (PIB,
2013).
On the other hand, producer cooperatives have been arguing that the BTIA is not in the interest of milk producers,
as there will be no level playing field, as Indian milk producers will not have protection against the subsidized
exports.

20. Who are the biggest
global players?
• Dairy analyst Saskia van
Battum said: “The top three
remained the same,
although the gap between
numbers one and two
continues to narrow. For the
third year in a row, there are
no new entrants in the list,
due to a lack of elephant
deals over the past 18
months, but some
reshuffling took place.”

21. What is the size of
the industry
world-wide and
what are the
global dynamics?
The dairy market is projected to grow with a CAGR of 5% over the forecast period.
In 2018, the global milk output was valued at 843 million ton, an increase of 2.2% from
the valued registered in 2017.
This increase can be primarily attributed to production expansions in India, Turkey, the
European Union, Pakistan, the United States, and Argentina.
However, this factor was partially offset by a decline in milk output, especially in China
and Ukraine.
Increasing demand for dairy products is driven by growing population, higher income
levels, and rising health consciousness. The global market is primarily dominated by the
milk segment, followed by butter and cheese segments. The yogurt and dairy desserts
segments are expected to be the fastest growing segments across the world.
Globally, in 2018, the export of butter increased by 7.5%, mainly contributed by
countries, like New Zealand, the United States, and India. However, in the European
Union, there was a decline in the demand for butter.

22. Indian dairy market and the Global market
• Milk exports by country totaled US$28.6 billion in 2018, declining in
value by -21.6% for all milk shippers over the five-year period starting
in 2014 when international milk sales equaled $36.4 billion.
• The rise in demand has been met with a fall in exports.

23. Indian dairy market and the Global market
• India stands 2nd among the
list of countries producing
the most milk.
• India has indisputably one
of the world's biggest dairy
industries —in terms of
milk production; last year
India produced close to
146.31 million tonnes of
milk, 50% more than the
US and three times as
much as the much-
heralded new growth
champ, China.

24. Indian dairy market and the Global market
• But India’s position in
terms of dairy exports is
not even in the top 20 in
the world.
• As of 2014, India was
only a minor contributor
in the world dairy
market, with 1.6 % of
the world dairy exports
which is very much
below par for a country
which it is the largest
producer of milk in the
world .

25. Indian dairy market and the Global market
• India falls in the
high milk producing
countries category
and again, the
exports are below
par.

26. How to improve the Global level game
• Lowering the cost of production and increasing productivity.
• Emphasis should be laid on cross-breeding, feed management, proper
healthcare
• Further reduction in cost can be achieved through use of technology for
production and processing, efficient supply chain, enhancing backward
linkages for milk procurement, implementing quality standards
• India needs to encourage low fat milk production as most of the western
countries prefer low fat milk.
• Quality management for Export.
• Adoption of the quality standards like PFA, GMP, GHP, HACCP, ISO and codex is
necessary for better governance of international trade

27. How to improve the Global level game
• Infrastructural Development
• International Marketing
• Strategic alliance
• For the export of dairy products, diplomatic initiation should be made at
international level (Australia and New Zealand who compete with each other but
enter the world market as strategic partners). In this context, India could play an
active role with the dialogue initiated by it with the 22 member countries of the
Austral Asian Animal Productivity Society.
• Awareness or training programs
• Dairy industry stakeholders should be sensitized to the emerging issues related to
WTO and their impact on the Indian dairy industry. To make producers and exporters
understand the implication of trade agreement under the WTO regime, there should
be awareness programs.

28. Implications of
the trajectory
of the industry.
India's dairy industry is worth Rs 5.4 trillion by value, having
grown at 15 per cent CAGR during 2010-16. Going ahead, the
dairy industry is expected to maintain 15 per cent CAGR over
2016-20 and attain value of Rs 9.4 trillion on rising
consumerism," Edelweiss NSE 4.44 % Securities said in a report.
India has progressed from being deficient in milk production at
20 million MT in 1970 to becoming the world's largest milk
producer at 160 million MT, accounting for 18.5 per cent of
global Milk production.
Expected Growth: The milk processing industry in India is
expected to expand at a compound annual growth rate (CAGR) of
~14.8% between FY 2018 and FY 2023 and will reach INR 2,458.7
Bn in FY 2023.

29. CONCLUSION
The dairy sector is a dynamic global industry, with steadily growing
production trends which are forecast to continue in the long-term.
These trends are driven by an increasing demand for animal proteins
that goes along with the population growth and income growth in
emerging economies. Consumption of dairy products is consequently
expected to increase by 20% or more before 2021, according to FAO
and OECD. In this context, dairy production and dairy processing clearly
appear as industries of utmost importance in contributing to the global
challenge of food security today and for decades to come.