Current Trends in Dairy Sector in India

The most basic feature of Indian dairy sector is that it is still predominantly unorganized. Of the total milk produced in India, only 18-20% is channelized via the organized sector. The unorganized sector is yet to participate into the modern processing infrastructure.

However, there is gradual and steady shift in positive direction because of favorable “consumption dynamics” led by increasing demand for packaged milk and value added products. Despite being largest producer and consumer of milk, India’s per capita dairy consumption levels are significantly lower than developed countries. India is neither an active importer nor an active exporter in Milk sector. Most of the produced milk is consumed domestically; despite that the eastern part of the country is milk deficient and thus, the industry is to remain demand driven for a long term.

The main challenges faced by dairy industry are in sourcing and logistics. This is because procurement of the fresh milk is the most crucial element of this business. It is not feasible to procure milk beyond a 200 kilometers radius; because of perishability of the product. Another challenge is low productivity and yield. For example, New Zealand has three times more productivity than India. The cold storage and supply chain infrastructure bottlenecks are ubiquitous in entire farm sector in India. There is a need to develop these infrastructure facilities at least at tier-3 centres.