AF Animals Milk Dairy Intro

1
Milk and Dairy Sector

World Scenario
he annual world trade in milk products (excluding intra-EU) amounts to 33
T
million tonnes, valued at US$ 10 billion. Barely 6 to 7% of the world milk production is traded internationally. The bulk of the world dairy trade is in cheese, butter and powders. A growing shift towards cheese is expected in the near future. Two dynamic products with a substantial projected growth in the coming years
are yoghurt and dessert.

The international dairy trade is dominated by four players - EU, New Zealand,
Australia and USA - which together account for 85% of all exports. New Zealand and
Australia export as much as 80 and 50% of their milk production respectively. The
Asia-Pacific region has been and will remain a net milk importer in the foreseeable
future. It accounts for the bulk of milk powder imports and half of the imports of
condensed and evaporated milk. In contrast, most cheese imports go from developing
countries to developed countries such as Japan and the United States.
The dairy industry is regulated in most countries through various ways. Imports are
commonly restricted, and exports frequently subsidised. High dairy price supports
in many countries are put in place to stimulate production to the extent that
subsidies for exports are necessitated to maintain domestic dairy programmes.
Technology Export Potential of Milk and Dairy Sector

private
In the
United
Kingdo
m, all
the
ed
by
farmer
s
ed
by
With
substantial cooper
and
continued atives
production,
milk
India
can emerge as a
major exporter of
dairy products and
technologies in the
next few decades.
dairies
in
erstwhile
the
West
in
Denmark,
Netherlands
Sweden
and
are
in
the
cooperative sector.
In
the
.
Privat
United
States, 70 per cent

of
the
up
of
is
procur
building
As
many as 90 per cent
cent
produc
in
plants.
Germany and 100 per
milk
investment
dairy
sector
the
dairy
industry
is
cooperative.
Dairy
programmes
subject
are
to
more
participation
or
Government
e
dairie
regulation than most
are
other
domestic
requir
agricultural
ed
to
industries
in
the
buy
USA. There are also
their
milk
requir
ement
from
cooper
atives
.
New
Zealan
d
no
has
Federal
Milk
Marketing Orders and

movement barriers in
the USA for orderly
marketing
control,
which is associated
with
fluid
stabilising
milk
prices,
providing secure and

dependable
markets
individualnegotia
for
dairy
farmers,tions.
primarily
forWith
the
dairy
sector
in
the countries of the

EU as well as in the
the fluid marketthe
USA will have to be
and
brought
improvingliberal
the
balance
market
between
ofisation
powerof
In
the
emerging
liberalised
global
scenario,
trade-distorting
agricultural
policies
have
been the focus of

the
multilateral
trade
GATT
few
in
the
years.
The
competitive
farmersagricul
and handlers.
next
down
advantages
of
the
tural
Indian dairy industry
trade
are
then
under
to
be
the new
With
GATT
continued
regime,
in
the
production, India can
heavy
emerge
subsidi
exporter
es
products
prevale
technologies
nt
next few decades.
in
considered
substantial.
substantial
and
investment
building
as
up
milk
major
of
dairy
and
in
the

years
is
the
largest
Indian
Scenar
io
India
milk
country
Milk
world.
percent
of
the
buffaloes
of
the
in
and
percent
cattle
the
are
and
milk
one
of
world
found
in
India, most of
which are milk
cows
and
buffaloes.
the
promising
insectors
population
which
appreciation in a
big way. When the
world
milk
registered
negative
growth
percent,
India
performed
much better with

4 percent growth.
total
milk
production
Dairy
over
72
is
million
development intonnes
and
the
India has beendemand
for
milk
is
acknowledged
estimated
at
the world overaround 80 million

as
modern Indias
most
developmental
programme.
Today,
India
this
sector
stood
3600
millio
n
is
about
oneforth
of the
total
invest
ment
made
in
this
sector
.
cture
By 2005, the value
of
successful
in
Manufa
oftonnes.
one
ment
which
production
The
at Rs.
deserves
of
foreig
invest
most
livestock
twenty
the
world.
of the largestas
Fifty
in
oneproducts is rated
has
the
producing
Indian
produce
dairy
is
expected to be Rs.
1,000,000
In
the
million.
last
six
of
casein
and
lactos
e,
largely
beingthese
imported
milk
surplus
States.
presently,
good
has
scope.
Exports of milk
products
have
been
decanalised.
The milk surplus
states
in
are
India
Uttar
Pradesh,
Punjab,
Haryana,
Today,
Rajasthan,
India is
Gujarat,
the
Maharashtra,
Andhra
Pradesh,
Karnataka
and
Tamil
The
Nadu.
manufacturing
of
largest
milk
produci
ng
milk products is
countr
concentrated
y in the
in
world.

The
produc
tion
of
milk
produc
ts
i.e.
milk
produc
ts
powder
including
infant
milk-food
had
risen
to
2.25
lakh tons in 19992000, whereas that

of
malted
food
is
at 65000 tons. The

trends
in
production of milk
products
is
in
India
given
in
Annexure 1.
includ
ing
Livestock accounts
for nearly 15.8% of
the
world
population,
infant
milk
food,
Cheese
and
condensed
milk
production
at
5000
stands
and
cattle malted
tonnes
more food,
respectively.
11000
Some
than half of the conden
plants are coming-
world
up
population.
buffalo sed
for
producing
milk &
lactose, casein and
cheese
improved
stood
varieties.
cheese
at
3.07
lakh
tonnes
in
Livestock
Populatio
n
India is rich in its
1999livestock wealth. It
2000.
accounts for nearly
Produc
15.8%
of
the
world
tion
of
milk-
cattle
more
population,
than
half
of
worldnos.)
the
follow
buffalo
Ased
population.
FAOUttar
per
yearPrades
production
book
by
theh
1998,
of(25.63
population
millio
cattle,
sheepn
buffaloes,
and goats in thenos.)

world
India
and
is
in
given
in Annexure 2.
As per the 1992

livestock
of
Ministry
of
Agriculture,
highest
reported
nos.). According to
livestock
census
the
highest
population
of
buffaloes
is
reported
in
(20.08
nos.)
U.P.
million
followed
by
A.P. (9.15 million

nos.),
M.P.
(22.15
million
millio
Rajasthan
million nos).
nos.)
(7.97
and
(7.74
nos.)
shtra
(17.44
Production
of Milk and
Milk
Products
millio
cattle
population
million
Bihar
Mahara
census
(17.45
was
in
Madhya
Pradesh
(28.68
million
n
nos.)
and
West
Bengal
The milk production

was almost stagnant
between 1947 to
1970 with an
annual growth rate
of merely one
percent
which
Present
sinceStatus
has
registered
growth
of over 4.5% per

annum
after
the
year
1970.
The
production
milk
in
increa
a
The
vigorous
role
of
in
India
has
Indian
industry
dairy
achieved
substantial
produc
during the 8th Five
tivity
Year Plan, achieving
an annual output of
Gradua
over
60
million
not only places our
steadily
asindustry
shown
inthe world after the
second
United
Annexure 3.
States,
in
but
represents sustained
The
major
milk
and
states
UP,
are
Punjab,
Rajasthan,
in
for
milk
our
real
has
Maharashtra
Number
of
milk products
burgeoning
Most
dairying
become
important
Gujarat.
products
population.
important,
M.P,
and
growth
availability of milk
producing
an
secondary
source of income for

millions
of
rural
come
these
have
up
in
states
extens
ion
of
improv
ed
husban
dry
practi
ces;
increa
se
in
consum
ption
of
balanc
ed
concen
families.
trates
manufacturing
Plants
the
growth
beentonnes of milk. This
increasing
sing
Improved
genetic
material
achieved
primarily
through
breeding
possib
le,
in
for
cross
Processing of
cattle and upgrading
throug
milk.
of
the
buffalo
of
made
national
herd
has
played a significant
part,
innova
tions
in
the
field
of
nutrition;
expanded
under
area
fodder;
greater
to
access
veterinary
care;
and
advances
in
the
fight
against
endemic
and
epidemic
cattle
diseases
have
also
contributed
to
increased
production
and
productivity.
About
of
an
secondary source of
rural families.
the
milk produced is
consumed
at
household
Of
supplied
the
level.
the
milk
to
the
market, about 911
percent
processed
over
275
important
income for millions of
three
quarters
Dairying has become
is
in
dairy
plants and

generally
processed
83
in
milk
located in the rural
produc
areas
transported
factor
cities
ies
Operation Flood Milk
operat
productions
ed
for
by
dairy
plants
and
then
into
and
towns.
account
about
0%
of
cooper
total
ative,
production or 40% of
About 45% of milk privat
the marketed output.
production
is
consumed as fluid
milk. About 35% is
processed
butter
into
or
about
processed
Paneer
The
dairy
90%
proces
production)
sors,
handled
and
private traders and
ghee; govern
7%
balance
(cottage
cheese) and other

about
4% is converted
of
total
is
by
the
processors.
About
scheme
s
in
the
orogan
ized
45%
consumed
processed
butter
used
Paneer
throug
sweet meats.
h
Operat
ion
Flood
cooper
atives
is
ghee;
7%
is
into
(cottage
cheese)
cheeses,
is
into
or
processed
Dahi (yoghurt) and
fluid
milk. About 35% is
and the balance is . Milk
products such as led
milk
is
as
about
other channe
of
production
into milk powder; sector
for
(about
is ment
into milk
cheeses,
milk
and
other
about
converted
milk
4%
into
powder;
and
the balance is used

for other products
such
as
Dahi
(yoghurt) and sweet

meats.
In
recent
years,
has
therespiced
t is cheese spread
ancheese
claiming a share of
been
ice,
increasing
placed
cream
asat
production
haveRs
companies
India.
Industr
y
Segment
s:
Cheese
The
organised
cheese
market
including
its
variants
like
processed
cheese,
cheese
and
of
total
the
cheese
is
primarily
urban
an
phenomenon
Proces
growing
sed
15%. The market for
cheese
cheese cubes slices
at 50%
and
of the
growing.
overal
flavoured
segment
market
declining.
is Rs.
In
at
around
tins
is
The
cheese
has
India,
been
Gujarat
1.5 bn
strong
.
The
Cooperative
Milk
Marketing
next
Federation
most
with the Amul brand
mozzarella,
30%
and is know to be
popula
spreads,
flavoured
inbn.
invested
around
market. The market
around
foreign
1.
is
varian
(GCMMF)
continues to be the
main
(DDI),
Annexu
operator in theHiranandani,
branded
cheese
ETA and Metro.
(a)
Ice Cream
and
market in India2.
with
about
60%
market share in
the
branded
market.
It
pioneered
the
market
for
processed,
branded
What
was
GCMMF
the
to
did
develop
technology
make
cheese
from
buffalo
milk.
World
over it is made
from
cow
milk.
Annexure
gives
4
the
market
size
cheese
in
India
estimated
is
to
have
reached the level of

Rs. 10 bn per annum,
of
which
the
about Rs. 6 bn. The

unorganised
market
has been shrinking.

The
per
capita
ice
cream consumption in
the
country
is
extremely low at 250

ml per year compared
with that of the US,
which
is
about
22
litre.
India.
rs
are
Britannia
Industries,
Dynamix
Dairy
Industries
growth
of
market
size
of
Ice
Cream
in
India
and
the
market
struct
ure
of
this
segmen
for
tively
ice
creams
around
manufacture
the
respec
of
has been growing at
cheese
shows
The organised market
about 60 mn litres,
Other
of
in
(b)
The ice cream market
organised sector is
cheese.
to
re
15%
3.
per
annum. The ice cream

industry
has,
in
short span of time,

undergone
structural
transformation.
The
C
h
o
c
ol
at
e
s
Chocolates
market
is
estimated
at
35,000
tonnes
valued
at
approximately
Rs. 8.0 bn. The
chocolate
indicate
counter
market
is
nearly
worth
Rs.
2.5
Market
to
3.5
growth
rates
that
the
cheese market in India

is growing steadily.
bn and the rest

is
made
up
chocolate
of
bars.
Chocolates
in
fact
make
up
less
than
fourth
of
the
sweet-tooth
products
including
sugar
boiled
confectionery
mints
The organised market

and
chewing
gums.
Sugar
confectionery
by
far
largest
is
the
segment
for
ice
creams
of
about 60 mn litres,
has been growing at
around
annum.
with a share
15%
per

sed
exceed
dairy
industry
processes
an
ing
estimated 15% of the
60%.
total milk output in
Annexu
India. The industry
re 6
has
(a)
high growth profile,
and 6
maintained
especially
wake
(b)
gives
in
The
organised market
dairy
industry size
processes
the
Operation
Flood,
termed
also
as
White
Revolution,
initiated
an are
the
of
colloquially
the
1980s.
in
early
Today
India
estimated 15% of struct
produces over 80 mn
the
tonnes
total
milk ure of
in
India. chocol
output
The industry has

maintained a high
growth
profile,
especially in the
wake
of
Operation
Flood,
colloquially
market
India.
also
termed as White
Revolution,
initiated
in
early
1980s.
milk
In
terms
economy
estimated
in
4.
annually.
milk
of value, the total
ate
the
of
D
ai
r
y
W
hi
te
n
e
r
s
is
at
Rs.
1200 bn.
The market for dairy
whiteners
(commercially know as
beverage milk powders
and
and
condensed
milk)
creamers
is
around Rs. 2,750 mn.

The growth of market
size
of
dairy
whiteners in the last
The
10 years is given in
organi
Annexure 7 (a) and
(b).
Apartin
from MNCs likeminipo

andrtions
Nestle
techniques
impart
shelf
product.
Britannia, thewidely
packed
Indian
used
cups
enterprises
in the
poured
perceptible
progress.
Names
like
Amul,
Sapan,
Vijaya, Mohan,
Parag
and
several others
have been seen
in
the
marketplace
with
their
whiteners.
Aseptically
packed
of
longer
life
companies likeis
have also madewest,
to
to
It
in
ready
tea
the
into
or
is
small
to
a
be
cup
coffee.
but
Creamer
has
milk with increased
yet to
fat
enter
12%)
the
aseptically
Indian
after
undergoing
market
Ultra
Heat
Treatment (UHT) at
Asepti
140oC.
cally
introduction
packed
affect the existing
creame
whitener market as
involv
product
creameres
is
fresh
content
(upto
and
is
packed
Its
natural
will
milk
with
longer shelflife.

on
The
potential
for
exports;
especially
to
neighbouring
countries
health-related
and
conventions.
ison
The
concept
of
andpackaged baby foods
India.
The
east, the Gulftraditional homemade

Africa,foods have dominated
and
also exist andthis

bethe
could
5.
sector
until
induction
packaged
exploited.
of
foods
mostly
Baby
Foods
from
companies.
foods
(solids,
semi-solids
and
liquids)
two
of
to
upto
years
of
age
are
classified
as
baby
In
foods.
some
cases,
however,
foods
baby
are
continued to be
given
to
children
than
years
of
older
two
depending
Baby
have
assumed
special significance
in the recent years
because
administered
babies
foods
of
greater
awareness of hygiene
and
health
and
constraints on time
of
busy
mothers.
reliable,
and
ready-to-use
baby
is
requirement
day.
healthy,
convenient
food
the
of
the
India
is
catching up with the

rest
of
developed
this
the
world
area
of
growth
rates
over
the
last
10
years
shows
that
these
multinational
Conventionally,
A
compar
Middlein
the
fast.
geo-societal
countriesis relatively recent
the
in
socio-economic,
in
rater
has
been
steady
rise
of
market
size.
Annexu
re
(a)
and
(b)
gives
the
market
size
and
the
market
struct
ure
of
baby
foods in India.
The
packaged
food
products
for
babies
are
broadly
classified
a)
into
cereal-based
such
b)
as
Nestum;
cereal-based
with
milk
as
such
Farex,
Cerelax,
c)
milk-based
as
such
Lactogen,
d)
ready-to-feed
liquids,
and
rusks
and
biscuits.
milk
Infant
foods
constitute
most
e)
The
potential
for
exports; especially to
neighbouring countries
and the countries in
the Middle east, the
Gulf and Africa, exist
and
could
be
exploited.
the
significant
segment.

small
6.
The
two
bakery
major
products,
biscuits and bread,

account for 82% of
all
bakery
production.
B
is
c
ui
ts
a
n
d
B
a
k
e
r
y
P
r
o
d
u
ct
s
The
Indian
bakery
indust
ry
is
domina
Biscuit
is ted by
and
size
medium-
producers,
besides
the
units
15
in
the
organised
sector.
Apart
from
the
nature
of
the
industry
which
gravitates
to
the
markets and caters

to
the
local
tastes,
the
industry is widely
dispersed.
The two major bakery
products,
and
biscuits
bread,
account
for 82% of all bakery

production.
The
unorganised
sector
accounts
for
about
two-thirds
of
total
biscuits
production
the
estimated
at 1.3 mn tonnes. It
estimated to enjoy the
also accounts for 80%
around 37% share small-
of
by
production
volume
and scale
the
total
bread
which
75% by value of sector
estimated
the
tonnes and around 90%
industry.
bakery with
an
estima
ted
50,000
of
the
at
1.5
is
other
mn
bakery
products estimated at
0.6
last
mn
tonnes.
The
includes
pastries,
buns,
rusks
others.
9
cakes,organi
(a)
the
The
organised
segment in biscuits
Annexuresector
and
gives
andsed
(b)is
has
witnessed
steady
growthunable
of market size ofto
growth
of
about 6%, conforming

broadly
to
the
biscuits over thecompet
growth rate of GDP.

last ten years.
Biscuit
is
estimated
enjoy
37%
to
around
share
volume
and
by
75%
by value of the
bakery
industry.
The
organised
sector
caters
to
medium
and
the
premium
segments,
are
less
which
relatively
price-
sensitive.
The
at
The
production
crossed
the
one-
million
tonne
mark
the
lower
price
range
due to
in 1995-96 which has

now
grown
by
estimated 30%.
the
excise
The
advant
bread
age
estimated at Rs. 13
enjoye
bn.
number of producers
by
the
inform
al
sector
.
in
size
of
the
market
is
There
are
both
sectors,
organised
and
unorganised. From a
low
priced
commodity, bread has
10
growt
local markets.
graduated
The
into a
the
branded
confectionery
product
in
with
the
boiled
market
organised
hard-boiled
candies,
toffees,
Confectioneclairs
ery
around
The
of
(comprising
plain
ing prices.
volume
sugar
sector
discriminat
7.
total
and gums) is
125,000
Indiantonnes. Add to this
confectionery
market
the
unorganized
includessector and the market
sugar
boiledfor
all
types
of
confectionery,
confectionery
hard-boiled
the order of 250,000
candies,
tpa. That
toffees
In
sugar-of
terms
The
penetrated
an
estimated
15%
of
the
households
it
is
potential
growth.
There are about

units
catering to the
at
a
in
rate
of
25%
1998
had
dropped
and
suggesting
sectors
expansion
to
only,
5,000
unorganized
less than 50%.
confectionery
for
the
sugarvalue
boiled
large
translates
candies.sector by volume. In
2000,
had
of
andinto 66% market share
other
based
is
17%
in
1999
registered
negative
growth
of 2% in 2000. In
the
long
run
it
is slated to grow
at
annually.
to
10%
The
in
the
size
of
the
confe
ction
ery
marke
t
is
gives
as
Annex
ure
10
(a).
types
of
The total volume of the
sugar
confectionery
boiled
market
in the organised sector

is
around
125,000
tonnes. Add to this the

unorganized
sector
and the market for all
confect
ionery
is
of
the
order
of
250,00
0 tpa.
1
1

dechannelised
Exp
ort
s
export of these milk

products with effect
from
mid
According
Export
of
milk
produc
ts
of
promoting
exports
of
milk
to
the
Policy
for
the
policy for export of

these milk products
is as under
like
With the objective
EXIM
1993.
1997-2002,
certai
n
the
milk
Powder
powder
(skimmed or full
Cream) whole and
ghee
milk
and
infant
milk
butter
food,
was
Ghee and Butter,
pure milk
products, the Govt. canali
except
have dechannelised sed
exported
the export of these uptil
branded products
milk products with 1993.
in
effect
packs,
1993.
from
mid With
when
as
consumer
not
the
exceeding
object
in
ive
be exempted from
of
5 kgs
weight, will
promot
the
ing
conditions :
export
s
of
following
)i
Quantitati
milk
ve ceiling
produc
as
ts,
notified
the
by
Govt.
DGFT
from
have
time
to
may
be
the
time.
i)
registrat
ion-cumallocatio
n
certifica
te
issued
by
agricultu
ral
and
processed
milk
of
Developme
of
and
powder
ghee
and
Commer
their export is now
ce
freely
vide
However, butter, if
Public
exported
Notice
packaging exceeding
No.
48/RE-
continues
98/199
under
7-2002
quantitative
dated
ceilings.
r,
Export
kg.
allowed.
in
in
weight,
to
be
the
Products for exports

-
Skimmed
Powder,
Milk
Whole
Milk
1998
Powder,
Ghee,
Butter,
Cheese,
have
nt
Authority
(APEDA).
Foreign
ry
Octobe
Products
General
export
13th
Food
The
Minist
remove
d
the
quanti
Condensed
Milk,
Casein etc. are some
Directortative
of the milk products
ofceilin
being exported from
Trade,g
for
India.
12

products
The
export
figures
of
dairy
products
during
the
last
five
years
are
given
in
in
ASEAN
the
region
fill
dairy exports will
this
become
limited
by
vacuu
GATT
agreements,
m and
while
Australia-
The
s-
UAE
(43%),
becom
have
adequate
leadi
Equally
dairy
rise of Russia as
expor
the
ting
worlds
dairy
importer.
(19%),
Although
milk
(12%)
producer
in
Europe,
Future
Markets
the
Russian output has

declined
by
more
Eastthan 25 percent in
Russiathe
Asia,
past
five
and Africa willyears.
The
be the emergingshortfall
Inmillion
products.
is
tonnes
future,
thereThese
prospect
3
tonnes
of
major
ofdeficits in milk
overoffer
millionopportunity
of
milk
Pot
ent
ial
for
val
ue
add
ed
pro
duc
ts
Ethni
India
additionalavailability
demand
ns.
immediateyear.
the
an
milk
dairyestimated to be 13
Indian
is
in
forproduction
market
natio
by far the biggest
Bangladesh
South
ng
significant is the
biggest
Nepal
to
New Zealand do not
capacity.
Destination
to
EU
alone.
Annexure 11. production
Major
India
n
dairy
produ
an
for
cts
like
Sweets
Shreekhand,
Rusgulla, Khoya
and
Ready-to-
Eat-Kheer,
Haluwa,
etc.
have
good
demand
in
the
countries where
ethnic
Indian
population
settled.
is
For
promotion
of
these products,
we
require
export
worthy
consumer
packing,
also
the
which
South
East
Asia,
Russia and Africa will

be
the
emerging
market for Indian dairy

products.
improves
shelf-life
of the product.
13
Steps Initiated by APEDA

APEDA
has
initiated
following
steps
to
increase export of dairy products:

Standards have been laid down for export of dairy products
APEDA is offering subsidies for implementation of HACCP and
ISO 9000, installation and upgradation of laboratories and
market promotion through sending of samples, printing of
catalogue
brochures
and
brand
publicity
through
advertisement etc. under its plan scheme. Export market

development will depend on ensuring the quality. This will
require that exporters ensure quality from the milk animals
to the port and beyond. To build the quality, mechanized
dairy fanning requires encouragement with export oriented
processing
facilities.
Manufacturing
units
linked
by
contract with large scale producers, can ensure of quality

raw material necessary to enter and maintain the position in
the
international
recognised
in
the
market.
It
is
international
the
cow
market.
milk
which
is
Since
India
is
producing more of buffaloe milk, there is a need for generic

promotion of buffaloe milk. Many countries in the world do
not import milk products from India since India is reporting
many
livestock
diseases
particularly
FMD.
Efforts
are,
therefore, needed to control and eradicate FMD at least in

major milk producing States. Creation of chilling facilities
at block level/ village level and transportation of liquid
milk to processing units in reefer units.
14
4
A SWOT
Analysis of
Dairy
Industry in
India
Increasing
availabili
ty
of
indigenous
ly
manufactur
Strengths
1
ed
milk
equipment.
Enhanced
r
i
m
m
Large
producti
number
on
dairy
with
of
e
n
s
conseque
plants
ntly
(252)
increase
public
cooperative
availabi
sector
lity
besides
milk
several
processi
others
ng.
coming
of
Improved
purchasi
ng power
of
the
consumer
.
6
and
up
in
the
private
Vast
pool
highly
trained and
tation
qualified
faciliti
manpower
es
available
movement
to
of
industry.
milk
and milk
products
.
the
Countrys
vast
transpor
for
sector.
of
Improved
in
natural
resources
o
r
g
r
o
w
t
h
a
n
d
developmen
t
of
dairying
With our
Threats
1
Introduction
of
foreign
products
in
Indian
market.
strengths
we have to
be aware of
our
weaknesses
also.
Weaknesses
1
Tropical
climate
conditio
ns.
Seasonal
fluctuatio
ns in milk
production
pattern.
pool of
highly
trained
and
qualifie
d
manpo
Species-
wer
wise
availab
variation
le
(buffalo,
the
cow,
industr
goat
etc.)
in
to
y.
milk
Countr
quality
ys
received
vast
by
natural
milk
plants.
Vast
Lack
of
marketing
avenues
for
the
dairy
produce.
resour
ces
offer
immen
se
potential
growth
for development
of
and dairying
15
as
residual
antibiotic
s in milk.
r
e
Poor
microbiolo
gical
quality of
milk.
Export
a
s
i
n
g
quality
ingredients
particularly
The
liberalisation
of
the
Dairy
Industry is likely to
be
exploited
by
multi-nationals.
of
cakes
under
the
liberalizatio
n policy.
a
l
feed
Deficiency
of
molasses,
n
t
a
rich
source
of
energy
and
binding
m
i
agent
feed
industry
constituent
of
molasses
milk as well as
mineral
value
lick.
Increasing
demand for fluid
products.
added
w
e
in
and
urea
Excessive
grazing
pressure
on
will
be
marginal
interested
in
and
manufacturing
small
milk
communit
which
lands
high
resultin
It will create
milk
in the country
adversely
affecting
consumers.
in
complete
degradat
ion
of
land.
6
Extinctio
of
the
indigenou
breeds
of
cattle
to
due
indiscrim
inate
use
products
yield
profits.
shortage
the
Inspite all
these problems
and threats we
have clear cut
and tremendous
opportunities
before us
of
crossbree
ding
programme
to
enhance
milk
productio
of western as
n.
well
The
traditional
liberalisa
types.
tion
of
Dairy
Industry
expanding
is
market for
the
likely
Opportunities
1
Great
improved
export
potential for
milk products
as
Establishe
and
traditio
nd
nal
fluid milk
dairy
as well as
products
value
added
products.
Increasi
16
for
By product
Utilizatio
n
for
import
substituti
on.
resistance,
draftability
and
ability
to
survive
and
Employme
nt
generati
on.
produce
under
Growing 7
demand
for milk
and milk
products
.
Availability
Liberali
sed
policies
in dairy
sector.
of
animal
production
for
faster
development
and
effective
be
integrated
tional
structure
feeds
of
and
marketing
fodders
for
milk
and
milk
Availability
like
diverse
heat
tolerance,
10 I
There
unconven
features
a
k
an
of
unique
technologies
with
conditions.
should
germplasm
a
e
resource
of
n.
of
large
stress
implementatio
Availabi
lity
disease
m
p
r
o
v
e
d
c
products.
Integrated
structure
for
livestock
marketing
through
on
ofproduction
data
oncountry.
in
The
contract requires
the
order
no
basis
permission for units
through
handling
agencies
.
10,000
less
litres
than
of
liquid milk per day
11 Market
or milk solids upto
informat 500
ion
intellig
ence
tpa.
Milk
and
Milk
system
for milk
Produc
and milk
ts
products
Order
(MMP
12 Developm
ent
O)
of
regulat
software
es milk
for
project
formulat
ion
for
and
milk
produc
ts
dairy
enterpri
produc
se.
tion in
the
Policies in
Milk & Milk
Products
Milk
and
Products
(MMPO)
milk
Milk
Order
regulates
and
products
milk
country
.
All
the
products
milk category of industries

except for
foreign
atically
malted foods are equity
participation
allowe
covered
51%
d.
in
the upto
which
autom
is
17
All the milk products except malted foods are covered in the
category
of
industries
for
which
foreign
equity
participation upto 51% is automatically allowed. Icecream,

which was earlier reserved for manufacturing in the small
scale sector, has now been dereserved. As such, no license
is
required
for
setting
up
of
large
scale
production
facilities for manufacture of ice cream.

Subsequent to dechannelisation exports of some milk based
products are freely allowed provided these units comply with
the compulsory inspection requirements of concerned agencies
like: National Dairy Development Board, Export Inspection
Council etc. Bureau of Indian standards has prescribed the
necessary
standards
for
almost
all
milk
based
products,
which are to be adhered to by the industry.
Regulatory Environment in the Dairy Processing
Sector in India
The
Indian
processed
dairy
industry
has
grown
and
diversified enormously in the last few years. To ensure the

proper development and growth of this industrial sector, the
Government
of
India
has
instituted
various
laws
and
regulations. The various regulations that govern the dairy

processing industry can broadly be classified into:
Compulsory Legislation
Prevention of Food Adulteration Act, 1954
This Act is the basic statute that is intended to protect the
common consumer against the supply of adulterated food. This
specifies different standards for various food articles. The
standards are in terms of minimum quality levels
18
intended for ensuring safety in the consumption of these

food
items
and
for
safeguarding
against
harmful
impurities and adulteration. The Central Committee for

Food Standards, under the Directorate General of Health
Services,
Ministry
responsible
for
of
Health
the
and
operation
Family
of
Welfare,
this
Act.
is
The
provisions of the Act are mandatory and contravention of

the rules can lead to both fines and imprisonment.
Milk and Milk Product Order (MMPO) 1992

The Milk and Milk Product Order (MMPO), 1992, issued on June
9,
1992
seeks
to
ensure
essential
commodity,
processing
and
to
the
supply
consumers
distribution.
Within
of
liquid
by
milk,
regulating
eight
years
an
its
of
its
operation, the Central/State Registering Authorities have

till
December
2000
registered
666
units
with
total
processing capacity of 65.8 million litres per day (mlpd).
Salient Features of the MMPO Order include the following:

Registrations for units handling up to 75,000 litres of
milk per day are granted by the State Governments and
units with more than 75,000 litres per day capacity
are registered by the Central Registering Authority.
The
Certificate
also
specifies
the
milkshed
area,
which, under the order is defined as a geographical

area demarcated by the Registering Authority for
the collection of milk by the registered unit.
Maintenance of specified hygienic conditions in

the premises where milk and milk products are
handled, processed, manufactured or stored.
19
The
collection,
normally
centres
transportation
around
the
and
processing
operations
of
of
milk
processing
plant. The region from which the marketable surplus of milk

production finds its way to a processing plant is called a
milkshed. The concept of milkshed areas is pivotal to the
MMPO. For an orderly development of the dairy industry, a
proper assignment/allocation of milkshed is critical.
Standards on Weights and Measures

(Packaged Commodities) Rules, 1977
These Rules lay down certain obligatory conditions for
all commodities that are packed form, with respect to
declarations on quantities contained. These Rules are
operated
by
the
Directorate
of
Weights
and
Measures,
under the Ministry of Food and Civil Supplies.
1)
Voluntary Standards
There
are
voluntary
systems
Indian
two
organizations
standardization
in
the
food
and
sector.
Standards looks
that
deal
with
certification
The
Bureau
of
after standardization
of processed foods and standardization of raw

agricultural produce is under the purview of
the Directorate of Marketing and Inspection.
2)
Bureau of Indian Standards (BIS)

The activities of BIS are two fold, the formulation of
Indian standards in the processed foods sector and the
implementation
of
through
voluntary
systems.
BIS
has
standards
and
on
through
third
record,
party
standards
promotion
and
certification
for
most
of
processed foods. In general, these standards cover raw
20
materials
permitted
hygienic
conditions
and
their
under
quality
which
parameters,
products
are
manufactured and packaging and labelling requirements.

Manufacturers complying with standards laid down by
the
BIS
exhibited
can
obtain
on
product
and
ISI
packages.
mark
BIS
that
has
can
be
identified
certain items like food colours/additives, vanaspati,

containers
for
packing,
milk
powder
and
condensed
milk, for compulsory certification.
3)
Directorate of Marketing and Inspection (DMI)

The DMI enforces the Agricultural Products (Grading
and
Marketing)
Standards
allied
are
Act,
1937.
prescribed
commodities.
These
Under
for
are
this
Act,
Grade
agricultural
known
as
and
Agmark
Standards. Grading under the provisions of this Act

is
voluntary.
Manufacturers
who
comply
with
standard the laid down by DMI are allowed to use

Agmark labels on their products.
Other Government Regulations :

1)
Industrial Licence:
No licence is required for setting up a Dairy Project
in India. Only a Memorandum has to be submitted to the
Secretariat
for
Industrial
Approvals
(SIA)
and
an
acknowledgment is to be obtained. However Certificate

of Registration is required under the Milk and Milk
Products Control Order (MMPO) 1992.
2)
Foreign Investment:
Foreign Investment in dairying requires prior approval
from the Secretariat of Industrial Approvals, Ministry
of Industry, as dairying has not been included
21
in the list of High Priority Industries. Automatic

approval will be given upto 51% Foreign Investment
in
High
Priority
Industries.
In
case
of
other
Industries, proposals will be cleared on case to

case
basis.
enforcing
the
Government
old
limit
may
of
allow
40%
51%
without
applicable
under
Foreign Exchange Regulations Act at its discretion.
22

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1

Milk and Dairy Sector

are yoghurt and dessert.

Technology Export Potential of Milk and Dairy Sector

States, 70 per cent

many as 90 per cent

Germany and 100 per

regulation than most

Marketing Orders and

providing secure and

the countries of the

the fluid marketthe

USA will have to be

been the focus of

Indian dairy industry

production, India can

next few decades.

Technology Export Potential of Milk and Dairy Sector

much better with

India has beendemand

the world overaround 80 million

Technology Export Potential of Milk and Dairy Sector

lakh tons in 19992000, whereas that

at 65000 tons. The

than half of the conden

plants are coming-

lactose, casein and

and goats in thenos.)

As per the 1992

A.P. (9.15 million

The milk production

Technology Export Potential of Milk and Dairy Sector

of over 4.5% per

during the 8th Five

Year Plan, achieving

not only places our

inthe world after the

source of income for

beentonnes of milk. This

cattle and upgrading

market, about 911

income for millions of

Dairying has become

Technology Export Potential of Milk and Dairy Sector

located in the rural

Operation Flood Milk

About 45% of milk privat

the marketed output.

private traders and

cheese) and other

Dahi (yoghurt) and

milk. About 35% is

and the balance is . Milk

products such as led

into milk powder; sector

the balance is used

(yoghurt) and sweet

15%. The market for

cheese cubes slices

with the Amul brand

market. The market

Technology Export Potential of Milk and Dairy Sector

ETA and Metro.

reached the level of