INDIAN DAIRY INDUSTRY

MILK MARKETING IN INDIA: CHALLENGES AND OPPORTUNITES

Mrs Smita Dayal

K.J. Somaiya Institute of Management Studies and Research

Milk Marketing in India:Facts

In India more than 67% of the dairy animals are owned by marginal and small farmers, primarily to supply milk for their own consumption.
80% of the milk (marketable surplus) is still marketed through the unorganized sector which includes local milk vendors, wholesalers, retailers, and producers themselves. 20% of the milk production is marketed through the organized sector which largely is constituted by the Cooperatives and Government. Milk production and dairy became a popular side-business for the rural farmers for enhancing there livelihood. With liberalization of the dairy industry, private investment has increased quite significantly.

Milk Marketing Channels

Challenges in Milk Marketing

Adulteration is very common in the unorganized sector which dilutes our competitiveness in the international market and nutrition of our country people is greatly compromised. Due to a very minimal share of the private sector in the organized milk market there is very little competition to the dairy cooperatives which has led to inefficiencies in the cooperative system.

Milk production is scattered over a large number of farmers producing minuscule quantities.The scattered production leading to high cost of transportation.Further, the milk is produced in the most interior.
Too many intermediaries between the milk producer and consumer lead to wide price spreads and non-remunerative prices to the producer. Milk being a perishable commodity cannot be stored for long hence lack of adequate infrastructure

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Milk productivity is also seasonal-lean and flush season. But due to lack of proper management and inadequate technology it is a challenge to meet demand in the lean season and to process milk into dairy products in the flush season. Low productivity of milk animals is a serious constraint in the dairy development.

The dairy- development policies and programs that are followed, including those relating to foreign trade, are not congenial to the promotion of sustainable and equitable dairy development.
Cooperatives are not a successful business models everywhere because of the political tie-ups or presence in the management leading to corruption and disruption of the cooperative culture.

Future Opportunities

HUGE MARKET FOR DAIRY PRODUCTS

India has so largely concentrated on production and distribution of liquid milk only but there is a huge market for dairy products like ghee, butter, cheese, dahi lassi, milk cream , ice-cream etc. which needs to be tapped.

ENTRY OF LARGE CORPORATIONS IN RETAILING

This has led to increased investment in the dairy industry which has led to higher capacity utilization,availability of better quality dairy products and better price to the milk producer.

INCREASED FARMER INCOME

Due to the high demand of milk and the setting up of milk cooperatives,the farmer's livelihood has increased and is no more dependent on agriculture alone. The cooperatives have further led to decreased price spreads in dairy which has led to more percentage share of the milk producer in the money paid by the consumer.

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AVAILABILITY OF CROSS-BREEDING FACCILITY TO ENHANCE THE MILK PRODUCTION IN THE COUNTRY OVERALL POSITIVE GROWTH ENVIRONMENT

The Government has been taking several steps to strengthen the dairy sector under the Five year Plans,Operation Flood project, dairy policy changes post 1991, setting up the National Dairy Development Board and by promoting the cooperative culture to ensure productivity and profitability.

EXPORT MARKETING OF DAIRY PRODUCTS

There is a scope for export marketing of the dairy products especially in the light of economic liberalization introduced by the Government in mid 1991. India has a comparative advantage over other countries in terms of lower production cost and higher production of milk