Milk and Dairy Products in India - Production, Consumption and Exports

• India is the largest producer of milk producing more than 100 million tons of milk per annum. Yet, her per capita milk consumption is around 250 g per day.
• India has a population of more than 1 billion with diverse food habits, cultures, traditions and religions. Regional variations within the country can be mind boggling. On one hand, the country has plains with long tradition of milk production and consumption. On the other hand, there are forest and hilly regions with no tradition of dairying. Most of coastal belts also do not have much of dairy tradition.
• Cow is holy for Hindus who make up more than 80 per cent of the population of India. Buffalo enjoys no such holy status. Cow slaughter is banned in many states of India. There are no restrictions on buffalo culling.

All this makes India a very complex dairy country.

Till about year 2000, India was not on the radar screen of most international dairy companies, since India was neither a major importer nor an exporter of dairy products. Through the 70' s, 80' s and 90' s India used to take some milk powder and butter oil as aid. Exports from India were insignificantly small. From 2000 onwards, Indian dairy products, particularly milk powder, casein, whey products and ghee started making their presence felt in global markets.

The decade of 2000-10 will be recorded in dairy history as the decade of exports. But the next decade will be different. Signs of change are already visible. India is finding it difficult to sustain exports. The day is not far when India will become a net importer of dairy products, particularly of dairy fats.

India' s milk production will grow at about 3 per cent per annum in spite of difficulties due to stagnant livestock herd size and shortage of fodder. Due to increasing population, per capita availability of milk will increase by only about 1.5 per cent per annum. For an economy growing at about 8 per cent per annum, this increase in availability will be grossly inadequate.

Production growing at only 3 per cent and consumption growing at more than double the rate is obviously going to lead to a mismatch between demand and supply. This will create opportunities for international dairy companies.

On one hand, India is expected to enter the international market with demand for commodities like skimmed milk powder and butter oil. On the other hand, growing prosperity and fast growth of organized modern retail and western style fast food outlets will lead to increased consumption of products like cheese and table butter. This will throw up opportunities for branded dairy products to enter this huge market of more than a billion people.

Helping international companies understand the dairy scenario of India from a macro-level perspective is the prime objective of this study. Facts and statistics, instead of opinions and impressions, are the key building blocks of this report.

During the study, we have tried, as far as possible, to rely on official data from some department / ministry / agency / directorate of government of India. This poses a problem since government agencies of India are slow in releasing data. For example, Director General of Commercial Intelligence & Statistics, Kolkata (responsible for compiling data on India' s imports and exports) had till the end of April 2008 released monthly export data in respect of only August 2007. Department of Animal Husbandry' s latest data is given in their Handbook released in December 2006, which gives data only for financial year ended on March 2006.

Inadequacy of official data is a perennial problem with most developing countries. Fortunately, in case of India the problem is not as severe. India has one of the oldest and most reliable census systems in the world. India conducts a fairly reliable livestock survey regularly. Data on economic fundamentals is extremely detailed and easily available. Trade data collection system of India is better than of most developing countries and is much more reliable than of most non-democratic countries.

Separating the useful and relevant from irrelevant and useless is always a challenge. It is more when so when one has an ocean of data (parts of which may be a bit old). This is a challenge that we are able to undertake with our long experience in India and Indian dairy / livestock industry in particular. We have our ear on the ground in India. We understand the dynamics of fast-changing India. We use the historical data provided by government agencies and rely on our experience and insightful expertise to see trends that others notice much later.

We hope that the study helps you get a macro-level understanding of the dairy scenario in India. This may however not answer all the queries that you may have. We look forward to conducting in-depth micro-level studies related to Indian dairy industry for you based on your requirements.