Milch money

The Dairy industry is seeing rapid growth as players milk the rising appetite for dairy products

India rarely tops a global commercial leader board, so it being the world’s largest milk producer is a notable exception. Dissecting the production numbers for productivity could take some sheen away, so let’s just celebrate the absolute figure. It was the ominously named Operation Flood that drove India’s transformation from a milk-deficient country to the largest milk producer. This National Dairy Development Board initiative was directed by no less a legend than Verghese Kurien and the world’s biggest dairy development programme led to an unprecedented rural transformation.

Today, India accounts for about 15% of global milk output, but even that volume could end up falling short in the years to come. Rising consumption of milk and dairy products such as butter, cheese, ice-cream, yogurt and flavoured milk has resulted in a number of players entering the value-added space. Hawking plain milk is a commodity business that throws up very little net margin, driving the rush to get into value-added products. This is true not only for multinational players but for existing domestic players as well. An important footnote that gets forgotten is the edge that Amul got after it developed skim milk powder from buffalo milk. This value addition enabled it to offer a better price to its producers. And it is this tried and tested path that players in the organised space are now treading by offering more variety to retail consumers. That precisely is the subject of this issue’s cover story: The diary explosion.

Unfortunately, this consumption boom in dairy products is not accompanied by a proportionate effort to boost supply at the producer level. If the status quo continues, we could soon see the price of raw milk rising and getting reflected in dairy products as well. NDDB estimates show that India could lose its self-sufficiency status in less than ten years. The time, then, seems ripe for a second milk revolution, in which the private sector could end up playing a bigger part.

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