Milk production to touch 208 million tonnes
MUMBAI, 19 May 2020: The manufactured dairy products output is estimated to grow 10% to INR 283,000 crore (USD $37.58 billion) during the current financial year (April 2020-March 2021), a Mumbai based rating firm, India Ratings and Research (Ind-Ra) said in a report.
During the same period last fiscal year 2019-20, Indian dairy sector market was at INR 256,000 crore (USD $34 billion) during 2019-20 as households continue to drive the consumption of milk and milk products, the rating agency said.
Household consumption in milk, milk products occupies 21% share
The household consumption demand for milk and milk products occupies the highest share in the private final consumption expenditure on food after breads, cereals and pulses. The share of milk and milk products averaged 21% in household expenditure on food during FY12 to FY18.
Notwithstanding the disruption in economic activity due to COVID-19 pandemic and closure of non-essential commercial establishments like hotels, restaurants, bakery and sweet shops, theatres and malls, Ind-Ra expects the consumption demand for liquid and pouch milk, ultra-high temperature milk and dairy products like butter, clarified butter and cheese to draw sustained support from the household demand.
Milk procurement from small farmers who are outside the coverage of organized cooperative and corporate sector dairy network could be impacted due to the lockdown.
However, the cooperatives and established private dairies continue to procure milk from their network farmers, with the surplus being converted into skimmed milk powder, ghee and other processed products, to be sold during the lean season.
Small private dairies closed due to lockdown
Small private dairies, primarily catering to milk-based sweet making shops and local supplies in towns, may have closed operations resulting in a diversion of milk to cooperatives. Milk procurement by dairy cooperatives increased to 56 million litres per day (MLPD) during the first phase of the lockdown from 51 MLPD in March 2019.
Milk production to rise in FY21
To meet the needs of a growing and rapidly urbanising Indian population, a commensurate increase in milk production is required to keep pace with demand. Ind-Ra has projected milk production to increase to 208 million tonnes (MT) in FY21 from 198 MT in FY20 and 187.7 MT in FY19.
With the increase in milk production, the per capita availability is projected to rise to 428 gm per day in FY21 (FY20: 411 gm per day.
Government set 300 million tonnes of milk production by FY24
The government has a milk production target of 300 MT by FY24 to meet the growing demand for dairy products and make dairying a sustainable source of livelihood for small and marginal farmers and landless labourers that constitute the bulk of milk producers in India.
The increase in productivity depends on the availability of feed and fodder, disease control and breed development programmes. Ind-Ra said productivity improvement initiatives will have to be aggressively pursued to achieve a high production target.
Investment announced for FMD, brucellosis and animal husbandry infrastructure
On May 15, Finance Minister Nirmala Sitharaman launched the National Animal Disease Control Programme for Foot and Mouth Disease (FMD) and Brucellosis with a total outlay of INR 13,343 crore (USD $1.78 billion). The scheme is aimed at ensuring 100% vaccination of cattle, buffalo, sheep, goat and pig population of 53 crore animals for FMD and brucellosis.
The government also announced its intent to support private investment in dairy processing, value addition and cattle feed infrastructure through the launch of an animal husbandry infrastructure development fund of INR 15,000 crore (USD $2 billion).
These measures, which form a part of the COVID stimulus package, will further the development of dairying activity over the medium-to-long term, said Ind-Ra.