Milk and milk products valued at Rs200,000 crore in India

India ranks among the world's largest and fastest growing markets for milk and milk products. The market size in value terms for milk and milk products, including the organised and unorganised sector, is Rs200,000 crore($47.6 billion), growing at nearly 7.5 per cent annually.

The demand for value added milk products, such as cheese, dahi (Indian yoghurt) and probiotic drinks is increasing at a double digit rate. At present, India seems to be self-sufficient in meeting is requirement for milk and milk products. However, given that demand is growing faster than supply, there could be serious issues with respect to self-sufficiency in the near future.

Any increase in milk production is dependent on the farmgate price received by the producer. Farmgate prices have increased by more than 50 per cent in the last three years. Focused efforts would be required on two front: increasing farm size (currently the average number of animals per producer is three to four), and increasing productivity of milk producing animals.

Global milk production, approximately 655 million tones in 2006-07, is estimated to be growing at 1.6 per cent per annum. India ranks second in terms of milk production after the EU-27 and accounts for 15 per cent of global production.

Annual milk production in India was at 100.9 million tones in 2006-07 and was growing at 4 percent per annum. The market for liquid milk, as well as value-added dairy products, is still largely dominated by the unorganised sector. India has an insignificant share of the global dairy trade, less than 1 per cent, despite being a leading producer of milk.

In 2006-07, Indian milk production, which includes cow and buffalo milk, stood at 100.9 million tones and accounted for 15 per cent of total world milk production. It is estimated that by 2010, India's milk production will reach 111 million tonnes.

Despite the high growth rate in production, the per capita availability of milk in India (245 gm. per day) is lower than the world average (285 gm. per day). Buffalo milk now accounts for  57 per cent of total milk production in India, alevel which has remained stable over the last few years.

Most of the packed liquid-milk segment in India is dominated by the cooperatives. The liquid milk contribution in total revenues ranges from 60 per cent to 80 per cent in the case of cooperatives. Private players barring few are mainly focused on milk products other than packed liquid milk.

There is a huge potential for processing and value addition in the organised sector, particularly in ethnic Indian sweets, which are largely sold in unbranded form in the market. The key differences between the organised and the unorganised sectors concern the level of investment in preserving the quality of milk, the technology used for processing and the compliance with food standards.