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AAKANKSHA ROBERTS NEHA SRIVASTAVA 4/23/12

analysi s

INTRODUCTION

Dairy industry represents a major segment of thefood industry. Every individual consumes dairyproductsdaily in various forms like curd, cheese, milk, and their increased attention towards health and nutrition has increasedthe demand ofdairyproducts. The dairy farming has been transformed from traditional farming to advanced 4/23/12 farming where more tools and

GLOBAL DAIRY MARKET

The global dairy market was valued at about 276 billion euros in 2010, corresponding to 207 million tons of dairy products Within the dairy market, liquid and powdered milk had the lowest growth rate. Flavored milk and yogurt were the most dynamic categories, with substantial growth rates over the five-year period being analyzed 4/23/12

milk and yogurt were the most dynamic categorie On a value basis, with milk s, (white+flav substanti ored) is the al growth biggest category rates

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(39%),

As shown in the chart below, the most important geographic macroareas for dairy products are Western Europe and Asia, which together account for about 50% of the total dairy market.

More specifically, while Western Europe and North America are more mature markets with limited growth 4/23/12

SCENE
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ASIAN DAIRY

POPULATION

MILK PRODUCTION
20%

60%

With 60 per cent of the world population, Asia accounts for only 20 per cent of the global milk production The total world milk production of more than 500 million tonnes for a population of about 4 billion amounts to an average annual per capita availability of 100 kg. The corresponding figure for Asia is only about 27 kg and the consumption is about 30 kg. Some 10 per cent of milk consumed in Asia is imported. In several Asian countries, imports of dairy products, both as finished products in consumer packs and in bulk for recombination into milk, have helped create a dairy market and a milk processing industry. 4/23/12

Dairy productivity growth in Asia: Sources of change in cow milk production, 19851998 % of change in cow's milk production 4/23/12

INDIA AND THE DAIRY INDUSTRY (Oyster of the global dairy industry)

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RESOURCES
India has vast livestock resources (57 per cent of the world buffalo population and 16 per cent of the cattle population)

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Indian Dairy products

Product Fluid Milk Ghee Butter Khoya Milk powder(IMF included) Cottage cheese others Percentage 46.0% 27.5% 6.5% 7.0% 6.5% 3.5% 2.0% 1.0%

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INDUSTRY INFRASTRUCTURE

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INDUSTRY INFRASTRUCTURE

The industry is dominated by small, informal and unorganized dairy units. In the absence of adequate integration and economies of scale, most of the milk and milk products are either sold unprocessed, or processed locally into low valueadded products. Such products in absence of hygiene, quality and safety are unable to command 4/23/12 premium prices from the consumers.

FROM INFORMAL TO ORGANISED SECTOR

The projected impact of these changes on the structure of dairy production and processing are:

Increase in crossbred population and herd size

The figures given in earlier sections clearly reveal that the population of crossbred high-yielding animals is increasing at a faster rate than local 4/23/12 cattle. If this trend continues, milk

RESEARCH AND DEVELOPMENT Thanks to one of the

latest scientific discoveries, babies could soon drink a

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RESEARCH INFRASTRUCTURE The Indian dairy industry has aimed at better mananamegemt of the
national resources to enhance milk production and upgrade milk processing involving new innovative technologies.

Embryo Transfer (ET) technology allows the multiplication of elite livestock breeds at a much faster rate. In the past 30 years, the annual production of compounded feed has gone up to 3 million tonnes from 40,000 tonnes New types of feeds have been developed, to improve the nutritive value of the traditional cattle diet. Herbal and ayurvedic formulations, are also

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SWOT ANALYSIS

The study of thisSWOTanalysis shows that the strengths and opportunities far outweigh weaknesses and threats. Strengths and opportunities are fundamental and weaknesses and threats are transitory.Any investment idea can do well only when you have three essential ingredients: entrepreneurship (the ability to take 4/23/12 risks), innovative approach (in

collaborate with India.

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INVESTMENT IN DAIRY New Zealand is keen to INDUSTRY

Biotechnology Dairy food processing equipment Food packaging equipment Distribution channels What Indian Dairy Industry Has To Offer To Foreign Investors? Retailing Product development Ingredient manufacture Technology-driven units Training centres for education

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Potential for investment in the dairy industry

Some areas of Indian dairy industry can be toned up by the evocation of differentiated technologies and equipment from overseas. These include: Raw milk handling: The raw milk handling needs to be elevated in terms of physicochemical and microbiological properties of the milk in a combined manner. The use of 4/23/12

TRADE IN DAIRY INDUSTRY EXPORT, IMPORT AND

DOMESTIC SALES

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EXPORT

Export of certain milk products like milk powder, ghee and butter was canalised uptil 1993. With the objective of promoting exports of milk products, the Govt. have dechannelised the export of these milk products with effect from mid 1993. Major Destinations- UAE (43%), Nepal (19%), Bangladesh(12%) FUTURE MARKET-

South East Asia, Russia and Africa will be the emerging market for Indian dairy products.

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Products for exports

1.Skimmed Milk Powder, 2.Whole Milk Powder, 3Ghee, 4.Butter,

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5.Cheese,

Potential for value added products

Ethnic Indian dairy products like Sweets Shreekhand,Rusgulla, Khoya and Ready-to-Eat-Kheer, Haluwa, etc. have good demand in the countries where ethnic Indian population is settled. For promotion of these products, we require export worthy consumer packing, which also improves the shelf-life of the product
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MILK PRODUCTION IN INDIA

YEAR 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 PRODUCTION (Million tonnes) 80.5 84.4 86.2 88.7 90.1 94.6 Per capita availablity (gms/day) 220 225 230 231 229 220

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IMPORT

Commercial imports of dairy commodities were significant until the early 1970s, comprising of about 50% to 60% of throughput, but declined significantly in the 1980s and 1990s. However, the imports of milk powders and butter/butter oil increased substantially in the late 1990s, mainly due to low import duties on these two products as a 4/23/12 commitment under the WTO

MARKETING(Reaching the target

customer)

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MILK MARKETING CHANNELS

CHANNELS Producer-consumer Producer-milk hawker-consumer Producer-processor-consumer Producer-processor- retailerconsumer Producer-dairy co-operative -processor- retailer consumer NO. OF INTERMEDIARIES 0 1 1 2 3

Producer-milk transporter-processor 3 - retailer-consumer Producer-milk trader-processorretailer-consumer Producer-dairy coop - milk transporter-processor-retailerconsumer 4/23/12 3 4

PRICING

The price of a product in the market is an important factor influencing consumer demand. Hence to be marketable, a dairy product must be competitively priced. This implies that the costs involved in raw material procurement, processing, packaging, storage, marketing and distribution must be kept as low as possible. generally the price of a 4/23/12 dairy product will involve the

Feasibility Study for Milk Marketing and Processing

Before one decides to invest in the business of milk marketing and/or processing one should carry out a feasibility study to establish the economic viability of the planned business. this should include a realistic business plan. The essential elements of a feasibility study should include:
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Establish the amount of milk

Overall dimensions

Dairying is an important part of the Indian agricultural economy. At the national level, about 17% of the total value of output from agriculture derives from this sector, placing Indian milk sector in first place followed by rice (14.4%) and wheat (8.7%) in 1998-99 (CSO, 2001). Dairying is dominated by smallholder production systems; almost 70% of 4/23/12 the milk producers in India are

Dairy enterprise is considered a "treasure" of the Indian economy, particularly for rural systems. It provides nutrition, draft animal power, organic manure, supplementary employment, cash income, and a 'cushion' for 'drought proofing' in India The sector involves millions of 4/23/12 resource-poor farmers, for whom

National Economy (income and employment)

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Socioeconomic Profile of Dairy Farmers

Indian dairy farming is basically a smallholder production system, characterized by milk production by the masses rather than mass production of milk. More than 80 million households (about 73% of rural households) keep some type of livestock Although dairying is becoming more commercialized in some areas, it predominantly remains subsistence farming constituting a complementary/supplementary enterprise to crop farming, with regular sales of surplus production. The base for Indian dairying is provided by millions of landless agricultural laborers and marginal and small farmers who maintain one or two milch animals of low genetic potential for milk production, primarily fed on crop residues and byproducts, and reared with the help of under-employed family members, mostly female workers. Dairy farmers in India are by and large illiterate, resource-poor, and low risk-

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Operation Flood

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OPERATION FLOOD

INTRODUCTION

Operation Floodwas a rural development programme started byIndia'sNational Dairy Development Board (NDDB)in 1970. One of the largest of its kind, the programme objective was to create a nationwidemilkgrid. It resulted in making India the largest producer of milk andmilk products, and hence is also called theWhite Revolution of India.

OBJECTIVES
Operation Flood's objectives included: Increase milk production ("a flood of milk") Augment rural incomes

I.

II.

III.

IV.

Fair prices for consumers 4/23/12

Salient Features of Operation Flood

Key parameters Date of start Date of ending Investment (Rs crore) No. of milksheds No of DCSs set up No of members(lakh) Average milk procurement(mkgpd) Liquid milk marketing (llpd) Processing capacity Rural dairies (llpd) Metro dairies (llpd) Milk drying capacity (MTPD) Technical inputsNo. of AI centers No. of AI done/year Cattle feed capacity ('000 MTDP) States covered Operation Flood Phases Phase I July 1, 1970 March 31, 1981 116.50 39 13,270 17.5 2.56 27.8 45.4 29.0 Phase II April 1, 1981 March 31, 1985 277.20 136 34,523 36.3 5.78 50.0 88.0 35.0 Phase III* April 1, 1987 April 30, 1996 137.95 170 72,744 93.0 11.0 100.0 192.0 72.8

340.0 4,868 820,782 1.65 Andhra Pradesh, Bihar, Delhi, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Uttar Pradesh, and West Bengal

507.0 7,802 1329,455 3.29 Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttar Pradesh, West Bengal, Andaman & Nicobar, Pondicheri, and Delhi

990.0 10,915 3943,890 4.80 Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Sikkim, Tamil Nadu, Uttar Pradesh, West Bengal, Pondicheri and Delhi

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Major Players

The dairy industry is dominated by the co-operative sector. About 60% of the installed processing capacity is in the co-operative sector. The National Dairy Development Board (NDDB) is a major player in the market with its major brand, Amul. Leading brands like Amul, Nestle, Mother Dairy and Britannia are in the race to tap the growing market. 4/23/12

AMUL- THE TASTE AmulOF INDIA has been ranked

as the best brand from India

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Amul is more than just a milk brand to the Indians. Its advertising campaign has always represented the common man's point of view on the serious national issues with a sense of beautiful humour
4/23/12 Owned and marketed by Gujarat Co-

Gujarat Cooperative Milk Marketing Federation Ltd.(GCMMF) -AN OVERVIEW

Year of Establishment 1973 17 District Cooperative Milk Producers' Unions (15 Members & 2 Nominal Members) 3.03 Million 15,712 13.67 Million litres per day 3.45 billion litres 9.2 million litres (peak 12 million) 647 Mts. per day 3690 Mts. per day Rs. 9774 Crores (US $2.2 Billion)

Members

No. of Producer Members No. of Village Societies Total Milk handling capacity per day Milk Collection (Total - 2010-11) Milk collection (Daily Average 2010-11) Milk Drying Capacity Cattlefeed manufacturing Capacity Sales Turnover -(2010-11)

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Our Member Unions 1. Kaira District Cooperative Milk Producers' Union Ltd., Anand 2. Mehsana District Cooperative Milk Producers' Union Ltd, Mehsana 3. Sabarkantha District Cooperative Milk Producers' Union Ltd., Himatnagar 4. Banaskantha District Cooperative Milk Producers' Union Ltd., Palanpur 5. Surat District Cooperative Milk Producers' Union Ltd., Surat 6. Baroda District Cooperative Milk Producers' Union Ltd., Vadodara 7. Panchmahal District Cooperative Milk Producers' Union Ltd., Godhra 8. Valsad District Cooperative Milk Producers' Union Ltd., Valsad 9. Bharuch District Cooperative Milk Producers' Union Ltd., Bharuch 10. Ahmedabad District Cooperative Milk Producers' Union Ltd., Ahmedabad 11. Rajkot District Cooperative Milk Producers' Union Ltd., Rajkot 12. Gandhinagar District Cooperative Milk Producers' Union Ltd., Gandhinagar 13. Surendranagar District Cooperative Milk Producers' Union Ltd., Surendranagar 14. Amreli District Cooperative Milk Producers Union Ltd., Amreli 15. Bhavnagar District Cooperative Milk Producers Union Ltd., Bhavnagar 4/23/12

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The Product Range

Breadspreads

Amul Butter, Amul Lite, Delicious Table Margarine Amul Pasteurized Processed Cheddar Cheese, Amul Processed Cheese Spread, Amul Pizza (Mozarella) Cheese,Amul Emmental Cheese, Amul Gouda Cheese, Amul Malai Paneer (cottage cheese), Utterly Delicious Pizza Amul Gold Full Cream Milk 6% fat, Amul Shakti Standardised Milk 4.5% Fat, Amul Taaza Toned Milk 3% fat,Amul Slim & Trim, Amul Cow Milk Amul Gold 4.5% fat Milk, Amul Shakti 3% fat Milk, Amul Taaza 1.5% fat Milk, Amul Lite Slim-n-Trim Milk, Amul Fresh Cream Amul Full Cream Milk Powder, Amulya Dairy Whitener, Sagar Skimmed Milk Powder, Amulspray Infant Milk Food, Sagar Tea and Coffee Whitener Amul Kool Flavoured Milk, Amul Kool Caf, Amul Kool Koko,Amul Kool Millk Shaake, Amul Kool Chocolate Milk,Nutramul Energy Drink Stamina Instant Energy Drink Nutramul Malted Milk Food Amul Masti Dahi (fresh curd), Amul Masti Spiced Butter Milk,Amul Lassee, Amul Flaavyo Yoghurt Amul Pure Ghee, Sagar Pure Ghee Amul Mithaimate Amul Shrikhand, Amul Mithaee Gulabjamuns, Amul Basundi,Avsar Ladoos Sundae Range, probiotic,,sugarfree and probiotic Amul Milk Chocolate, Amul Fruit & Nut Chocolate, Amul Chocozoo, Amul Bindass, Amul Fundoo

Cheese Range

Fresh Milk UHT Milk Range

Milk Powders

Milk Drink Health Drink Brown Beverage Curd Products Pure Ghee Sweetened Condensed Milk Mithaee Range (Ethnic Sweets) Ice-cream

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The Product Range

Sales Turnover 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 4/23/12

Rs (million) 11140 13790 15540 18840 22192 22185 22588 23365 27457 28941 29225 37736 42778 52554 67113 80053 97742

US $ (in million) 355 400 450 455 493 493 500 500 575 616 672 850 1050 1325 1504 1700 2172

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