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DAIRY FARMING IN

INDIA

A GL BAL COMPARISON

TITLE

Dairy Farming in India: A Global Comparison

YEAR

November 2015

AUTHORS

Dr. Torsten Hemme, Dr. Amit Saha and Prashant Tripathi, IFCN Dairy Research Network, Germany
Food and Agribusiness Strategic Advisory and Research Group (FASAR), YES BANK

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CONTACTS

YES BANK Ltd.

IFCN Dairy Research Network

Nitin Puri
President & Country Head
Food and Agribusiness Research
Management (FARM)

Anders Fagerberg
Chairman of the Board

Northern Regional Office
48, Nyaya Marg, Chanakyapuri
New Delhi – 110 021
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7th Floor, Building No-8 B
Cyber City , DLF Phase –II
Gurgaon – 122002
Tel
: +91 124 4619136
Email
: fasar@yesbank.in
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Dr. Torsten Hemme
Founder and Managing Director
Schauenburgerstrasse 116
24118 Kiel
Germany
Tel
: +49 (0) 431-5606 250
Fax
: +49 (0) 431-5606262
Website : www.ifcnnetwork.org

ineffective breeding. we are pleased to release this joint Knowledge Report – ‘Dairy Farming in India – a Global Comparison’ by YES BANK and IFCN. New Zealand. a sustainable and strong dairy farming base will be critical. in the specific context of making small holder dairy farming globally competitive.Foreword The Indian dairy industry has grown consistently ever since the White revolution of the 1970s. To leverage this high growth potential and to meet the rising demand. Sincerely. making India. It also assesses the sustainability of Indian dairy farming and identifies innovative dairy farming models which could be the way forward. With an annual production of 146 million tonnes of milk India generates approximately USD 70 Billion of revenue. appropriate farm level policies need to be developed by the Government to ensure sustainable dairy development through existing socio-economic dynamics and resource advantages. the world’s largest producer of milk with 17% global share. In addition to the excellent backend work being done by private sector and cooperative. Thank You. The report compares cost components across dairy farming systems in major regions as well as countries like USA. We are confident that this report will serve as an effective reference for stakeholders of dairy industry as well as policy makers. Rana Kapoor Managing Director & CEO Chairman . China and Germany with key focus on India. deficient veterinary care. it becomes critical to address key challenges faced by the industry such as. Poland. The Indian dairy market is expected to double within the next decade. it becomes all the more challenging to address these issues. improper feed and fodder management. low animal yields. On the occasion of the 4th IFCN Regional Workshop India 2015. With dairy farming in India dominated by smallholder farmers. primarily driven by over 15-20% growth in value added dairy segment. with an average herd size of less than 2. For achieving this. poor farm management and low financial inclusion among others.

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the cow and the dairy farmer. What is the aim our regional workshop 2015 in India.Message Why do we focus on milk production and dairy economics? Today the dairy world is serving over 7 billion consumers and providing livelihoods for approximately 1 billion people which either live on dairy farms. GADVASU University from Punjab joined as regional partner from Punjab. Since the year 2014 Suruchi Consultants joined as research partner to better analyse commercial dairy farming systems in India. What is IFCN? IFCN is a global research network to better understand the dairy world. In 2015 researcher from over 100 countries and over 100 dairy related companies are a member of the network. The IFCN is independent from third parties and is a politically-neutral knowledge provider. Andhra Pradesh and Punjab during 2001-2005. NDDB cooperated with IFCN as research partner. The results of the research are published annually in the Dairy Report. For this reason we are now in India. Amit Saha. We believe that by addressing challenges in the dairy world we can contribute to a more resilient and more sustainable future for all of us. which can drive dairy development in India forward. The IFCN chapter in this publication shall give an illustration of the dairy world today and the position of India in it. The key challenges for the dairy stakeholders lie in its complexity and the high rate of change in a globalized world. In 2012 we started cooperation with Arohana dairy to analyse farming systems in Tamil Naidu. During 2006-12. In 2013. Step by step we deepen and widen the knowledge base every year. 25 November? The main topic of the event is: “How to sustainably grow milk production in India at a price consumers can afford? As a neutral knowledge provider we like to share global dairy trends and relate what this can mean for India. Torsten Hemme Founder of IFCN and Managing Director . Since 2008 NDRI is involved in the annual country profile analysis. comparing typical farm types from Haryana as part of a PhD project of Dr. Additionally we like to develop in open and inspirational way ideas. Since the year 2012 we have added a third event which is focusing on a specific world region. In June we have an event for our researchers and in September we meet with our company partners. The more intensive work with India began with involvement in the ProPoor Project Initiative of FAO to analyse farm types from Orissa. we share our findings via three main conferences per year. Our aim is to show the dairy world as it is and as accurately as we can measure it. We at IFCN started in 2000 with the basics . What type of work has IFCN done in India? We started our work in India in 2000. Moreover.

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1 Sustainability of Indian Dairy Farming Systems.5 Cost of Milk Production in Key Countries 2000-2014 20 1.3 Summary on Sustainable Indian Dairy Development 31 3 ANNEX 34 3.2 Milk and Feed Prices Development 1996 – 2015 13 1.1 Dairy Farming Scenario: Global vis-à-vis India 12 1.2 Innovative Farming Models for Enhancing Sustainability 29 2.3 Cost of Milk Production 2014 by World Regions 16 1.Content 1 IFCN OVERVIEW ON MILK PRICES AND COSTS 12 1.2 YES BANK and Knowledge Banking Proposition 36 .4 Analysis of Two Typical Dairy Farm Types in India 2014 17 1.What are the Key Drivers 26 2.6 Summary on the IFCN Overview on Global Milk Production 22 2 SUSTAINABLE INDIAN DAIRY FARMING 26 2.1 IFCN and its Research Paradigm 34 3.

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1 IFCN Overview On Milk Prices and Costs Dairy Farming in India: A Global Comparison 11 .

3% proteins) was produced by around 121. India has about 76 million farms involved in milk production. Large scale commercial dairy farming is still at a very nascent stage with rough estimates of about 1% of dairy animals and 5% of milk production in India.1 ton ECM/animal/year.5% of the milk produced in the world. The dairy farming systems differ significantly in terms of farm size.2 ton ECM per year. However. the milk is mostly produced in dairy households with an average herd of 2 animals.1 DAIRY FARMING SCENARIO: GLOBAL VIS-À-VIS INDIA Introduction In 2014.4 million ton of ECM. Most of these farms are households with dairying as a subsidiary occupation. housing. Farm structure The prevailing farm structure in India could be shown as the following illustration in table 1. The simple example shows that milk production is performed distinctively in different countries and their dairy regions. medium scale family farms with 10-50 cows are making their presence felt representing about 35% of the milk production.000 cows per farm in others. The average milk yield is about 1. Of course. Of late. USA and Poland will help to provide a comparative of large farms and mid level farms respectively with India. This means that the world’s average farmer keeps 2. There is a wide variation of dairy farms in the world ranging from less than 3 cows per farm in some countries to over 1. building averages is an oversimplification. 1 12 USA and Poland are present among top 10 milk producing regions and represents the North American and CEEC regions respectively.5 million dairy farms (IFCN estimate) keeping 363 million milking cows and buffaloes. A comparison has also been created by showcasing the farm structure at Poland and USA. milk production of 778 million ton ECM (energy corrected milk with 4% fat and 3. Dairy Farming in India: A Global Comparison . This accounts for about 19.1 India has continued to remain the world’s largest milk producer with 157.1. IFCN Overview On Milk Prices and Costs 1. milking and feeding systems.9 milk animals with an average annual milk yield of approximately 2.

the more favourable intensive feeding is considered. India is growing its milk production at a faster pace of 4. India has managed to attain top position in milk production globally owing to huge bovine population. This growth is however mostly coming from the increasing number of farms.7% 0.7% annual growth rate for the last 15 years. However. the full potential of Indian milch herd still remains unattained. after selling one kg of milk.Table 1.8% -9.2 Average milk yield kg/ cow/year 1248 5504 9633 Number of dairy farms Thousands 76136@ 286 51 Average farm size cows/farm 2 8 182 Annual Average Growth rate (2000-2014) Milk production % 4. small holding dairy farms assume significance for the rural development.9% Source: IFCN data based on national statistics and estimation. Dairy Farming in India: A Global Comparison 13 .2 MILK AND FEED PRICES DEVELOPMENT 1996 – 2015 The graphs in chart 1 below describe the development of the world market prices for milk and feed. there has been a declining trend in number of farms in USA and Poland on account of consolidation There is a great prospect to improve dairy productivity by increasing milk yield to meet the growing milk demands.4** 12.9% Number of dairy farms % 1. The dairy structure in India in comparison to Poland and USA for 2014 Description Units India Poland USA Milk production and dairy farms 2014 Milk production Mill Ton ECM* 157. The IFCN world feed price indicator represents the world market price level for feed. The small scale dairy farms in Asia including India have proved to be an effective tool for improving rural prosperity. With more than 70 million rural households engaged in milk production.3% proteins. The calculated feed price indicator is based on the price for a diet comprising 70% corn (energy feed) and 30% soybean meal (protein feed).7% Milk production / farm % 2. 1. The world milk prices are based on the weighted average of three IFCN world price indicators: skim milk powder & butter (35%). the majority being small and marginal farmers. The sustainability of such dairy farms is highly impacted by the number of factors including subsidiary nature of dairying.3% -4. In such case please contact info@ifcndairy. IFCN is happy to collect feedback on its number to improve them steadily.5 and in general one can conclude that the higher the ratio. The milk: feed price ratio indicates how much compound feed a dairy farmer receiving global milk prices and paying global feed prices can buy.9% 11.0% 6. However.org *ECM refers to Energy Corrected Milk with 4% fat and 3. low milk yields. The ratio is defined as favourable. like USA and Poland.1% 1. **Refers to cow and buffalo milk @ refers to mostly milk producing households If compared with other major milk producing countries. rising input costs and a transition to non-farm activities. when it is >=1.4 89. cheese & whey (45%) and whole milk powder (20%).

On the other hand.0 10 Source:IFCN Dairy Database on monthly real time data on production. summer 2012 and summer 2015 were accompanied by feed prices that were actually higher per 100 kg. the milk price had dropped by approximately 35 US-$ to 21. Since June 2014.11 Jan .12 Jan . The very low milk prices in the first half of 2009.14 Jan . fluctuations were less extreme.12 Jan . September 2015 14 Dairy Farming in India: A Global Comparison Jan .4 US-$ within 18 months. Until 2010. prices and farm economics.5 20 15 1. though to a lesser extent than the milk price indicator.9. with a range between 48 US-$ in March 2011 and 34 US-$ in July 2012. Between January 2011 and June 2014. this commonly used milk: feed price ratio.09 Jan .3 kg/kg milk) Bound-average 2007-14 Jan .11 Jan .12 10 Jan .0 25 Jan . the feed price has declined by more than 10 US-$ to 22 US-$.e. peaking at 56 US-$ in February 2014.8 US$.15 Jan .08 Jan . Between January 2010 and January 2013. the fluctuation of the margin over compound feed is generally only influenced by milk price developments.10 Jan . the threshold of 40 US-$ was surpassed for one month.09 Jan . This is the margin over compound feed costs. the milk price indicator showed a rollercoaster behaviour. Besides. During this period.08 60 Milk to Feed Price Ratio Margin over compound feed costs (0.11 0.15 Jan .09 30 30 Jan . peaks in the milk price did not necessarily mean peaks in the feed price. By that time.06 World milk price World feed price . This indicator assumes an average feed intensity of 300 g compound feed per 1 kg milk. especially when exposed to world market prices.13 Jan .10 Jan . IFCN has developed a new farm economic indicator.07 Jan . Low milk prices of less than 25 US-$/100 kg ECM throughout 2006 were followed by a steep increase to more than 50 US-$ at the end of 2007. just to be followed by a sharp decrease to 20 US-$ in early 2009.10 20 2.07 0 Jan .5 35 1. causing a milk : feed price ratio below one during these three time periods. The key improvement is that the milk : feed price ratio weighs milk and feed price changes one to one. swinging between less than 20 US-$ per 100 kg ECM to peaks of 56 US-$. This low point was followed by a strong increase to a level above 50 US-$ for nearly a year. Since 2007. their behaviour was not synchronised.14 Jan . dairy farming systems with much higher milk yields and higher compound feed use are strongly driven by a combination of milk and compound feed price.2 US-$. This feed intensity could represent a farm with a milk yield of 8000 kg milk / cow / year using 2. the feed price was generally higher than 20 US-$.13 Jan .Global prices for milk and feed Milk and feed price developments Jan 2007-Sept 2015 Margin over compound feed 50 45 3.15 Jan .5 Jan .07 40 Costs in USD/100kg ECM Price in USD/100 kg (ECM) 50 Milk : feed price ratio Average ratio 2006-2014 3.Besides. The ensuing decline was not finished in August 2015. The highest difference between milk and feed price was noticed in August 2007 at 33.14 Jan . Chart 1 . i. whereas the margin indicator weighs the feed price based on the amount of compound feed fed per kg milk and weather related uncertainties. In August 2011.0 Jan .13 0. The feed price indicator also showed fluctuations.5 5 Jan . This enables us to give a better assessment of existing farm economics situation in real time. For farming systems which operate at a lower milk yield and lower use of compound feed per kg milk.0 40 2. the feed price hovered around 20 US-$ with the exemption of June 2008. the milk price varied around 40 US-$. where it reached 32.08 0 Jan . This led to a milk : feed price ratio of 2.4 ton of compound feed per year.

India Country-wise the farm economics situation is Average difference 70 deteriorating. as seen in chart 2.4 US-$ below world prices but during 2010-15. The year 2015 shows the milk prices dipping to the lowest levels since 2009 in July touching the 23. 50 Jan 06 Though world milk prices have shown high variability during 2006-2015. in US-$ / 100 kg ECM 4% fat / 3. milk price begin to decrease while feed price continued to rise pushing dairy farmers to produce milk with a milk : feed ratio below the long-term average.The very high milk : feed price ratio in August 2007 followed by low milk and high feed prices quickly led from a very profitable situation in the end of 2007 to a negative margin over compound feed cost by the end of 2008. The next phase was a period of relative stability of the milk price on average of 40 US$/100kg ECM. India has more or less a protected market not affected much by the volatility in world markets.3% protein 60 Dairy Farming in India: A Global Comparison 15 . IFCN assumes that the world milk price is currently in the middle phase of the roller-coaster price scenario – similar to the one from the first world crises in 2009. when volatility plays a big role in maintaining sustainability and managing risks. this difference has narrowed down to 4. 30 Jan 08 Average distance between World and Indian milk price during 2006-2009 was 6. From 60 countries analysed 46 are in the group of poor and very poor farm economics. 40 Jan 07 There have been very less price transmission between world and Indian milk price especially during peaks. dipping below the long term average of 32. the farm economics didn’t improve significantly. 20 10 0 -10 Jan 15 Jan 14 Jan 13 Jan 12 Jan 11 -30 Jan 10 -20 Jan 09 As India gets more and more integrated to the world markets.Milk price developments in India vs World the world feed price decrease of 6% in September vs August. Observing the world milk price development and the drop of 59% vs February 2014. That was the beginning of the second global dairy crisis which has it epicentre in middle 2012 when milk prices dropped and feed prices rose towards new highs until the middle of the year.9 US-$ per 100 kg ECM. there will be a tendency to align with world prices.2 US-$ mark – the climax point of third global dairy crisis. August world milk price shows an increase of 4%. Later in 2011. In this period margin over compound feed cost was lowering since March 2011. average Milk prices in India have shown more or less a stable growth in milk prices since 2006. It was the beginning of the first global dairy crisis which lasted until early 2010 with the lowest milk prices on the level of 20 US$/100kg ECM.4 US$/100kg at the end of the year. September margin over compound India vs World milk price level 2006-2015 feed cost is at the level of 20 US-$/100kg. This is Difference IFCN world milk price indicator the 6th month in a row of very poor farm economics. Despite the world milk price increase of 10% and Chart 2 .

the large farm in Idaho had the lowest cost of about 35 US-$.7832) / 3.3% protein.5 US-$ per 100 kg milk in extensive farming systems in Cameroon (where beef is the major output and milk is a side product) to 118 US-$ for an average sized farm in Switzerland. A typical farm represents the most common production system which produces a significant proportion of milk in a country or a region. The typical farms were built and validated by a combination of accounting statistics and a panel of dairy experts. land and capital are also included. Furthermore.383 * % fat + 0. Low cost regions: Based on the average sized farms. Western Europe: The leading farms in Western Europe had costs ranging from 45 – 55 US-$. The US: The smaller farm types in the Eastern Region of USA i. respectively.e. Chile and Uruguay b) Central and Eastern Africa c) Some farms in the Central and Eastern European Countries. From this cost level. calves. etc. the IFCN uses the energy correct milk (ECM) approach to standardise milk volumes to 4% fat and 3. The following formula was used: ECM milk = (milk production * (0. Usually. For creation of the world map. The average cost over all countries analysed was 46 US-$/100 kg milk. In the western region.3 COST OF MILK PRODUCTION 2014 BY WORLD REGIONS The annual IFCN work of comparing typical farms around the world has been an on-going process since the year 2000. The data collection and validation were done by researchers in the represented countries. economic analysis and results validation uses the three elements: 99 a network approach of research continuously co-operating. Since then. the number of dairy farm types analysed has increased from 21 to around 170. the opportunity costs for own labour.1. 99 the concept of typical farms described below and 99 a standard model TIPI-CAL (Technology Impact Policy Impact Calculation model) to ensure technical comparability of indicators. Peru. 16 Dairy Farming in India: A Global Comparison . the non-milk returns from sales of cull cows. Moreover.1138). two farm types are used per dairy region – the first represents an average farm and the second a larger farm type. Cost indicator: The IFCN uses the indicator cost of milk production only which can be directly related to a milk price. Cost range: Cost of milk production ranges from 4. This cost includes all costs from the profit & loss account of the farm.242 * % protein + 0. Wisconsin and New York had a cost of 46 and 59 US-$. the average size farm from each country was used. Some selected countries in Asia (except Japan and large farms from China) also have low costs. manure. The IFCN methodology applied for data collection. heifers. and also returns from coupled direct payments have been deducted. three low cost regions have been identified: a) Argentina. researchers in the IFCN Dairy Research Network and also during the IFCN Dairy Conference held in Germany in June 2015. the number of countries participating has increased from 8 to 55. ECM correction: As the dairy farms operate with milk of very different fat/protein content.

a simplified global overview on costs of milk production is shown. Generally. on an average. The average cost of milk production worldwide was 46.In chart 3 below.e. Cost of milk production in Australia is in the range of 3035 US-$ while in New Zealand it is about 41-42 US-$ per 100 kg ECM. Dairy Farming in India: A Global Comparison 17 . land costs and exchange rates to US-$.2 US-$ per 100 kg ECM in 2014. It is important to note that New Zealand cost estimates refer to the seasonal year i. 3. The results can be summarised as follows: Chart 3 .6 US-$. This along with good feed prices made farm economics a very profitable year for many dairy farmers in the world. the milk prices for the year 2014 were at similar levels as in 2013.3% protein) 50 40 30 20 0 > 60 <= 60 <= 50 <= 40 <= 30 <= 20 no data Cost level of farms in region where shade is placed Oceania: The cost level in Oceania was about 36. South and South East Asia: Farms is this region are able to produce milk in the range of 20-44 US-$ per 100 kg ECM with average costs of 33 US-$. July 2013.Cost of milk production on average sized farms 2014 Cost range in US$/100 kg ECM (4% fat.June 2014. The difference is mainly on account of higher feed prices. The illustration is based on the results of the typical average sized farm analysed per country in 2014. This signifies great potential for dairy development in South and South East Asia to exploit its strengths on international competitiveness. which is below the milk production costs in New Zealand.

000 5 Other activities Cash crops IN-20N IN-4N 0% IN-20N 0 IN-4N IN-20N 0 IN-4N 500 Dairy (incl.4 ton of milk (ECM) per year.3% proteins. Chart 4 – Representation of typical dairy farming systems in India Farm size (number of cows) Milk yield 25 Return structure of the whole farm 100% 5. The feeding system is based on green forages. As seen in chart 4 below.000 4. North India. The chart 5 below shows the cost competitiveness of milk production in the typical dairy farming systems in Punjab. The average yield is about 4.500 60% 3.500 40% 2. ECM: Refers to Energy Corrected Milk with 4% fat and 3. straw. and type of returns from the farming system. With herd size increasing from 4 to 20 animals.500 20% 1. The feeding system is quite similar to the average farm type above.000 2. home grown on a quarter of the land owned. The family operates on about 3 hectare of land and a part of the income is coming from crop enterprises. The family used hired labour to carry out 70 percent of the dairy operations.500 80% 4. household type with 2 jersey crossbred cows and 2 Murrah buffaloes that produce on an average 4. The farm types are as follows: IN-4N: This is an average size typical farm from Punjab region in North India. the return to labour increases by about 5 times making dairying a better employment alternative at the present wage levels.2 Jersey cross. IN-20N: 20 HF cow farm in Punjab. 2 murrah buffalo farm in Punjab. The farming system is represented in terms of average milk yield.000 1. Most of the land is used to grow green fodder throughout the year. It can be seen that the cost of milk production in 2014-15 was about 39 USD per 100kg ECM on the average farm and 32 USD on the larger farm. farm size. IN-20N: A larger family farm in North Punjab with 20 Holstein crossbred cows and 3 hectare of land. The cost reduction by about 20 percent is mostly owing to the labour economies of scale as shown in the graph depicting the return to labour. the typical dairy farming systems from Punjab region is shown.3 ton of milk (ECM).000 kg ECM/cow and year Number of cows 20 15 10 3. coupled dairy subsidies) Legend: North India: IN-4N: India.4 ANALYSIS OF TWO TYPICAL DAIRY FARM TYPES IN INDIA 2014 India has typical dairy farming systems ranging from household farms with 1-10 cows to family farms with 10-50 cows and commercial farms ranging from 50-1000 animals. crop residues and compound feed. 18 Dairy Farming in India: A Global Comparison . North India.1.

CN-340BE: 340 corporate farm in North China. NZ-390: 390 family farm in Newzealand. haulage. etc. Beijing. Dairy Farming in India: A Global Comparison 19 .4 30 1.0 45 1. breeding. PL-65: 65 cow family farm in Poland.non milk returns USD/100 kg milk Milk price USD/100 kg milk 25 20 1.2 0. The feed costs share is relatively higher than the typical dairy farming systems in other major milk producing countries.4 5 0.8 40 1.0 0 IN-4N IN-4N IN-20N IN-20N In order to understand the specific cost component which gives cost competitive edge to the dairy farming systems. Legend on farm types: DE-126N: 126 cow family farm in Germany-North.6 10 0. cost analysis is done for the six farm types for the year 2014 as shown in the chart 6 below: Chart 6 – Cost components of dairy enterprise across typical dairy farming systems in major milk producing countries in the world in 2014 Feed costs Labour costs Capital costs Land costs Other costs 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% IN-20N DE-126N US-500WI PL-65 NZ-390 CN-340BE India Germany USA Poland Newzealand China *Other costs refers to dairy management costs like veterinary. IN-20N: 20 cow farm in North India.Chart 5 – Economics of typical dairy farming systems in India Cost of Milk Production Return to labour Average wages on the farm 2. The chart 6 above clearly shows the comparative advantage in typical dairy farming systems from India coming from lower proportion of labour and other costs.8 15 0.6 35 1. record keeping.US-500WI: 500 Cow family farm in Wisconsin. taxes.2 USD/hour USD/100 kg milk ECM 50 Return to labour Opportunity costs USD/100 kg milk Cost P&L .0 0.

Though costs in USA have remained more or less stable.2 US-$. In Brazil. Milk prices began to decline from the all-time peaks in February 2014 to its lowest levels since 2008 in July 2015 at 23. the New Zealand dollar has also depreciated by about 11%.5 COST OF MILK PRODUCTION IN KEY COUNTRIES 2000-2014 It is very important to understand the average cost trends of typical farms over a period of time to understand the factors behind the competitiveness of milk production. costs in EU are expected to decline by currency devaluation and farmers reactions. This will probably make the costs competitive in this part of the world. Chart 7 – Cost of milk production 2000 – 2014 of typical dairy farms in 7 countries New Zealand. milk prices had dropped by 30-40%. the currency devaluated by 28% while in Poland by 17%.2 1.OUTLOOK OF MILK PRODUCTION COSTS IN 2015 The devaluation of the Euro against the US-$ has been about 20% in 2015. Poland 30 20 US-500WI DE-126N PL-65 10 0 00 20 02 20 04 20 06 20 08 20 10 12 014 20 20 2 40 30 20 NZ-390 10 CN-340BE IN-20N 0 00 20 02 20 04 20 06 20 08 20 10 12 20 20 14 20 The graphs in chart 7 above illustrate the costs of milk production of selected typical farms the IFCN had been analysing over a certain period of time. Hence. in this part of the analysis. Details to be delivered during IFCN analysis and Dairy Conference in 2016 2 20 Dairy Farming in India: A Global Comparison . It also enables us to take a view on the levels of milk production costs to sustain milk supply levels or the milk prices level in the short and medium term. By July 2015. India 60 70 50 60 50 40 US$/100 kg ECM US$/100 kg ECM USA. In Oceania. China. The ensuing crisis has led farmers to respond in a way to reduce their intensity of dairy farm operations in many countries in EU and Oceania. we tend to compare the cost trends of average typical farm types from the six major milk producing nations representing the major regions of the world with special reference to India. Germany. It is expected that the average costs of milk production will reduce in EU by a range of 8-9 US-$ per 100 kg ECM primarily driven by Euro devaluation against US-$ while in Oceania by 5-6 US-$ due to farmers response and NZ-$ devaluation.

This Polish farm had very low costs in 2003 and 2004 and was almost as cost competitive as dairy farms in New Zealand. The key driver was the appreciation of the Euro (+36%) and moderate increase of costs in Euro terms. costs increased from 17 US-$ to 53 US-$ per 100 kg milk in 2008. because the drop in prices in national currency was almost fully compensated by the appreciation of the Yuan. In the year 2000. the costs showed a declining trend towards 42 US-$ per 100 kg milk. this had a direct impact on these farms and costs. which increased by 50% to a level of 38. Costs stayed under the 40 US-$ mark for the last three years. This is mainly due to higher feed and energy prices and labour costs in Euro terms. the Yuan had gained value by + 25% to the US-$ compared to 2000. Until the year 2012. It enables us to understand the dynamics of cost trends in China. the costs were 28 US-$/100 kg milk and increased towards 42 US$ per 100 kg milk in 2006.US-500WI: 500 Cow family farm in Wisconsin. NZ-390: 390 family farm in Newzealand. the costs in New Zealand were approximately 25% higher than in Argentina and about 25% below the costs level in Germany in 2014. the rising feed prices were a strong driver for increasing cost of production. From 2010 until 2014. It has been monitored since 2006 with 300 cows. After joining the EU. This was driven by an increase of wages. a strong increase in cost due to the appreciation of the Yuan could be seen. This dairy farming system was a world leader in cost competitive milk production in the year 2000. Dairy Farming in India: A Global Comparison 21 . In the year 2012. Poland (PL-65): This farm type represents a larger family farm type in Poland in the range of 20-100 cows. Driven by an increase in input prices and an appreciating currency. Costs have increased again to 50 US-$ since then. cost had increased – mainly driven by feed prices . the costs were on a similar level. China (CN 340BE): This typical farm represents 30 to 40% of the farms and is a larger farm type in China in the range of 200-500 cows.5%. Like in Argentina. costs were relatively stable from 2000 to 2006 as inflation driven change of input prices could be compensated by increasing milk yields. when farmers tried to cut costs wherever possible. which was the lowest cost level in those days. PL-65: 65 cow family farm in Poland. They have stayed between 40 and 45 US-$ per 100 kg milk for the last four years. This increase could not be compensated by an increasing farm productivity. Since 2006. The sharp drop in costs in 2009 can be interpreted as a result of very bad milk prices. New Zealand (NZ-390): The typical farm representing an average sized farm covers about 60% of the farms and milk production in New Zealand.5 US-$ per 100 kg milk. The key drivers were a devaluation of the Euro by 14%. Based on the typical farms chosen for this analysis. It represents about 10% of the farms and 41% of the cows in the country.towards 44 US-$ per 100 kg milk. After 2008. The costs on Chinese farms did not drop sharply in 2009 as was observed in most other countries. Once feed prices started rising. Germany (DE-126N): This farm type stands for an average farm in Northern Germany representing an estimated 13% of the farms and 46% of cows in the country. USA (US-500WI): This farm type is a larger family farm in the range of 200-1000 cows and represents 10% of the farms and about 18% of the cows in the USA. This farm has been monitored since 2003 when it had 60 cows. the farm type followed a similar cost trend as the German dairy farm. land prices and an appreciated currency against the Euro. IFCN identified costs of 12 US-$ per 100 kg milk. CN-340BE: 340 corporate farm in North China.Legend on farm types: DE-126N: 126 cow family farm in Germany-North. In 2012. US dairy farms had a significant cost advantage over larger family farms in Germany for over 10 years. From 2008 – 2012. weather conditions and pasture growth had an impact on milk yield and thus production costs per 100 kg ECM. costs increased to a level of 40 US-$ per 100 kg milk in 2014. The farm has grown from 68 cows in 2000 to 126 cows in 2014 at an average annual growth rate of 4. IN-20N: 20 cow farm in North India. This farm has been in our data base since 2000. The 20% reduction in costs in 2012 was a result of the devaluation of the Zloty (-7%) and improvements in farm efficiency. Beijing. In the US.

The results show that costs in a specific country can increase significantly within 3-6 years. and labour costs have increased significantly. 170 typical farms in 55 countries were analysed. a control in feed prices and a depreciating currency has seen costs go down and reach very competitive levels of 32 US-$ in 2014. since 2012. The family farm in 2006 was very competitive in 2006 producing milk at 18 US$ per 100 kg ECM but increased significantly since then till 2011 to reach costs upto 39 US-$ driven by an increase in wage rates.3% proteins). Very volatile milk and feed prices –we are now in the 3rd dairy crisis since 2008 Via standardised world milk and feed prices. 22 Dairy Farming in India: A Global Comparison . a time series analysis was possible. This situation occurred three times within the last eight years. IFCN tracks the overall farm economic situation for dairy farming. feed prices and an appreciating currency. The average dairy farm size has 2.9 milk animals with an average milk yield of 2145 kg ECM milk/ animal/year. From 2000 – 2014. in 2014 there were 121.5 million dairy farms and farming households on this planet producing 778 million ton of ECM milk (cows and buffaloes with 4% fat and 3. China had the strongest increase in salaries and an appreciation of the currency of 24%.6 SUMMARY ON THE IFCN OVERVIEW ON GLOBAL MILK PRODUCTION 121.5 US-$ per 100 kg milk in extensive farming systems in Cameroon to 118 US-$ for an average sized farm type in Switzerland. China. Costs in EU and US reach a level of 40 – 50 $ Cost of milk production in China still significantly higher than EU and Germany An extreme case was observed in China where dairy farming highly depends on purchased feed.5 million dairy farms on this planet keeping on average 2. 2014 Costs to produce milk ranges from 4 to 128 US-$ per 100 kg milk Based on the IFCN cost comparison.India (IN-20N): The typical farm representing larger family farm in North India. cost of milk production increased in all countries analysed As the IFCN has analysed typical dairy farms since the year 2000. In addition.9 cows per farm Based on IFCN data collection and estimations. The IFCN developed an indicator “margin over compound feed costs” which is a significant improvement compared to the often used milk:feed price ratio. in 2012 and most recently in the beginning of 2015. By using this margin. Cost of milk production ranged from 4. in 2009. the farm has maintained an average herd size of 20 cows varying from 18 to 26 cows. 1. The combined effect of these factors drove the costs in China from a level of 40 US-$ / 100 kg milk in 2008 to a level of 60 US-$/100 kg in 2014. However. feed. The simple average cost over all countries analysed was 46 US-$/100 kg milk. and New Zealand where the value of the currency has significantly strengthened against the US-$ and farm input price like land. These farms are mostly having crossbred or pure Holstein Friesen cows with average yield of 4300 kg ECM in 2014. Monitored since 2006. it becomes visible how much of a threat dairy farmers face in a situation when milk prices fall and feed prices increase to such an extent that 100 kg feed are more expensive than 100 kg ECM. This is especially the case for countries like Poland.

This is mainly because of the protection of its market policy and the insulation from extreme volatility. Dairy Farming in India: A Global Comparison 23 . PL.2015 perspectives of production costs to decrease in US-$ terms 99 99 The cost analysis results shown are based on 2014 data– but changes to be expected for 2015 will be mainly driven by 2 factors: a) Changes in exchange rate b) Lower milk price which drives changes in dairy farming systems. First estimation by IFCN for costs in 2015 show stable costs for USA and significant costs reduction of 5-9 US. Perspective on competitiveness of Indian milk production 99 99 99 Costs of milk production in 2014 in the typical farms analysed is in the range of 30-40 US-$ per 100 kg ECM and is in the competitive range of milk production. There is very less price transmission between the global milk market and the Indian milk prices. This implies that the ability to maintain stability in volatile markets or adoption of innovative solutions to sustainable dairying is the key.$ in the EU. NZ. World dairy competitiveness is getting more and more consolidated as the major countries are able to produce milk in the competitive range of 40-45 US-$/ 100 kg ECM. BR.

24 Dairy Farming in India: A Global Comparison .

2 SUSTAINABLE INDIAN DAIRY FARMING Dairy Farming in India: A Global Comparison 25 .

WHAT ARE THE KEY DRIVERS Dairy sector continues to be one of the major livelihood sources for rural India and a significant contributor to the country’s agricultural economy. Further. promotion of balanced feed rations. processing facilities and backward integration is providing further impetus to India’s dairy industry. It contributed over 4. SUSTAINABLE INDIAN DAIRY FARMING 2. integrated watershed development approaches for encouraging fodder production systems and 26 Dairy Farming in India: A Global Comparison . which comprises of majorly milk and milk products. With rapidly shrinking land and natural resources. availability of good quality feed and fodder is increasingly becoming a challenge.1 SUSTAINABILITY OF INDIAN DAIRY FARMING SYSTEMS.1% to the overall GDP during 2012-13.2. The dairy industry is still predominantly unorganized with only 20-25% of milk production being routed through the organized channel. Key Drivers of Sustainability of Indian Dairy Farming System Sustainable dairy farm management practices are critical to ensure the profitability of dairy farms thereby ensuring lower cost of milk production and quality and clean milk to the end consumers. Maximization of the usage of crop residues and leguminous forages. there is a supply demand gap for quality forage seeds as well. The current deficit level of green fodder and concentrates is up to the tune of 34%.62.600 village level dairy corporative societies up to March. Feed and Fodder Management: Feed is one of the critical components in ensuring good milk yield and also constitutes approximately 60% to 70% of the operating expenses. supply chain. contributes a large share to the agricultural gross domestic product (GDP).46 million farmers have been brought under the ambit of 1. 2014. Private players account for approximately 55% of milk routed through the organized channel and rest 45% is procured by the cooperatives. Growing private sector investment in dairy farming. Key drivers impacting the sustainability of dairy farms and essential for making it globally competitive are presented below. Livestock sector. About 15. Dairying has become an important secondary source of income for millions of rural families and has assumed the most important role in providing employment and income generating opportunities particularly for women and marginal farmers.

These yield very good tonnage with higher digestibility and ensure uniform supply of quality nutrients. increase milk and meat production of animals. Source: Company Publication Breeding and Health Care Management: Lack of awareness amongst the dairy farmers in India on technical skills regarding breeding practices including record keeping and progeny testing is the key deterrent for improving herd quality.training farmers in silage preparation are some of the measures to optimize feed and fodder production in farming systems in India. Feeding a nutritionally balanced ration with the available feed resources could be a practical approach for mitigating GHG emissions from large ruminants in India in the longer term. Source: BAIF’s Annual Report. manure and effluent handling can go a long way in addressing this challenge.8–2. deducing an adopted genotype to specific environments and possibilities of production and use of sexed semen in small holders’ dairy production system. 2013-14 Impact of Climate Change on Sustainability: The estimated annual milk loss due to heat stress in cattle and buffalo in India is about 1. Some of these include Marker Assisted Selection (MAS) for breeding bulls. Timely identification of diseases and knowledge about preventive measures will add to better livestock health which will further improve productivity and quality of milk. The innovative inoculants used to prepare silage improve fermentation. reproductive management and healthcare. disease free germplasm needs to be given priority for addressing these issues. It can be addressed through expansion of artificial insemination (AI) network and extension services provided by research institutions and private sector participation. molecular studies on prevalence of Beta-casein and Kappa casein allelic variants in breeding stock. retain valuable nutrients. Investment in R&D initiatives for reduction in greenhouse gases (GHG) emissions through cost effective and scalable interventions in the areas of animal selection and breeding. The company offers solutions that enable farmers to make silage using corn hybrid crop and inoculants. cattle nutrition. designing metagenomic studies to deduce mastitis pathogens. Livestock Development Initiative by BAIF BAIF’s under its livestock development initiative is exploring the modern technologies in animal breeding. Effective management of nitrogen in dairy farms need to be emphasized upon to reduce its loss. Precise feeding as per the nutrient requirements of animal will maximize production and minimize greenhouse gas (GHG) emissions per unit of product. reduce dry matter losses. A corn silage based diet is more nutritious and also improves farm productivity by reducing production costs substantially.0 million tonnes. Breeding services using superior quality. Hybrid Corn Seeds Developed by DuPont Pioneer DuPont Pioneer has developed hybrid seeds of corn for livestock feeding. Dairy Farming in India: A Global Comparison 27 . BAIF has also been instrumental in indigenous breed improvement initiatives for Gir and Sahiwal breeds. and improve the quality of milk by increasing fat percentage and protein in milk. There is an urgent need to curtail the effects of global warming through development of focused policy and research and development initiatives.

The objective of the programme is to empower women dairy farmers to improve quality and productivity of milk.600 village women across Punjab. As a result. 28 Dairy Farming in India: A Global Comparison . Haryana and Rajasthan have benefitted from the Village Women Dairy Development Programme by the end of December. Source: Company Website Access to Finance: Given the importance of dairy sector in rural employment and revenue generation. Reduction in enteric methane emission per kg of milk yield in lactating cows and buffaloes has been reported earlier. easy access to credit and instant payments for sale of milk and milk products are critical for making production system remunerative and sustainable. Private sector participation in extension services needs to be aligned with the public schemes and market led practices are to be encouraged to increase resilience in the smallholder dairy farming ecosystem. Animal husbandry and dairying is a state subject. through improved efficiency of utilization of available feed resources. Augmenting knowledge and skill levels of the workforce is essential to enhance resource productivity.an initiative focusing on empowering village women engaged in dairy farming was formally launched in 2006. In absolute terms. The central government contributes about 10% to the total investment through central and centrally-sponsored schemes as to supplement state governments’ resources.National Dairy Development Board (NDDB) Ration Balancing Programme NDDB had launched a ration balancing programme to feed least cost balanced ration to milch animals of smallholder dairy farmers. The village women are educated through women training team on 99 99 99 99 Good dairy practices including good feeding and breeding practices Animal care and treatment Sustainable agricultural practices Personal health. 2013. About 80 % of the credit to animal husbandry and dairying is provided by the commercial banks. the Village Woman Dairy Development (VWDD) Programme . total outlay for animal husbandry and dairying has increased over the plan periods. as excretion of excess nitrogen (N) by the animal is not only an economic loss of a valuable feed component but it also acts as a source of nitrous oxide (N2O). availability of skilled manpower will be of utmost importance. Over 58. mitigate risks and improve decision making ability which will enable sustainable dairy farming. water conservation and economic independence. In 2009. in different agro-climatic regions of the country. manage finance. Village Women Dairy Development Programme by Nestle Nestle India recognized that village women are the primary caretakers of cattle and play a significant role in dairy farming. and bulk of the investment for their development comes from the state governments. a potent greenhouse gas. About 10-40% of the consumed feed nitrogen is retained in the form of animal products like milk and meat and the remainder is excreted into the environment through urine and faeces. hygiene. dairy processing was included in the list of priority sector lending activities but presently there is no specific target with the banks for animal husbandry loans. boost innovation. Inefficiencies in the conversion of feed protein into edible animal protein present a major challenge to livestock nutritionists. Source: NDDB Extension Services and Skill Development: With the paradigm shift of dairying from being a subsidiary occupation to mainstream activity.

financial services. Each of the farmers may be assigned a single account where all the transactions pertaining to payments. there have been initiatives in the direction of establishing large scale dairy farms (with more than 1000 animals) by private players to achieve better product quality. 2.2 INNOVATIVE FARMING MODELS FOR ENHANCING SUSTAINABILITY In the past decade. Farmers also used the YES SAHAJ Micro ATM Business Correspondent facility that YES BANK provided. It is important to invest in the information systems to make strategic decisions on optimization of dairy supply chain and costs involved. Farmers were happy to receive direct credit in their accounts and were comfortable with money withdrawal from other bank ATMs during their routine visits to cities/bigger villages. offering structured financial products and services to them. This model represented an immense opportunity for scale-up given that 60% of farmers supplying to PPC prefer the use of regular ATM network. large investment and lack of adequate knowledge to manage large scale farms. Source: YES BANK Annual Report 2013-14 Role of Information Technology : Information technology is an important tool which can be harnessed for efficient management of small scale dairy farms in India. This will also enable the government to keep a track of the small scale farmers in order to pass on the benefits of several important schemes run by it. in association with respective dairy) b) Basic Saving Account (BSA) with 6% interest and ATM-cum-debit card c) Free unlimited withdrawals on any bank’s ATM d) Lean season Over-draft facility e) Unlimited deposit/withdrawals through YES Bank’s specially deployed YES SAHAJ handheld device f) Domestic inward/outward remittance service g) Annual Group Life Insurance for member and spouse h) Flexible Recurring Deposit facility linked to BSA. traceability and increase productivity with lower cost of production. low productivity. Due to the current diversity in nature of farming systems. insurance etc. Rural financial institutions need to focus on widening their reach to small farmers who are conventionally under-banked or unbanked. most of the players have been able to achieve limited success due to high operating costs.Financial institutions need to design innovative and tailor made suite of financial products including systems to immediately credit milk payment in farmers’ accounts. to provide payments to farmers along two milk procurement routes in Renwal and Sri Madhopur Milk Chilling Center in Rajasthan. promoted by National Dairy Development Board (NDDB). However. can be monitored through a single platform. Dairy Farming in India: A Global Comparison 29 . based in the Villupuram district of TamilNadu. which helped manage their cash flows as per convenience. This would pave the way for financial literacy of the farmers and reduce their dependence on moneylenders for credit requirements. IT can play pivotal role in bringing a large chunk of small holder farmers under the ambit of financial services. YES Kisan Dairy plus product proposition comprised of a) Instant milk payment (as applicable. YES BANK’s Kisan Dairy Plus and Pilot Project with Paayas Producer Company (PPC) YES Kisan Dairy Plus was implemented as a pilot project in collaboration with one of the largest dairies in South India. It can also be used for real time monitoring of transactions for efficiently managing the payment cycle of farmers. Small holder famers do not have direct access to basic financial services including insurance. farmer capacities. YES Bank started a pilot project with PPC. prevailing infrastructure.

30 Dairy Farming in India: A Global Comparison . ownership and responsibility for the operation and maintenance lies with a private player. feed etc. The anchor provides technical support (veterinary care. The significant benefit of this model is efficiency in scale of operations. Community dairy farms . end to end product traceability and high level of product and process control. The milk is either sold to other dairies or used for processing into value added milk products at its own plant.socio-cultural realities and climatic patterns. training) and financial support (directly or through financial institutions) to the farms. feed management. consistent and good quality. Further. scale and systems. have basic infrastructure for milking and cattle management and are owned by progressive dairy farmers/rural entrepreneurs in close proximity to the main farm (less than 100 km distance). a mix of various models may evolve and determine the landscape of commercial dairy farming in India in coming years. training) to the satellite farms. Government also provides support to small farmers for purchase of cattle and also by way of administration of breeding programmes. a key input for enhancing milk yield of cattle. Hub and spoke model . This model envisages investment in farm infrastructure by a private player with ownership of the stall lying with the individual milk producers. The model is also more socially inclusive and lends itself to faster scale up. feed management. This model enables the smallest of the dairy farmers to avail the benefits of technology. who are responsible for housing of cows and managing them under guidance of the private player. Critical to this model are the control systems that need to be put in place to ensure that farm management administration is of desired level and that milk output quality adheres to the set standards. modern breeding techniques and feed management. This model is constrained by way of limited capital investment capability of the progressive farmers and is also challenging in terms of the anchor’s ability to have a fool proof mechanism to ensure checks and controls on the farm operations. Progressive dairy farming model . This is an entrepreneurship model wherein the anchor without incurring substantial capital expenditure benefits from an assured supply of milk of traceable. Large scale single location integrated dairy farms .Large scale integrated dairy farms possess high yielding cross bred cows. The connected/satellite farms (spokes). although with significantly lesser capital expenditure by the Anchor. in comparison to Single Location Large Scale model. Players may also enter into contract farming model with the farmers for supply of green fodder. this can be an excellent partnership between farmers and processors and can be a win-win model for all stakeholders in the long run. with 50 to 200 cattle each. the land requirement is distributed over multiple locations. In these farms. Industry supported farming model – Various players in the industry provide financial support through tie-ups and technical assistance to farmers for scaling up of their herd size along with extension activities related to farm management. The main farm provides technical support (veterinary care.Hub and spoke model of dairy farming includes the main farm (hub) having all the integrated facilities including processing and other connected farms (spokes) having basic infrastructure for milking and feeding.Mid size dairy farms with 300-500 cattle may evolve in near future as they have comparative advantage of size economics in the business through efficient management of labour. milk processing and storage facilities along with feed production systems. However if replicated. This model offers the benefits of end-to-end product traceability and reasonable level of product and process control.The Chinese dairy model of setting up of community dairy farms or hostels for milch animals owned by people in neighbourhood is also gaining acceptance in India. The milk is purchased under the buy-back arrangement by the private player. Some of the key innovative models emerging in dairy farming are listed below. veterinary services.

and promotion of collective farming is essential for development efficient value chains. Capacity building of small livestock owners. dedicated extension services and procurement infrastructure development with ICT support are required. There is great opportunity to exploit the world markets provided India is able to take care of its constraints and strengthen its value chain to deliver quality milk. financial inclusion.2. improved breeding and health care systems. Concerted efforts in the areas of feed and nutrition management. One of the major constraint has been the feed prices which are quite high relative to the milk prices.3 SUMMARY ON SUSTAINABLE INDIAN DAIRY DEVELOPMENT Key messages for sustainable Indian dairy development 99 99 99 99 99 Suitable farm level policies need to be developed by the government to ensure sustainable dairy development keeping in view the ensuring socio-economic dynamics and the existing competitive resource advantages. particularly women. The key strengths of Indian dairying lies in maintaining its milk production growth at an even rate to meet its domestic needs but with demand rising at a faster pace as economic development takes place it will have to look into better ways to meet its domestic needs. Concerted efforts in linking the milk producers to the organized supply chain needs further strengthening to ensure stable milk prices that consumers can afford. The road ahead for the small holder dairy farmers is quite challenging and considerable gains in productivity can be reaped through improved management by linking production system to consumer demand. Dairy Farming in India: A Global Comparison 31 .

32 Dairy Farming in India: A Global Comparison .

3 ANNEX Dairy Farming in India: A Global Comparison 33 .

The first farm is an average sized farm with an average management performance. The IFCN economic models and standards ensure comparability between countries and provide a global picture. For further details please contact us at info@ifcndairy.the cow and the dairy farmer. Analysing the Dairy World Using the Typical Farm Approach In the IFCN. What does IFCN do? IFCN provides globally comparable dairy data. The IFCN started in 2000 with the basics . to show economies of scale. managed by the IFCN Dairy Research Center with currently 15 dairy researchers. By addressing challenges in the dairy world.org 34 Dairy Farming in India: A Global Comparison . The goal is to have at least two (and up to six) typical farms for each region. farm size. More than 100 dairy related companies and organisations support the IFCN and use the knowledge to better solve challenges in the dairy world.1 IFCN AND ITS RESEARCH PARADIGM About IFCN IFCN is the global dairy research network. The second farm is larger than the first one but also having an average management performance. The knowledge creation is done via a network of dairy researchers from over 90 countries contributing to our annual processes.ifcndairy. ANNEX 3. outstanding knowledge and inspiration to widen your imagination. a typical farm represents a certain production system. The IFCN events are a key element in developing the network spirit. The key issue in creating high quality farm comparison results is to apply a uniform method to all farms. IFCN creates a better understanding of the global dairy world. IFCN has innovative ways to share the knowledge with its members and with the dairy world as a whole.org or visit us at www.3. IFCN can contribute to a more resilient and more sustainable future for all of us. Step by step we deepen and widen the knowledge base every year. production technology used and the related milk volume in a country/dairy region (HEMME 2000).

This demand growth is likely to be met by an average increase in herd productivity of 1. milk production and milk delivered gives an overview of the dairy supply chain in the world. Dairy Farming in India: A Global Comparison 35 . It is likely that India and Pakistan may shift from selfsufficient situation to importer under existing conditions. The information on the top 20 milk processors. margin over compound feed costs and cost of milk production at monthly and yearly intervals since 2006.9 animals to 3. feed price. The map gives us an overview of the major economic parameters like milk price.8 animals indicating decrease in farm numbers.4% reaching 1059 mill ton ECM in 2025. IFCN Baseline Results and Outlook 2025 The IFCN Baseline is produced every year to show the most probable scenario of the Dairy World in the next 10 years and to show perspective guide line for dairy industries and all related business.4% per annum meaning an additional 240 million ton of milk ECM to be produced by 2025. The IFCN results for 2015 predicts that the world milk production will grow on an average of 2.3% and animal population by 1%.World Dairy Map 2015 The World Dairy Map 2015 shows us the dairy economic results of the Dairy Report 2014 representing 98% of the world milk production volume. The average farm size will show a rising trend from present 2. The highest milk production increase is expected in South Asia. The world milk demand is likely to grow at an average growth rate of 2.

In line with YES BANK’s approach of being a knowledge driven organization. service driven. Our knowledge banking initiatives across sectors continue to gain traction with several State Governments and Central Ministries appointing YES BANK as their strategic advisors on significant projects. dairy processing. Business dynamics vary from sector to sector and YES BANK believes that in-depth understanding of each sector is crucial for success and sustenance. The group houses industry specialists with immense sectoral knowledge and relevant experience and expertise in the conceptualization and implementation of food & agri initiatives. logistics. Ministry of Commerce.3. modern terminal markets. agri supply chain. food safety. agri inputs. India’s 5th largest private sector bank. multinationals. food parks. customer centric. large scale farming. private Indian Bank catering to the ‘Future Businesses of India’. Food Processing. skill development and rural retail among others. Indian Sugar Industry and Skill Development among others. FASAR also conducts in-depth research on various sub-sectors of Food & Agri domain and releases knowledge reports and research papers apprising the stakeholders on the latest issues. 36 Dairy Farming in India: A Global Comparison . a specialized Food & Agribusiness Strategic Advisory & Research Group (FASAR) has been domiciled within the Food & Agribusiness Research Management (FARM) division of the Bank. key trends and developments in the sector. FASAR works with corporates. plantations. YES BANK has adopted international best practices. and offers comprehensive banking and financial solutions to all its valued customers. the highest standards of service quality and operational excellence. state governments. YES BANK is a knowledge driven organization and is structured around product and knowledge teams. small & medium enterprises. Ministry of Food Processing Industries) & multilateral agencies in sectors like dairy farming. Additionally the division anchors knowledge pool development for publication of thought leadership articles in the print media. The team has published knowledge reports with various partners covering the latest industry trends and sectoral issues on Agri Infrastructure. Dairy. Biotechnology. central government (Ministry of Agriculture. vision and strategy of its Promoter and Founder Rana Kapoor and his top management team. The Bank has 630+ Branches and 1190+ ATMs across all 29 States and & Union Territories of India. to establish a high quality. agri-infrastructure. is an outcome of the professional & entrepreneurial commitment. agri SEZs. Retail.2 YES BANK AND KNOWLEDGE BANKING PROPOSITION YES BANK. food processing & food services. commodities.

customer centric. to establish a high quality. the highest standards of service quality and operational excellence. is the outcome of the professional & entrepreneurial commitment of its Founder Rana Kapoor and its top management team. service driven. headquartered in the Lower Parel Innovation District (LPID) of Mumbai. private Indian Bank catering to the future businesses of India. corporate and emerging corporate banking clients. . YES BANK has adopted international best practices. and offers comprehensive banking and financial solutions to all its valued customers. India’s fifth largest private sector Bank with a pan India presence across all 29 states and 7 Union Territories of India. YES BANK has a knowledge driven approach to banking.YES BANK. and offers a superior customer experience for its retail. YES BANK is steadily evolving as the Professionals’ Bank of India with the long term mission of “Building the Finest Quality Large Bank of the World in India” by 2020.

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7 % 1.5 % O 06 Dairy Farmers of America Fonterra Co-operative Group Groupe Lactalis (incl. AMI. 2. The database covers 60 countries.5% protein and 4 % fat.1 % 1. Malawi: Fanny Chigwa. starting on farm level to the consumer.6 1. in mill. Croatia: Darija Bendelja.5* 4. in some cases estimations. Quota costs: Quota rents paid+ opportunity costs for quota owned Explanation: The data of the graphs is content of the IFCN product ”Monthly real time data of milk production. Farm data for the year 2014 is used to derive the monthly estimates using national level figures for Milk price.5 1.5 0. Pérez R. Norway: Bjorn Gunnar Hansen.org + Armenia: Vardan Urutyan.7* 1.4 35 US-$ / 100 kg milk (ECM) 10 11 Delivered 2013 in mill t ECM 0. Data represents in most cases the year 2013.org.6 % 0.4 0.0 5.5 Cost of milk production (2013) 1. Milk production is partly milk produced or milk delivered. 2 Cheese & whey (45%). Figures are adjusted for leap year effects.1 6.6 % 0. its tools and the database for their research. Milk production data and milk prices are standardised to ECM volumes (Energy corrected milk. This figure shall be interpreted with care as the precise number is difficult to define and a direct comparability between companies is limited. Costs from P&L account: Costs as calculated in the Profit and Loss Account · Non-milk returns: cattle returns and coupled direct subsidies (including VAT Surplus). teaching and farm advisory work. Mike Francesconi. Belarus: Sviatlana Takun. IN annualised milk production. Milk intake figures in mill tons. in US-$ 0.4 % 1. estimates for some countries.3 23 Not delivered 2013 in mill t ECM 2008 to 2013 milk production increase in mill t ■ ■ ■ ■ ■ ■ ■ 1. Smita Sirohi. estimates for some countries.8 4.6 184. DFA) or is sourcing milk in form of dairy products.7 10. FAO.4 4 – 4. t milk equivalants 27.4* 5. Jamaica. in some cases converted to US-$ by using the annual average exchange rate. Institutional partners Albania Algeria Argentina Bolivia Brazil Bulgaria Croatia Czech Republic Greece Hungary Armenia Australia Austria Cameroon Canada Chile Bangladesh Belarus Belgium China Denmark Ecuador Egypt China Colombia Costa Rica Ethiopia Finland France Germany Iceland India India Iran Ireland Israel Italy Dairy Consultant Dairy Research Center Health and hygiene + Estonia Indonesia + Dairy Expert Japan International Dairy Federation Dairy Expert Freelancer Dairy farmer Milking and barn equipment Cost level of farms in region where shade is placed 0 < = 20 Indicator: Cost of milk production (excluding quota cost) of the “average sized” typical farms analysed in the countries.5* 4.0 14-15* 12.non milk returns Opportunity costs Quota costs Milk price 60 50 USD/ 100 kg milk ECM Italy China 40 30 20 10 Jan-15 Mar-15 May-15 Jul-14 Sep-14 Nov-14 May-14 Jan-14 Mar-14 Nov-13 Sep-13 Jul-13 May-13 Jan-13 Mar-13 Sep-12 Nov-12 Jul-12 Mar-12 May-12 Jan-12 Nov-11 Jul-11 Sep-11 May-11 Mar-11 Jan-11 Nov 2010 Jul 2010 Sep 2010 Jan 2010 Mar 2010 Nov 2009 May 2010 Sep 2009 Jul 2009 May 2009 Jan 2009 Mar 2009 Nov 2008 Sep 2008 Jul 2008 May 2008 Jan 2008 Mar 2008 0 Explanation: monthly real time cost economics for a typical 126 Holstein Frisian Family farm in Northern Germany (DE-126N) with average milk yield of 8100 kg ECM and a free stall barn · Data Source: IFCN farm comparison database 2015. Armenia Milk production and share of milk delivered in 2013 Annual absolute change of milk production volume 2008 – 2013 Cost of milk production in average sized farms in 2013 -0. FAO.1 % 0.5 1. Mexico: Rigoberto Beccerra.3 29 ID EU-28 155 87 South Africa 1. Dairy turnover represents turnover which belongs only to processed milk and not to other activities.org Change in milk production on monthly basis 2007 – 2015 20 0 Brazil 0 30 10 10 0 30 0 40 Jan-11 World market milk price National price USD/100 kg ECM 20 50 40 Jan-08 30 60 50 0 10 Source: IFCN data collection. feed price. Srivastava. 4 % fat and 3. Source of data: National statistics.0 % 1. Data is adjusted for leap year effect. New Zealand: Fonterra payout milk price before retentions. Data until April 2015. Company name Jan-07 IFCN Top 20 milk processors 2014 by milk intake 50 50 40 3% 1% 0% USD / 100 kg USD / 100 kg USD / 100 kg 40 2% 30 30 20 20 -1% Average annual % change IFCN World feed price indicator Margin over compound feed costs IFCN World milk price indicator Average margin 2007-2014 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 Jan-07 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 0 Jan-07 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-07 Jan-09 0 -3% Norway 10 10 % change to previous year -2% Jan-08 Panama Results of the real time farm economics calculations for Germany – Cost of milk production only Cost P&L . AMI.6 % 0. others China France/others USA No. India: IFCN estimations based on consumer milk price index. USA: Christopher Nobel. Turkmenistan.2 4. both on global view down to farm and country levels.1 0.ifcndairy.2 A 06 Orgin & main operation countries USA New Zealand/ others France/others Switzerland/others Denmark/Sweden/others Netherlands/others USA France/others USA Germany Canada/USA/others Ireland/USA/others USA France India China Germany/UK. Data until April 2015. IN annualised milk production. Explanation of variables: 1.0 1.8 22. Poland: Ewa Koloszycz. The coverage of the data represents 98% of the milk production volume. Anna-Maija Heikkilä.9 1.0 in USD / 100 kg ECM 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Milk intake.0 0. local processors payout and expert knowledge. Feed prices shown in the chart represent the development of ”compound feed prices“ (balanced in energy and protein) and have been estimated out of corn and soya bean prices of the country and the developments on the world market. IFCN DAIRY REPORT The IFCN Dairy Report summarizes the annual research work of the IFCN. Explanation: Data: Energy corrected milk (ECM) price.4 EU-28 1. It visualizes the global dairy development worldwide.7 0. Tanzania. These companies use the IFCN knowledge for their strategic planning: Afghanistan SE S 60 40 < = Agribusiness partners Milk processing HJ BE SE Jordan Feed Dairy farmer Kazakhstan Kyrgyzstan Latvia Lithuania Luxembourg Macedonia Malawi Malaysia Philippines Poland Spain Sri Lanka The IFCN IFCN is the Dairy Research Network that provides globally comparable dairy economic data and forecasts. analysis and estimates. Colombia: René A.1 1. Leonie Prinsloo. This knowledge is built along the complete dairy chain.org Monthly milk price in USD / 100 kg milk 2006 – 2015 30 20 Jan-14 Jan-15 Jan-13 Jan-12 Jan-11 Jan-15 10 50 40 30 20 10 Jan-13 Jan-12 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 Jan-10 0 Jan-06 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-09 Jan-14 Jan-10 Jan-09 Jan-06 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 20 0 Jan-08 J 15 J 14 30 Jan-09 10 70 60 Jan-08 20 80 Jan-06 30 China 90 USD per 100 kg ECM 40 USD per 100 kg ECM 50 40 IFCN Margin over compuond feed costs 2007 – 2015 60 4% Jan-07 Jan-06 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 Jan-07 Jan-06 60 50 Jan-06 USD per 100 kg ECM 60 A 15 J 14 O 14 J 13 A 14 J 13 O 13 J 12 A 13 J 12 O 12 J 11 A 12 J 11 O 11 J 10 A 11 J 10 O 10 J 09 A 10 J 09 O 09 J 08 A 09 J 08 O 08 J 07 A 08 J 07 O 07 J 06 A 07 J 06 IFCN World milk and feed price 2007 – 2015 5% New Zealand Source: National statistics / surveys. representing 92 % of world milk production.6* 1. Enrique Vazquez Selem. excluding distributable profit. The team in the IFCN Dairy Research Center in Kiel © IFCN AG 05/2015: All rights reserved . Source of data: National statistics. K. This indicator gives an indication of value creation per kg of milk processed. IFCN combined world milk price indicator: For details see graph on the left.4 1. Cameroon: Asaah Ndambi.6 % 0. > 60 50 < = 50 30 < = 40 20 < = 30 no data Research partners / organisations participating These researchers provided information in 2014 about their countries and use the global IFCN knowledge.8 % 0.8 6. Jaime Jurado Arredondo. Milk intake represents milk volume collected and dairy commodity purchases (in milk equivalent) for the main company and its subsidiaries. Chad Harris.1 8-9* 8. * = figures marked like this have been estimated by IFCN. This means that the total milk volume of the top 20 processors can be overestimated.8 % 0. By providing these data IFCN creates a value for people which aim is to develop the dairy world further.0 N NY PU TO JA 149 5. AU. Kheir Jarrah.5 .7 % 0. Calculation: (Milk production 2013 minus milk production 2008) divided by 5.6 % 0.6* 1. Relative change of the 12-months rolling sum of milk production expresses the relative deviation of milk production in a 12 month period compared to the same period one year before. AP Gunasekaran.9* 0. In some cases recalculated from litre (1litre = 1. inflation and exchange rate from national statistics and IFCN estimates. Turn over per kg milk: Dairy turn over divided by milk intake. For more details on the world milk and feed prices see www. cheese&whey.7 % 0.0 15.4 % protein). Turnover figures in US-$ bill. milk & feed prices“. For more details see http://www. Namibia Dairies.7 % 2.3 10. Australia: Andrew Weinert..g. Matti Ryhänen.4 % 1. Parmalat) Nestlé Arla Foods FrieslandCampina Dean Foods Danone California Dairies DMK Deutsches Milchkontor Saputo Glanbia Group Land O' Lakes Groupe Sodiaal Amul (GCMMF) Yili Group Unternehmensgruppe Theo Müller Mengniu Dairy Company Bongrain Darigold (Northwest Dairy Association) Sum of Top 20 IFCN combined world milk price indicator 2006 – 2015 Estimated turnover per kg milk.7 1. In the milk intake a double counting is possible once a processor sources milk from a collecting cooperative (e.2 -0. Vietnam: Tieu Duc Viet. 40 10 40 20 25 % 50 Jan-07 50 USD/100 kg ECM 60 USD/100 kg ECM 70 60 60 Poland Russian Federation 70 IFCN world milk price indicator Jan-07 USA Range of IFCN milk price indicators (SMP&butter. WMP) Jan-07 70 Market share in % of world milk production 3. 3.1 0.0 2008 to 2013 milk production decrease in mill t Data: Cow and buffalo milk production 2013 and 2008 in mill t ECM per year. 3 WMP (20%). Zimbabwe: Rob Jansen-van Vuuren · These countries have joined the IFCN network 2015: Lebanon.1 31 45 WI CA 2. Kyrgyzstan. India: Dr.3 1. Comment: NZ.9 % 2.7 1. THE IFCN RESEARCH ACTIVITIES • Analysis on cost of milk production • Milk price analysis and projection • Dairy sector and policy analysis • Sustainable dairy development IFCN DAIRY RESEARCH CENTER Torsten Hemme Managing Director Anders Fagerberg Chairman of the IFCN Board Agriculture Researcher Mexico Morocco Nepal New Zealand Norway Pakistan Panama Peru Portugal Russian Federation Saudi Arabia Senegal Serbia Slovakia Slovenia South Africa Genetics for animal & plants Sudan Sweden Switzerland Taiwan Tajikistan Thailand The Netherlands Tunisia Turkey Uganda Other branches of the dairy chain Ukraine United Kingdom Uruguay USA USA USA Uzbekistan Vietnam Yemen Zimbabwe Farm machinery Peritus Farm DMCC Contact: info@ifcndairy.2 3. Data until April 2015. A. Finland: Jukka Tauriainen.ifcndairy. Pakistan: Waseem Shaukat. AU. standardised to 3. Data: Cow and buffalo milk production and milk delivered 2013 in mill t ECM. Data are based on national statistics and also estimates once needed. Comment: NZ.25* 1.033 kg). National milk price: USA: All milk price. weighted average of 3 IFCN world milk price indicators: 1 SMP & butter (35%). France: Benoit Rubin. Tajikistan.ifcndairy. Namibia.0 6.0 % 2. IFCN combined world milk price indicator: Combined IFCN world milk price indicator.World Dairy Map 2015 For a better understanding of the dairy world Results of the IFCN Dairy Report 2014 – www.8 % 0. Share of milk delivered estimated for Venezuela.