President's Desk

Future of Indian Dairy: Vision 2050

In the span of the last five decades, India has witnessed remarkable growth and transformation across various sectors, most notably in food production and dairy. As the population surged by 2.5 times, from 1972 to the present day, food production rose from 200 million metric tons to an impressive 900 million metric tons, marking a notable 4% growth. This growth is not uniform across all sectors; cereals increased 2.8 times, fruits and vegetables 6 times, dairy 10 times, fisheries 12 times, and poultry a staggering 23 times.

India has 1.42 billion stomach to feed currently, and it would be 1.65 billion in next 25 years. This number of stomachs, along with increased purchasing power will lead to more consumption of food and dairy products. Currently 32% population is in urban India and 68 percent is in rural India. But the way migration is happening, it may touch 50% both in urban and rural in the years to come. So, we will have increased number of mouths to feed and less hands for the production. This demographic shift will see a balanced distribution between urban and rural populations, with both segments equally sharing the responsibility of food production and consumption. However, this equilibrium poses challenges, as the increasing urbanization may strain agricultural production, leading to an increased reliance on efficient farming practices and technological advancements.

A focal point of discussion in the dairy industry is its future trajectory. Presently, the value of India's Dairy industry is of Rs. 14 lakh crore, with only 3.5 lakh crore contributed by the organized sector. Looking ahead to 2030, the Indian dairy industry is anticipated to be valued at Rs. 30 lakh crore, with the organized sector contributing 10 lacs crore. Going by past trend wherein tripling of milk production takes place every 25 years, by 2030, India's milk production could reach 330 million metric tons, constituting 30% of the world's milk production. By 2048, this figure could soar to 628 MMT.

The per capita milk consumption has increased steadily, from 110 gms to 460 gms over the past 50 years. Projections suggest that by the next 25 years, this figure could reach 850 gms, aligning with consumption patterns observed in developed nations. With estimated production outstripping consumption by 110 MMT, India will have to enhance its export capabilities to avoid domestic surpluses that could disrupt prices and discourage farmers from production.

To achieve sustainable growth in dairy production and exports, India must focus on enhancing productivity and reducing production costs. Quality improvement is paramount to compete in the global market, necessitating a focus on feed conversion ratio, cost reduction, and breed improvement, etc. Moreover, capitalizing on emerging trends, such as the increasing demand for dairy fat, presents an opportunity to leverage buffalo milk production, which boasts twice the fat content of cow milk.

Investment in the dairy sector is crucial to accommodate the anticipated surge in production. Estimates suggest a requirement of Rs. 1.60 lakh crore in next 6 years, with significant investments in processing, backward integration, and animal husbandry. This investment surge will not only foster economic growth but also generate substantial employment opportunities, with 72 lakh jobs expected to be created, predominantly in rural areas.

As India charts its course in the dairy industry for the next quarter century, strategic investments, technological advancements, and a focus on quality and efficiency will be pivotal in ensuring sustainable growth and global competitiveness.

On the one hand global milk production has been on an upward trajectory, with Asia emerging as the leading milk-producing region, holding a substantial 42 per cent share of the total production in 2018, Contrastingly Europe and Oceania are grappling with the problem of declining production.

The House of Representatives Standing Committee on Agriculture, Parliament of Australia, has recently embarked on a crucial inquiry into the state of food security in the nation. Commissioned by the Minister for Agriculture, Fisheries, and Forestry in October 2023, this inquiry aims to address the challenges and explore strategies to bolster and safeguard Australia's food security. Among the focal points of this inquiry is the dairy industry, a sector facing significant hurdles that require urgent attention.

Australia's dairy industry, once a robust pillar of the agricultural sector, has been experiencing a troubling decline. In the 2021-22 period, the industry produced approximately 8.5 billion litres of milk from 1.34 million cows, amounting to a farmgate value of $4.9 billion. This figure marks the industry's lowest output since at least 1996-97. Various factors contribute to this downturn, including rising input costs that continually erode profitability, stagnant productivity growth, a shrinking share in export markets, challenges to social licence, evolving consumer preferences, changes in production systems, and the pervasive impacts of climate change.

In this global context, Australia accounts for a mere 2 per cent of world milk production. Despite this, Australia holds a significant position in the global dairy trade, ranking fourth with a 5 per cent share, trailing behind New Zealand, the European Union, and the United States.

How India is prepared to face the challenges going head?
The recent experiences of Australia's dairy industry offer valuable insights and lessons that can be applied to the Indian dairy sector. Here are some key takeaways:

Indian dairy producers must focus on cost management strategies, such as adopting more efficient farming practices, utilizing economies of scale, and leveraging technology to reduce operational costs.

Investing in research and development to enhance dairy productivity is essential. This includes improving feed quality, breeding programs, and adopting advanced dairy farming technologies to boost milk yield per cow.

The Indian dairy industry should stay attuned to changing consumer trends, such as increasing demand for fresh and health-oriented dairy products, and innovate accordingly. Developing products that cater to these new preferences can help capture a larger market share.

Strong collaboration between government bodies and the dairy industry is vital. Policies and support mechanisms that encourage innovation, provide financial assistance, and facilitate market expansion can significantly bolster the industry's growth and resilience.