India has rapidly emerged as one of the largest producers of milk over the last three decades, accounting for 18.5% of global milk production.
But inefficiencies in our dairy supply chain pose a serious health risk, which needs to be addressed immediately.
What is the market scenario in the India dairy sector?
Increasing preference for a healthy lifestyle is expected to nudge the Indian dairy industry to grow at a compounded 15% annually till 2020.
The sector is touted to emerge as a Rs. 9.4-lakh crore industry – which presents a immense opportunity for businesses.
Significantly, over the last few years, several well established Indian companies and multinationals have made efforts to move in into the sector.
This has resulted in a slew of new and innovative products being launched at the upper-end of the spectrum.
However, the dynamics of the Indian dairy industry is very different from that of more developed countries.
Hence, amidst the growing output, a serious health issue is also looming large, which is primarily due to our supply chain inefficiencies.
What are the problems?
In developed markets, dairy aggregator companies depend on large corporate dairy farms, whereas in India, dairy farming is largely a subsistence activity.
India’s major milk supply comes from millions of small producers who have an average of one or two milch animals comprising cows and/or buffaloes.
Additionally, only about 20% of the milk produce is channelled for organised marketing, and the rest remains in the ambit of unorganised supply chains.
A large cadre of small time vendors are involved in collecting milk from local producers and selling it in both urban and rural areas.
This kind of supply chains imply glaring inefficiencies, where a large portion of the milk produced does not adhere to the basic standards of hygiene.
The issue is aggravated as over 80% of milk consumption in India is liquid milk, which can pose serious health risks.
Un-chilled and unpasteurised milk can produce disease-causing germs and bacteria – surveys iterate that as much as 68.5% of supplies are contaminated.
FSSAI (Food Safety and Standards Authority of India) pointed out in a 2012 survey that 70% of the Urban and 31% of rural supplies don’t meet standards.
What is the way ahead?
To ensure that the Indian dairy industry continues to grow in a healthy and sustainable manner it is important to reassess our supply chain.
The focus needs to be on modernising milk logistics in order to create toxin free and antibiotic safe, high quality milk.
At the start of the supply chain, attention needs to be paid for managing and rearing cattle, and providing farms with the right kind of cattle feed.
Secondly, “processing and cold chain infrastructures” are in need of massive upgrades in a leapfrog manner like during “Operation Flood”.
Quality-friendly technologies such as the Bulk Milk Coolers (BMC) that brings down the time taken to collect milk to about ‘45 minutes’ are needed.
Notably, it takes about 2-3 hours for the currently prevalent central chilling/cold storage model - which enhances bacteria formation.
Also, since transporting raw milk beyond 200 km is not feasible, we need to ensure a geographical distribution of sourcing and processing sites.
While all these will enhance the quality and shelf-life of milk, improvements in the last mile connectivity will result in holistic betterment of the sector.
