India destined to be milk bowl of the World

When India attained independence, milk production in the country was hardly around 17 million MTs during 1950. Per capita availability of milk in the country was very low and it was at the perils of imports from Europe and other countries to meet its basic requirement. In fact, during that time, we had a system of issuance of milk cards to households in major urban centres like Mumbai & Delhi and quota of milk was fixed for the household, beyond which, you cant take more milk. There are numerous stories of how households had to toil hard all the way upto the milk commissioner to increase their quota of milk when there was addition of family member.

Thereafter, cooperative movement started spreading around the country on 'Amul model' and farmers started organising themselves creating large dairy businesses. This movement was initiated at the suggestion of 'Ironman of India', Sardar Vallabhbhai Patel and taken forward by leaders like Morarji Desai and others. Tribhovandas Patel led this movement in Kaira District of Gujarat to create Amul and other leaders like Mansinhbhai Patel, Galbabhai Patel, etc. took it forward in neighbouring districts of Mehsana, Sabarkantha, Banaskantha, etc. Tribhovandas Patel found able executive in form of Dr. Veghese Kurien. 

Looking at the rapid development of cooperatives in rural India and its impact on improving livelihood of dairy farmers, India's second Prime Minister, Lal Banadur Shashtri decided to replicate the model across the country and that led to establishment of National Dairy Development Board (NDDB) under the leadership of Dr. V Kurien. Shashtri ji made sure that NDDB was helmed by professionals like Dr. Kurien, was provided full autonomy to operate through a separate law passed in the Parliament and was headquartered in Anand to keep it aloof from the bureaucracy of Delhi. 

Dr. Kurien got assistance from European governments & UNICEF in form of grant of milk and took assistance of Michael Halse to draft Operation Flood (OF) Programme, which was basically a project to replicate 'Amul model' across the country in form of developing Unions of milk producers in different Districts, creating national milk grid to meet consumer requirements of milk and internal milk exchange between rural & urban India. The donated milk was sold into the market and realisation was used as seed money to rotate investments under OF Programme and rest is history as we all know.

Milk production in the country grew by around 2.5% during initial days of cooperative formation and it propelled further after implementation of OF programme in four different phases across the country to more than 4%.

Then came the moment of Liberalisation & Privatisation announced by Prime Minister Narsimha Rao and Finance Minister Dr. ManmohanSingh, which opened up the dairy sector for private sector participation. This further fuelled growth, both for increased consumption due to higher awareness & affluance as well as by higher investments from private players and bringing in more farmers to the fold of organised dairy industry. 

Currently, India is largest milk producer in the World with its production estimated to reach 200 million MTs, representing around 22% of the global production.

As per OECD-FAO World Food Outlook 2030 released recently, India is projected to grow at similar break-neck speed going forward. 

 

In near future, half of the global growth in milk production would be contributed by India alone as per FAO-OECD Projections

We are estimating India's milk production to more than double over next 20 years and reach around 424 million MTs by 2040. At that point, India would account for around 36% of global milk production or plainly speaking, one out of every 3rd glass of milk would be produced in India!

With its large milch animal population, productivity improvement and large farmer base; India is firmly in position to establish itself as milk bowl of the World

This would be made possible by a slight increase in herd size but a significant increase in yield. Further, a large part of this increase would be consumed within the domestic market.

However, mapping the above staggering increase in milk production would pin the total market size by 2040 in India at mind-boggling Rs. 50 Lakhs crores or USD 700 billion (at current conversion rates) from current levels of USD 140 billion. This shows the potential for Indian milk market for future and it remains to be seen, who is able to ride the giant wave and at what pace!

Shall discuss consumption growth story for India in further post.