Milk production in India has come a long way over the years from a low volume of 17
million tons just after Independence to 117 million tons in 2010 (FAO, 2011). With the
highest livestock population in the world, India has emerged as the largest milk producing
country in the world, constituting about 16.23% of the world milk production with a
cumulative annual growth rate of about 4%. Establishment of well-developed market
linkages and marketing infrastructure are the key inputs that governed the success of
dairying. In this context, ‘operation flood’ program, the world’s largest integrated dairy
development program, played a significant role in improving the markets swiftly. The
Indian dairy industry stands at a mammoth size of US$70 bn and comprises 15 milk
federations, 177 district milk unions across 346 districts of the country, 1,28,799 village
dairy cooperative societies and 13.4 million dairy farmers. Currently, only 16-17% of the
fluid milk is being processed in the country, of which buffalo and cow milk account for 53% and 43% respectively. Of the total cow milk being processed, 26% is from indigenous
cows and the rest from crossbred cows. Uttar Pradesh, Rajasthan, Andhra Pradesh and
Punjab are the top four milk producing states in the country. Almost 70% of milk is
consumed as liquid milk and conversion of milk into various value-added products is to
a very limited extent, especially in the organized sector. Value addition in dairy industry
is restricted to butter, ghee, flavored milk beverages, ice cream, dahi, condensed milks,
canned gulabjamun, canned rasogolla, etc. In contrast, the unorganized sector has been
concentrating on three main semi-finished products, viz., paneer, khoa and chhana.
The future of any business is bleak if it is not sustainable and dairying business is no
exception. Presently, dairy industries are facing high input costs for milk production, lack
of infrastructure for handling, transport, processing and marketing. Although sustained
Research and Development (R&D) inputs for improving the quality and shelf life of milk
products and designing appropriate and cost-effective equipment have been made
throughout the country, value addition to milk in the organized sector still remains at a
very low rate. Dairy industry could be sustainable only when remunerative prices to the
farmer, value to the consumer, reasonable returns to the industry and stakeholders are
ensured. Efficient supply chain and value addition through product diversification are the
two key approaches to make dairying business sustainable. At this juncture, there is a need
to encourage or invite private players for investing and improving the logistics such as
cold storage facilities or bulk milk cooling systems, ultramodern and energy-efficient
processing equipment, refrigerated transport vehicles, computerized marketing networks
and monitoring systems. There is much scope for establishing large-scale dairy farms and
input supply production and marketing such as fodder production and feed processing
units, vaccine production centers and animal healthcare systems. Public-Private
Partnerships (PPPs) are being increasingly implemented as part of the all-inclusive
development framework in India and have become vital service delivery mechanisms for
the government and public sector institutions to achieve sustainable growth in an array
of sectors. The huge number of stakeholders and still largely unorganized Indian dairy
industry provide bounteous opportunities for the private players to come into a PPP mode
with the government and bring sustenance to the dairy industry. This study outlines the
scope of value addition and PPPs for sustainable dairy supply chain management.
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