Organised milk procurement share to reach 34% by FY19: report

The share of organised milk procurement, which currently contributes 24 per cent of total supplies, may climb to 34 per cent by 2018-19, according to a Rabobank report.
The organised dairy sector has shown strong growth in the face of product price increases. Further growth in value-added dairy products will compel private milk processors to reinforce the supply chain links to get additional supplies of quality milk, Rabobank said in a report 'Milking the Chain'.
It said access to capital will be the main driver to support the growth ambitions of private processors.
"Large-scale corporate dairy farming is only likely to develop in the long term. In the meantime, medium-scale farming will be essential to secure sufficient milk supplies. Processors will have to play an anchor role for other stakeholders.

"This will help create integrated dairy companies involved in milk production and in the processing and distribution of dairy products, yielding higher returns in the value chain," Rabobank Senior Industry Analyst Shiva Mudgil said.
To increase milk production, private processors have to become actively involved upstream to promote and enhance their milk supply, it said.

They need to reduce their dependence on agents and directly engage with dairy farmers to source good quality milk, according to the report.
Private processors must also engage with service providers of feed, nutrition, genetics and animal health care, it said.
With strong value growth of 15 per cent over the past five years, the Indian dairy industry has experienced little impact on demand even after retail prices of dairy products were increased.

Further, growth in traditional market categories such as packed milk and indigenous products (10 to 15 per cent) and in value-added categories such as cheese and infant milk products (20 to 25 per cent), has created a good opportunity for milk processors to expand the product portfolio and geography.