June 3, 2022

India's milk production on the rise as dairy companies take advantage of opportunities

During the 2020-21 period, milk production in India went up by 5.81%.

As per the production data of the Food and Agriculture Organization's Corporate Statistical Database (FAOSTAT), the country ranks first in milk production, accounting for 21% of global output. Its milk production was 209.96 million tonnes in 2020-21, compared to 198.44 million tonnes in 2019-20.

Additionally, prices relating to milk procurement by private dairies and cooperatives have increased. This will partially compensate for the rising production costs of milk production; in the past three months, prices of dry fodder and cattle feed and concentrates had spiked drastically.

One dairy company is stepping up activities in eastern and western India: Mother Dairy is seeking to strengthen its presence in these regions as it aims to grow sales at a compound annual growth rate (CAGR) of 30% over the next five years. The company's sales were previously muted during the peak summer months of 2020 and 2021 due to pandemic lockdowns.

Amul is now developing a portfolio of protein products. As the largest cheese producer, it has a daily liquid whey availability of 2.5 million liters per day. Amul stated that India's whey protein market is worth $2 billion and it aims to gain a large market share of this segment with a premium product range — thereby making India self-reliant in a category that is heavily dependent on imports.

Meanwhile, outside India, Sri Lanka is placing hopes on dairy players and policymakers in India to bail it out from its current milk crisis. Once averse to allowing access to Indian dairy players, the country had imposed barriers on the import of Indian dairy products.

The estimated value of the Sri Lankan dairy market is $400 million, of which the majority is catered to by New Zealand and Australia's dairies.

With the country's change of heart towards Indian dairy imports, Indian companies may enjoy some opportunities to supply dairy products to Sri Lanka.

However, it should be noted that, in the past, India's National Dairy Development Board had helped Sri Lankan Government to improve its milk production — but with little success.

- Dr. Dinesh Bhosale