There is need for the dairy industry to adopt “continual structured support” to make its operations more competitive. Like other industries, the maximum retail price of dairy products is influenced by market forces and at the same time there is consistent demand for increasing price of the raw milk by the producers. The only way to balance this is to make all the activities in dairying become efficient and effective.

With the diminishing price spread and profit margin, the dairy plants must control expenses on processing and packaging operations. This is further challenged by the large investments that are required to undertake modernisation, technological improvements, innovations and expansion of the projects. Current efficiency status of the dairy industry in terms of milk collection, transport, labour, processing and distribution is given in Table below.


Table: Efficiency status of the dairy industry.

Cost of milk collection and transportation per litre

Rs. 0.14 to 1.30

Labour cost per litre handled

Rs. 0.23 to 2.30

Energy cost per litre of milk

Rs. 0.09 to 1.60

Water consumption per litre of milk

1.3 to 28 litres

Cost of milk distribution per litre

Rs. 0.14 to 2.50

Source: Study report by National Dairy Research Institute, Bangalore.

With this background, an attempt has been made here to identify the key drivers to bring in efficiency in all aspects of dairy operations.

Efficiency in milk production

The productivity of Indian cows, buffaloes and crossbred animals is low as compared to developed countries. This is mainly because farming is based on minimal inputs. In addition, there are issues like inadequate feed resources, nutritional management and non-availability of suitable breeding facilities.

Dairy farmers with low productive animals and small herd holding would find milk production unviable with increasing input costs. Concept of family farms and business farms should be introduced in order to move the milk producers from livelihood to sustainability and further to prosperity. Small and marginal farmers should be encouraged to adopt collective dairy farming to get access to modern farm practices such as ration balancing, automation, animal housing.

A research conducted by the NDRI in the dairy farms in Punjab (Ludhiana) and Karnataka (Bangalore and Kolar) has shown that through adoption of scientific management practices, performance of crossbred animals had significantly improved. To improve the productivity of existing herd, it is necessary to induct high yielding animals, adopt Good Feeding Practices (GFP), Good Animal Health Practices (GAHP), Good Animal Breeding Practices (GABP), etc.

Efficiency in milk sourcing

Efficient procurement has become vital for corporates and cooperatives for sourcing milk of desired quality for maintaining their brand reputation. By cutting corners, there might be short-term gains, but there is every possibility that the consumers would reject the brand. Prevailing food laws in the country envisage safe and hygienic procurement and handling of milk at the village level. Currently milk procurement at village level happens through various networks such as cooperative societies, collection centres, milk pooling points, vendors/agents, etc. An efficient milk procurement network should ensure fairness and transparency in the process and focus on milk producers. This needs investment for which many organisations are reluctant. For procuring good quality milk, the organisations have to support the producers, create village level infrastructure of cold chain and implement milk production enhancement activities in their areas of operation.

Many dairy organisations consider that providing inputs to the farmers for enhancing milk production is the responsibility of government/public sector and they do not attach any importance to it. This might lead to a situation where production may suffer substantially without the study support of the entire dairy industry. It is prudent for the corporates to allocate 10 to 15 paise per litre of milk procured and plough it back for implementing milk production enhancement activities.

Efficiency in quality

As the quality of final products depends on the quality of raw milk, it is essential that clean milk production and procurement (CMPP) practices are adopted meticulously. Cold chain at the village level is essential to arrest the growth of microorganisms. There should be multistage testing facility from the cow to the consumer to support the quality of milk and milk products. It is essential that the quality and safety of dairy products should meet with the international regulatory requirements. The Indian dairy industry has taken some positive steps in the recent past and an appreciable number of milk processing plants in the organised sector have secured ISO/HACCP certification to ensure quality of products.

Efficiency in milk processing

Controlling handling loss in a dairy plant is one of the major issues affecting efficiency. To reduce operational losses and to bring in efficiency in processing, dairy plant must be set up at a suitable site, should have good design and layout, should ensure smooth flow of products as per safety and hygienic parameters, should have appropriate automation of operations and should be managed by skilled and trained personnel. Selection of right capacity of machinery/equipment and electronic controls would help in checking process loss and save on manpower. Efficiency in operations can be enhanced by replacement of machinery at specified intervals, upgrading the equipment, following a preventive maintenance schedule, utilising utilities in consonance with operational capabilities, monitoring data compilation and its usage. Handling losses which currently range from 1 to 3 per cent can be significantly reduced by proper maintenance of equipment and machinery, following standard operating practices, manning the plant with trained and skilled professionals and automation and modification of equipment, wherever necessary.

Preventive maintenance enables trouble-free operations and avoids occurrence of crisis. It increases the life of the machinery, minimises energy consumption, produces better quality products, reduces delays in production and ensures overall safety.

Utilities play a major role in dairy processing. Well operated and maintained utilities ensure availability of reliable and efficient energy, avoiding tripping and variations in pressure and temperature of steam, refrigeration, water, maximising energy efficiency output by continuously monitoring the fuel inputs, automating low value-high cost repetitive tasks, increasing asset life through proper maintenance and reducing maintenance cost by using data to determine when the machines need to be attended to, etc.

Efficiency in marketing

Common market drivers are consumer expectations, changing life style, disposable income and competitiveness. The market for value added products is growing and the industry should focus its attention on it to remain competitive. Traditional milk products offer considerable opportunities for growth in the domestic as well export market. The market is ripe for introduction of health centred milk products.

The cold chain facility in marketing should be strengthened by installing stock points in strategic locations and introducing insulated vehicles for secondary transport of milk and products. The retail points should be equipped with necessary refrigeration container facilities to ensure that the consumer gets safe and quality product. Intensification of cold chain on the distribution front would make the marketing operations sustainable and efficient. The distribution channel should be competitive, innovative and sustainable both in the short and long term. Moreover, all channel partners in the chain should have interest in maintaining it.

Efficiency in manpower

The capacity utilisation of dairy plants in the public, cooperative and private sectors varies from 50 per cent to 80 per cent. Skilled manpower is required at all the stages of dairying—milk production, procurement, processing and marketing. It is estimated that the deficit of skilled manpower in the dairy sector is to the extent of 60 per cent and this is likely to increase further in the coming years. It is felt that there is a deficit in research personnel too as well as dairy technologists and technicians and quality assurance personnel. Non-availability of adequate manpower would become a major bottleneck in the growth of the dairy industry.

It is necessary to take immediate steps to reduce the cost of milk production by increasing the productivity of our animals and adopting scientific feeding, breeding and management practices. There is also a need to reduce the cost of transportation, storage and processing of milk by trimming down the intermediary agencies as well as by adding value to the produce at village level. The quality of milk should be improved to international standards which could be possible with vaccination of livestock against significant diseases and maintaining clean surroundings in the dairy farm.

The policy of promoting production of low fat milk for general consumption and high fat buffalo milk for select purposes should also be considered in general interest of the public. An effective technical input and extension service should be established to facilitate the farmers to address their problems on milk production. Acquiring new technologies for improving productivity at all levels and understanding the milk market scenario at national and international level would help the industry to make its operations more viable and sustainable. In order to remain competitive, the dairy industry should reinvent and develop skills for continuous improvement.