Milk and Dairy Products in India

Production, Consumption and Exports

June 2008

Author Anil Chawla,

Hindustan Studies & Services Ltd.
Co-authors Pankaj Kandhari, Naveen Sharma, Nitin Jain, Deepesh Gupta,
Infolitics

Published by:
Hindustan Studies & Services Ltd.
MF-104, Ajay Tower, E5/1 (Comm.)
Arera Colony, Bhopal 462 039, India
info@hindustanstudies.com
http://www.hindustanstudies.com

FOR PRIVATE USE ONLY

Infolitics
st

103, 1

Floor, Bhavani Industrial Estate, Opp. IIT,

Powai, Mumbai 400076, India
indiafood@infolitics.com
http://www.infolitics.com

USE SUBJECT TO LEGAL CONDITIONS ON LAST PAGE

Milk & Dairy Products in India

Table of Contents
Chapter & sub-chapter description

P. No.

1. Introduction

2. Overview of Indian Economy

2.1

Rate of growth of Indian economy (GDP) from 2000-01 to 2007-08

2.2

Inflation Pressures during 2007 and 2008

2.3

Growth continues from 2003-04 onwards

2.4

Forecasts of Growth Rates by professional forecasters

2.5

Business Confidence Survey by National Council of Applied Economic

Research, Reserve Bank of India, and Dun & Bradstreet

2.6

Monsoon forecast for 2008 and report for 2007

2.7

Population 2004 to 2012 and rural urban divide

2.8

Map Of India showing states

2.9

Key Economic Indicators for 2004-05, 2005-06, 2006-07 and 2007-08

2.10

Balance of Payments & International Trade during 2006-07 and 2007-08

10

2.11

Foreign Exchange movements from May 2003 to May 2008

11

3. Livestock Scenario

12

3.1

Livestock overview issues affecting cattle, buffalo, goat and sheep

12

3.2

Livestock population by species (cattle, buffalo, sheep, goat, horses and ponies,
camels, pigs, mules, donkeys, yak, mithun) from 1951 to 2003

13

3.3

State-wise Dairy Animal population & Average Yield (Crossbred cows, nondescript cows, buffaloes and goats) during 2002-03, 2003-04, 2004-05 and
2005-06

14

3.4

Livestock health including disease scenario of dairy animals

18

3.5

Livestock ownership by marginal, small, semi-medium, medium and large

landholders

18

3.6

Fodder scenario present and future; with projections of demand-supply

scenario till year 2025

19

3.7

Herd size past trends and future projections of herd size of cattle, buffalo and
goat with herd size figures from 1982 to 2012 and growth rates from 1977-82 to
2008-13

20

4. Milk Production

22

4.1

National milk production and per capita availability from 1950-51 to 2011-12 and
comparison with other countries

22

4.2

Milk production in states (state-wise data for milk production by crossbred cows,
non-descript cows, buffaloes and goats)

23

4.3

States with crossbred cows (states that receive more than 25 per cent of milk
from crossbred cows)

24

4.4

Buffalo states (states that receive more than 40 per cent of milk from buffaloes)

25

HS&SL 2008

ii

Milk & Dairy Products in India

Chapter & sub-chapter description

P. No.

4.5

Major Dairy states (13 states that produce more than 90 per cent of Indias milk)

25

4.6

Milk Quality standards for fat, solids-not-fat in respect of buffalo milk, cow milk
and goat / sheep milk as well as of packed milk for retail sale; other quality
problems faced in India

26

5. Structure of Indian dairy industry

28

5.1

Distribution of surplus milk from villages role of traditional milkmen vs.

organized dairies

28

5.2

Cooperative milk movement history, concept and structure of dairy

cooperatives organized on Kaira / Anand pattern

28

5.3

Sector-wise distribution of dairies milk processing capacity in cooperative,

private and other (government) sector as on 31st March 2006

30

5.4

Dairies in cooperative sector state-wise data about number of dairy

cooperative societies, farmer members, milk procurement, liquid milk sale and
processing capacity

31

5.5

Regulatory environment applicable laws, rules and standards

32

5.6

Leading brands of dairy products top 20 dairy brands in India

33

5.7

Dairy companies catering to domestic market only Top 16 dairy companies of

India with insignificant presence in exports segment, along with addresses,
e-mail ids, telephone / fax numbers

35

5.8

Dairy companies actively engaged in exports - Top 9 dairy companies of India

with significant presence in exports segment, along with addresses, e-mail ids,
telephone / fax numbers and names of contact persons

37

5.9

Liquid milk market packing, pack size, logistics and brands

38

UHT milk market

39

5.10

6. Consumption of milk & milk products

40

6.1

Liquid milk per capita consumption state-wise per capita rural and urban
consumption of liquid milk and changes in consumption from 1993-94 to 2004-05

40

6.2

Milk & milk products per capita consumption trends changes in per capita rural
and urban consumption of milk & milk products from 1987 to 2006; Estimates by
industry chambers of growth in consumption of dairy products

42

6.3

Milk & milk products per capita expenditure state-wise during 2005-06

44

6.4

Milk & milk products consumption drivers of growth; economic, demographic,

historical, cultural and social factors defining the big picture

44

7. Dairy products production & consumption

46

7.1

Milk converted to products like curd, butter, ghee, cheese, khoa, cream, ice
cream etc.

46

7.2

Dairy fats butter and ghee production and consumption from 2002 to 2012

47

7.3

Curd / yogurt market preferences and attempts by organized sector to

introduce packed variants

51

7.4

Paneer (cottage cheese) / chhanna / chhanna based sweets product

descriptions, composition, methods of preparation, market size and forecasts of
growth

51

HS&SL 2008

iii

Milk & Dairy Products in India

Chapter & sub-chapter description

P. No.

7.5

Processed cheese major brands, estimate of market size and growth forecast

53

7.6

Khoa / mawa product descriptions, methods of preparation, composition,

market size and forecasts of growth

54

7.7

Condensed milk / dairy whiteners major brands, estimate of market size and
growth forecast

55

7.8

Milk powder

55

8. Prices

56

8.1

Milk prices wholesale price index; Comparison of WPIs for milk, butter and
ghee with WPI for food articles from January 2003 to January 2008

56

8.2

Purchase price of milk from farmers method, procedure and indicative prices in
April 2008 for cow milk and mix milk

58

8.3

SMP prices from 2001-02 to 2007-08 and in May 2008 with recent influencing
factors

61

8.4

Retail prices of milk & milk products (butter, ghee, cheese, curd, standard milk,
toned milk and full-fat milk)

62

9. Dairy exports overview

63

9.1

Dairy exports historical data Consolidated dairy exports data from 1995-96 to
December 2007; Item-wise exports data in quantity terms, INR terms, USD and
EUR terms for years 2004-05, 2005-06, 2006-07 and April-August 2007;
Item-wise average export realization (INR/kg) for years 2004-05, 2005-06,
2006-07 and April-August 2007

63

9.2

Dairy exports trends

68

10. Dairy exports country-wise statistics in quantity terms and INR

terms for years 2004-05, 2005-06, 2006-07 and April-August
2007

70

10.1

Milk & cream concentrated HS code 0402

70

10.2

Butter Milk, Curdled Milk etc. HS code 0403

79

10.3

Whey products HS code 0404

81

10.4

Butter, other fats & oils derived from milk HS code 0405

84

10.5

Cheese HS code 0406

88

10.6

Casein, caseinates and derivates HS code 3501

89

10.7

Lactose and lactose syrup HS code 1702

91

11. Future of Indian dairy exports

93

12. WTO influence

94

13. Global companies in India

95

13.1

Nestle

95

13.2

Fonterra Cooperative Group of New Zealand

95

13.3

Groupe Danone

96
HS&SL 2008

iv

Milk & Dairy Products in India

Chapter & sub-chapter description

P. No.

13.4

New Zealand Naturals

96

13.5

Wal-Mart

96

13.6

Unilever

96

13.7

Schreiber Foods

96

14. New products

97

14.1

Functional products

97

14.2

Local traditional tastes

97

15. Summary of projections

98

Annexures
A

Definitions & Abbreviations

99

Sources of Information

100

Profiles

101

Legal Conditions

102

Amul girl often used by Amul in advertisements of their products

Amul plant at Anand (Gujarat)

HS&SL 2008

Milk & Dairy Products in India

List of Tables
Table Description
T 1.1 Projected growth rate of milk production and dairy products consumption
T 2.1 Growth Rates of Real GDP
T 2.2 Forecasts of Growth Rates (in per cent) by various agencies
T 2.3 Business Expectations surveyed by various agencies
T 2.4 Indias population official projections
T 2.5 Population rural and urban of states
T 2.6 Key Indicators of Indias economy absolute values
T 2.7 Key Indicators of Indias economy Percentage change over previous year
T 2.8 RBI Reference Rate for Indian Rupee against major currencies
T 3.1 Livestock population in India by species
T 3.2 Annual Growth Rate of Livestock population in India by species
T 3.3 Crossbred cows Numbers and average yield in various states
T 3.4 Non descript cows Numbers and average yield in various states
T 3.5 Buffaloes Numbers and average yield in various states
T 3.6 Goats Numbers and average yield in various states
T 3.7 Incidence of Diseases in Dairy Animals in India during 2006 (January-December)
T 3.8 Livestock holding pattern among landowners
T 3.9 Supply and demand scenario of forage and roughage till 2025
T 3.10 Herd size of dairy animals as per livestock census
T 3.11 Growth rates of herds of dairy animals past and future
T 3.12 Projected herd size of dairy animals
T 4.1 Milk production from 1950-51 to 2011-12
T 4.2 Share of milk production by cows, buffaloes and goats state-wise during 2005-06
T 4.3 States where milk from crossbred cows is significant percentage of total milk
T 4.4 States where milk from buffalo is significant percentage of total milk
T 4.5 Major Dairy States and their production
T 4.6 Standards of different types of milk in India
T 5.1 Dairy processing units in cooperative, private and other sectors
T 5.2 Capacity and performance of Dairy processing units in cooperative sector
T 5.3 Share of cooperative sector in total milk in major dairy states
T 5.4 Leading brands of milk and dairy products
T 5.5 Contact Details of leading dairy companies excluding companies engaged in exports
T 5.6 Contact Details of leading dairy companies actively engaged in exports
T 6.1 Monthly per capita quantity of consumption of milk (liquid) by State/UT
T 6.2 Changes in consumption of milk (liquid) between 1993-94 and 2004-05
T 6.3 Changes in average value of consumption of milk & milk products per person per 30
days over National Sample Survey Rounds: all-India
T 6.4 Comparison of Monthly per capita quantity and value of consumption of milk & milk
products during 1999-2000 and 2004-05
HS&SL 2008

P. No.

1
3
5
6
6
7
9
10
11
13
13
14
15
16
17
18
19
20
20
21
21
22
23
24
25
26
27
30
31
32
34
35
37
40
41
42
43

vi

Milk & Dairy Products in India

Table Description
T 6.5 Average expenditure (Rs.) per person per 30 days on milk & milk products
T 6.6 Per capita income & consumption
T 7.1 Utilization of milk in different dairy products
T 7.2 Production and consumption of butter and ghee
T 7.3 Consumption of ghee
T 7.4 Consumption of table butter
T 7.5 Ghee & T Butter consumption and milk used for production
T 7.6 Typical composition of paneer
T 7.7 Composition of khoa
T 7.8 Types of khoa
T 8.1 WPI for milk, butter, ghee and food articles during 2003-08
T 8.2 Annual rate of change in WPI
T 8.3 Skimmed Milk Powder Prices
T 8.4 - Retail price of milk products and packed liquid milk
T 9.1 Indian dairy exports since 1995-96
T 9.2 Dairy exports month-wise during 2006 and 2007
T 9.3 Indian dairy exports 2004-05 to 2007-08
T 9.4 Indian dairy exports 2004-05 to 2007-08 in USD
T 9.5 Indian dairy exports 2004-05 to 2007-08 in EUR
T 9.6 Average realization from exports
T 10.1 Exports of Skimmed Milk Powder fat < 1.5 per cent HS Code 04021010
T 10.2 Exports of Milk food for babies HS Code 04021020
T 10.3 Exports of Other Milk Powder HS Code 04021090
T 10.4 Exports of Milk Powder Fat >1.5% HS Code 04022100
T 10.5 Exports of Milk for Babies Fat >1.5% HS Code 04022920
T 10.6 Exports of Other Milk Powder Fat >1.5% HS Code 04022990
T 10.7 Exports of Whole Milk Powder containing sweetening matter HS Code 04029910
T 10.8 Exports of condensed milk HS Code 04029920
T 10.9 Exports of other milk or cream containing sweetening matter HS Code 04029990
T 10.10 Exports of yogurt HS Code 04031000
T 10.11 Exports of butter milk HS Code 04039010
T 10.12 Exports of other curdled milk products HS Code 04039090
T 10.13 Exports of whey concentrated HS Code 04041010
T 10.14 Exports of whey dry, blocks & powdered HS Code 04041020
T 10.15 Exports of other whey products HS Code 04041090
T 10.16 Exports of products other than whey consisting of natural milk constituents HS Code
04049000
T 10.17 Exports of butter HS Code 04051000
T 10.18 Exports of dairy spreads HS Code 04052000
T 10.19 Exports of butter oil HS Code 04059010
T 10.20 Exports of melted butter (ghee) HS Code 04059020
T 10.21 Exports of fresh cheese HS Code 04061000
T 10.22 Exports of processed cheese HS Code 04063000
HS&SL 2008

P. No.

44
45
46
47
48
49
50
52
54
54
57
58
61
62
63
64
65
66
67
68
70
72
73
74
75
76
77
77
78
79
79
80
81
82
83
83
84
85
85
86
88
88

vii

Milk & Dairy Products in India

Table Description
T 10.23 Exports of casein, casein derivatives HS Code 350110
T 10.24 Exports of caseinates, caseinate derivatives HS Code 350190
T 10.25 Exports of lactose & syrup containing 99 per cent or more of lacts HS Code 170211
T 10.26 Exports of lactose & syrup containing < 99 per cent of lacts HS Code 170219

P. No.

89
90
91
92

A milk booth in Mumbai

HS&SL 2008

viii

Milk & Dairy Products in India

List of Charts
Chart Description

P. No.
8

C 2.1 Map of India showing states

C 4.2 Milk production in major dairy states

24
25

C 5.1 Distribution and consumption pattern of milk produced in villages

28

C 7.1 Utilization of milk in different dairy products

46
48
50

C 4.1 Increasing milk production

C 7.2 Evolution of Butter and Ghee Production 2002-2012

C 7.3 Ghee and Table Butter production and consumption
C 8.1 Movement of WPI for milk, butter, ghee and food articles
C 8.2 - Price List of mix milk
C 8.3 Price List of cow milk
C 9.1 Exports of dairy products from 1995-96 to 2006-07
C 9.2 Average export realizations of key dairy products

56
59
60
64
69

A typical milkman in North India bringing milk from village to sell in cities, dressed up during winter

HS&SL 2008

ix

Milk & Dairy Products in India

1.

Introduction
India is the largest producer of milk producing more than 100 million tons of milk per
annum. Yet, her per capita milk consumption is around 250 g per day.
India has a population of more than 1 billion with diverse food habits, cultures, traditions
and religions. Regional variations within the country can be mind boggling. On one hand,
the country has plains with long tradition of milk production and consumption. On the
other hand, there are forest and hilly regions with no tradition of dairying. Most of coastal
belts also do not have much of dairy tradition.
Cow is holy for Hindus who make up more than 80 per cent of the population of India.
Buffalo enjoys no such holy status. Cow slaughter is banned in many states of India.
There are no restrictions on buffalo culling.

All this makes India a very complex dairy country.

Till about year 2000, India was not on the radar screen of most international dairy companies,
since India was neither a major importer nor an exporter of dairy products. Through the 70s,
80s and 90s India used to take some milk powder and butter oil as aid. Exports from India
were insignificantly small. From 2000 onwards, Indian dairy products, particularly milk powder,
casein, whey products and ghee started making their presence felt in global markets.
The decade of 2000-10 will be recorded in dairy history as the decade of exports. But the next
decade will be different. Signs of change are already visible. India is finding it difficult to sustain
exports. The day is not far when India will become a net importer of dairy products, particularly
of dairy fats.
Indias milk production will grow at about 3 per cent per annum in spite of difficulties due to
stagnant livestock herd size and shortage of fodder. Due to increasing population, per capita
availability of milk will increase by only about 1.5 per cent per annum. For an economy growing
at about 8 per cent per annum, this increase in availability will be grossly inadequate.
Table 1.1 Projected growth rate of milk production and dairy products consumption

Projected Growth Rate

Product

Per cent per annum

Milk production

Ghee consumption

Table Butter consumption

10

Paneer (cottage cheese)

10

Processed cheese

12

Dairy whiteners and condensed milk

Production growing at only 3 per cent and consumption growing at more than double the rate is
obviously going to lead to a mismatch between demand and supply. This will create
opportunities for international dairy companies.
On one hand, India is expected to enter the international market with demand for commodities
like skimmed milk powder and butter oil. On the other hand, growing prosperity and fast growth
HS&SL 2008

Milk & Dairy Products in India

of organized modern retail and western style fast food outlets will lead to increased
consumption of products like cheese and table butter. This will throw up opportunities for
branded dairy products to enter this huge market of more than a billion people.
Helping international companies understand the dairy scenario of India from a macro-level
perspective is the prime objective of this study. Facts and statistics, instead of opinions and
impressions, are the key building blocks of this report.
During the study, we have tried, as far as possible, to rely on official data from some
department / ministry / agency / directorate of government of India. This poses a problem since
government agencies of India are slow in releasing data. For example, Director General of
Commercial Intelligence & Statistics, Kolkata (responsible for compiling data on Indias imports
and exports) had till the end of April 2008 released monthly export data in respect of only
August 2007. Department of Animal Husbandrys latest data is given in their Handbook
released in December 2006, which gives data only for financial year ended on March 2006.
Inadequacy of official data is a perennial problem with most developing countries. Fortunately,
in case of India the problem is not as severe. India has one of the oldest and most reliable
census systems in the world. India conducts a fairly reliable livestock survey regularly. Data on
economic fundamentals is extremely detailed and easily available. Trade data collection system
of India is better than of most developing countries and is much more reliable than of most
non-democratic countries.
Separating the useful and relevant from irrelevant and useless is always a challenge. It is more
when so when one has an ocean of data (parts of which may be a bit old). This is a challenge
that we are able to undertake with our long experience in India and Indian dairy / livestock
industry in particular. We have our ear on the ground in India. We understand the dynamics of
fast-changing India. We use the historical data provided by government agencies and rely on
our experience and insightful expertise to see trends that others notice much later.
We hope that the study helps you get a macro-level understanding of the dairy scenario in
India. This may however not answer all the queries that you may have. We look forward to
conducting in-depth micro-level studies related to Indian dairy industry for you based on your
requirements.
For any queries or research assignments, kindly contact us.

A woman farmer brings milk to a collection center

HS&SL 2008

Milk & Dairy Products in India

Annexure C - Profiles

Hindustan Studies & Services Ltd. (HS&SL)

HS&SL, incorporated in 1992, is a research and consultancy company providing services to
clients across the globe.
HS&SL understands India, Indian business, Indian markets, Indian laws and Indian ethos.
HS&SLs primary business is Strategic Business Research. They have done significant work
in the field of Foods, Beverages and Ingredients. But, they also work in other fields.
In addition to business research, the company is involved in technology development and
training of manpower.
Simplicity, clarity and aversion to jargon are their hallmarks. They never lose holistic
strategic perspective of client's business and needs.

Website www.hindustanstudies.com
Contact Person: Mr. Anil Chawla (Mobile +91-94250-09280)
E-mail: info@hindustanstudies.com

DNP Information & Analytics Pvt. Ltd. (Infolitics)

Infolitics provides Business Research / Consulting and Intellectual Property services to
organizations around the world.
Business Research: Infolitics provides customized solutions to client problems. Business
Research services provided by Infolitics assist clients in taking better business decisions.
Intellectual Property: The IP services provided by Infolitics enable clients to create and
protect IP, generate value from it, and safeguard it against infringement.
Consulting Services: Infolitics provides consulting services in Business Process
Transformation / Business Process Re-engineering by helping clients aligning their
processes with strategic goals and designing new processes. We also provide consulting in
emerging areas like Logistics and Retail.
The team has experience of working with clients from across the globe including Fortune
500 clients. They have collectively worked on more than 300 client projects.

Website www.infolitics.com
Contact Person: Mr. Pankaj Kandhari (Mobile +91-98199-85859)
E-mail: pankaj.kandhari@infolitics.com
HS&SL 2008