Introduction
The Indian dairy industry has been through an advancement right from the British period until today. The nation is the world's biggest milk maker, representing more than 13% of world's aggregate milk creation. Milk creation contributes 22 % to agricultural GDP. It has made some amazing progress throughout the years from a milk generation volume of 23 million tons in 1973 to 132.4 million tons in 2013. Today, the Indian Dairy industry is at a mammoth size of US$ 70 billion. Presently, just 20% of the milk creation originates from the sorted out segment (organized) including co-agents and private dairies. The extent of Indian dairy industry in both organized and un-organized areas is expected to double to $140 billion by 2020, because of growing demand and rising disposable income.
According to NDDB, the Indian dairy industry is good to go to experience high development rates with demand to reach 200 million tons by 2022 from 132 million tons in 2013.
Regardless of the increment in dairy creation, a demand supply crevice has ended up basic in the dairy business because of the changing utilization patterns, different demography, and the quick urbanization of rural India. With this quite a bit of quick changes in the area, supply chain network assumes an essential part in getting the outcomes productively.
Supply chain network has ventures to get a good or service from the supplier to the client. Supply chain network management is an essential part for organizations, and numerous organizations endeavour to have the most enhanced supply chain network on the grounds that it normally means lower expenses for the organization. Supply chain network incorporates various organizations, for example, suppliers, makers, and the retailers.
Indian Dairy Industry
The Indian dairy industry is chiefly constituted of 22 state milk federations, 110,000 dairy agreeable social orders including more than 12 million milk makers. There are likewise some real private players in the field which further enhanced the dairy area of the nation to be specific: Amul, Britannia, Nestle, Mother dairy and numerous local players, to give some examples. Gujarat Cooperative Milk Marketing Federation (GCMMF) which showcases Amul brand of milk and dairy items has ascended to the rank of 15 amongst the top dairy associations of the world as per a latest survey by International Farm Comparison Network (IFCN), a main, worldwide dairy knowledge association.
Key Facts of Indian Dairy
· Ranks 1st in world milk production (115 million metric tons)
· Value of milk output from livestock (at current price) is around INR 2400 Billion
· Value of dairy products market is around INR 4000 Billion
· Only 5 per cent of the milk is sold through retail chains
· 65 - 70 per cent is delivered to the homes by milk agents
· Carton milk or packaged milk has been growing at 24 per cent annually
Supply chain of Indian Dairy Industry
Steps are:
1. Supply of inputs for dairying in form of fodder, animal feed plant, vetenery aids for the animal (cattle and buffalos).
2. Milk is taken out from the mulching animal on the daily basis by the dairy farmers (large, medium and small scale farmers).
3. Collection of milk by collection centres (various milk cooperatives societies).
4. Milk collected by the cooperative societies are sent to the dairy plants where chilling of milk, processing and packaging of milk and milk product, transportation of milk and milk product is carried out.
5. The transportation of chilled milk and milk products from one place to another is done through the means of refrigerated vans, or insulated milk tankers vans of private, government and cooperatives societies.
6. Final processed milk and milk products are transported to various retails outlets, supermarkets, and to retails markets from where the processed milk and milk products finally reaches to their end customers.
Issues and challenges in value chain of dairy industry
Issues and Challenges at the Procurement stage
1. Meeting seasonal spikes in demand and ability to measure the quality of procured milk at the source.
2. Complex logic of payments to producers based on fat, solid non-fat (SNF) and quality of milk received.
3. Keeping track of truck and tanker routes, as well as capabilities for viewing, monitoring and payment based on route or distance.
4. Visibility into the shelf life and stock-outs of raw material.
Issues and Challenges at the Production and Standardization stage
1. Manual and time-consuming processes for milk standardization calculation, handling production planning based on nonstandard raw material, addressing growing food concerns from consumers.
2. FAT accounting and effective tracking of FAT loss in the production process.
Issues and Challenges at the small suppliers’ level
1. Inadequate feeding of animals
2. More disease incidence
3. Low genetic potential of animals
4. Lack of chilling capacities
5. Exploitation of farmers
6. High production costs
7. Delayed payment of dues
Issues and Challenges at Collection location Level
1. Milk base mainly consisting of small holders
2. Involvement of too many intermediaries
3. Gaps in information
4. Absence of a screening system
5. Lack of Infrastructure
6. Manipulation of the quality of milk by the farmers
Issues and Challenges at the Processing stage Level
1. Seasonality of production and fluctuating supply
2. Absence quality standards
3. Adulteration and Food safety
4. Lack of trained and skilled workers
Issues and challenges at the Storage and Logistics stage Level
1. Lack of cold storage facilities
2. Gap in the cold chain and transport facilities
Issues and Challenges at the Co-operative Level
1. Less number of member farmers
2. Lower participation in the decision making process
3. Losses
4. Low prices of milk
5. Inefficient services
6. Insufficient Infrastructure
Issues and challenges for Marketing
1. Majority of the Market is still unorganized
2. Acceptability of the Consumer base
3. Less penetration to the rural Market
4. Lack of transparent milk pricing system
Exceptionally aggressive Indian dairy industry has risk/challenges for the survival in the worldwide dairy market in future. Extension is high for the development of the dairy business in future. The advancement of Indian dairy industry is because of auxiliary changes realized by the coming of dairy cooperatives.
With a Compound Annual Growth Rate (CAGR) of 16 percent, dairy industry in India is expected to reach USD 118 billion in 2017. Utilization in India is principally skewed towards customary items. Interestingly, buffalo milk represents the biggest share of the aggregate milk created in the nation. Since net revenues are high when contrasted with cow milk.
The Indian dairy sector is dominated by the unorganized sector comprising of 70 million rural households. The per capita availability of milk in India stands at 289.4 grams per day and is anticipated to reach 336 grams per day in FY 2017. Despite being the one of the largest milk producing countries in the world, India accounts for a negligible share in the worldwide dairy trade. Multiple limitations restrict competitiveness in world markets. The ever-increasing rise in domestic demand for dairy products and a large demand-supply gap could lead India to be a net importer of dairy products in the near future.
Sources: Google, Economic Times, Business Standard, Operations Management by Heizer & Render and Supply Chain Management by Chopra & Meindl.
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