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Budget 2016: Organised dairies to add capacities

Better milk production coupled with power availability will boost rural demand

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Budget 2016, Dairies

Sohini Das  |  Ahmedabad 

Budget 2016: Organised dairies to add capacities

Organised dairies are considering capacity additions in view of the Budget announcement on an allocation of Rs 850 crore for dairy-related projects and the government’s ambitious target for electrifying all of India’s villages by 2018. Better milk production coupled with availability of power will boost rural demand and that is motivating dairy players to boost processing capacities.

Dairies process about 20 per cent of India’s milk production (146 million tonnes) at the moment. With the rise in rural demand, an additional processing capacity of two-five per cent might come up as there is a potential for an additional three to seven mt processing capacity for dairy, entailing an investment of a few thousand crores, explained an industry official..

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The Gujarat Cooperative Milk Marketing Federation (GCMMF) had announced a plan to invest Rs 5,000 crore to set up 10 processing plants that would take its processing capacity to 3.2 million litres per day (mlpd) from 2.3 mlpd.

R S Khanna, chairman, Kwality Limited, a leading dairy player with a portfolio of value-added dairy products, felt the move to boost productivity coupled with the target to achieve 100 per cent rural electrification by 2018 would mean higher consumption as well. “With better roads and power, rural demand for value-added dairy products is set to increase. As such the sector now accounts for nearly 70-75 per cent of the country’s cold-chain infrastructure. With power reaching villages, and options to install deep freezers, rural consumption of products like ice creams is set to rise,”Khanna said.

He said 50 per cent of India’s milk production remains in its villages, and of the remaining 50 per cent that is sold, the organised sector processes only 20 per cent.

Crisil said in its analysis that the organised channel would invest around Rs 15,000 crore by financial year 2018 to shore up capacity to around 105 mlpd, or a 40-per cent jump over FY15.

Finance Minister Arun Jaitely had also said on Monday that to make dairying more remunerative to farmers, four new projects would be taken up; first, the ‘Pashudhan Sanjivani’, an animal wellness programme and provision of Animal Health Cards (‘Nakul Swasthya Patra’); second, an advanced breeding technology; third, creation of ‘E-Pashudhan Haat’, an e market portal for connecting breeders and farmers; and fourth, a National Genomic Centre for indigenous breeds. These projects will be implemented at a cost of Rs 850 crore over the next few years.

R S Sodhi, managing director of GCMMF said, "New measures will boost dairy productivity."


He said as such average productivity per animal per day in India was around four litres, which lower than countries like New Zealand and Australia, where it is around 20-25 litres per day per animal.

Sodhi further added that the move to connect breeders with farmers through an e-market would mean that the role of the middlemen was reduced, and in turn, would offer more value deals for farmers. "States like Gujarat are a big market for cattle, and breeders from Maharashtra and Punjab come here to sell cattle. The benefit goes to traders, but now, farmers are likely to benefit."

India ranks first in milk production, accounting for 18.5 per cent of world production, achieving an annual output of 146.3 mt during 2014-15 as compared to 137.69 mt during 2013-14, a growth of 6.26 per cent.

First Published: Wed, March 02 2016. 22:31 IST
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