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India: Number 1 in dairy and growing

India says their milk production will increase by six percent this year taking total production to 140 million metric tonnes.  The world’s largest dairy producing country had 132.4 million metric tonnes last year.  By comparison, the U.S. produced 91 million metric tonnes last year and is projected to produce over 93 million this year.  The National Dairy Development Board (NDDB) expects they will need 200 million metric tonnes by 2022.

Created in 1965 by an act of Parliament, the National Dairy Development Board was charged with extending the success of one dairy cooperative to other parts of India.  A program called Operation Flood, launched in 1970 and financed by the World Bank sought to increase production, improve farmer income and provide fair prices for consumers.  By 1996 India had become the largest milk producing country in the world.

The second phase of the plan, launched in 2010 seeks to expand production of milk and milk products and improve quality.  In its annual report; NDDB says with rising incomes comes the demand for more and diversified dairy products.  Right now about 70 percent of the milk produced in the country is used in its raw form and the rest is processed into dairy products.  The value-added dairy products share is growing by around 25 percent per year and that pace is expected to continue through 2019-20.

The profitability of fluid milk ranges from 4 to 5 percent while value-added products return 12 to 18 percent.  That profitability is attracting private investment from around the globe; France’s Lactalis recently purchased Tirumala Milk Products in a deal estimated at $275 million.  Danone and Fonterra are looking while investors like Sequoia Capital, Cargill Ventures and Rabobank are already in.  The World Bank is also helping finance an effort to increase production per cow.

Read the latest NDDB Annual Report here: