The Hindu Business Line : Private dairies may overtake cooperatives by 2011

New Delhi May 15 Private corporates will overtake cooperatives to emerge as dominant players in the country's dairy industry by the year 2011, according to DAIRY INDIA 2007.

The 836-page publication, launched by the Secretary, Department of Animal Husbandary & Dairying, Ms Charusheela Sohoni, here on Wednesday, has projected the country's total milk production to touch 120 million tonnes (mt) by 2011, against 94.5 mt in 2005.

Marketable surplus

Currently, out of the total 94.5 mt, 46 per cent (43 mt) is retained for self-consumption in rural areas, with the balance 54 per cent (51.5 mt) being the surplus marketable milk. And out of this 51.5 mt surplus, only 17 mt (18 per cent of the total) is handled by organised dairies, while the bulk 34.5 mt (36 per cent) is sold through `dudhias' and other small unorganised players. Further, within the 17 mt handled by the organised sector, the private and cooperative/government dairies have an equal 8.5 mt share.

But this scenario will undergo a change by 2011. Going by DAIRY INDIA's projections, out of the 120 mt produced, the proportion retained for self-consumption will rise marginally to 48 per cent (58 mt) due to increased rural incomes and living standards.

What will change though is the profile of the 62 mt surplus, with the organised sector handling more milk (36 mt) than the unorganised players (26 mt). And within the organised sector, private dairies will handle two times more milk (24 mt) than cooperatives/government dairies (12 mt).

Leading force

In other words, within the next four years, the private sector would become the leading force in a sector hitherto identified with the Amuls, Aavins and Mother Dairys. DAIRY INDIA has estimated the current size of the Indian dairy market at Rs 2,27,340 crore, which is expected to more than double to Rs 5,20,780 crore by 2011. Out of the total production of 94.5 mt, 73.1 mt or 77 per cent is now sold as liquid milk and the rest 21.4 mt converted into various products.

Significantly, in 2011, the proportion of output sold as liquid milk is slated to rise further to 81 per cent (97.5 mt), with a corresponding fall in the portion converted into products.

With liquid milk becoming a profitable business, more than more organised players are expected to enter this segment that was till recently a virtual cooperative monopoly.

While liquid milk sales by cooperatives will increase from 6.4 mt to nine mt, the rise would be even more (from three mt to 14.5 mt) in case of private dairies.

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