- Scope-Significance of Dairy Sector
- Location: Dairy cooperatives
- Milk Supply Chain: Upstream Issues
- Milk Supply Chain: Processing Issues
- Milk Supply Chain: Downstream Issues
- Operation Flood
- Government Schemes
- National Dairy Plan (NDP)
- Mock Questions on Milk Supply Chain Management
First, regarding “Write Articles, Win Books” competition: so far 34 entries received. And last date to submit is 25th Sept 2013. Click me for more details.
For UPSC General Studies Mains Paper III, we were looking at the Food processing and related industries in India. So far we saw following topics
- Food processing industry: Awesomeness and Obstacles
- Food processing industry: Truckload of Government Schemes and bodies
- Marketing of agricultural produce: issues and constrains, Nuisance of APMC Acts and Commission Agents
- Agro/Food Processing: Export, Dumping, FDI, Finance, Taxation, Budget Provisions, CODEX, NWR, BRGF, RKVY
- Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries
Then I got bored with food processing, hence made three compilations on Hindu Sci-tech (and some posts about results, answer keys etc.) Anyways, back to where we had left in [Food processing]: fruits veggies SCM-updream downstream. Now time for Dairy & Milk Supply Chain Management SCM-upstream downstream issues.
|UPSC syllabus||topic in this article|
|prelims Paper I||
|(GS1) location of primary, secondary, and tertiary sector industries in various parts of the world (including India)||Dairy industry in India.|
|(GS2) Effect of policies and politics of developed and developing countries on India’s interests,||How the Fonterra crisis will help Indian dairy biz.|
|(GS3) economics of animal-rearing||Lot fodder material.|
|(GS3) Food processing and related industries in India-scope and significance, location, upstream and downstream requirements, supply chain management.||for Milk/Dairy business.|
Next time we’ll see [Food processing] meat, poultry and fisheries.
Scope-Significance of Dairy Sector
|Top five Milk producers (World)
|CONTRIBUTION TO GDP||Livestock sector (milk, meat, eggs) contributes 3.6% of GDP. (2010’s data)|
India has proximity to milk deficit countries e.g.
Hence Indian dairy production could be utilized to earn good foreign exchange by targeting those markets. More under “Downstream=>Export”.
SOME STUPID NUMBERS FROM ECONOMIC SURVEY:
|Year||Milk (Million Tonnes)||Eggs(Million Nos.)||Fish(Million Tonnes)|
Location: Dairy cooperatives
|STATE||Brand Name||official name|
|GUJARAT||Amul||Gujarat Cooperative Milk Marketing Federation (GCMMF)|
|ANDHRA||Vijaya||Andhra Pradesh Dairy Development Cooperative Federation (APDDCF)|
|KARNATAKA||Nandini||Karnataka Cooperative Milk Producers’ Federation (KMF)|
|MAHARASHTRA||Mahanand, Gokul, Dhawal, Dudh Pandri||Maharashtra Rajya Sahakari Maryadit Dugdh Mahasangh (Mahasangh)|
|PUNJAB||Verka||Punjab State Cooperative Milk Producers’ Federation (MILKFED)|
|TN||Aavain||Tamilnadu Cooperative Milk Producers’ Federation Ltd (TCMPF)|
Issue: there is a regional imbalance in production and processing capabilities. e.g. UP contributes over 17 percent of India’s total milk production. Ironically, only one percent is procured by co-operatives, remaining milk goes to private-dairy players, who exploit farmers, and do adulteration.
|NO. COWS N BUFFALOS||MILK PRODUCTION||PER CAPITA MILK AVAILABILITY|
Bottom in all of above: North Eastern States, Delhi, Goa and UT.
- Milk production =directly related to fodder availability.
- Fodder=need irrigation.
- Therefore, states with good irrigation facilities and / or rich farmers that can afford tubewells= milk production is high.
For these reasons, you can see how MP is in top-5, for number of cows and buffalos BUT still MP doesn’t figure in top-5 in milk production due to fodder shortage. (Rankings taken from NDDB website)
Milk Supply Chain: Upstream Issues
|Country||Avg. Cow Milk Kg Per Year|
India has world’s largest cow population, but the average productivity of Indian cows is among the lowest in the world. WHY?
- Veterinary service problems
- Breeding problems
- Fodder problems
Let’s see them one by one:
#1: Veterinary problems
- Inadequate availability of vaccines vs. High prevalence of FMD, theileriosis and brucellosis amongst cattle
- FMD alone causes economic loss of ~Rs.20,000 crore per year to India. let’s check more details about FMD for MCQs.
Foot and mouth Disease (FMD)
- FMD is a viral disease that spreads rapidly between animals.
- high prevalence in Africa, the Middle East and Asia
- FMD affects cloven-hoofed animals (those with divided hoofs), including cattle, buffalo, camels, sheep, goats, deer and pigs.
- It can even affect wild animals e.g. Deer, wild pigs and buffalos.
- Pigs are regarded as ‘amplifying hosts’ because they can excrete very large quantities of the virus in their exhaled breath.
- Cattle are very susceptible to FMD. They get infected by breathing even small quantities of the virus.
- FMD spreads rapidly from one animal to another, especially in cool, damp climates and/or when animals are housed closely together.
- Although FMD is not very lethal in adult animals, it can kill young animals and cause serious production losses.
- Animal suffering from FMD :
- Becomes lame and unable to walk to feed or water.
- Stops eating because its tongue and mouth gets blister- very painful to chew anything. =Adult animal can survive a few days of starvation but young animal will die.
- Its mammary glands are damaged=milk production loss.
- FMD has serious ramifications in international trade of milk and meat. Because countries that are free of the FMD disease= they ban or restricting imports from FMD affected countries.
- There is no cure for FMD. The Affected animals will recover with time. Although Vaccines can protect against the disease.
Department of Animal Husbandry, Dairying & Fisheries (DADF) has initiated National Programmes for prevention and control of FMD, with help of State government.
#2: Breeding issues
|BREED||promote in ___ area|
|HOLSTEIN FRIESIAN||in feed-fodder rich states|
|JERSEY||in states poor in feed/fodder resources.|
- Government started ‘National Project for Cattle and Buffalo Breeding (NPCBB)’ is to promote genetic upgradation of Indian cattle livestock through Artificial Insemination.
- NGOs like BAIF and JK trust are operating about 6,000 mobile artificial insemination centres.
#3: Fodder problems
- Rich farmers=irrigation /tubewell =can grow fodder=>higher milk yields
- But majority are poor farmers= rely on common pastures =>underfed cattle= less milk yields.
- For the same reason: MP is in top 5 for cattle population but not in top 5 for milk production
- While the number of livestock is increasing, the grazing lands are diminishing, because
- Real-estate mafias and National Son-in-law encroaching on such land
- Farmers prefer growing food grains, oil seeds, and pulses hence fodder production generally gets lower priority.
- At present, fodder is being cultivated only on 4% of gross cropped area= insufficient to meet requirement.
- High quality fodder seeds =not available.
- Agriculture crop residues are sold to paper industry, packaging, etc. rather than using as animal feed.
- We dont have specific extension machinery with specialized manpower for popularization of good fodder varieties.
- Azolla is a floating fern. It resembles algae, Multiplies very rapidly.
- widely distributed in tropical belt of India.
- Grows in paddy fields or shallow water bodies.
|FOR LIVESTOCK FEED||
From farm to dairy, there is significant deterioration in milk quality. Because of two reasons:
Result: following properties of milk get affected
|SENSORY PROPERTIES||color, taste, odour|
|COMPOSITION||fat, protein etc.|
- Currently, when farmer supplies milk @dairy cooperative society (DCS) of his village, they only test one thing: “fat content”. Therefore, farmer has no incentive to maintain any other qualities of milk.
- Setup quality testing facilities @collection center to test bacteria count, acidity, smell/taste, bacterial count, heavy metals, pesticides residue etc. and not just fat-content alone.
- Train farmers on hygiene habits for milk collection.
- Pay farmers more money if they supply quality milk
- Supply of Hygiene Kits+ Training to DCS staff. Impose penalty if they don’t comply with the standards.
- Less manual handling, use more machines: Bucket Milking machines, Feed racks, water bowls and partitions etc.
Milk Supply Chain: Processing Issues
A typical supply chain of milk sector:
- Bulk of new capacity in the period in last decade, has been established in the Northern states, Maharashtra and Tamil Nadu. Remaining states are lagging in dairy growth.
- Capacity utilization of dairy plants is about 60% (assuming 300 working days in a year). Due to Lack of milk availability in the lean season.
- For e.g. Rajasthan has 8% share in milk production and 11% share in consumption of milk products, however the share in dairy processing capacity is 4%. Meaning much of the milk escapes from the ‘value-addition’ in dairy supply chain. A similar situation prevails in Bihar.
Anand/Amul Model/dairy cooperative model
|1946||Sardar Patel encourage the farmers of Anand region in Gujarat, to form their own milk cooperative, to protect themselves from exploitation from private milk traders|
|1965||National Dairy development board setup @Anand, to replicate the dairy cooperative model throughout country.
(PM Lal Bahadur Shashtri)
|1971||Gujarat Cooperative Milk marketing federation setup (GCMMF)|
|1974||GCMMF starts maketing milk products under single brand name Amul (Anand Milk Union Limited)|
Amul Supply Chain
|DISTRICT MARKETING COOP.UNION||
|STATE MILK COOP. FEDERATION||
- this “Amul Model” eliminates middlemen and directly engages farmer with the processor (dairy)
- These cooperatives form part of a national milk grid which links the milk producers throughout India with consumers in more than 700 towns and cities
here is one more supply chain diagram: click to enlarge
Cooperative sector limitations
Milk Supply Chain: Downstream Issues
#1: MRP and adulteration
- WPI for Milk product= more than 190 (for 2012)
- Meaning there is 90% increase in the wholesale price of Milk, compared to base year 2004.
- This type of killer price rise=> has led to adulteration, fake milk from urea, Nakli-Maawaa etc. once in a while, you’ve seen reports about this, particularly in Delhi-UP region.
- Such fake milk products are extremely hazardous to health.
- In long term, they’ll destroy India’s name in foreign market, just like Chinese milk products lost business internationally, after news reports of Melamine adulteration in 2008.
Synthetic milk is prepared by mixing urea, caustic soda, refined oil (cheap cooking oil) and common detergents.
|INGREDIENT||Why added in synthetic milk?|
|REFINED OIL||As a substitute for milk fat.|
|CAUSTIC SODA||To neutralize the acidic PH of other ingredients and thus prevents fake-milk from turning sour during transport.|
|STARCH||Prevents curdling in fake-milk.|
Heath hazards of Synthetic milk: damages kidney, heart problems, cancer and even death
National Survey on Milk Adulteration 2011
- Was conducted by FSSAI. click me to learn more about FSSAI
- Bihar, Chhattisgarh, Odisha, West Bengal, Mizoram, Jharkhand and Daman & Diu= their milk failed in all tests.
- only Goa and Puducherry’s milk passed all the test.
- ~70% of Indian milk doesn’t meet the standards set by set by the Food Safety and Standards Authority of India (FSSAI)
Last year, Union government quoted ^this report, while filling affidavit in SC about milk adulteration. Union also said that it Is state government’s responsibility to act on milk adulteration problem. Later SC asked state governments to file affidavit about what action they’ve taken.
#2: Ethnic products: untapped potential
- Examples of ethnic milk products: Paneer, Rasogolla, Sandesh, Pantua, Rasomalai, Cham, Rajbhog, Kulfi, Rabri, Basundi, Burfi, peda, Gulabjamun, Kalakand, Dahi, Mishti Doi, Lassi, Chhach / Mattha, Srikhand etc.
- Scope: For ethnic milk products, profit level is ~12-38% of the input cost.
#3: Export issues
Earlier we saw India is located close to the milk deficit countries, but still India hasn’t capitalized on this location advantage due to the following reasons:
- Low quality and hygiene standards.
- Only ~35% of milk produced in India is processed. Rest is sold by local doodhwalla= not enough milk available for export.
- Domestic consumption of milk has increased => less surplus left for exports
- Lack of experience in marketing products in international markets, particularly for ethnic milk products.
- Low productivity and quality are the key reasons due to which processors in India, are not able to achieve the scale of operations of their counterparts in New Zealand or Australia.
|2011||Export of milk powders (Skimmed Milk Powders, Whole Milk Powders, Dairy Whitener, Infant Milk Foods etc.), Casein and Casein Derivative was prohibited|
|2012||ban lifted, these milk/casein products export given under Vishesh Krishi and Gram Udyog Yojana(VKGUY)|
- New Zealand = one of the biggest dairy exporter of the world.
- Fonterra= New Zealand’s biggest dairy company
- 2013: News report came that Fonterra’s milk powder could have been contaminated with the Clostridium bacteria. It can cause fatal botulism.
- After this news report, China and Sri Lanka banned Fonterra’s products.
- Fonterra CEO says: it was a false alarm, the bacteria variety found in our milk powder is not capable of causing botulism, but nonetheless we have recalled all the batches exported. So don’t worry
Anyways, all this negative publicity and banning of New Zealand dairy products= gives opportunity for Amul to tap those export markets.
#4: Tax on inputs
- In earlier times, dairy industry had been subjected to octroi and sales tax etc. creating a non-level playing field with the unorganized sector.
- There had been high level of taxation on dairy equipment and machinery (excise, sales tax, octroi) Even the excise duty on polyethylene film, aseptic packaging machines, milk vending machines, pouch filling machines, used in packing and distribution.
- This has hampered the growth of dairy industry. Although nowadays, taxes on most of these items have been reduced / abolished.
- Necessary Reform: Speedy implementation of GST.
Enough of supply chain, let’s look at some allied topics: NDDB, Operation Flood, Government schemes related to dairy sector.
- National Dairy Development Board
- Statutory body (1965)
- apex organization of dairy cooperatives in the country
- Chairman: Amrita Patel
- HQ: Anand, Gujarat
2013: NDDB been in news because
|CHAIRMAN (PERSON IN NEWS)||
|1970||NDDB launches Operation flood.|
|1996||The End of Operation flood.|
Operation flood had three objectives:
- Increase milk production (“a flood of milk”)
- Increase farmers’ income.
- Reasonable milk prices for consumers
Op.Flood setup following hierarchy of dairy cooperatives
|VILLAGE||Primary Village Cooperative Society|
Operation flood worked in three phases from 1970 to 1996:
Result of Operation Flood
- Made India the largest Milk producer of the world.
- Imports of milk solids ended. Our milk requirements now met through desi-dairies. (Otherwise imagine, if we were still relying on “imported” milk, like imported crude oil – than what will be the current account deficit and rupee’s downfall!)
(Although given in previous article, but copy pasting again for the sake of continuity during reading-revision)
Department of Animal Husbandry, Dairying & Fisheries
They run following schemes:
- install Bulk Milk Coolers at village level close to the area of milk production
- for installation of bulk milk cooler
|Intensive Dairy Development Scheme (IDDS)||
|Dairy Entrepreneurship Development Scheme (DEDS)||
National Dairy Plan (NDP)
By National dairy development board (NDDB), with support from International Development Association (IDA)
- Phase-1 (2012-17) was launched at Anand, Gujarat.
- Scheme will run in 14 states – Uttar Pradesh, Punjab, Haryana, Gujarat, Rajasthan, Madhya Pradesh, Bihar, West Bengal, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Orissa and Kerala.
- ^These states collectively account for over 90% of country’s milk production.
National Dairy plan will do following:
- Breed improvement + animal nutrition=> increase milk production, reduce methane emission.
- Strengthen of village based milk procurement system= Rural milk producers to get greater access to the organized dairy sector.
- Use of ICT technology: Internet Based Dairy Information System (i-DIS), Data warehousing System along with Business Intelligence tool etc.
- HRD, management, knowledge sharing, R&D and other fancy stuff
|ca$h comes from||
|to||NDDB: National Dairy Development Board (a statutory body)|
|ultimately to||End Implementing Agencies (EIAs):
Mock Questions on Milk Supply Chain Management
- Correct Statements about Foot and mouth disease(FMD)
- It is caused by brucellosis bacteria
- Wild animals are immune to FMD
- FMD is usually lethal to Adult buffalo
- None of above
- Incorrect Statement about Foot and Mouth disease (FMD)
- Pigs are considered amplifying hosts for FMD
- Pigs themselves are immune to FMD
- Find odd term
- Correct statement about Azolla fern
- It is a weed that negatively affects paddy cultivation.
- If Azolla fern is mixed with fodder, it improves the health of cattle.
- Why is caustic soda used in manufacturing of synthetic milk?
- To act as an emulsifying agent and give frothy appearance to the liquid.
- To neutralize the acidity of other ingredients and stops milk from turning sour
- To increase the milk fat content
- None of above
- Correct statements about National Dairy plan
- It’ll be uniformly applied to all 28 states of India, in its first phase.
- International Development Association will finance part of this project.
- Intensive Dairy Development Scheme (IDDS)
- Dairy Entrepreneurship Development Scheme (DEDS)
- Write a note on NDDB and its contribution in white revolution.
- National Dairy Plan (NDP) is a scientifically planned multi-state initiative to improve milch animal productivity. Comment
- Write a note on the functions of Department of Animal Husbandry, Dairying and Fisheries.
- The destruction of India’s village system was the greatest of England’s blunders.
- Government initiatives to boost the milk productivity in India.
- Dairy cooperatives have played an important role in the women empowerment and social transformation of rural India. Comment
- Write a note on the upstream and Milk Supply Chain: Downstream Issues in the dairy sector of India.
- Essay (200m)
- Education remains the key to both economic and political empowerment.
- There is more potential for economic growth in rural India than at any time in decades.
- The Internet is becoming the town square for the global village of tomorrow.
- Emigration, forced or chosen, is the quintessential experience of our time.
- The notion of the world as a village is becoming a reality.
- A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual doom.
Sir, I want to know that -will the concepts about food processing industries, like what is scope, significance, upstream, downstream , NMFP, its salient features, supply chain management, not enough?
You have given wonderful notes on fisheries, dairy, edible oils , beverages etc … GIven the time constraint, Can I skip individual industries ?
What does the “location” mean in “Food Processing and related industries in India – scope and significance, location, upstream downstream requirements, supply chain management” ?
Just some related news I came across..