India: the world's largest milk-producing nation

Published 8 August 19

India is the world’s largest milk producing nation, with around 70 million producers. This year, India is expected to produce 175 billion litres of milk, nearly twice what the US, the second biggest milk producing nation, is expected to produce.

Rabobank forecasts suggest milk production will increase by 4% next year, which is well above the global average. This equates to an additional 9.7 billion litres of milk, equivalent to 65% of UK’s production last year.

Overview Of Indian Dairy Industry

Many hands make light work

The Indian dairy industry is highly fragmented, with an estimated 70 million small-scale farmers handling only a few cattle and buffalo each. Average milk yields are comparatively low compared to our standards, at around 1,360 litres/year.

Buffaloes make up around half of the all the milk produced. For many farmers, buffalo are preferred due to the high milk fat content, which attain higher milk prices. Additionally, buffalo can be sold for slaughter, unlike cattle where slaughter is banned in the majority of Indian states.

A large proportion of the cows are of Bos indicus descent, adapted to high temperatures and are slow to reach reproductive maturity (around 44 months). These animals inherently produce much less milk than their Bos taurus cousins found here in the UK. Furthermore, Bos indicus cattle will only milk while the calf suckles from the teat, limiting milk available for sale.

While there has been a rise in the number of larger farms with high-yielding breeds, Bos Taurus dairy breeds (e.g. Holstein/Friesian) struggle with heat stress, and so struggle to maintain yields.

As such, growth in milk production in 2020 is expected to come from an increase in the number of animals, rather than yields.

40% of the milk produced is consumed by the producer’s household

Around 40% of all the milk produced is consumed within the producer’s household, and 35% sent to small-scale local processors. These local processors are usually well established within the community and so many producers will only sell milk exclusively to these vendors, who cater almost exclusively to local demand.

Only around a quarter of milk produced is delivered to larger companies or co-operatives. These vendors tend to focus on meeting domestic demand, and are not active in the export market. The fragmentation of the industry means maintaining the chill chain from the large number of small farms through to a large-scale processor is a challenge.

There have been large investments in developing the cold supply chain infrastructure more recently. Collection centres and milk chillers at a village levels are being introduced to secure greater control of the milk supply. By 2020, organised milk handling is expected reach 30%. This means that cooperatives and private dairy processors will handle up to an estimated 160 million litres a day. 

Domestic demand is growing

Dairy is a key staple of Indian cuisine, and consumption of fresh dairy products is expected to increase by 2.3% a year, reaching 108kg/capita in 2028, according to the FAO. While fresh dairy products will account for the majority of consumption, there is growing demand for processed products driven by a growing middle class and increased numbers of time-poor consumers in urban areas. 

Felicity Rusk