Experts predict loss of milk production to 3Mt per year by 2020 due to climate change

The government has invited milk cooperatives to run Delhi Milk Scheme (DMS) a dairy retail unit started by the first President of India Rajendra Prasad in 1959 on lease for 30 years, an alternative of cater to the milk needs of Delhiites.

The bid document for the same was released by Union agriculture ministry released on Wednesday.

DMS has piled up losses of nearly Rs 900 crore and just has 6% market share in the capital’s milk market, but it sits on huge real estate and retail infrastructure in prime areas of Delhi.

It could be picked up by Amul brand owner Gujarat Cooperative Milk Marketing Federation (GCMMF) or other prominent milk cooperatives that have shown interest in it in the past, officials said.

The document said, “The agriculture ministry intends to hand over the operations and management of DMS to a profitable and professionally run cooperative dairy federation or other semi-government organisation with a proven track record in dairy processing and marketing for an initial period of 30 years and renewable thereafter.”

DMS has a milk processing plant of 5 lakh litres of milk per day capacity located in the heart of Delhi and spread over 25 acres. It also has five milk collection and chilling centres plus 566 milk booths located at various places in Delhi and NCR. “It is expected that with the viable operation of DMS, through the appointment of a concessionaire, the financial burden on the government on account of funding losses incurred by DMS would reduce and there shall also be a net gain by way of realised lease rentals,” the government bid document said.

Around 700 employees, working with DMS, shall be placed in the ‘surplus pool’ and can be redeployed elsewhere by the government, if they opt not to work for the cooperative or are not selected to work for it.

The bid winner will earn all the rights to use DMS assets and the brand for 30 years and decide price of the milk product, but the ownership will be retained by the government of DMS’ land, buildings and the brand.

The cooperative are also open to revamp, modernise, and increase capacity of the land and building, plant and the machinery of DMS for milk at their own expenditures. The contract could be given this September.

The decision to lease DMS took its time coming as the proposal had been pending since the time of the previous UPA government.

Ananda Dairy is predicting a total add up of 30 percent rise from its  Rs 2,000 crore revenue in the next financial year as it expands retail footprint as well as product portfolio.

The company is planning to open 500 retail company-owned and company-operated outlets by end of next fiscal at places like Delhi-NCR, Haryana, Uttar Pradesh and Punjab.

Ananda Group Chairman R S Dixit said, "We are targeting over 30 per cent growth in turnover to Rs 2,000 in financial year 2018-19. We expect retail outlets to contribute 15 per cent to sales by then as we increase the number of outlets. It is 10 per cent at present."

The company is expected to report a turnover of Rs 1,500 crore in the current fiscal, ending March 31. Currently, it operates over 200 outlets in the NCR. It sells over 50 products at present and has presence in most of the dairy products, except ice creams.

About the company prospects of introducing ice creams category in the near future, he said: "It is not a priority right now. It will require huge investment". Based on customer need and feedback the company will launch more value-added products especially those with higher protein content.

Indian dairy companies have taken a hit on their margins due to the fall in international prices of skimmed milk powder (SMP) and doubling of domestic tax on ghee. Dairies have cut milk procurement prices 10-22 per cent in the past few months.

Prakash Kutwal, secretary, Doodh Utpadak Va Prakriya Vyavasayik Kalyankari Sangh (milk producers and processors’ welfare federation) said “SMP price has declined from Rs 260 per kg to Rs 120 per kg in the international market in the last 3-4 months. Maharashtra produces about 30 million litres of milk every day, of which only about eight million is used as liquid pouched milk. The bulk of milk procured is used for making various dairy products such as butter, SMP, ghee, cheese, curd, etc. Maharashtra’s milk farmers are more vulnerable to international price fluctuations since state is the leader in export of milk products. Sale of ghee has fallen substantially as the price has increased from Rs 30 per kg of smaller brands to Rs 55 per kg in case of national brands. Maharashtra government increased the procurement price of cow’s milk to Rs 27 per litre for 3.5 per cent fat and 8.5 per cent SNF (solid not fat), up about 12 per cent”.

The tax on ghee increased to 12 per cent under GST from 6 per cent before the implementation of the GST regime.

Provider of milk and other milk products prepared by the Orissa State Cooperative Milk Producers' Federation Limited (OMFED) at customers’ doorsteps on Monday signed a MoU with Grozip, a city-based online grocery service. Grozip will make home delivery of various OMFED products on a phone call or click of a mouse.

Odisha government had asked OMFED to start online marketing of milk and milk products in 2015 after the state-owned dairy board failed to sale huge amount of surplus milk. “Online marketing is the need of the hour and more numbers of customers want to buy products online so we tied up with Grozip.

Managing director of OMFED said “It a sizable costumer base who buy various products like grocery and vegetables from them and now the costumers can get milk through it. OMFED is also going to launch its own mobile APP (application) soon through which customers can directly order milk and milk products.

Anand Mishra, CEO and founder of Grozip  said “We have a customer base of around one lakh in the last one and a half years. We have plans to offers attractive schemes for customers like cash back and free delivery on a minimum order. We get around 60 to 100 orders a day from Cuttack and Bhubaneswar for various grocery items including vegetables. We are also planning to include cooked food in our products soon”.

Meanwhile, the online marketing service launched by Odisha State Poultry Products Co-operative Marketing Federation Ltd (OPOLFED) in 2015 has not been working for last several months.

Chennai-headquartered dairy products maker, Hatsun Agro Product Ltd, has entered into a pact with Germany-based, GEA, to set up a Greenfield plant in Tamil Nadu at an investment of Rs 120 crore.

According to a company statement issued by GEA, "Hatsun Agro Product is currently establishing an automated greenfield dairy project at Dharapuram near Coimbatore in Tamil Nadu. The company has contracted GEA to install it (the factory) on turnkey basis."

The factory, expected to become operational next year, would have a capacity to produce three lakh litres of milk per day in pouches and 1.50 lakh litre of curd, it said.

The manufacturing unit is expected to be fourth largest plant for the Chennai-based dairy maker. GEA would provide an RO plant for concentration of skimmed milk at the factory. It would also provide specialised equipment like homogenizer and flow components at the factory.

Abhay Chaudhari, Country Managing Director, GEA India Cluster, said, "So far, GEA had been supplying components to HAP and it is a great pleasure to be able to partner HAP (Hatsun Agro Products) on their turnkey project."

India, projected to be the most populous country over the next decade, will be the world's largest milk producer by 2026 and will account for the biggest increase in wheat production globally, according to a report by the UN and OECD.

The OECD-FAO Agricultural Outlook 2017-2026 said the world's population will increase from 7.3 to 8.2 billion over the course of the next decade with India and Sub-Saharan Africa accounting for 56 per cent of total population growth.

India's population will grow from 1.3 billion to 1.5 billion, an increase of almost 150 million. India will overtake China and is projected to be the most populous country in the world by 2026.

The report said that given their strong population growth, India and Sub-Saharan Africa will also drive a large share of global demand.

It further said that over the first quarter of the 21st century, milk production in India will be nearly tripled.

According to the report by the UN and Organisation for Economic Cooperation and Development, "Over the course of the outlook period alone, milk production in India will grow 49 per cent; in 2026, India will be the world's largest milk producer, with an output one-third above that of the second largest producer, the European Union."

The report further stated, global production of wheat is projected to increase by 11 per cent over the outlook period of 2017-2026, while the wheat area increases by only 1.8 per cent.

The increase in wheat production is expected to occur through higher yields, most notably in Asia and Pacific, which will account for 46 per cent of additional wheat production.

Within the region and globally, India (15 Mt) will account for the biggest increase in production and Pakistan (6 Mt) and China (5.5 Mt) are also expected to have significant gains.

The European Union accounts for 13 per cent of the production increase. Rice production is expected to grow by 66 Mt and will be almost exclusively driven by yield growth, which accounts for 93 per cent of additional production.

The global area dedicated to rice is expected to increase by only a per cent from the base period, while global yields will increase by 12 per cent. Major production gains are projected for India, Indonesia, Myanmar, Thailand and Vietnam with yields in these countries are expected to increase by over 15 per cent.

The report said that global food commodity prices are projected to remain low over the next decade compared to previous peaks, as demand growth in a number of emerging economies is expected to slow down and biofuel policies have a diminished impact on markets. 

Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF), which markets the popular Amul brand of milk and dairy products, has successfully quadrupled the income of its dairy farmers by four times in last seven years.

During the last seven years, Amul’s milk procurement prices to its farmer-members more than doubled from Rs. 24.30 per litre for buffalo milk (Rs. 337 per kg fat) in 2009-10 to Rs. 49 per litre (Rs. 680 per kg fat) in 2016-17. Since the cooperative’s total milk procurement also doubled during this period, from 90.9 lakh litres per day to 176.5 lakh litres per day, this effectively increased the income of its dairy farmers, four-fold in the last seven years.

Results of the apex body of dairy cooperatives in Gujarat were declared on 15thJune 2017, in the 43rd Annual General Meeting of GCMMF.

GCMMF aims to achieve a business turnover of Rs. 50000 crore and become the largest FMCG organization in India by 2020-21. In the long-term, Amul claims to establish itself as the largest dairy organization in the world, rising up from its current ranking of thirteenth largest dairy organization to number one.

Jethabhai Patel, Chairman, GCMMF, said, "During the last seven years, our milk procurement has witnessed a phenomenal increase of 96%. This enormous growth was a result of the high milk procurement price paid to our farmer-members which has increased by 102% in this period. This highly remunerative price has helped us retain the farmers’ interest in milk production. Better returns from dairying have motivated them to enhance their investments in increasing milk production."

He added, "The drive towards digital and cashless payments, which received a huge boost thanks to Government of India’s demonetization initiative, has brought about significant benefits to our farmers in rural Gujarat. We have actively helped our farmer-members to open bank accounts and have linked an additional 13 lakh farmers’ bank accounts to our system. Now, milk payments are cashless and directly transferred into their bank accounts."

Jethabhai Bharwad, Vice-Chairman, GCMMF, said, "Our digitalization drive has brought in complete transparency in payment to milk producer members. Farmer-members are aware of the exact amount due to them and the rationale behind the same. Payments going directly into their bank accounts also helps inculcate the savings habit in them. The need for an active bank account has brought large number of the Amul family farmer households directly into the formal banking network.Automated Milk Collection Systems installed at village dairy cooperative societieshave now been linked through common online software applications. This helps to further enhance transparency among producer members using digital technology."

R S Sodhi, Managing Director, GCMMF, said, "Amul’s success has been driven by its ‘3E’mantra – Rapid expansion in milk procurement, rapid expansion in manufacturing facilities and rapid expansion in marketing & distribution network. "

Jethabhai Patel, Chairman, GCMMF, AMUL, informed, "in view of the demonetization of currency notes by Central Government, we have made necessary arrangement to pay milk producer members for their milk price through direct credit in their bank account."

He further informed that, "even though 60 percent of milk producers already have bank accounts, but, due to some vested interests, the payment was made in cash. We are in the process of opening of the bank account for milk producers who do not have their bank account. We have been stressing for the need to go for cashless transactions for the last couple of years. We have asked all our dairy unions to help farmers open their bank accounts in the next couple of months."

Patel has informed that GCMMF (AMUL) and its 18 associated milk unions are paying around Rs. 450 crores on weekly basis to 36 lakhs milk producers through 18,500 milk cooperatives in Gujarat.

He has also informed that due to demonetization of currency notes and restriction by RBI on District Cooperative Banks, rural milk producers are facing shortage of cash.

However, Central and State Governments have made alternative arrangement with the help of RBI for cash disbursement through District Cooperative Banks to milk producers to protect their interest which will definitely help milk producers to meet their daily expenses related to animal husbandry and other requirements.

Patel emphasized that till date, there has been no impact of demonetization of currency notes on milk procurement and sale of milk in the market. In fact, milk procurement of member unions of GCMMF has increased.

RI Bureau

Milk Mantra, with its vision of creating truly pure functional dairy products has brought Suresh C Senapaty on board as an Independent Director.

Senapaty recently superannuated as CFO and Executive Director at Wipro where he spent 35 years working closely with Mr. Premji in managing growth and transitions to take Wipro to the position it is today.

Talking about his decision to join Milk Mantra, Senapaty said, “Milk Mantra's outlier and inclusive growth is an idea that excites me apart from the company being based in my home state. I am happy to join the Board and look forward to a meaningful engagement with Sri and his team to rapidly scale up the venture whilst building a strong governance framework."

Following his superannuation, this is one of Senapaty’s selective board appointments.

Milk Mantra is India’s 1st VC funded agro food start-up which has raised 3 series funding from Fidelity Growth Partners and Aavishkar VC and is fast evolving as an exciting functional dairy food brand in the country. Its 2 flagship brands Milky Moo and MooShake have a strong consumer connect based on the quality of the product and the challenger brand marketing approach.

With a 100% CAGR over past years and on track to reach Rs.125crs revenue this year, Milk Mantra has expanded its portfolio of products beyond Odisha to Kolkata, Bangalore, Hyderabad and Ranchi. It's unique Ethical Milk Sourcing network has grown to 35,000 farmers.

Shedding more light on this decision, Srikumar Misra, Founder & CEO, Milk Mantra, said, “I am very pleased to welcome Suresh Senapaty to our Board. There is a strong alignment in our conscious capitalist philosophy of building a scalable brand and venture and Senapaty's mindset of bringing his deep experience to an organisation which can be fast growing and yet create significant meaningful impact across the value chain both on the consumer and farmer side."  

R S Sodhi, Managing Director of Gujarat Cooperative Milk Marketing Foundation has been given extension for another five years for his role as the MD of the group.

The decision to extend the tenure of Sodhi was taken last week in a board meeting of Gujarat Cooperative Milk Marketing Federation (GCMMF), which owns Amul brand.

"Sodhi has done a good work as Managing Director of the company, so the board decided to extend his tenure for one more term of five years," shared Jethabhai P Patel, Chairman, GCMMF told PTI.

Patel added that Sodhi has done a remarkable job especially in marketing. He has a long experience of working with the cooperative and had worked with Dr Kurien.

Sodhi was supposed to retire on December 31, after completing his term of five years. He has been working with Amul for the last 34 years.

He has done his MBA from the Institute of Rural Management Anand (IRMA) and started his career as Senior Manager Sales in Amul only.

Amul is one of the country's largest food product marketing organisation and had an annual turnover of Rs 20,733 crore in 2014-15.

Its daily milk procurement is about 14.85 million litres from 18,536 village milk cooperative societies, 17 member unions covering 31 districts, and 3.37 million milk producer members.

Amul is expecting its turnover to jump by 18 per cent to Rs 24,500 crore on the back of rising consumption in 2015-16.

Mother Dairy, the dairy major has denied allegations of detergent in its milk samples picked up from its collection centres, saying it has sent it for retesting in a lab in Kolkata, reported PTI.

A day after the UP FDA claimed that it has found detergent in one of the milk samples, the co-operative said the tested was done on "loose milk samples collected at village level" which were yet to be accepted by it.

"The first test was conducted in Meerut by UP FDA and it found solid not fat (SNF) and there was no adulteration. We questioned SNF and sent the same samples for retesting to a lab in Kolkata, we are still awaiting the results," said, S Nagarajan, MD, Mother Dairy.

Mother Dairy said the milk sample, which the UP FDA claimed to find presence of detergent, was drawn even before reaching the chilling centre where the first level of testing happens to ascertain the quality of milk for further processing.

"It is unfortunate that loose milk samples collected at village level which are yet to be accepted for processing at our factory has been attributed to Mother Dairy brand," he said, adding its milk was "safe for consumption".

Nagarajan said Mother Dairy has not yet got any official report of the tests from the UP FDA and is awaiting for details on the same.

He said Mother Dairy would take up the issue with central food safety regulator FSSAI.

Mother Dairy said that it under goes four levels of testing at input, processing, dispatches and even at the market level.

"Only after securing clearances from all quality measures, the milk is then accepted for processing and re- examined after processing, thus ensuring the product available is safe for consumption," Nagarajan said.

The UP Food and Drug Administration yesterday said it had found detergent in one of the samples of milk picked from Mother Dairy's collection centres. "Results showed that the samples were sub-standard and one of the two contained detergent," UP FDA official in Agra, Ram Naresh Yadav had said.

The samples had been picked up from Mother Dairy's collection centres in Bah in November 2014.

"The samples were first sent to Lucknow and later to Kolkata on the demand of the company," Yadav said.

Mother Dairy is a wholly-owned subsidiary of the National Dairy Development Board. It procures milk from western UP, Andhra Pradesh, Punjab, Himachal Pradesh and Rajasthan.

It sells 35 lakh litres per day in NCR, UP, Haryana, Punjab and other parts of the country.