Opportunities to Look Forward to in the Dairy Industry

Even though India is the largest producer of milk in the world, the industry itself is largely unorganized, with only 18-20 per cent of the total milk produced being channelized in an organized manner

Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

The livestock industry contributes almost 4per cent to India’s GDP, with the dairy sector making up the majority. It is thus surprising that this sector should be largely unorganized. As a growing economy, India has seen rapid development in recent years and the dairy industry, in particular, is one which needs to be brought into focus. With the Union Budget 2018-19 providing a special focus on the rural sector, we can only hope that there will be more development in terms of supply chain management and introduction of technology. The sector as it is at present faces several challenges such as unavailability of nutritious fodder, poor storage facilities and lack of technological support, to name a few.  


Thus, we can see that the major challenge faced by the Dairy Industry is the organization of the supply chain and logistics. The good part is that challenges are nothing but opportunities in disguise and in order to meet this challenge head-on, proactive steps need to be taken to educate farmers and provide a stronger supply chain for them to rely on. Even though India is the largest producer of milk in the world, the industry itself is largely unorganized, with only 18-20 per cent of the total milk produced being channelized in an organized manner. The first step to countering this would be to shift the focus to smaller dairy farms, which sometimes lack veterinary facilities and basic nutritious fodder. Let us look at some of the developments and opportunities which lie ahead for the Dairy Industry:

Increasing Demand for Milk and Value-Added Products

With an increase in the spending power of the population, the demand for milk and other value-added dairy products is only set to increase in the coming years. In order to meet the rising demand, there needs to be a marked shift from the unorganized to the organized sector. Moreover, consumers nowadays not only hold greater buying power but are also health conscious regarding what they consume. There is thus a necessity to provide healthy dairy products which can be readily consumed. This creates an opportunity for boutique dairy farms to set up local operations providing fresh cow, buffalo or goats milk to consumers. Over and above with people having less time these days, the demand for premium value-added products such as probiotic yoghurt, cheese, health shakes etc. are on the rise. These products not only have a higher margin but also have a higher shelf life which makes the supply chain easier and cost effective.

Greater Technological Innovations and Increased Margins

Businessmen looking to invest in the dairy industry have noted the increased spending power of the consumers and their willingness to pay a premium in order to have fresh milk delivered to their doorsteps. As a result, it is expected that there will be investments made in this sector which will aid the introduction of technological advancements both in logistics and farm management. Big Data is one such technology which needs immediate implementation in the dairy industry. Big Data will help dairies accumulate and analyze data to accurately predict consumer behaviour, like buying patterns, leading trends, etc. With increased investments, dairies will be enabled to automate processes, reduce major costs and improve the quality of milk.

Artificial Intelligence, will be a disrupting inclusion into this industry. Today local farmers and large dairy farms use fodder without much understanding of its impact on the milk. Changes in the fodder content and lifestyle of the animal, the weather and atmosphere, all of it have an impact on the production of milk and the quality as well.

As Artificial intelligence and machine learning become more common and easily available, it is expected in 2019, that the use of such technology in the dairy industry will automate most of the farm processes while at the same time produce information based on the farm’s operational history.

As per recent reports, however, the prices of milk in India may be seeing a hike in 2019 as there have been lesser supplies during the winter months of 2018. The low returns received by farmers are said to be the primary cause of this. The usage of Skimmed Milk Powder has previously helped keep the industry stable, but with more farmers opting out of buying cattle, it looks like there will be a drop in the production and thus an increase in the prices. In order to resolve the major issues of the Dairy Industry, it is imperative that problems at the grass root level are taken care of, with farmers receiving better veterinary facilities and fodder supplies. Following this, the introduction of technology can help automate the supply chain for the overall development of the Dairy Industry. While there are several challenges to be resolved, the Dairy Industry still remains as one of the most lucrative businesses to enter into in 2019.