Van 't Hooft notes that within existing companies in the Indian dairy sector a large potential exists to produce milk of a better quality. "Throughout the world family farms in the dairy sector perform best. This type of farm offers the best possibilities to provide animals with the individual attention they need. Indian family farms offer important scope for development. Average milk production is often less than 1,500 kilograms milk per cow. Improvements in ration and management can bring significant improvements. As the situation currently is by no means ideal, antibiotic use in the Indian dairy sector is very high."
According to Van 't Hooft, the fact that the Indian government more or less obligates dairy farmers to breed Holstein cattle is a major bottleneck. "Breeding with Holstein once can lead to fine results, but pure Holstein cows are unable to cope with the Indian conditions. Indian dairy farmers must be given the opportunity to breed robust cows with local breeds."
Foreign companies currently have a hard time entering the Indian market as supplier of the dairy sector. "Business culture in India is not the same as in the EU and America. Companies need to utilise local talent and local acumen to achieve the necessary trust and relationships in Indian business community," says Philippi from Jaylor. Jaylor is a manufacturer of Fodder wagons of various sizes ranging from 10 cows to 10,000 cows. "We have products that can work for the Indian market." Philippi is acquiring a network within the Indian dairy sector and hopes to sell mixer wagons there in the coming years, although he expects he will need to display staying power. "The five to eight cow farms don't have the means to afford this kind of equipment. Larger farms are finding interested investors but the current number is low and spread over five regions."
A problem for companies like Jaylor is that the distribution channels are poorly and inadequately established and supported. "Farmers indicated a real challenge to improvement being the after sales support and parts required to sustain the dairy. This issue was apparent for many of the recognised industry leaders of equipment," says Philippi. "The lack of quality distribution could also be caused by the Indian economic and business models that exist."
According to GDF chairman Prins, there is no doubt companies from outside India will play a role in the further development of the dairy sector in India. "At some point the strong growth in demand for good-quality milk will create room for the international business world to contribute to upscaling, production efficiency and milk quality improvement. The usage of modern techniques and knowledge will allow milk production in India to double over the next 30 years."
Many small companies
The Indian dairy sector produced 134.5 million tonnes of milk last year. Over the past decades production increased from 53.9 million tonnes in '90-'91 to 127 million tonnes in 2011-2012. The Asian country represents 17% of the world's total dairy production. This makes India the largest dairy producing country in the world.
The Indian government is aiming for an intensive expansion of milk production to 180 million tonnes in 2021-22. This is happening within the framework of the National Dairy Plan (NDP).
Particularly small family farms with few cows account for an important part of India's milk production. In 2010, Indian dairy farmers kept a total of 109 million animals for the dairy industry (almost half concerns buffaloes).
The selling price of farm milk showed an upward trend over the past years. Indian dairy farmers currently receive a converted average of 35 euro cents per kilogramme. The selling price of milk that meets higher standards can reach as high as 56 euro cents per kilogram.