The Milky Way: The evolving National Dairy Development Board of India
Milk in India
India took over the European Union as the largest producer of milk [1} with over 138 million tonnes of milk produced in 2014[2]. With over 1.25 billion people in the country [3], we get a per capita of 0.290 liters of milk per person in day (1 tonne of milk is 1333.33 liters and 1 liter is 0.264 gallons). In a country with growing population, the government is looking to increase nutrition for its citizens and is aiming to increase milk production to 200 million tonnes by 2022[2]. Milk, butter, yogurt and sweets are fundamental to the Indian culture as it comprises much of the cuisine and religious ceremonies and hence, milk has a poignant place in the food ecosystem.
![Exhibit 1: Milk poured into a holy fire during prayers [4]](https://i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com/wp-content/uploads/sites/4/2015/12/India-Milk-Everywhere-Photo-Gallery-4.jpg)
Setting up the distribution
Setup in 1965, the National Dairy Development Board (NDDB) brought about a “white revolution” in India making the country the largest consumer of milk. The NDDB is owned by the Indian government and its when established its primary goals were to i) increase the production of milk ii) augment rural incomes and iii) get reasonable prices for consumers [5]. The NDDB copied independent milk cooperatives such as Amul and formed its own supply chain model (three-tiered structure) to get milk to the market.
Famers (4.8 million women as of 2014) bring their batches of cow and buffalo milk to the Village Society where it is collected and transported to a District Union in small shipments. Each household milks cows twice daily and usually the evening batch of milk is kept for the household itself while the morning batch is sold at the village center. For quality testing, each member’s input is tested for fat content and impurities at the village collection level itself. At the district level, the milk is pasteurized and refrigerated. From the District Union milk is sent to State Federations in larger shipments, where it is packaged and distributed to customers (the transport time for a batch of milk from village to State Federation is less than 6 hours, as milk is highly perishable). [6] The total throughput time for milk from point of milking to packaging is less than 24 hours.
The NDDB has successfully expanded to 0.16 million village cooperatives and has established a strong distribution network across the country. [7] The State Federations now cross-sell processed goods such as powered milk, ice-cream and yogurt has well.
The National Dairy Plan – I (NDP-I)
The average yield of an Indian bred cow is 2.5 kilograms while the world average is 7.15 kilograms. [8] While providing medicines, vaccines and high nutritional feed at discounted prices to farmers has helped in improving output per cow, it has not been enough to boost production. The NDDB is now focusing on adding infrastructure to its facilities and on increasing research and development spend through NDP-I. An objective of the NDP-I is to increase the yield of cattle through genetic research.
Increasing yields
The NDDB is running three programs to increase yields of cows: Bull Production Program, Strengthening of Semen Stations and Pilot Artificial Insemination Delivery Services. NDDB has identified high genetic merit bulls (Kankrej, Hariana, Pandharpuri in Indian breeds and Jersey in foreign breeds). Through its 4 research and development centers, NDDB has produced, tested and processed 19 million units of frozen bull semen. By reversing their supply chain, 13.3 million Artificial Inseminations (AIs) have been conducted in 2014 covering over 50,000 villages. The semen is usually designed to produce cows and not bulls as most farmers prefer to raise cows on their farms. A cow gives birth to a calf in a year and after two years the next generation begins to produce milk. Hence, through AIs production of milk can be boosted throughout the country in less than 5 years and increase efficiency for all stakeholders in the network.
Conclusion
The operating model of NDDB has successfully evolved as the milk market of India has developed. Initially, NDDB concentrated on establishing distribution centers as the backbone of their operations. Now, NDDB is focusing on increasing the capacity of their operations by focusing on increasing yields for farmers and for India.
References:
- Page 42, OECD-FAO Agricultural Outlook 2015-2024 (http://www.fao.org/3/a-i4738e.pdf)
- http://articles.economictimes.indiatimes.com/2015-03-23/news/60404218_1_dairy-sector-dairy-industry-milk-production
- https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
- http://www.foxnews.com/world/2015/10/27/milk-in-india-popular-refreshment-huge-business-and-gift-from-gods/
- https://en.wikipedia.org/wiki/National_Dairy_Development_Board
- http://modernfarmer.com/2014/02/chilling-cow/
- NDDB Annual Report: http://www.nddb.org/sites/default/files/pdfs/nddb-annual-report-2013-2014.pdf
- http://www.bloomberg.com/news/articles/2015-09-03/india-milk-chuggers-turn-to-bull-semen-peddlers-as-deficit-looms
Thanks Tania. I am a firm believer in the importance of genetics to improve milk yields. My questions below:
1. How does age influence yields and how old are Indian cows relative to other milking cows in the global sample?
2. In the dairy industry “dry” cows (low milk yielding ) are usually used for the beef industry; however, my understanding is that in India this is not common practice. Do you have more color on this?
3. In order to go around the issue of perishability, what role do you see for powder milk?
Thanks!
Hey Andres, thank you for reading my blog! Below are my answers to your questions:
1. Most cows that are used for dairy production are between 1 to 4 years of age. With age the yields of the cows reduces drastically, however, some Indian farmers choose to keep their cows to help produce the next generation.
2. While this may be a controversial topic, most cows that are not useful to the farmer anymore are sold to middle men who take the cows across the border or to slaughter houses. India does produce 1.53 million tons of beef every year. It is a bit ironic but also, a natural way the industry has evolved over many years. http://www.theatlantic.com/business/archive/2015/02/selling-the-sacred-cow-indias-contentious-beef-industry/385359/
3. India exported 13 million tons of skim milk powder as of 2014, however, it is not a large part of domestic consumption. It take about 7 liters of milk to get 1 kg of milk powder, hence, this would be difficult to implement at the village lever. However, to make sure that more milk is captured at the beginning of the supply chain and wastage is minimized, newer technologies such as small thermal and solar chillers are being introduced. http://news.mit.edu/2015/promethean-power-india-milk-chillers-0908
Hey Andres, thank you for reading my blog! Below are my answers to your questions:
1. Most cows that are used for dairy production are between 1 to 4 years of age. With age the yields of the cows reduces drastically, however, some Indian farmers choose to keep their cows to help produce the next generation.
2. While this may be a controversial topic, most cows that are not useful to the farmer anymore are sold to middle men who take the cows across the border or to slaughter houses. India does produce 1.53 million tons of beef every year. It is a bit ironic but also, a natural way the industry has evolved over many years. http://www.theatlantic.com/business/archive/2015/02/selling-the-sacred-cow-indias-contentious-beef-industry/385359/
3. India exported 13 million tons of skim milk powder as of 2014, however, it is not a large part of domestic consumption. It take about 7 liters of milk to get 1 kg of milk powder, hence, this would be difficult to implement at the village lever. However, to make sure that more milk is captured at the beginning of the supply chain and wastage is minimized, newer technologies such as small thermal and solar chillers are being introduced. http://news.mit.edu/2015/promethean-power-india-milk-chillers-0908
As a state-owned enterprise, how effective is it in performance vs. private market solutions? Does it engage in anti-competitive practices that reduce value creation for farmers?
Hey Jeremy, thanks for your comment. The NDDB was established by the Indian government with funding from the World Food Program and was modeled from private milk cooperative business models (like Amul in the state of Gujarat) to reach an all India scale. Similarly the National Dairy Plan is one that requires a large amount of capital investment which cannot be done by a private company alone. However, many private companies are interested in this sector (milk processing and cheese) and are looking to provide more value to players in the supply chain including farmers. http://qz.com/372049/private-industries-hope-to-bring-order-to-the-chaos-of-the-indian-milk-industry/