Strong growth in India’s organised dairy industry, due to the formalisation of perishable milk products and the growth of value-added dairy products, brought the focus on to raw milk sourcing. In the coming years, milk procurement could become the single most critical link in the dairy supply chain. Medium scale dairy farms (with 50 to 300 cattle) could emerge as one of the key growth drivers in the Indian dairy sector, reports Rabobank in its recent report, ‘Emerging Dairy Farm Trends in India’.
The report estimates that to keep pace with the strong growth in branded milk and dairy products, direct milk sourcing will gradually replace agent-based sourcing as a dominant model. This will help them secure consistent supply of superior-quality raw milk. The share of milk procured from small and marginal farmers will decline; however, this segment will still stay relevant. Currently, 75%-80% of milk is procured from these farmers. Large-scale-dairy farming (where the cattle herd is less than 1,000) has proved difficult to establish in India due to factors such as land unavailability and paucity of professional labour, among others. Rabobank expects this segment to remain an initiative of a select few.