Challenges faced by Indian Dairy sector in different segments

int1Dr. Capt Tanweer Alam is an entrepreneurial executive with over 18 years of experience of serving  animal/feed industry. Besides that, he has a 5 years experience of serving in Indian Army in Remount & Veterinary Corps. Presently, he is working with Kemin Industries South Asia as Director – Sales & Marketing for Ruminant Division, In an e-interview with “Think Grain Think Feed”, he shares his observations about upcoming Indian dairy farming model, problems that are plaguing the dairy production and much more. Excerpts from the interview:

Compared to poultry farming in India, which is very much organized, the dairy farming in India still remains hugely an unorganized sector. In your opinion, what could be the way forward for the dairy farming to grow faster and on commercial lines like the way poultry farming does.
For a profitable dairy farming, following four factors are important:
1. Cost effective and nutritionally balanced feed for animals
2. Reproductive efficiency of the herd with sound heifer management
3. Captive and entrepreneurial marketing acumen of milk and milk product
4. ‘Optimum usage of technology’ available for herd management and genetics (the key is optimum and one should not get too much obsessive on these)
Off late, we are seeing an influx of serious player in this field who are very cognizant of all these factors. Most of them start with herd size of 50-60 animals and after setting the house in order, they graduate and add up more animals depending upon their investment prowess. They are emerging as role models for many dairy enthusiasts and I am seeing that this trend will continue and eventually we will be having a sizeable semi-organized and organized dairy farms. To substantiate with data, of approx. 150 MMT milk produced in India as of now, 90% comes from rural area and of this almost 80% comes from unorganized and backyard farms. In next decade or so, I assume that at least 40% of milk production will come from organized and semi-organized farms.
One of the contributory factors behind this trend is the increased consumption of value added milk and milk products which is facilitating the farmers and producers to fetch better realization price of milk. When the farmer gets a better realization price of his milk, then he is more open for improving the nutritional optimization of feed and fodder and that indeed improves the milk production. This organic graduation of dairy farmers from unorganized to organized mindset of dairy farming is the most exciting phenomena in Indian dairy scenario, which has already begun, and now slowly picking up.
Entry of large scale private milk congregators is also adding a positive competition in the milk collection ecosystem, which hitherto was mainly governed by state run cooperatives.
With the adoption of vertical integration as the main business model, we have seen a catapulted growth of poultry market in India and in a way these state cooperatives and private milk congregators are also now following the same model with a stronger backward integration (under which they are focusing on feed, genetics, vet services, heifer management etc for the animals of their members who pour milk in their milk collection centers) as well as they are also strengthening the forward integration (in which they are focusing of marketing of value added milk and milk products with better value realization and in turn passing on the benefit to the farmers by steadily increasing the milk procurement price).
In your view, which is the main problem plaguing the dairy production sector and what are your suggestions for improvement?
One of the initiatives of Kemin was to look at the dairy market from the eyes of segmentation and after defining it in organized, semi-organized and backyard farm categories, we are clearly seeing that the challenges with each of these segments are different.
For the backyard farms, the main challenge is the reluctance in acceptance of balanced nutrition for their animals. Most of them still feed their animals in the traditional way with unbalanced feed, forage and supplements and this leads to less than expected milk output from the animals. The answer towards improvement lies in educating the farmers on the importance of balanced nutrition as per DMI / Protein /Energy needs. The industry players are adding a lot of focus on such extension activities but still lot more is needed to be done.
For semi-organized dairy farms, the key challenge is the improvement in the herd efficiency and maintaining the consistent milk production round the year. The solution lies in having a robust transition management and reproduction efficiency management. Also using quality and branded feed as per the life cycle need of the animals will also help.
For organized dairy farms, the key challenge is the economic availability of forage and maximizing the Income over Feed Cost on day to day basis. The solution lies in having a robust silage and TMR facility. Also, it is critical to have an excellent forward integration with the market, for being able to sell the output as value added milk and milk products with better realization price of the produce.
Please comment up on Kemin portfolio for dairy animals.
Kemin has a very strong commitment to serve the Worldwide Dairy market with the ‘TOTAL NUTRITION’ concept and in partnership with our customers, we offer a range of inspired molecular solutions to help the dairy farmers improve their farm productivity. The key offerings from our side include a range of propionate minerals (Kemtrace), encapsulated rumen protected amino acids (PEARLs) , Bye pass Fat technology (EnerFAT), Toxin management in feed to keep the milk in desired M1 level (Toxfin) etc. Also one noteworthy point is that Kemin has also contributed in getting our produced Cr approved by USFDA as daily nutritional need of dairy animals @ 500ppb per Kg diet.
Can you share some statics that illustrate feed and milk prices variation in the past decade or the last 5 years?
Fortunately, for Indian market , but for some ups and downs , the milk and feed price variation is not a roller coaster as we often see in worldwide market. One of the assumptions behind this resilience is supposed to be the admix of backyard, semi-organized and organized farms in India therefore in a way, it is a blessing in disguise. For example, even in 2009 and 2013, when there had been a sharp drop on WW milk prices, still in India, we were not affected to that extent . As a matter of fact, the monsoon and Agri crop output leaves a larger impact on us. For instance, in 2015, the economics of bad cotton crop had affected the cattle feed pricing as the cotton seed cake price, one of the ingredients in cattle feed, that time had increased to Rs 2200 per quintal from Rs 1450 per quintal a year ago. Around the same time, DORB price also had sky rocketed. And as a double whammy, the milk price had dropped by a few Rupee because of poor monsoon and the market sentiment had been down. This year, with the expectations of normal monsoon, the horizon looks positive.
Feed shall continue to remain the critical area. At present less than 20 % of the requirement for cattle feed is met by the cattle feed industry. Do you see any increase in this figure in the use of compound feed by Indian dairy Farmers?
If we consider around 50 Million milch animals in India then we need at least 50 Million MT of compound cattle feed per annum, however, we are producing only around 8-10 MMT compound cattle feed per annum. Clearly, there is a immediate 5 times need gap existing. The mood of the players who understand this trend , is very upbeat. We can see the aggressive CAPEX increase of many established players along with entry of new and large corporate into this segment.
The non availability of green fodder throughout the year is one of the major problems faced by Indian dairy farmers. What essential steps would you recommend to increase green fodder production/ availability for the dairy farmers?
Non availability of fodder, specially green fodder round the year is an established fact. It is estimated that by 2025, going by the present way of cultivation pattern, there will be 65% deficit of green fodder. As a strategy to overcome this situation, there has to be more usage of high yield fodder varieties for cultivation and thankfully some of the organizations, in both Govt. and Private sectors are taking good initiatives in coming out with high yield varieties. Cultivating in wastelands and community cultivation of fodder crops also needs encouragement. And above all, ensiling the green fodder when its available in abundance for usage in scarce time is one of the best solutions. Most of the organized dairy farmers have understood the importance of silage in managing the cost economics of fodder. I see that the market of silage, silage innoculants and haylage will see its hey days ahead. It is not only the conventional crops like green fodder maize, fodder sorghum, bajra, hybrid napier, sugarcane tops etc which are used for silage making, but unconventional ones like sugar beet pulp is also catching its prominence.
You believe in increasing the pie of market , rather than marketing the pie of market. Please elaborate on this in relation to south Asian Market .
In South Asian market, India itself has more than 50 million milch animals and having only a handful of established players in nutritional feed supplement, we need to look at the market with blue ocean strategy perspective rather than red ocean perspective. We at Kemin, work on the concept of defining the biological potential of the market and with our confidence of delivering at least 1:2 Return on Investment with our product and services, the market potential looks immense. At the rate of Rs 10 usage potential of feed supplements per milking animal per day, we believe that there is a market of approx Rs 10,000 Cr for feed supplements in India alone and if we add the market potential of other south Asian countries, primarily Bangladesh, then the market potential will further swell. The existing animal feed supplement market by the present players is just a small fraction of this number. Hence me and my team firmly believe in increasing the pie of market rather than fighting for taking the share of existing pie.
Kemin happens to be the pioneer in the production of Mould Inhibitors. Would like you to throw some light about the product technology which gives the company an edge over its competitors
The Safety platform of products from Kemin offers a range of solutions for keeping the feed safe from the growth of moulds during the shelf life of the feed. We have a program called MillSMARTTM which facilitates the cattle feed millers in not only producing the feed from their mill with better mill efficiency, but it also supports in keeping the moisture of feed in bounded form with gelatinization and the mold inhibitors help check the growth of moulds which may produce zearalenone and aflatoxins, which affects the reproductive and productive efficiency of animals, respectively. We handhold our customers in end to end solutions on mould control, integrating the services of our Customer Laboratory Services, and MillSMART engineers alongwith our sales and technical team, so that the desired results are achieved for keeping the feed safe from moulds with value addition in mill efficiency improvement.