K Rathnam Elucidates on the Need of Private Players in the Dairy Sector

Milk in India is a preliminary need in every household. Also, its usage is wide and when one of India’s dairy cooperative societies raised the prices for producers by Rs 2 per litre, it became a national news. Many in the media are debating over the issue and how it will push up the Consumer Price Index causing inflationary pressure, which might force RBI to change its ‘accommodative stance’ on monetary policy. K Rathnam, the CEO of Milky Mist, takes part in explaining how this hike concerns Indian dairy farmers and why the dairy industry needs more private players like them.

Addressing the troubles of dairy farmers, K Rathnam states that the hike in milk prices is not proportionate to the increase in their feed and other costs. Farmers feel that their margins are getting squeezed. And the price still does not count their logistics cost.

Acknowledging the fact that Milk is an important case study for our nation’s agricultural growth, he mentions that it is our biggest agri-commodity in terms of value, more than rice, wheat, and sugarcane combined. In 2019, the dairy sector was reported to be growing at approximately five per cent every year. In the present time, India is largely self-sufficient in milk production making dairy the top-ranking commodity. It has largely been possible because of the private sector entities, who form 35 percent of the organised dairy industry. They collectively supply to both the urban and rural parts of India, especially in former arenas where prominence of government enroled schemes is still not as effective.

The dairy industry has traditionally been regulated. The government projects and programmes enhance dairy development including subsidies for development of infrastructure for milk processing and testing. The Clean Milk Production Programme is a centrally sponsored scheme that is being implemented by the State Department of Animal Husbandry, Dairying and Fisheries. The creation and strengthening of necessary infrastructure for the production of quality milk and its products, improvement of milking techniques, and training to enhance awareness on the importance of hygienic milk production are the key targets of this programme

Based on the estimates by the National Dairy Development Board (NDDB), the demand for milk and its by-products is likely to reach 218 million tonnes by 2022. K Rathnam cites, “To meet the growing needs of people and make use of milk production effectively, our country requires collective efforts of government as well as private sectors.”

Against the backdrop of government support for farmers and allied intermediaries, several private dairies are emerging in the dairy industries. Leading companies such as Milky Mist are effectively working in the direction of promising farm-to-home experience of milk and milk products. It targets the present needs of consumers by marketing a wide range of products, including milk, curd, buttermilk, paneer, and other dairy variants. It offers flavoured yoghurt and milk to cater to the changing tastes of the young generation. It also has digitised cattle health, milk production, milk procurement, milk testing, and cold chain management. Other private dairy organisations including Paras Milk Foods, VRS Foods, Nestle India, and Prabhat Dairy are prospering in this sector with a focus on value added products.

K Rathnam promotes the collective efforts by private companies and government initiatives to benefit the dairy industry of India. Government intervention is crucial to establish the necessary conditions for private companies to thrive. It can prove to be very effective when planned with a long-term approach. Also, the cooperatives and government organisations are doing a great job to boost the dairy industry, but more private players entering this sector in a big way will open gates of ingenuity and contest particularly in value added dairy products segment.