What is India’s milk production and how realistic are the estimates put out by the department of animal husbandry and dairying (DAHD)?
The reason for asking this is that the growth in milk output based on official data does not seem to square up with the increase in sales of organised dairies — at least in the recent period.
Take the last 10 years from 2008-09 to 2018-19. During the first half of this period (2008-09 to 2013-14), production registered a 4.2 per cent compound annual growth rate (CAGR) from 112.2 million tonnes (mt) to 137.7 mt. The second half (2013-14 to 2018-19), however, saw a CAGR of 6.4 per cent, with output rising from 137.7 mt to 187.7 mt.
The above trend, though, isn’t reflected in liquid milk marketing by cooperative dairies, which recorded a CAGR of 7.9 per cent in the first period (from 201.03 lakh litres per day to 294.44 LLPD) and only 3.8 per cent during the second (from 294.44 LLPD to 354.53 LLPD). Quite the reverse, in other words.
But it’s not only the cooperatives.
The country’s top 10 private dairy companies reported combined net sales of Rs 15,886.43 crore in 2014-15. That touched Rs 20,357.44 crore in 2018-19, translating into a CAGR of 6.4% in current value terms. Given an average annual wholesale price index inflation of 4.3 per cent for milk during this period, the yearly sales volume growth would work out to just 2.1 per cent or so.
Simply put, the organised dairy sector would have grown by hardly 3 per cent annually in the last five years, which isn’t even half of the 6.4 per cent CAGR for milk production, as per DAHD statistics.
Another reason to raise questions on the official output estimates has to do with data from the National Statistical Office’s (NSO) household consumer expenditure surveys (HCES). The all-India per capita consumption of milk over 30 days was reported at 3.866 litres for rural and 5.107 litres for urban households in the 2004-05 HCES. These went up to 4.333 litres and 5.422 litres, respectively in 2011-12.
The significant point to note is that the NSO per capita consumption numbers are way below what one would get from the DAHD’s production estimates. The weighted all-India average (rural and urban) daily per capita consumption of milk from the NSO’s HCES was 139.3 ml (or 143.5 grams) in 2004-05 and 154.8 ml (159.4 grams) in 2011-12. This was as against the daily per capita availability of 233 grams in 2004-05 and 290 grams in 2011-12 arrived from the DAHD’s production estimates of 92.5 mt and 127.9 mt for these two years. It can be seen that the gap between the two per capita numbers, which was 89.5 grams in 2004-05, had widened to 130.6 grams by 2011-12.
The HCES takes into account consumption of milk both in direct liquid form, as well as converted into products (curd, ghee, butter, etc) or used for preparation of sweetmeats at home. It excludes non-household consumption — by tea shops, restaurants/dhabas, ice-cream and sweetmeat makers, and other institutional users. Such consumption, however, is unlikely to exceed, say, 20 per cent of the milk consumed in households (that too, assuming every fifth meal to be eaten outside). Even adding 20 per cent takes the NSO daily per capita consumption to 191.3 grams in 2011-12.
Now, let’s assume that the per capita milk consumption from 2011-12 to 2018-19 grew by 11 per cent, the same rate as during the preceding seven-year period. Again, this is highly unlikely, given the pronounced slowdown in growth of real rural wages and crop prices after 2013-14 (note that the increase in per capita consumption between 2004-05 and 2011-12 took place more in rural than in urban India).
But even 11 per cent growth would mean a per capita daily consumption of 212 grams for 2018-19. This is just over half of the DAHD’s corresponding figure of 394 grams derived from an estimated production of 187.7 mt for a population of 1,305 million.
If the 212 grams per capita consumption is used, the actual milk production last year would have been under 101 mt. That is a vast difference over the official estimate of 187.7 mt. It is a serious gap which needs both explaining and filling. Hopefully, the next HCES for 2020-21 will bring greater clarity.
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