A report from Rabobank says that India’s milk processors are now targeting smaller cities as demand in that country rises for products like cheese and baby food. But, the Indian industry is far from being organized.

Business-Standard, India’s leading daily business newspaper, reports that Rabobank estimates that the organized portion of the dairy industry saw a 15% yearly value growth, while processed products grew in value 20 to 25%. But, even as prices rose, demand stayed constant.

Rabobank encourages Indian processors to invest in milk procurement, rather than solely on plant capital upgrades. One way to do this is provide farmers with feed and healthcare, Rabobank suggested.

The report also warned against sourcing milk through intermediaries due to the higher price and potential lower quality of the milk. Rabobank estimates that just 24 percent of the country’s milk procurement is “organized,” but that will grow to 34% in the next 5 years.

Source: Business-Standard