India Continues to Improve Dairy Output While Consumption Grows

The fifth largest economy could overtake China in a few years to become the world’s most populous.
The fifth largest economy could overtake China in a few years to become the world’s most populous.
(Stock Photo)

Population in India, the world’s largest consumer and producer of milk when including buffalo milk, is anticipated to grow by 272 million people by 2050. However, it is unclear whether the country’s dairy industry will be able to meet its growing demand for milk and dairy products, or whether production will exceed domestic needs.

According to a 2019 United Nations report, India could supplant China as the world's most populous country by 2027 and remain there through the end of the century. In 2019, India’s economy surpassed both the United Kingdom’s and France’s as the world’s fifth largest, with GDP of $2.94 trillion.

“After experiencing sustained growth in recent years, India is poised to consolidate its position as the world’s largest producer and consumer of milk,” said Monica Ganley, analyst for the Daily Dairy Report and principal of Quarterra, an agricultural consulting firm in Buenos Aries.  

According to a recent USDA Global Agricultural Information Network report, India’s milk production is estimated to grow 2.2% in 2021 to reach a total of 199 million metric tons (MMT). USDA expects output to expand another 2.3% next year. Over the next decade, USDA projects India milk production will rise another 130 MMT.

While the majority India’s milk production is sourced from water buffalos, the share of cow’s milk has been climbing, Ganley noted. In 2021, she said cow’s milk will account for 48.2% of the country’s total milk production.

“The country’s small dariy farms generally prefer to milk water buffalos because their milk is higher in fat and they generally withstand the climate better than Holsteins and other traditional dairy cows,” Ganley noted. “Furthermore, water buffalos can be slaughtered, providing an additional revenue stream to Indian producers, while the slaughter of dairy cows is outlawed in most parts of India for religious reasons.”

Nearly all the milk produced in India is consumed domestically, with only nominal volumes of product sent to the export markets, Ganley said. Slightly more than half of India’s milk production is formally processed while the remaining 48% is consumed on farm or sold through informal channels.

Dairy products, particularly yogurt, cheese, and ghee, are considered staple foods in India, where large numbers of vegetarians depend on dairy as a key source of protein in their diets, Ganley said. India’s growing population and the country’s large number of younger consumers who tend to favor dairy products bode well for the future of dairy consumption. However, with milk production also expected to grow, it is uncertain whether production growth will fall short of or exceed rising demand

“India’s per capita dairy consumption of 0.9 lbs. per day already is believed to exceed the world average by 33%. Thus, if milk production increases significantly in coming years and demand growth doesn’t keep pace, India could soon be looking to the global market to offload excess production,” Ganley said.

 

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