AI-powred high-tech system eye-opening for Dairy business in India

Animal husbandry is one of the most lucrative and demanding businesses not only in India but across the globe. The livestock sector - within it, dairy - needs to play a larger role in the prime minister's goal to double the farmer's income by FY23. Dairy farming in India contributes to 4% of its GDP. CARE Ratings estimates milk production to have increased by about 3.9% in FY20 to reach 195 million tonnes. Also, between FY19 and FY23, milk production is expected to increase at about 4.8% CAGR to reach 226 million tonnes by FY23 while the per capita availability is expected to witness a CAGR of about 4.6% during the period to cross 470 grams per day by FY23. India has also retained the leadership position in milk production by producing 188 mn tonnes in FY19; accounting for about 22% of global milk production. Hence, dairy industry has played a crucial role in the agro-based Indian economy[CARE Rating].

Overview of dairy marketing channels in India

India's milk consumption is the highest in the world and accounts for 26% of world consumption[Global Strategic Studies Institute,2017]. Estimates suggest that 48% of the milk produced is consumed by dairy farmers themselves, and 52% is marketable. A study undertaken by a private agency has estimated that of the total surplus, 20% is processed in the cooperative sector, 30% by branded private dairy companies, and the rest by the unorganized sector (milk for sweet shops, loose milk, etc). Uttar Pradesh, Andhra Pradesh, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Haryana, and Punjab together account for 65% of the country's milk production. The processing capacity, measured in terms of milk chilling infrastructure (cooperatives), is highly skewed, with Gujarat alone accounting for 46% of this. Future growth of dairy must come from newer areas, and with modernized technology suited for small dairy farmers.

National Action Plan for Dairy Development includes the introduction of exotic cows, cross-breeding, and the improvement of nutrition and hygiene. The plan aims to increase daily output per cow to 7.1 kg by FY 2023, equivalent to 1.5 times the FY 2015 level.

Background:

Structure of Indian Dairy Industry

The unorganized segment consists of traditional milkmen, vendors, and self-consumption at home, and the organized segment consists of cooperatives and private dairies. In most of the developed nations, 90% of the surplus milk is processed through the organized sector. With the increase in population, rise in per capita income, changing lifestyle, affordable aspirational food habits, export opportunities, etc., the demand for milk is expected to rise. As per the Department of animal husbandry and dairying, it is estimated that the demand for milk would be in the range of 200–210 million tonnes by FY22. As per the Department of Animal Husbandry, Dairying and Fisheries, the organized milk handling is expected to grow from 20% at present to 50% by FY23.

State-wise milk production (000 tonnes):

The top 10 states of milk producers have continued to remain constant over the last few years accounting for a share of over 80% in the total milk production in the country. In FY10, Madhya Pradesh ranked 7th in milk production and it has moved up to 3rd position in FY19, while Punjab has moved to 6th position, down from 4th in FY10.

Dairy Products:

During the last five to ten years, India has seen dramatic shift towards the consumption of value-added products such as cheese, yoghurt, UHT (ultra-heat treatment) milk, flavored milk, and whey. To tap the advantages of the changing consumer food preferences, most organized players are expanding product portfolios in the value-added segment. This segment offers high growth potential and better margins versus the liquid milk and Skimmed Milk Powder (SMP) segment.

The value-added products market is under-penetrated, thus having tremendous scope for growth and is expected to grow at much faster rate as compared with the commodity market. The private players are also investing in brand-building exercise and aiming to add more B2C business in their portfolio. The value-added products overall contribute to ~35–40% of the total dairy market in India and commodity products together contribute to almost ~65% of market share. Furthermore, within the value-added segment, largest product category is ghee, having a market share of about 15–18% in the overall dairy market. While loose packets of curd is available locally, a key characteristic of emerging value-added products like UHT milk, flavoured milk, low-fat curd/yogurt, cheese and whey is that 100% of these products are sold through organized market. Average margins for value added products across categories shown below-

Few Indian Major Players are as under:

AI and future of dairy:

Nowadays emerging technologies affecting agriculture in the long run to optimize management and profitability. The implementation of robotic milking machine brushes for added cow comfort, and automatic calf feeders on dairy farms across the country and world going to revolutionizing the dairy sector. Imagine a data system that monitors your cows' activities 24 hours a day, 7 days a week from lameness and estrous detection to dry matter intake (DMI). With a new technology that recognizes each cow in the barn, this dairy farmer's dream becomes a reality.

Cainthus is the technology company that created the cow facial recognition system that monitors cattle via cameras located on the roof of the barn. The data is then sent to a server on the farm. The main goals are to utilize the data to maximize production and limit stress levels on the cows.

There are many uses for the artificial intelligence system that can be customized for the dairy farm's needs. For example, the system detected that the cows are eating three to four hours a day. The efficient adjustment of herd's feed rations and dairy tour routes based on information. In addition, limiting pen moves for cattle helps keep feed intake consistent across the herd.

Few more used case given in below articles:

https://www.positivelyosceola.com/will-artificial-intelligence-technology-change-the-dairy-industry/

https://www.analyticsvidhya.com/blog/2020/12/use-of-machine-learning-in-dairy-farming/

Selecting the Animal for Dairy Farming in India - Cows v/s. Buffaloes: [Article]

Cow:

• Good quality cows are available in the market and it cost around Rs.1500 to Rs.2000 per liter of milk production per day. (e.g. Cost of a cow producing 10 liters of Milk per day will be between Rs.15,000 to Rs.20,000).
• If proper care is given, cows breed regularly giving one calf every 13–14 month interval.
• They are more docile and can be handled easily. Good milk yielding cross breeds (Holstein and Jersey crosses) has well adapted to the Indian climate.
• The fat percentage of cow's milk varies from 3–5.5% and is lower than Buffaloes.

Buffalo:

• In India, we have good buffalo breeds like Murrah and Mehsana, which are suitable for commercial dairy farms.
• Buffalo milk has more demand for making butter and butter oil (Ghee), as the fat percentage in milk is higher than the cow. Buffalo milk is also preferred for making tea, a welcoming drink in common Indian households.
• Buffaloes can be maintained on more fibrous crop residues, hence scope for reducing feed cost. Buffaloes largely mature late and give birth to calves at 16 to 18 months intervals. Male calves fetch little value.
• Buffaloes need a cooling facility e.g. Wallowing tank or showers/foggers with the fan.

Deciding the Animal for Dairy Farming:

Subsidies-related information is available in the following article.

• Various Breeds ,Which has the Economic Life of Animals for Dairy Farming in India are buffalo milch breeds are Murrah, Surti, Mehasani, Jaffrabadi, and Nali - Ravi and Badhawari. The indigenous milch breeds of cattle are Gir, Sahiwal, Red Sindhi and Tharparkar. The exotic breeds of cattle are Holstein Friesian, Jersey and Brown Swiss.The economic life of buffaloes is 5–6 lactation and that of Crossbreed cows is 6–7 lactation.
• Under Indian condition a commercial dairy farm should consist of minimum 20 animals (10 cows, 10 buffaloes) this strength can easily go up to 100 animals in proportion of 50:50 or 40:60. After this however, you need to review your strength and market potential before you chose to go for expansion.
• Middle-class health-conscious Indian families prefer low-fat milk for consumption as liquid milk. Better go for a commercial farm of mixed type. (Crossbreed, cows, and buffaloes kept in separate rows under one shed). Conduct a thorough study of the immediate market where planning to market your milk . Mix milk from both types of animals and sold as per need of the market. Hotels and some general customers (can be around 30%) prefer pure buffalo milk. Hospitals, sanitariums prefer cow's milk.

Getting Some Initial Professional Training for Dairy Farming in India:

Opportunities for training are available with most of the Agricultural/Veterinary Universities of various states

• Krishi Vigyan Kendras
• State Department of Animal Husbandry
• State Institute of Rural Development

Future target[Financial express]:

There will be two major drivers of demand for dairy products - increase in income levels, and urbanization - spurring household demand for packaged dairy products like ghee, curd, butter, etc. The demand for value-added products (VAPs) like paneer and cheese is expected to grow more in the HoReCa (hotel, restaurant, and café) segment. By 2020, the share of VAPs in the organized milk market is likely to be increased to 30% from the current 23%. VAPs bring in higher profits for dairy companies than liquid milk, which provides a window-passing higher profitability to farmers in the form of milk procurement price. Dairy cooperatives have largely catered basic milk, butter, processed cheese slice, and ice cream for many decades. Thus, though a large portion of milk would be sold as processed packed liquid milk, focus would be on enhancing the share of dairy cooperatives in the VAP segment.

• At present, most of the milk processing plants with cooperatives are old and need to be expanded or modernized. The technology in these plants may not be energy efficient compared to available modern technologies. It is estimated that an additional capacity of 75 lakh liters per day, modernizing capacity of 75 lakh liters, and milk processing capacity of 12.5 crore tonnes per day can be augmented with an investment of Rs 5,000 crore. The transparent payment system and modernisation of procurement process are key drivers for organised milk marketing infrastructure, and can be achieved by installing Automatic Milk Collection Stations and Bulk Milk Cooling Units, respectively. Modern procurement process also aids hygienic milk production, boosting state efforts to promote export-oriented dairy industry.
• On the production and productivity end, gaps in artificial insemination (AI) and breeding services have to be overcome - for covering at least 60% of the breedable population, the requirement is 200 mn doses of AI, against which only 115 mn doses are being produced.
• Technological developments have opened up various possibilities for the dairy sector that need to be mainstreamed and leveraged to enhance productivity. IoT and data analytics has to be harnessed for digitising milk production, procurement, processing, and marketing. Such digitisation may focus on solutions for herd management, smart milk procurement, cold chain management, livestock insurance, fintech for dairy farmers for seamless transactions, etc.
• Refrigeration penetration in India is not more than 10–20% at the household and retail level - lower, in rural India (1–2%). Refrigeration is critical in tropical countries when it comes to the growth of normal dairy products as opposed to ultra-high temperature products.

The future of dairy in India hinges on supporting smallholder dairy farmers, promoting the sector in newer areas, creating (and modernizing) dairy infrastructure, bridging the gaps in fodder requirements, and giving a technological face-lift to the sector.

Reference:

1. https://www.careratings.com/uploads/newsfiles/Indian%20Dairy%20%20Dairy%20Products%20Industry%20-%20June%202020.pdf
2. https://odishavet.com/dairy-farming-project-report/dairy-farm-project-4-cows/
3. https://www.startupindia.gov.in/content/sih/en/government-schemes/dairy-entrepreneurship-development-scheme.html
4. https://krishijagran.com/news/how-to-get-subsidy-on-starting-dairy-business/
5. http://www.businessworld.in/article/Things-To-Keep-In-Mind-When-Starting-A-Dairy-Farm-In-India/29-09-2019-176678/
6. https://powergotha.com/en/profit-and-loss-in-dairy-farming-milk-business-in-india/
7. http://www.fao.org/3/i0588e/I0588E05.htm#:~:text=In%20light%20of%20the%20increasing,180%20million%20tonnes%20by%202022.
8. https://hoards.com/blog-20445-artificial-intelligence-the-future-of-the-dairy-industry-.html