Required Report - public distribution

**Date:** 10/30/2006

**GAIN Report Number:** IN6098

IN6098

**India**

**Dairy and Products**

**Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Oliver Flake

U.S. Embassy, New Delhi

**Prepared by:**

Deepa Dhankhar

**Report Highlights:**

MY 2007/08 milk production is forecast to reach 98 million tons from an
estimated 95 million tons in MY 2006/07. The current GOI sanitary
conditions effectively restrict imports of dairy products from almost
all countries.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

New Delhi \[IN1\]

\[IN\]

**Table of Contents**

[SECTION I: SITUATION AND OUTLOOK 3](#section-i-situation-and-outlook)

[Production 3](#production)

[Production Developments 3](#production-developments)

[Consumption 3](#consumption)

[Trade 4](#trade)

[SECTION II: STATISTICAL TABLES 5](#section-ii-statistical-tables)

[Table 1: Commodity, Dairy, Milk, Fluid, PSD
5](#table-1-commodity-dairy-milk-fluid-psd)

[Table 2: Commodity, Dairy, Nonfat Dry
6](#table-2-commodity-dairy-nonfat-dry-psd)

[Table 3: Commodity, Dairy, Butter, PSD
7](#table-3-commodity-dairy-butter-psd)

# SECTION I: SITUATION AND OUTLOOK

# 

## Production

MY 2007/08 (Apr-Mar) milk production is forecast at 98 million tons
compared with 95 million tons in MY 2006/07. Government and private
sector efforts to increase milk production, combined with increasing
processing capacities and growing demand for dairy products, are factors
driving the growth. India is world's largest Bovine milk producer with
the world's largest bovine population with most milk coming from
Buffaloes, which is estimated at 50.5 million tons in MY 2005/06.

The peak milk production season is from September to March, whereas the
lean season is from April to August, coinciding with the winter and
summer-monsoon periods. Although the major milk producing states of
Andhra Pradesh, Maharashtra, Gujarat and Rajasthan experienced heavy
rains during the latter part of the monsoon season, it did not have any
significant impact on this year's milk production.

High farm gate prices for milk in recent years are making dairy a
remunerative enterprise. Milk prices in India are largely determined by
the fat content. Hence, buffalo milk, with a higher fat content,
attracts a premium. Growing export demand for buffalo meat also supports
buffalo production. Buffalo milk now constitutes nearly 56 percent of
India's total milk production. According to industry estimates, only 15
percent of total milk production is handled by the organized dairy
sector, including cooperatives.

The average July--October 2006 producer price for milk ranged between
Rs. 14 to 17 per liter (\$309 to \$375 per ton) for buffalo milk (with
6% fat and 9% SNF) and Rs. 12 to 14 per liter (\$265 to \$309 per ton)
for cow milk (with 4% fat and 8% SNF).

## Production Developments

Government dairy development programs are focused on upgrading cattle
and buffalo genetics, increasing feed and fodder availability,
controlling the spread of animal diseases, and expanding cold chain and
other infrastructure facilities under the Tenth Five Year Plan. Like
agriculture, animal husbandry and dairying is also a state subject, thus
central government efforts are largely to support the dairy development
efforts of state governments. Under the Central government annual plan
for IFY 2006/07 (Apr-Mar), Rs. 790 million (U.S.\$17.5 million) was
allocated for dairy development.

## Consumption

About 45 percent the total milk production is retained in producing
areas for local consumption. Dairy cooperatives, private dairies, and
village venders (targeting urban markets) handle the rest of production.
Cooperatives and private dairies market 50 percent and 35 percent
respectively of the milk they procure in liquid form, while the balance
is processed into packaged milk, milk powder, butter, ghee (melted,
clarified butter), ice cream, cheese, yogurt, ethnic sweets, and
flavored milk. Ghee is used in premium-cooking and is typically priced
at almost double the price of vegetable cooking oils.

Total nonfat dry milk production in 2007 is forecast at 340,000 tons
compared to 295,000 tons in 2006. Combined butter and ghee production is
forecast at 3.4 million tons. The unorganized sector is expected to
handle 70 percent of total ghee/butter production.

Per capita milk consumption in 2005 was 232 grams per day, which,
although growing, is much below the world average of 265 grams per day.
The demand for branded milk products by urban consumers is growing.
Amul, Nestle, and Mother Dairy are some of the more well-known dairy
product brands.

## Trade

Post forecasts milk powder, butter, and fluid milk exports at 60,000
tons, 10,000 tons and 60,000 tons respectively in MY 2007/08, assuming
international prices stay competitive. MY 2007/08 butter imports are
forecast at 5,000 tons. Imports of nonfat dry milk are likely to be
negligible because of the prevailing sanitary restrictions and weak
domestic demand.

Imports of milk and cream, milk food for babies, whole milk, condensed
milk, yogurt, buttermilk, whey, dairy spreads, ghee, cheese
(fresh/grated, powdered, processed, blue veined) are permitted without
any quantitative restrictions. However, in most cases import permits are
required. Skimmed milk, milk food for babies, whole milk, milk for
babies, and condensed milk should also adhere to standards set by Bureau
of Indian Standards. Import of table butter and ghee attract a total
duty of 45.6 percent. Condensed milk and whole milk attract duties of
58.41 and 35.90 percent respectively. Effective June 2000, a Tariff Rate
Quota was established for Skimmed Milk Powder, under which imports of up
to 10,000 tons are allowed at a 15 percent basic tariff, and quantities
above that level at a basic tariff of 60 percent.

The current GOI sanitary conditions effectively restrict import of dairy
products from almost all countries.

In an effort to harmonize the domestic standards for milk and milk
products with codex standards, the Ministry of Heath and family Welfare
has released a number of GOI gazette notifications. For details see:

1\) GSR 356(E) dated June 7,2005
([www.mohfw.nic.in/GSR356.pdf](http://www.mohfw.nic.in/GSR356.pdf)).

2\) GSR 532(E) dated December 6, 2005
([www.mohfw.nic.in/706.pdf](http://www.mohfw.nic.in/706.pdf) )

3\) GSR 131(E), dated March 3, 2006
([www.mohfw.nic.in/131.pdf](http://www.mohfw.nic.in/131.pdf))

4\) GSR 532 (E), dated September 5, 2006
([www.mohfw.nic.in/Noti%20352.pdf](http://www.mohfw.nic.in/Noti 352.pdf))

# SECTION II: STATISTICAL TABLES

## Table 1: Commodity, Dairy, Milk, Fluid, PSD

<table style="width:100%;">
<colgroup>
<col style="width: 21%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 6%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 6%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 11%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>PSD Table</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td><strong>India</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="2"><strong>Dairy, Milk, Fluid</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"><p>(1000 HEAD)</p>
<p>(1000 MT)</p></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
<td>UOM</td>
</tr>
<tr class="odd">
<td></td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>04/2005</td>
<td>04/2005</td>
<td></td>
<td>04/2006</td>
<td>04/2006</td>
<td></td>
<td>04/2007</td>
<td>04/2007</td>
<td>MM/YYYY</td>
</tr>
<tr class="odd">
<td>Cows In Milk</td>
<td>38000</td>
<td>38000</td>
<td>38000</td>
<td>38600</td>
<td>38000</td>
<td>38000</td>
<td>0</td>
<td>0</td>
<td>38500</td>
<td>(1000 HEAD)</td>
</tr>
<tr class="even">
<td>Cows Milk Production</td>
<td>38500</td>
<td>38500</td>
<td>37520</td>
<td>39450</td>
<td>38750</td>
<td>39775</td>
<td>0</td>
<td>0</td>
<td>41150</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Other Milk Production</td>
<td>53500</td>
<td>53500</td>
<td>53980</td>
<td>57000</td>
<td>57000</td>
<td>54925</td>
<td>0</td>
<td>0</td>
<td>56850</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>Total Production</td>
<td>92000</td>
<td>92000</td>
<td>91500</td>
<td>96450</td>
<td>95750</td>
<td>94700</td>
<td>0</td>
<td>0</td>
<td>98000</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Other Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Total Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td><strong>Total Supply</strong></td>
<td><strong>92000</strong></td>
<td><strong>92000</strong></td>
<td><strong>91500</strong></td>
<td><strong>96450</strong></td>
<td><strong>95750</strong></td>
<td><strong>94700</strong></td>
<td><strong>0</strong></td>
<td><strong>0</strong></td>
<td><strong>98000</strong></td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Other Exports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Total Exports</td>
<td>0</td>
<td>0</td>
<td>50</td>
<td>0</td>
<td>0</td>
<td>55</td>
<td>0</td>
<td>0</td>
<td>60</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>Fluid Use Dom. Consum.</td>
<td>38500</td>
<td>38500</td>
<td>36600</td>
<td>39700</td>
<td>39000</td>
<td>39865</td>
<td>0</td>
<td>0</td>
<td>42975</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Factory Use Consum.</td>
<td>53500</td>
<td>53500</td>
<td>54850</td>
<td>56750</td>
<td>56750</td>
<td>54780</td>
<td>0</td>
<td>0</td>
<td>54965</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>Feed Use Dom. Consum.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Total Dom. Consumption</td>
<td>92000</td>
<td>92000</td>
<td>91450</td>
<td>96450</td>
<td>95750</td>
<td>94645</td>
<td>0</td>
<td>0</td>
<td>97940</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td><strong>Total Distribution</strong></td>
<td><strong>92000</strong></td>
<td><strong>92000</strong></td>
<td><strong>91500</strong></td>
<td><strong>96450</strong></td>
<td><strong>95750</strong></td>
<td><strong>94700</strong></td>
<td><strong>0</strong></td>
<td><strong>0</strong></td>
<td><strong>98000</strong></td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>CY Imp. from U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>CY. Exp. to U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
</tbody>
</table>

## Table 2: Commodity, Dairy, Nonfat Dry, PSD

  ---------------- ----------- ---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------- ---------
  **PSD Table**                                                                                                           

  **Country**      **India**                                                                                              

  **Commodity**    **Dairy,                                                             (1000 MT)                         
                   Milk,                                                                                                  
                   Nonfat                                                                                                 
                   Dry**                                                                                                  

                   2005        Revised                2006       Estimate               2007       Forecast               UOM

                   USDA\       Post\      Post\       USDA\      Post\      Post\       USDA\      Post\      Post\       
                   Official    Estimate   Estimate\   Official   Estimate   Estimate\   Official   Estimate   Estimate\   
                                          New                               New                               New         

  **Market Year                04/2005    04/2005                04/2006    04/2006                04/2007    04/2007     MM/YYYY
  Begin**                                                                                                                 

  Beginning Stocks 14          14         14          19         19         5           0          0          5           (1000 MT)

  Production       270         270        256         290        290        295         0          0          340         (1000 MT)

                                                                                                                          

  Other Imports    0           0          0           0          0          0           0          0          0           (1000 MT)

  Total Imports    0           0          0           0          0          0           0          0          0           (1000 MT)

  **Total Supply** **284**     **284**    **270**     **309**    **309**    **300**     **0**      **0**      **345**     (1000 MT)

                                                                                                                          

  Other Exports    0           0          0           0          0          0           0          0          0           (1000 MT)

  Total Exports    15          15         40          20         20         55          0          0          60          (1000 MT)

  Human Dom.       250         250        225         270        270        240         0          0          280         (1000 MT)
  Consumption                                                                                                             

  Other Use,       0           0          0           0          0          0           0          0          0           (1000 MT)
  Losses                                                                                                                  

  Total Dom.       250         250        225         270        270        240         0          0          280         (1000 MT)
  Consumption                                                                                                             

  Total Use        265         265        265         290        290        295         0          0          340         (1000 MT)

  Ending Stocks    19          19         5           19         19         5           0          0          5           (1000 MT)

  **Total          **284**     **284**    **270**     **309**    **309**    **300**     **0**      **0**      **345**     (1000 MT)
  Distribution**                                                                                                          

  CY Imp. from     0           0          0           0          0          0           0          0          0           (1000 MT)
  U.S.                                                                                                                    

  CY. Exp. to U.S. 0           0          0           0          0          0           0          0          0           (1000 MT)
  ---------------- ----------- ---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------- ---------

## Table 3: Commodity, Dairy, Butter, PSD

  ---------------- ----------- ---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------- ---------
  **PSD Table**                                                                                                           

  **Country**      **India**                                                                                              

  **Commodity**    **Dairy,                                                             (1000 MT)                         
                   Butter**                                                                                               

                   2005        Revised                2006       Estimate               2007       Forecast               UOM

                   USDA\       Post\      Post\       USDA\      Post\      Post\       USDA\      Post\      Post\       
                   Official    Estimate   Estimate\   Official   Estimate   Estimate\   Official   Estimate   Estimate\   
                                          New                               New                               New         

  **Market Year                04/2005    04/2005                04/2006    04/2006                04/2007    04/2007     MM/YYYY
  Begin**                                                                                                                 

  Beginning Stocks 0           0          0           0          0          0           0          0          0           (1000 MT)

  Production       2850        2850       2749        3200       3200       3050        0          0          3425        (1000 MT)

                                                                                                   0                      

  Other Imports    5           5          1           0          0          5           0          0          5           (1000 MT)

  Total Imports    5           5          1           0          0          5           0          0          5           (1000 MT)

  **Total Supply** **2855**    **2855**   **2750**    **3200**   **3200**   **3055**    **0**      **0**      **3430**    (1000 MT)

                                                                                                                          

  Other Exports    0           0          0           0          0          0           0          0          0           (1000 MT)

  Total Exports    10          10         7           15         15         10          0          0          10          (1000 MT)

  Domestic         2845        2845       2743        3185       3185       3045        0          0          3420        (1000 MT)
  Consumption                                                                                                             

  Total Use        2855        2855       2750        3200       3200       3055        0          0          3430        (1000 MT)

  Ending Stocks    0           0          0           0          0          0           0          0          0           (1000 MT)

  **Total          **2855**    **2855**   **2750**    **3200**   **3200**   **3055**    **0**      **0**      **3430**    (1000 MT)
  Distribution**                                                                                                          

  CY Imp. from     0           0          0           0          0          0           0          0          0           (1000 MT)
  U.S.                                                                                                                    

  CY. Exp. to U.S. 0           0          0           0          0          0           0          0          0           (1000 MT)
  ---------------- ----------- ---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------- ---------