Dairy in North East India

Presentation
on
Pre- Investment Feasibility Study
in the context
of
Development of Dairy Industry
in the
North Eastern Region
24/10/01
Genesis Fintec Limited

Consulting & Advisory Services
GFL is a multi discipline as well as cross discipline consulting
organisation rendering services in following principal functional areas :
Slide 1/2
 Financial & Management Consulting
 Project Consulting
 Environment & Safety Management
 Studies & Research

Position Name
Team Leader cum Dairy Expert Dr. J. V. Parekh
Animal Husbandry
Dairy Market Expert
Environmental Expert
Field Investigator
Social Study Expert
Dr. R. M. Singh
Mr. Arun Bhargava
Dr. Ardhendu Mitra
Mr. Santosh Mondal
Ms. Madhumita Das
Gupta
Survey Specialist & Statistician Mr. Sukhendra Kr.
Gupta
Slide 1/3
Finance & Project Specialists Mr. C.R. Sengupta
Project Engineer Mr. Avinash Singh
Finance & Project Specialists Mr. Abhay Mishra
Legal Expert Mr. Naresh Balodia
KEY PERSONNEL
Experience
Implementing Dairy Projects World Wide, World Bank
Consultant
Ex UP State Animal Husbandry Department.Presently
Practicing Consultant
15 Yrs. Exp. In Milk Product Marketing, Ex Consultant to
Indo Swiss Project , Sikkim
EIA & Formulating EMP for World Bank, NHAI,
Infrastructure Projects in India
Collection of Primary Data & Assistance Consultants with
Data Collection from various Depts.
Social Sector Evaluation, Baseline Studies in various World
Bank & ADB Projects in India
Qualitative & Quantitative Analysis of Primary Data and
collation with secondary Data. Senior Consultant, World
Bank, Ex Chief Technical Advisor Ex Director NSS
Financial Specialist, Expert in Bankable Projects Ex Executive
Director IDBI, Ex Chairman UBI,
Project Planning, Plant Lay out, Design, Erection &
Commissioning of Process Plants
Financial Analyst and preparation of DPR, CA.for 20 Yrs.
Company Law & Corporate Affairs Expert

Present Scenario-A Brief Over view
Statewise Production
Source : Basic Animal Husbandry Statistics 1999, Min. of Agriculture, GoI.
Arunachal Pradesh
Assam
Manipur
Meghalaya
States
Mizoram
Nagaland
Tripura
Sikkim
44
Production
1997-98 (‘000MT)
775
62
59
20
46
47
35
118
Per Capita
Availability of Milk
1997-98 (gms/day)
82
79
78
64
84
40
191

/6
 Low genetic potential of local breeds
 Non-availability of feed which is imported from other States.
 Poor collection & distribution network
 Lack of micro-credit availability
 Monpa & Tibeto Mongolian tribes in West Kameng &
Tawang districts depend primarily on local Yaks
 Veterinary Institutions are not functioning properly.
ARUNACHAL PRADESH

 Low cross-breed Cattle population.
 Shortage of quality Feed & Fodder.
3 Milk unions (capacity 53000 litres per day )
-Guwahati >only active Union
-Jorhat
-Silchar - Others are Defunct / Underutilised.
 Central Dairies (25000 LPD capacity) -2. One central dairy (Capacity
60000 LPD) under coop. sector.
 Cooperative milk societies-297
 Very low Milk Procurement & Lack of Organized Marketing.
 Kamrup, Sibsagar, Nagaon, Jorhat, Morigaon, Barpeta, and
Sonitpur are some of the potential districts for dairy development.
 Urban pockets have good demand and farm- gate prices are
attractive.
ASSAM

 Animal Husbandry sector is underdeveloped
 Department of Animal Husbandry and the state livestock
federation are the only developmental agency working
 There is one milk collection and marketing centre in Manipur.
 Small operational holdings.
 Low productivity of animals.
 Although Cross breeds are available there is inadequate coverage for
repeat breeding.
 No feed Plants. Fed is brought from WB & Bihar resulting in high cost.
 Taboos regarding milk consumption amongst some tribal groups.
MANIPUR

 The Animal Husbandry sector is underdeveloped.
 Poultry and Piggery are the major activities followed by the
Dairy
 Average milk yield of animals is too low.
 Cross breeds are available and the State policy encourages cross
breeding particularly with Jersey cows.
 Cattle feed deficit state - shortage estimated at 40%.
 High cost of feed
 Lack of marketing infrastructure.
MEGHALAYA

 The animal husbandry sector is relatively underdeveloped
 Piggery and Goatery are the major activities followed by the
poultry and dairy
 Low productivity of animals & Non availability of improved /
purebred animals.
 Vet Institutions network is not working effectively.
 Shortage of feed and fodders and high cost of feed.
 Lack of marketing infrastructure.
 Poor Intra state connectivity.
 Scarcity of water & steep mountainous terrain.
 Taboos regarding milk consumption amongst some tribal groups.
MIZORAM

 Animal Husbandry sector is relatively underdeveloped. Piggery &
Goatery are major activities.
 Vet Institutions are not properly equipped.
 Huge deficit in Feed & fodder - resulting in regular imports.
 Milk consumption has gained ground in last decade
 KOMUL the only organised Milk procurement & marketing
organisation has a milk processing plant of 10000 litres per day
capacity. However, procurement is only 1800 lpd.
 About 46 dairy cooperatives are in operation
 About 2000 ltrs of Milk is distributed in Dimapur and
Kohima.
 Mountainous territory.
NAGALAND

 Livestock rearing is major household allied activity. About 80-90%
households keep cattle.
 Cross breeding has been quite successful with 50% of the Cattle
population being crossbred.
 Dept. of Animal Husbandry & Sikkim Milk Union are the
development agencies working for Dairy development.
 Two Schemes under Integrated Dairy Development Program are in
operation.
 5 Milk Processing Units with a combined capacity of around
23000 LPD are in place.
 Feed & fodder shortage is estimated at 50% and is made up by
imports from other States.
SIKKIM

 Animal Husbandry sector is underdeveloped
 Non availability of improved / purebred animals.
 The state has one milk processing plant and chilling centre
with a capacity of 10000 litres per day capacity .
 A milk union has started functioning with jersey cows and
upgrading of Reang tribal buffalo with Murrah breed.
 Regular import of feed ingredients as well as compounded
feed from West Bengal and Bihar.
TRIPURA

Scene-I
Keeping 2/3 Cattle of local breed is a regular domestic activity in NE region.
Inconsistent Quality of Milk
Low Productivity of animals
Limited presence of Organised Milk Production
Very limited presence of Organised Milk Collection & Distribution Activity
Very few Dairy Processing Plants
Very high ratio of non-descript animals
Scene-II
Climate is congenial for Animal Husbandry
Demand of Milk & Milk product > Supply
Demand is growing day by day
Pasteurs offering natural feed resources
About 61 species of grass and 160 species of fodder trees are available in the
region
Transformation of local type in to high yielding stock is possible by cross
breeding
Both the scenes are contradictory but present in NE
Slide 2/1
BACKGROUND OF THE STUDY

Immediate Objectives leading to Wider Objectives
To Examine the Techno Economic
Viability of Dairy Project in NE
To provide basic information on Business
Opportunity in Dairy Sector
to:
• Economic development
of NE through Direct &
indirect Employment
Opportunity
• Attracting Investors
Slide3/1
Immediate Objectives Wider Objectives
Government
Agencies
Banks &
Financial
Institutions
Entrepreneurs
& Investors
OBJECTIVES OF STUDY

.
.
.
Slide 4/1
Field Investigation + Input of Consulting Organisation Out put to Clients i.e NEDFi
Field &
Market
related
information
Pre -
Investment
Feasibility
Report
Technical/
Technological
Input.
Project Profiles
Legal,
Financial &
Commercial
Input
Report on
Model Dairy
Farms
Measurement of production & productivity level of
animals
Status of organised Dairy farming
Identification of different marketing channels and price
spread
Analysis and projection of demand & supply of milk and
milk products
Assessment of HRD needs
Suggestion on regulatory requirements
Estimation of Cost & Means of Finance ( Suggested)
Assessment of required Infrastructure
Assessment of financial viability
Socio - Environmental factors
Identification of the number & suitable locations for Dairy
farming& Milk Processing
Suggestions on Model Farming
Status of milk processing units
CONCEPT OF STUDY

/1
Analysis of Demand & Supply of Milk and Milk Products
Identification of no. and location of:
•Dairy Farms
•Milk Processing Units
Assessment of requirements & Suggestions on Support Facilities
The whole of North Eastern Region
GEOGRAPHIC SCOPE
Arunachal
Pradesh
Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura
SCOPE OF STUDY
SUBJECTIVE SCOPE

District Level
Data to be collected on
following parameters
Present Status
of Organised
Dairy Farming
Projects
Analysis of
Data of last 5
years
Analysis of
Demand
Supply Gap
Using Statistical
Methods
SCOPE OF STUDY
Analysis of Demand & Supply Position
Slide 5/2
Milk
Production &
Productivity
of animals
Present status
of Milk
Processing
Units
Projection for
next 10 years

• Identification of different marketing channels
Farmer’s share in
Consumer’s Rupee
This would help us in assessing what measures be taken to ensure an increase in
the Rural farmer’s share.
Marketing Channels
Farmer's
share
Ot her share
SCOPE OF STUDY
Analysis of Demand & Supply Position
Slide 5/3
Rural
Farmer IM
1
I
M
2
IM
3
Consumer
+
%
+
%
+
%

Data
Collected
from
various
sources
Data related to District level
To assess present
situation & future
development of
Milk pocket areas
To consider :
•Hinterland for
fodder
•Feeding, Breeding &
Management
•Availability of other
facilities
SCOPE OF STUDY
Identification of Farms & Milk Processing
Units
Slide 5/4
To assess No. &
location of viable
Dairy Farms
Include information on:
Requirement of Food
Regulations & Standards
Requirement of
Clearances
Identify no.,
location &
Capacity of Milk
Processing Plants
5 Project ProfilesTo consider :
•Scale of operation
•Suitability of animal
Breed
•Market &
Marketing Channel
•Investment required
•Man power needed
•Model of Dairy
Farm

SCOPE OF STUDY
Assessment of Requirements of Support
Facilities
Unorganized
Small Rural
Farmers
Organized
Dairy Farms
Procurement through
Middlemen or Co-
operatives
Processing
Unit
T T T T T T T T
Livestock
Market
Veterinary
Inputs
Breeding/Artificial
Insemination
Animal
Feed
Transportation Storage &
Preservation
Grazing
land
H R D & BASIC INFRASTRUCTURE
T T T T T T T T
Assess the
need
With Inputs on
• Costs & viability
• Mode of financing
• Policies & programs
to be framed
A report on Model
Dairy Farm
Suggest solutions in
tune with ground
situation in the Pre
Investment Feasibility
Report
+
Consumer

Slide 6/1
Past
Studies
Interaction
with
NEDFi
Final
Report
Proposed
Study
Draft
Report
Pre -
Investment
Feasibility
Project
Profile
Project Report
of Model Farm
Assessment
Findings
APPROACH

Methodology for Preparation of Reports
METHODOLOGY
Methodology an overview
Methodology for Field Investigation & Desk Research
Methodology for Consultant's Input
Slide 6/2

Collection of data
Published
Data
Plan the
Survey
Authentic
secondary
sources
Case Studies
• Scrutiny
• Validation
• Processing
• Analysis
To emerge with
Projections
Dairy Unions &
Federations
To be
supplemented by
sample surveys at
Producer level
(Primary Data)
Formulate
Data Set
Taking into account - Type of
Breed
- Production
- Productivity level
- Type of Milk
- Size
- Marketing System
- Profitability Level
- Availability of surplus milk
- Seasonality Factors
Key Persons : Dairy Expert
Survey Specialist & Statistician
METHODOLOGY
Slide 6/3

METHODOLOGY
Slide 6/4
The Proposed Guideline for Study & Survey in NE Region :-
Primarily based on Secondary Data to be collected from various Agricultural Statistics Authorities (ASAs)
including :-
 Directorate of Economics & Statistics of various State Governments
 Directorate of Economics & Statistics, Ministry of Agriculture, Govt. of India
 Department of Animal Husbandry & Dairy of various States
 National Sample Survey Organisation
 District Industrial Centres
 Veterinary Centres & Sub Centres
 Frozen Semen Banks
 State Milk Federation & Milk Unions
 Office of the Registrar of Co-operatives of each State
National Dairy Development Board
Indian Council for Agricultural research
NABARD
This would be supplemented by collection of Primary Data through Sample Surveys
Following would be considered in course of the study
 Recommendations of National Statistical Commission (NSC) for “Livestock
Number”
 Scheme of Animal Integrated Sample Survey for estimation of Major Livestock
Products, Govt. of India
 Findings of NSSO on Periodic household enquires by the NSSO relating to
Livestock

Key Persons : Entire Team
METHODOLOGY
Methodology for Consultant's Input
Slide6/5
Assess Supply
position of
Milk & make
future
projections
Assess present
availability of &
future
development of
Support
Facilities
Assess viable
no. & locations
of Dairy
Farms
Identify no. and
location of
viable Milk
Processing
Units
With application
of statistical tools
After considering grazing
requirements, suitability of
breeds, marketing channels &
other facilities
Consider
requirement of
•Food regulations
& Standards
•Clearances from
authorities
To consider model of Dairy
Farming
( Cooperative , Private,
Corporate)
Assess
Demand
Supply Gap &
make future
projections
Consider
•Suitability &
Adaptability of
Technology
•Product Mix

Market related information
Measurement of production and
productivity of milk
Analysis of demand and Supply
gap
Marketing Channels and Price
spread
Technological / Technical Input
(Social & Environmental factors)
Regulatory requirements
Pre- investment
Feasibility study
Report
Project Profiles
Report on Model
Dairy Farm
Own Inputs
Field
Investigation
Desk
Research
Key Persons : Entire Team
METHODOLOGY
Methodology for Preparation of Reports
Slide 6/6
Financial Input

Dairy Development
in
NE Region
Constraints
and
Road Map towards Solutions
Slide 7/1

Dairy Development in NE
Constraints
Slide 7/1/1
•Poor Cattle Population
•Very high ratio of non -descript
animals
•Mostly indigenous stock - few cross
breeds
•Low Productivity
•Limited presence of Organized milk
production
•Inconsistent Quality
Production
•Lack of grazing pastures
•Poor Feeding,
Breeding & Management
•Inadequate manpower & Training
facilities
•Lack feed & fodder
Support Facilities
•Lack of Organized Milk Distribution
network
•Absence of organized markets
•Inadequate packing & Storage
•Poor Transportation
Procurement
•Very limited presence of organized
milk collection system
•Taboos amongst some Tribal groups
•Non availability of Storage &
Preservation Facilities
•Inaccessibility in some places
Distribution
•Limited presence of Organized Milk
Processing activity
•Lack of Basic Infrastructure
Processing

The Possible Road Map
Through activation &
augmentation of:
1) Collection system
2) Breeding, Feeding &
Management
facilities
3) Captive/satellite Dairy
Farms which would
act as Catalysts
To be set up by:
• Processing Units
•Cooperative Society
Movement
•Private Enterprise
Through Market Force
to be created by :
• Private &
cooperative sector
sector Milk
Processing Units
• Marketing Networks
set up by Private
Sector / Cooperative
Push Mechanism Pull MechanismTo galvanize Dairy
Industry

The Possible Road Map
Pull & Push mechanism to operate simultaneously from
that point.
Integration of Government Support, Private Investment
and Community Participation
Attract Private sector Investment in identified
Processing units to create the initial pull.

The key areas to be dealt with :-
Dairy farming
Milk Processing & Marketing
Support Facilities for Dairying
Slide 7/1/2
Key Areas
Collection & Bulk cooling

Key Areas
Slide 7/1/1
•Setting up of satellite Dairy Farms by Milk
Processing Units to galvanize dairy farming
•Setting up of Organized Dairy farms
•Veterinary Inputs
•Availability of Cattle
Dairy Farming
Feeding, Breeding & Management
facilities set up /aided by :-
•Processing units through Satellite
Dairy Farms
•Cooperatives
•Local groups of entrepreneurs aided
by Micro Credit of Banks
•Govt. agencies
Support Facilities
•Setting up of viable Milk
Processing Units at locations thrown
up by the Study
•Setting up of Marketing Networks
organized on a Private / Co-
operative level
Collection & Bulk Cooling
•Collection system / Network initiated or
set up by Processing Unit i.e.
Backward Linkage by Processing Units
•Attempt to activate co-operative movements
considering the relevant socio-environmental
factors
•Setting up of chilling centres based on study
results
Milk Processing & Marketing
Measures which may be taken under each area

Market Analysis
Projects & Locations Identification
Infrastructure & Support Facilities
Socio- Environmental Factors
Investment Analysis

Slide 7/2/2
Market Analysis
STATES Demand
(Recommen
ded per
capital
consumptio
*Estimated
population
in the year
1997
Per capita
availiblity
of Milk in
gm/day
(1997-98)
Gap in
MT/day
Gap in the
State
'000MT
Arunachal Pradesh 220 969861 118 98,92 36
Assam 220 25144386 82 3470 1267
Manipur 220 2060913 79 291 106
Meghalaya 220 1990945 78 283 103
Mizoram 220 773546 64 121 44
Nagaland 220 1356868 84 185 67
Tripura 220 3093032 40 557 203
Sikkim 220 455450 191 13 4,8
Total NE 5018,92 1830,8
* Population Estmation on base year of 1991 Census and Growth @ 2.03/annum
220 gms recommended by the Nutritional Advisory Committee of the Indian Council of Medical Research
Demand Supply Assessment
Extent of Business Opportunity

Market Analysis
Present opportunity in the NE region is primarily in Fluid Milk segment
The demand for fluid milk is constantly growing.
On demand supply equilibrium of fluid milk, demand for value added
products to rise
Nature of Market Opportunity

Slide 7/2/3
Projects & Location Identification
A
Projected Supply
from Rural Farmer
( Next 10 Yrs
Projection)
B
Projected Supply
from Organised
Dairy Farm
( Next 10 Yrs
Projection)
Processing
Unit
C
Demand Supply
Gap Forecast for 10
Yrs.
( In a defined Area)
Capacity of Viable Processing Unit to be determined by way
of match making between A + B and C . The balance need
would be fulfilled by D if required.
D
Captive/ Satellite
Dairy farms to
provide the
balance Supply

Slide 7/2/4
Projects & Location Identification
Project Opportunities lie in the areas of :-
1. Organized dairy Farming
2. Milk Processing
Location identification made through the study would hold the key to success.
Factors to be considered for Identification & Location of Projects:-
 Geographical, Topographical & Climatic Parameters
 Milk Production & Availability
 Milk Transportation & Collection
 Milk Utilisation Status
 Packaging
 Distribution Methods
 Utilities availability
 Social & Environment Impact
 Plant Organisation
Other Considerations
 Milk & Milk Product Order
 Recommended Standard of Bureau of Indian Standards
 Norms of NDDB
 Prevention of Food Adulteration Act
 Standards of Weight & Measures (Packaged Commodity) Rules 1977
 Agreement on Agriculture, WTO
 DMI Norms, GoI
 Industrial Policy of respective States

Slide 7/3/1
VETERINARY INSTITUTIONS
Arunachal
Pradesh
Assam
Manipur
Meghalaya
Mizoram
Nagaland
Tripura
Sikkim
Vet Hospitals 8 25 5 7 2 4 9 12
Vet DisPensary 134 137 136 107 126 87 44 23
Key Village Centers 30 25 3 5 3 2 3
A.I Centers/ Regional/Sub centres 120 415 99 78 104 68 156 34
ICDP 11 1 1 1 1
Frozen Semen Bank 3 1
DAIRY FARMSFEEDING & BREEDING FARMS
Breeding Farms 9 8 2 5 5 6 2 2
Fodder Production /Demo Farms 5 4 3 5 6 1 9
Bull Rearing Farm 2
DAIRY DEVELOPMENTCOLLECTION & MARKETING
Milk Collection & Maktg. Centres 2 1 105
Chilling Centers 18 6 1
Milk Union 3 1 1
MILK PROCESSING UNIT NA 3 1 1 1 1 1 5
Present Scenario

•Cattle Feed Plants
•Veterinary & Animal Husbandry Centres
•Distribution of Fodder seeds
•Breeding farms & Insemination Centres
•Supply of Crossbreed Animals
•Supply of equipment
Opportunities for Private Entrepreneurs & Cooperatives may lie in :-
Support facilities
Collection & Bulk Cooling
•Setting up Cooling centres
•Collection / Procurement agents network
•Transportation business (tankers)
To examine the possibilities of activating this push mechanism by encouraging
Micro Credit from Banks.
Marketing of Milk
•Distributors & Agents network

Study would include :
Assessment of Present status of Infrastructure &
Support facilities
 Indications of requirements of Support facilities &
Infrastructure to activate and augment the Dairy activity.

Slide 7/3/3
Socio-Environmental Factors
 Environmental Impact Assessment &
related action Plan
 Social Impact Assessment & Action
Plan
Study to undertake
These studies are crucial to :-
• Determine the ideal model for Dairy farms
• To identify the best ways to activate the Co-operative movement
keeping in view the cultural & environmental factors.

Genesis Fintec Limited.
Slide 7/3/4
Investment Analysis
Investments in identified Viable Units :-
oDairy Farms
o Milk Processing units
 Investment Requirement for Support Facilities
 Investment required for Milk Producers’
participation in the integrated Dairy Development
Programme
 Investment for Marketing & distribution network
Considerations for Assessment of
Investment over a period of 10 years :

/1
 Major Market Pull must come from the investment by Private sector
/ Cooperatives in the areas of Milk Processing as well as Marketing .
 Major Push must come from the activation of collection network by
Private sector and Cooperatives.
 Push to Local Entrepreneurship in the area of support facilities to
come from encouragement of Micro Credit.
 Dairy Development has to be done through integration of pull &
push mechanism.
 Identified Projects & Business Opportunitiesto show strong business
sense to Entrepreneurs.
Concluding Remarks

Dairy in North East India

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