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2 MR Sunjay, PWC
2 MR Sunjay, PWC
2 MR Sunjay, PWC
Scope of presentation
Price trends
Market
Constraints Opportunities for investment
6 November 2012 1
7.0
50% 40% 30% 20% 10% 0% 1991 Meat Dairy F&V Cereals 22.0% 16.4% 9.8%
18.4%
10.3% 24.9% 2011 Others
*Data extrapolated based on compound annual growth rate to forecast 2030 volumes Source: FAOSTAT, PwC Analysis
Demand for animal proteins likely to continue to increase faster than other categories
FICCI Food 360 An overview of the Dairy Sector in India PwC 6 November 2012 2
Regional contribution to protein consumption Country Asia Asia excl China China 1991 52.2% 31.5% 20.7% 2011* 57% 33.9% 23.1% CAGR 2% 2% 2%
Asia -
Africa -
Africa
South America North America Europe Oceanic
9.9%
5.4% 10.9% 20.9% 0.7%
12.1%
6.0% 10.1% 14.2% 0.7%
3%
2% 1% 0% 1%
*Data extrapolated based on compound annual growth rate to forecast 2030 volumes Source: FAOSTAT, PwC Analysis
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These regions have driven growth in dairy consumption as well however, per capita consumption remains much lower than developed countries
Dairy consumption kg/capita/year (milk excl butter)
1991 Northern America Oceania Europe South America World India Africa Asia China
100.7 75.9 51.4 36.5 32.5 6.4 253.5 219.4 202.5
2009
CAGR
250.2 - 0.1% 178.1 219.5
Growth of
Close to 9%
in Chinas per capita consumption
FICCI Food 360 An overview of the Dairy Sector in India PwC
6 November 2012 4
Global per capita consumption estimated to be 103 Kg/year in 2011 Estimated to have grown at about 17% over the last decade
Participation in world imports (2012*) Countries China Algeria Indonesia Brazil Russia Total of main importers 44 24 6.7 6 5.3 86 * Estimates %
17.5
World milk production expected to touch 750 MT in CY 2012 Estimated to have grown at about 2% over the last decade
Participation in world exports (2012*) Countries %
New Zealand
EU - 27 Argentina Australia Philippines Total of main exporters Production in million tonnes* 1st
55
21 13 7.3 1.1 97.4 * Estimates
2nd
3rd
129 USA
91
4th
34
32 Russia
31 Brazil
China
Prices of dairy products remain high despite increased production due to increasing demand and higher cost of production
FAO Dairy Price Index (2002-2004 = 100)
Index derived from a trade weighted average of a selection of representative internationally traded dairy products Source: FAO
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1940s
Per capita milk
2012
Per capita milk
White Revolution
Cooperative dairying
6 November 2012 9
FY FY FY FY FY FY FY FY '01 '02 '03 '04 '05 '06 '07 '08 * DAHD Estimates, Source: GoI, PwC analysis
FY '09
FY '10
FY '11 (E)
31 Oilseeds
17
Pulses
Rice
Wheat
Maize
FICCI Food 360 An overview of the Dairy Sector in India * 2000 to 2011 decadal CAGR estimate PwC
Bovine production system dominated by buffalos with 1 to 2 animal households contributing major share
Bovine population about 115
million
Species wise contribution to production system 120% 100% 80% 60% 40% 20% 0% Milch Population Indigenous cow Milk production Buffalo Crossbred 14% 21% 40% 24%
Indigenous cows account for 40% of in-milk population but only 24% production Buffalo milk -
55% of production
Average daily milk yield/ animal 4.4 ltrs / animal Wet animals 69.3% (increased by about 12% over the last decade)
Percentage contribution
46%
55%
Crossbred
Buffalo
Source: DAHD, ICAR, PwC analysis
6.9
4.6
6 November 2012 11
Indian dairy market estimated to have grown by 6.8% over the last decade*
Consumer spend on food
6.0% 8.1% 12.8% 15.8% 6.6% 6.9% 27.5%
Milk consumption pattern 8% 17% 30% Others Curd Liquid Milk 45% Tea & Coffee
16.2%
Beverages Others
*Source: CSO- 2008 census, CII Dairy Industry Report, PwC analysis
Dairy contributes to 16% of consumer spend on food 18% in Urban, 15% in rural Estimated value of market - INR 3.6 lakh crores. Driven by increasing population, life expectancy and preference for dairy products High value processed products estimated to be growing at 15 to 25% Market dominated by unorganised sector (80%)
*CSO- 1997 and 2008 census, value terms, PwC analysis
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Milk procurement price has grown by about 2.5 times in the last decade ... trend expected to continue in the near future
Average milk procurement rate (farmgate) INR/Kg fat 500 450 400 350 300 250 200 150 100 50 0 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12
*Source: GCMMFL-Gujarat Agri-convention
239 184
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Inputs
Productn Processing
Market / Consumer
Unorganised market Heterogeneous consumer requirements Lack of robust food safety standards
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Increasing demand and high inefficiencies across supply chain open up diverse business opportunities
Supply Demand
Intensive dairy farming / increasing herd size Technology and management of dairy farms Opportunities to standardise Buffalo rearing unique to India
Opportunities to address milkman at the doorstep preference of Indian households Growing convenience market (packaged milk) Niche market for high value products high quality ice creams, cheese etc Increasing preference of hygiene and food safety Addressing ethnic milk savouries market Proximity to China leading milk importer
Fodder cultivation
Feed & Nutrition Breeding
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In addition to market drivers, policy interventions could play a key role in shaping the future dairy scenario
Large scale
Small scale
Herd size
High
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To conclude ...
On the production side Slow growth in productivity likely to increase demand- supply gap There is a need to promote interventions that would increase production efficiencies - Need to secure availability of fodder and high quality breeds - Promoting entrepreneurship in large herd dairy farming through PPP There is increasing interest in Intensive dairy farming increasing demand & farm gate price On the demand side Indian dairy market offers diverse opportunities to tap into
Unique nature of the market requires entrepreneurs to study it carefully before entry
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Thank you.
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