CONCEPT OF VALUE ADDITION IN MILK & DAIRY PRODUCTS
Dr J.V. Parekh, Consultant, Dairy Processing Industry Edited by Dr.Rk singh
DAIRY INDUSTRY PROFILE
India has been the leading producer and consumer of dairy products worldwide since 1998 with a sustained growth in the availability of milk and milk products. Dairy activities form an essential part of the rural Indian economy, serving as an important source of employment and income. India also has the largest bovine population in the world. However, the milk production per animal is significantly low as compared to the other major dairy producers. Moreover, nearly all of the dairy produce in India is consumed domestically, with the majority of it being sold as fluid milk. On account of this, the Indian dairy industry holds tremendous potential for value-addition and overall development.
India is currently self sufficient and the largest producer of milk in the world, a status it has maintained since the late nineties. This has been largely achieved through a combination of favourable policies and an institutional network that has helped support millions of rural households in pursuing their livelihoods through small scale dairy farming. About one-fifth of the milk produced is collected and processed by the organized dairy sector. Cooperatives now link
more than twelve million small scale dairy producers to urban markets and provide them a stable source of income. The dairy industry in India is going through major changes with the liberalization policies of the Government and the restructuring of the economy. This has brought greater participation of the private sector. This is also consistent with global trends, which could hopefully lead to greater integration of Indian dairying with the world market for milk and milk products.
India today is the world’s largest and fastest growing market for milk and milk products with an annual growth rate of about 4.5 per cent.
India is witnessing winds of change because of improved milk availability, a change-over to market economy, globalization, and the entry of the private sector in the dairy industry. Value addition and variety in the availability of milk products is on everybody’s agenda. There is an increasing demand for new products and processes. The main reasons are – an increase in disposable incomes; changes in consumer concerns and perceptions on nutritional quality and safety; arrival of foreign brands; increasing popularity of satellite/cable media; and availability of new technologies and functional ingredients. From conventional milk products like paneer and cheese, the market has evolved over time and now caters to the wellness market as well with its sugar free and probiotic milk products.
Increased urbanization has given a boost to demand for health products. Moreover, with rise in disposable income and educational level, the awareness for nutrition and health improves which in
turn raises the demand for health and nutritional products. Market studies indicate that consumers are looking for healthier alternatives. Keeping this in mind, companies have introduced a range of functional products. After introducing India’s first sports and energy drink Stamina, Pro-biotic Ice- creams, Pro-biotic Lassi and Curd, and High Calcium Milk, Amul has also introduced Reduced Salt Butter in order to give the consumers a wide choice of health products. Another example is Nestle which introduced Nesvita Pro-Heart Milk with Omega 3 that helps manage Cholesterol.
Market Size, Growth, Prices, Segments, Cooperatives, Private Dairies, Procurement and Distribution”, the dairy market in India reached a value of INR 10,540 Billion in 2019.
Along with offering profitable business opportunities, the dairy industry in India serves as a tool of socio-economic development. Keeping this in view, the Government of India has introduced various schemes and initiatives aimed at the development of the dairy sector in the country. For instance, the “National Dairy Programme (Phase-I)” aims to improve cattle productivity and increase the production of milk expanding and strengthening and expanding the rural milk procurement infrastructure and provide greater market access to the farmers. On the other hand, the private participation in the Indian dairy sector has also increased over the past few years. Both national and international players are entering the dairy industry, attracted by the size and potential of the Indian market. The focus is being given to value-added products such as cheese, yogurt, probiotic drinks, etc. They are also introducing innovative products keeping in mind the specific requirements of the Indian consumers. These players are also improving their milk procurement network which is further facilitating the development of the dairy industry in India. Looking forward, the Indian dairy market is expected to exhibit strong growth during the next five years.
NATIONAL DAIRY PLAN
To address issues of increasing demand and greater coverage of producers by the organized sector, A National Dairy Plan covering a 15 year period has been formulated aimed at meeting the
projected demand of about 180 million tonnes of milk by 2021-22. With an estimated outlay of about Rs 17,371 crore, the Plan has three major components—enhancing milk production through
increased productivity; strengthening/expanding the infrastructure for procurement, processing, marketing and quality assurance through existing institutional structures and by promoting new
ones; and, human resource development. NDP aims to increase the productivity of milch animals by adopting focused, scientific and systematic processes including generic improvement of our milch
animals.
Today milk stands first as the largest source of agriculture income in India. Through milk production per day is 325 million litres, organized sector handles only about 30 percent of the total
milk production (doubled—from 15 per cent a decade ago). This is seen as an encouraging sign, with most big players assuring quality checks at multiple points. The fast expanding private sector
investment and entry of global players is also intensifying competition—Fonterra, Danone, London Dairy, Dairy Lite and Baskin Robbins, among others, have already entered the high-end milk products segment in India. Many other foreign brands—including New Zealand Dairy Board and the Irish Dairy Board—are reported to be looking for partners to enter the Indian market.
Alongside, the number of Indian private sector biggies entering the field is growing with Reliance Dairy Foods, Kishore Biyani’s Fresh and Pure and Jaypee Group joining the ranks of Hatsun Agro,
Paras, Saras, Britannia and Nestle among others. Today, the share of private players in the organized milk processing sector has risen to around 40 per cent. This is good news. As the organized sector expands, experts are pinning hopes on competition to ensure better quality delivery. Of course, be prepared to pay a higher price for it too. As an industry veteran put it: “What is inflation for consumers is income for farmers.” That’s what they call milk for thought.
NDP will help provide rural milk producers with greater access to the organized milk processing sector. The National Dairy Development Board (NDDB) is all set to roll out its ambitious 15 year long National Dairy Plan (NDP) at an outlay of Rs. 17300 crore. The Union Government had approved the National Dairy Plan Phase – I (NDP – I) with an outlay of Rs. 2242 crore. It is a six year plan that will be implemented in the 14 major milk producing States of Uttar Pradesh, Punjab, Haryana, Gujarat, Rajasthan, Madhya Pradesh, Bihar, West Bengal, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Orissa and Kerala.
The scheme will be largely financed with loan from the International Development Association (IDA) of the World Bank and implemented by NDDB through End Implementing Agencies (EIAs)
located in the States. High Margin dairy products like yogurt, ice cream and cheese constitute only ~8% of the Indian dairy market currently; expected to grow at CACR ~25% over next 5 years.
Value added products of dairy industry
Commodities
Full Cream Milk Powder •
Skim Milk Powder •
Butter •
Butter Oil/ Ghee •
Cheddar cheese •
Caseinates MPC 70
Lactose
Value added products————
Whey protein Isolates
Whey protein concentrates Functional MPC
Specially designed dairy ingredients
Functional MPC and WPC ingredients for Yoghurt, Analogue cheese, Protein bars etc. Lactoferrin
Colustrum MPC/Immunoglobulin Protein fractions
Whey protein hydrolysates Probiotics
Complex carbohydrates Complex lipids
Figure No. 1 indicates expected growth trends in the high margin value added products.
Table 2: Importance of milk components w.r.t. commercial value addition
| Compounds | Properties | Uses |
| α-lactoglobulin | Nutrition, carrier of retinol and its
fatty acid |
Infant formula, Humanized milk |
| ß-lactoglobulin | Gelling, solubility and nutrition | Restructured meat and fish |
| Immunoglobulins
and bovine serum albumin |
Anticancer, Enhanced immunity | Cancer prevention and treatment, diet for
person who are HIV Positive, have AIDS |
| Lactoferrin | Antibacterial | Infant Formula, health foods |
| Lactoperoxidase | Anticaries, important component of
LP system, antimicrobial |
Tooth paste, Tumor therapy, Cosmetics |
| Whole protein co
precipitate |
Balanced amino acid profile | Nutritional beverage |
| Whey protein isolates | Functional performance | Egg substitute in bakery industry, Fat
replacer in ice cream and frozen dessert |
| Protease-peptones | Immunomodulatory | Prebiotic foods |
| Immunoglobulin | Provide passive immunity | Cancer prevention |
| Casein (acid) | Functional properties | Glue, paints, leather, rubber, textile,
plastic industries |
| Casein (rennet) | Stretch properties | Analogue cheese preparation |
| When protein
concentrate (WPC) |
Special performance, solubility,
gelling, emulsifying, foaming agent |
Value added products, health beverages
and egg substitute in bakery products |
| When protein
hydrolysates |
Nutritionally rich, reduce
allergenicity, solubility over a wide range of pH |
Infant health foods, geriatric foods,
Athletic drinks |
| Lactulose | Bifidobacteria enhancement,
laxative, oxygen uptake, ammonia reduction in blood |
Infant formula, laxative, diet for athletes |
| Lactitol | Bifidobacteria enhancement,
noncaloric sweetener |
Infant formula, chewing gum |
| Lactobionic acid | Bifidobacteria enhancement and
other health related uses |
Various food applications |
| Oligosaccharides | Bifidobacteria enhancement | Infant formula, baby foods, yoghurt,
fermented dairy products |
| Mixture of salts
recovered from when UF permeate |
Flavor, nutrition, low sodium
content |
Table salt substitute, health drink |
Table : Key issues and opportunities for dairy industry
| Issues | Opportunities |
| Low Value Addition (Liquid milk) | |
| Liquid milk accounts for ~75% of total volume sales for
most Indian dairy companies. Liquid milk is a very competitive and price-sensitive market with typical margins of 4%-5%. |
Value added segment has been
growing at a healthy 20%-30% on a small base |
| Mostly Regional Players | |
| Except Amul (pan-India player), all the other domestic
players cater to specific regions Lack of cold storage facilities is the biggest inhibitors for regional players trying to gain a national presence. |
Emergence of few national players
over medium term |
| Sourcing Network | |
| Unlike Europe /USA where an average framer has 150-200
cattle, Indian dairy farmer has 2-3 animals Quality of raw milk procured varies with region and season. High capital is required to set up infrastructure at the village level |
Setting up of organized cattle
farms are being by dairy companies |
| Exports | |
| In 2012-13, India exported only 87,800 tonnes of dairy
products out of its total production of 132 million tonnes (<0.1%). However in FY 2014 India exports were Rs. 5000 Cr+ |
Tremendous export potential
exists to milk deficit countries like Bangladesh, Indonesia, Malaysia, Philippines, South Korea, Africa, Middle East etc |
Table 2: Importance of milk components w.r.t. commercial value addition
| Compounds | Properties | Uses |
| α-lactoglobulin | Nutrition, carrier of retinol and its
fatty acid |
Infant formula, Humanized milk |
| ß-lactoglobulin | Gelling, solubility and nutrition | Restructured meat and fish |
| Immunoglobulins
and bovine serum albumin |
Anticancer, Enhanced immunity | Cancer prevention and treatment, diet for
person who are HIV Positive, have AIDS |
| Lactoferrin | Antibacterial | Infant Formula, health foods |
| Lactoperoxidase | Anticaries, important component of
LP system, antimicrobial |
Tooth paste, Tumor therapy, Cosmetics |
| Whole protein co
precipitate |
Balanced amino acid profile | Nutritional beverage |
| Whey protein isolates | Functional performance | Egg substitute in bakery industry, Fat
replacer in ice cream and frozen dessert |
| Protease-peptones | Immunomodulatory | Prebiotic foods |
| Immunoglobulin | Provide passive immunity | Cancer prevention |
| Casein (acid) | Functional properties | Glue, paints, leather, rubber, textile,
plastic industries |
| Casein (rennet) | Stretch properties | Analogue cheese preparation |
| When protein
concentrate (WPC) |
Special performance, solubility,
gelling, emulsifying, foaming agent |
Value added products, health beverages
and egg substitute in bakery products |
| When protein
hydrolysates |
Nutritionally rich, reduce
allergenicity, solubility over a wide range of pH |
Infant health foods, geriatric foods,
Athletic drinks |
| Lactulose | Bifidobacteria enhancement,
laxative, oxygen uptake, ammonia reduction in blood |
Infant formula, laxative, diet for athletes |
| Lactitol | Bifidobacteria enhancement,
noncaloric sweetener |
Infant formula, chewing gum |
| Lactobionic acid | Bifidobacteria enhancement and
other health related uses |
Various food applications |
| Oligosaccharides | Bifidobacteria enhancement | Infant formula, baby foods, yoghurt,
fermented dairy products |
| Mixture of salts
recovered from when UF permeate |
Flavor, nutrition, low sodium
content |
Table salt substitute, health drink |
How This Can Be Done?
- Through Strong Research and development capability, implementing New Technology
- Continuous innovation and meeting customers demand
- Ingredients tailored to customers need/ functionality required in the Final product
KEY ISSUES AND OPPORTUNITIES
In the last 5 years, USD 150 Mn has been invested by private equity investors in the Indian dairy
industry, of which USD 125 Mn has come in the last 18 months. The capital raised has largely been
invested in backward and forward integration of the private dairy companies. Private equity
investors are encouraging Indian companies to move up the value chain. The key issues faced and opportunities available have been summarized in table 3.
Table 3: Key issues and opportunities for dairy industry
| Issues | Opportunities |
| Low Value Addition (Liquid milk) | |
| Liquid milk accounts for ~75% of total volume sales for
most Indian dairy companies. Liquid milk is a very competitive and price-sensitive market with typical margins of 4%-5%. |
Value added segment has been
growing at a healthy 20%-30% on a small base |
| Mostly Regional Players | |
| Except Amul (pan-India player), all the other domestic
players cater to specific regions Lack of cold storage facilities is the biggest inhibitors for regional players trying to gain a national presence. |
Emergence of few national players
over medium term |
| Sourcing Network | |
| Unlike Europe /USA where an average framer has 150-200
cattle, Indian dairy farmer has 2-3 animals Quality of raw milk procured varies with region and season. High capital is required to set up infrastructure at the village level |
Setting up of organized cattle
farms are being by dairy companies |
| Exports | |
| In 2012-13, India exported only 87,800 tonnes of dairy
products out of its total production of 132 million tonnes (<0.1%). However in FY 2014 India exports were Rs. 5000 Cr+ |
Tremendous export potential
exists to milk deficit countries like Bangladesh, Indonesia, Malaysia, Philippines, South Korea, Africa, Middle East etc |
Processing technology for value addition
ASEPTIC PROCESSING AND PACKAGING
Considered as the single most important innovation for food products in the last half-century, it involves producing shelf-stable products by sterilizing product and the packaging material or container separately and filling in a sterile environment. It was popularized in India with the success of fruit juices drinks & milk such as Frooti and Amul Taaza. Milk with a long shelf-life is currently produced by three different processes:
Conventional sterilization
UHT treatment
Two-stage sterilization
UHT Milk in Aseptic Pouch
UHT milk has a singular and distinct advantage of not requiring any cold chain and depending upon the initial milk quality and type of package can present a shelf life from 2 to 6 months under ambient conditions. Both the processing and packaging add to the cost to the consumer significantly and hence for many years to come it would still remain a product to be chosen on the basis of need, affordability and specific requirement.
MEMBRANE PROCESSING:
Recently, membrane processing has gained importance over conventional processes in food industry for its advantages that are well known and established. Membrane processing has presented new possibilities for the production of newer intermediate dairy products that can be used in different foods based on their functional properties. Some membrane based processes are:
Reverse Osmosis (RO)
Nanofiltration (NF)
Ultrafiltration (UF)
Microfiltration (MF)
Reverse Osmosis
The Reverse Osmosis membranes are characterized by a molecular weight cut off of nearly 100 daltons and the pressures involved are 5-10 times greater than those used in UF. The potential applications of RO Technology are:
1) Bulk transportation of R.O. concentrated milks.
2) Utilization of pasteurized RO concentrate in place of market milk.
3) Preconcentration of milk for khoa making and spray drying.
Nanofiltration
Nanofiltration allows divalent ions to pass through while retaining the organic molecules, It separates particles with molecular weights in the range of 300-1000 daltons. Operating pressures required are nearly 300 psig. Nanofiltration applications in the dairy industry are related to the capability of the process to selectively remove ionic particles. NF is used for demineralization of whey UF permeate prior to manufacture of lactose. It is also used for deacidification of sour whey and for removal of sodium chloride from salty cheddar cheese whey.
Ultrafiltration
UF membranes allows separation of smaller molecular weight substances ranging from 10,000 to 75000 daltons with operating pressures ranging between 10 to 200 psig. The ultrafiltration technology can be used for :
1) Deproteinization of whey
2) Fractionation of proteins
3) Milk protein standardization
4) Preparation of Biological peptides.
5) Cheese making
6) Manufacture of rasogolla mix powder
7) Manufacture of milk protein concentrate
8) Manufacture of low lactose powder
Microfiltration
In microfiltration, membranes with pore sizes ranging from 0.1 to 10 micron and the operating pressures in the range of 1 to 25 psig are used. MF is essentially employed as a clarifying operation to remove macromaterials and suspended solids, milk fat globules, bacteria and colloidal particles. Of these, the most significant application of MF is for selective separation of bacteria from milk. The MF system is capable of removing 99.5% of all the bacteria in skim milk, and when used in combination with pasteurizer or UHT processing can substantively improve the thermal efficiency and shelf life of resultant products. MF system can also be used for separation of native casein from whey proteins and for isolating peptides for Pharmaceutical applications.
OTHER PROCESSES LEADING TO VALUE ADDITION
Application of supercritical extraction
In the dairy industry, the potential of SFE for the removal of cholesterol and fractionation of milk fat has been investigated by several researchers and commercialized
Spinning Cone Column Technology (SCC) For Flavour Management
Flavoaurtech’s Spinning Cone Column is the world’s fastest, most efficient and cost-effective method for the capture and preservation of volatile flavour components, from all kinds of liquid or slurry substances. This unit handles a wide range of products, such as Dairy products like milk, cream, hot beverages like tea, coffee, malt drinks.
Bactofugation
The process involves subjecting milk to high speed centrifuging at around 50-600C to remove bacteria of milk. The process can be adopted selectively before or after pasteurization depending on
the equipment. The process is reported to remove 70-80% of bacterial cells from milk depending on the initial load.
Super heated water spray sterilizer
A new method of sterilization has been developed called “Super Heated Water Spray Sterilizer” for heat sensate products. This is suitable for delicate containers like plastic bottles. This system is suitable for rapid heating and rapid cooling for heat liable products.
Conclusion
There are continuing efforts to evolve techniques and technologies that are consumer and nature friendly, low cost, of improved productivity, energy economic and capable of producing nature resembling products with undoubted safety features. By the application of some of these technologies to improve the production and shelf life of food products it is possible to achieve better penetration of distant market in not only the country but even for export.
Current food processing trends as well as inflow of new foods into the market are driven by consumers’ choices and novel technologies. Within the next twenty years, the world population is
expected to increase by two billion people with majority are youth and urban. Further, worldwide non-communicable diseases such as obesity, diabetes, cardiovascular diseases and cancer have
become major health problem due to the changing lifestyle and dietary pattern among people.
As consequence, interesting changes can be expected in the way dairy and food products are processed, packaged and marketed. In general, the functional attributes of foods are enhanced by
incorporating in them certain ingredients that possess health promoting benefits.
