How IoT can help transform India’s huge dairy market
Much of the credit for the surge in milk production goes to the first ‘white revolution’ of the 1970s, when Operation Flood—the world’s biggest dairy development programme—was launched. Today, India’s $120 billion dairy market, of which the organized sector accounts for $70 billion, is bigger than that of the European Union and the US. It has been growing steadily for the past two decades and the nation accounts for more than 18% of the world’s total milk production. Demand remains high: and the organized dairy market is expected to grow at 23% every year.
However, as urban demand has continued to grow exponentially, the industry needs a second dairy catalyst.
Unlike the West, milk producers in India remain largely unorganized, which results in inconsistent quality and composition of milk. They lack granular, actionable data to improve their operations. In the world’s largest market for milk, dairy farmers—who own just two cows on an average—have struggled to improve their productivity: they produce 1,248 kg of milk per cow in a year, while their counterparts in the US—where the average farm size is 90 times larger—produce about eight times more per cow, according to IFCN Dairy Research Network.
India has set itself a target of producing 200 million tonnes of milk by 2022, according to the department of animal husbandry, dairying and fisheries, ministry of agriculture and farmers welfare. To meet this ambitious goal, farmers will need to increase their productivity. Digitalization, which has been slow in coming to the sector, will have a major role to play in making this transformation possible.
Start-ups are leading the way. They are transforming the largely unorganized dairy sector by building automated tools that leverage the Internet of Things (IoT) and advanced analytics to improve milk production and quality for India’s small dairy farmers. One of them is Stellapps Technologies, founded in 2011 by five IIT graduates. The Bengaluru-based company’s offering is being used by more than 750,000 small farmers daily, in some of India’s most rural areas where digitalization has never reached before. It has recently raised funding from ABB Technology Ventures—the venture capital arm of ABB, Qualcomm, and the Bill and Melinda Gates Foundation.
IoT offerings in the dairy sector cover the entire value chain from milk production to payments. Farmers can track a cow’s health and yield through a wearable sensor—something akin to a Fitbit for cows—and measure important parameters such as milk quantity and yield. Using this data, farmers will receive immediate feedback, which they can then compare with their peers to improve productivity and boost incomes.
This technology works for the farmers’ customers too. Buyers of milk, such as large dairy cooperatives and companies, will be able to track conditions under which the milk is stored, transported and distributed. They will have accurate data about the quality and composition of milk, the history of production by each farmer and fees owed to them, leading to improved inventory management, reduced wastage of perishable food items and better service delivery.
It makes a lot of sense for start-ups in the industry to have strategic partnerships with large players to create more value for small farmers. Such partnerships go beyond equity investments to strategic ones for deeper domain knowledge, flexibility and access to real-time operational technologies. Through such deals, start-ups will have access to the larger partners’ cutting-edge technologies, including artificial intelligence-powered operations management software, thereby helping them scale faster during their phase of growth. Larger dairy organizations, too, are increasingly powered by technology. Gujarat-based Amul, the world’s largest dairy federation, implemented advanced automation to reduce milk wastage and support its rapid growth. By 2014, the new automation and control systems at the organization ensured uninterrupted processing of more than a billion litres of milk.
Amul’s growing output provided an opportunity for the cooperative’s three million milk producers to lift their own output and meet increasing demand for dairy products.
Partnerships between start-ups and established companies are vital to accelerate innovation in a sector like this. Empowering India’s milk producers with better data and faster paths to profits will also enable India to maintain its position as the world’s biggest dairy producer. Bazmi Husain is chief technology officer at ABB Group.