Monday, July 16, 2018

Adulterated ghee and analog milk fat sector : A wolf in the sheep's clothing (65th Dairy Pulse 1st to 15th July, 2018)

Dear friends,

Last fortnight saw some good developments in terms of government extending support to dairy farmers and dairy sectors through their export subsidies policies and large players like Amul coming to the rescue of both farmers and consumers in Maharashtra. An interesting article in Business Today on organic milk farming( in which I was being interviewed by the journalist Ms Radhika  ) talked a lot about emerging trends in this sector with a few success stories. Two underlying facts about this sector as shared by me were long gestation period of this sector ( so a start up needs to be patient enough for 5-6 years at least with deep pockets) and  need of regulatory for organic foods ( on which FSSAI is already doing a commendable work). A news related to new norms for organic certification requirements from FSSAI is also part of this bulletin.

A very good news related to dairy sector is about an investment of close to 140-150 billion Rupees ( Rs 14000-15000 Crores)  in next three years as per Crisil report. Amul is looking at around 35 -40 % of this investment followed up by other leading private sector players like Hatsun, Heritage, Parag and others. It would definitely shows a positive sentiment in the sector for those who are getting too depressed due to current dairy situation in India.

An interesting article in Indian Express strongly professed the idea of India to focus on revenue generation through its livestock beyond milk also. It states that if Modi ji wishes to double the farmer's income then Livestock sector must be able to gain its revenue from both of its streams like beef and milk. In current scenario the prices of milk or prices of SMP in global market is not the only reason for farmer's pathetic position. It is like harvesting half of the crop and maintaining the rest at your farm without any realization. A farmer has to keep animals with him irrespective of their productivity and maintain them with their limited resources and have to sustain the whole dairy farm business on paltry revenue generated through milk only. In rest part of the world animals maintained kept for beef purpose are reserves to be used on a rainy day.

Now let us focus on the title of today's blog in which I am trying to highlight the perils of this analog as well as adulterated category of products which are taking away the opportunity of emerging boom in higher consumption of milk and milk products due to improvement in socio economic condition of India. These products are also responsible for poor state of dairy farmers in a benign manner.

Just look at  the news which talks about sale of Ghee flavored cheap edible oils under the label of Desi ghee in central India's markets of MP, Rajasthan etc. It is not the only region where such cases are present, you may find in whole of India desi ghee being sold either adulterated with palm oil etc or simply using ghee flavored combination of  a mixture of oils, hydrogenated ( or partially hydrogenated)  fat and some typical fat based agents like dolphin oils to adjust all the regulator's requirements of BR, RM, FFAs etc. Even some brands of large dairy players are also negotiated with their qualities through some channel partners or some unknown patrons. Currently it seems that all scientific tests requirements by FSSAI for desi ghee have been very well manipulated by these culprits and they can easily pass all the tests even after adding edible oils and other low price fat based alternatives. 

Simultaneously under the nose of all of us there is a new segment which is very comfortably strengthening its foundation which is of cooking media. These people make use of edible oil, hydrogenated fat and milk fat ( to the tune of 5% or so) and later in their advertisements or packaging use terms like Desi or Ghee in a deceptive manner. All large format modern trade including the largest one are more than happy selling them as they are much cheaper in prices and lures innocent consumers due to lack of clarity on terms being used.

Considering Ghee market to be of around 15-20000 Crores and at an average price of Rs 300/kg accounts for around 7 % of total milk being produced in India or 14 % of the total marketable surplus milk in India . In this market we are not considering the ghee made at homes in rural as well as urban India. 

Suppose that till date these people are able to replace only 5 % of the total ghee market which is a highly conservative figure for the sake of understanding the hole this sector is creating in the pockets of poor farmers. Milk equivalent of 5 % ghee equivalent is equal to half billion liters of milk or total annual milk production of whole of North Eastern states ( except Assam), Goa, Puducherry, Chandigarh, Dadar and Nagar Haveli put together.

At 10 % it is equivalent to whole of Himachal Pradesh and at 20 % you wont believe but it would cover total production of any of the states Odissha, Uttrakhand, J&K, Jharkhand  etc along with that of Delhi.

Key findings from above  : Only 5 %  adulterated ghee in market is equivalent to half billion litres of milk.

All these players from analog sector or spurious ghee supplying channels are showing better growth rates than  their dairy counterparts in all analog categories of cream, butter or cooking media on one hand or largely adulterated desi ghee  on the other hand. I am amazed that why the industry is so silent and letting these players grow and take away the rights of dairy farmers by supplying spurious products in the guise of desi ghee or butter or cream so easily.

I have already made a representation to the FSSAI for analog products and requested scientific panel in person to get the testing procedures for desi ghee redefined so that these adulterated products may be checked. I firmly believe that if the industry come together and make a proper representation to the FSSAI and other relevant authorities then surely our farmers would be able to get better prices for their products and would be able to dispose higher volumes of milk also.

In my forthcoming blogs I shall be covering on analog cheese and panir market where the situation is much worse than Ghee and fat based products.  As in case of panir and cheese the value chain is just at the door steps of farmers.

Happy e reading

with best regards

Kuldeep Sharma
Chief Thinking Officer
Suruchi Consultants (ISO 9001:2008 Company)
C-49 Sector-65
Noida 201307

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