Madhya Pradesh Cooperative Dairy Federation partners with NDDB to enhance dairy sector

INDIA – The Indian Madhya Pradesh Cooperative Dairy Federation (MPCDF) has signed a memorandum of understanding (MoU) with the National Dairy Development Board (NDDB) to exchange technical expertise and support.

The partnership aims to bolster quality improvement measures and enhance the utilization capacities of milk plants. It is also expected to aid in the revival of the Gwalior and Jabalpur milk unions.

“We have signed an MoU with NDDB. The partnership’s objective is to enrich NDDB’s expertise. The board’s expertise and guidance will help strengthen and upgrade the dairy sector,” MPCDF managing director Dr. Satish Kumar stated.

In addition, NDDB will extend support to enhance the underutilized capacity of the ice cream and cookies plants in Indore and the cattle feed plants at Bandol, Sagar, and Shivpuri.

As part of the MoU, NDDB will suggest measures to improve quality at various stages of milk collection and transportation.

“Technical expertise from NDDB will help in processing optimal utilization of existing infrastructure, plant technology up-gradation, and end-to-end digitization of the dairy sector,” added Kumar.

NDDB will also provide guidance and support in formulating draft guidelines and implementing a proposed milk incentive scheme for cooperative milk producers in MP.

The partnership comes when the Indian dairy industry is set for revenue growth of 13-14% this fiscal year, driven by strong consumer demand and an improved raw milk supply, according to Crisil Ratings.

Rising consumption of value-added products (VAP) and ample milk supply, bolstered by good monsoon prospects, will support this growth.

The report noted that increased raw milk supply will also lead to higher working capital requirements for dairy players.

While continued capital expenditures by organized dairies over the next two fiscal years will result in debt levels inching up, strong balance sheets will support stable credit profiles.

“Amidst modest realization growth of 2-4%, the dairy industry’s revenues are seen rising on healthy 9-11% volume growth,” Crisil Ratings’ Mohit Makhija said.

“The VAP segment, which contributes 40% to industry revenues, will be the primary driver, fueled by rising income levels and consumer transition towards branded products.”

The strong consumer demand will be complemented by improved raw milk supply, expected to increase by 5% in FY25 due to better cattle fodder availability following a favorable monsoon outlook.

 Milk availability will also be supported by normalizing artificial insemination and vaccination processes after past disruptions.

Additionally, measures such as genetic improvement in indigenous breeds and increased fertility rates of higher-yield breeds will help enhance the milk supply.

The report stated that steady milk procurement prices augur well for dairies’ profitability, with operating profitability expected to improve by 40 basis points to 6% this financial year.

According to Crisil Ratings Associate Director Rucha Narkar, while dairy revenue and profitability will improve this fiscal year, debt levels are also expected to increase.

One reason is the healthy milk supply during the flush season, resulting in higher skimmed milk powder (SMP) inventory, which will be consumed over the rest of the year,” he said.

“The SMP inventory typically accounts for 75% of dairies’ working capital debt. Another reason is continued milk demand, which requires increased debt-funded investments for new milk procurement, milk processing capacities, and expanding distribution networks.”

Despite the additional debt contracted for working capital and capex, the credit profiles are expected to remain stable, supported by low leverage.