Importance of Holistic Project Planning in the Dairy Sector

In an exclusive interview with Industry Outlook magazine, Kalyan Bhadra, Founder & Chief Consultant of 360 Degree Dairy, shares the dairy sector’s role in a circular economy by converting by-products into valuable resources. He insists on sustainability efficiency through judicious use of water, reduction of emissions, and adoption of renewable energy. He also emphasizes increasing supply chain efficiency and adopting eco-friendly packaging. He has over 11 years of experience in providing holistic consulting and training services exclusively for dairy food sector.

Sustainable growth is crucial for the long-term viability of the dairy sector. What role does holistic project planning play in ensuring sustainable growth and scalability in the dairy sector?

Dairy remains better than other products in many respects. It is also the only source of animal protein for vegetarians, with unmatched bioavailability.  When it comes to holistic project planning, there are two critical areas to address: improving animal productivity and incorporating considerations for procurement, processing, manufacturing, and marketing. In terms of marketing, the principles are largely similar to those for FMCG food products. The focus should be on deploying 100 percent electric vehicles or 100 percent solar powered vehicle, for distribution and milk procurement. Alternative energy sources should also be employed in manufacturing and processing of milk and milk products.

Water consumption in the dairy industry has significantly improved. Initially, three liters of water were required per one liter of milk. With advancements in technology, particularly in effluent treatment, this has been reduced to a 1:1 ratio. In an efficient dairy plant, the usage of water is as low as one liter of water per liter of milk handled or processed. For instance, efficient dairy plants are Gandhinagar dairy of Amul, which are zero-disposal plants. Treated water from effluent treatment plants (ETPs) is reused within the dairy for purposes like gardening, fruit cleaning, and other cleaning activities.

The project must aim to reduce energy consumption. For instance, milk procurement testing machines and analyzers have been converted to solar power. In a holistic plan, improving animal productivity is key to enhancing sustainability. To achieve this, factors such as breeding, feeding, animal management, and animal health management must be prioritized. Holistic project planning must consider all these factors to ensure sustainability in the dairy sector.

In what ways does holistic planning improve the integration of supply chain elements, from feed production to milk distribution?

There are two primary value chains in the dairy sector. The first value chain ranges from milk production to milk procurement, up to the point that it reaches the dairy. This is the back-end value chain. After reaching the dairy plant, the milk undergoes intermediate chilling, processing, and manufacturing, turning into various dairy products. The front-end process involves moving these products from the dairy’s cold storage to consumers. This supply chain resembles that of any other FMCG product, involving transporters, distributors, warehousing, and finally, retailers.

It is the same case as in the case of FMCG distribution. Some dairies in North India have adopted e-rickshaws for the distribution of milk, which is a step toward sustainability. In addition, the Automatic Milk Collection Units (AMCUs), being solar powered, is another initiative contributing to the sustainability of the dairy sector in the back end. Throughout the supply chain, there are huge opportunities to improve efficiency, reduce energy consumption, and transition to alternative energy sources.

Similar considerations should be applied to product packaging. The type of packaging material used in the dairy sector presents a challenge because milk is a bulk product with high water content, requiring cost-effective packaging solutions.

Across other countries, carton-packed milk is commonly sold, and HDP bottles are used for packaging milk. In contrast, India is the only country relying on low-cost Low-density polyethylene (LDP) for milk packaging. This choice is influenced by the nature of our consumer base; at what price milk is made available is a critical factor. A significant consideration is the percentage of the consumer’s money spent on packaging material. The consumption of products has increased in daily life, and with that, the demand for packaging materials has increased significantly. While progress and convenience have grown, they are accompanied by challenges related to the biodegradation of packaging materials.  

How can holistic project planning address the challenges of resource optimization and cost efficiency in dairy processing units?

Cost optimization is solely dependent on the efficiency of operation. That efficiency of operation needs to be addressed at the minutest level because efficiency is essentially the relationship between output and input—how much energy is being put in versus how much output is being obtained. For instance, in the boiler, one must consider the type of fuel and the efficiency at which it burns. The same applies to the efficiency of the boiler. Two main considerations are made: fuel efficiency and boiler efficiency. Both of these need to be taken care of. Another critical aspect is the reuse of water. It is essential to determine how the water used in the dairy can be effectively recycled. Another aspect concerns to the overall energy consumption within the dairy. When utilizing a pasteurizer, it is important to evaluate its regeneration efficiency. Each component of the operation plays a role in cost optimization.

What is the significance of stakeholder collaboration in achieving long-term success through comprehensive project planning in the dairy sector?

With regard to milk procurement, if the aim is to safeguard the interests of farmers and rural milk producers, cooperatives or milk producer organizations are the only viable solutions. Profit maximization should be focused on the front end and should not be a component at the back end. Purchasing milk economically does not necessarily mean paying the minimum to farmers. It is possible to pay a fair amount to the farmer while simultaneously improving supply chain efficiency. When comparing different Indian states, there is a variation in the price a farmer earns per liter of milk, despite the consumer selling price being almost the same. Such disparities can only be addressed effectively through a cooperative structure or a farmer producer organization structure on the procurement side.

What would  you suggest  to an entrepreneur or someone looking to venture into the dairy sector?

The dairy sector is highly lucrative. Entrepreneurs entering this industry should focus on value addition, specifically Value-added dairy products (VODP). If an entrepreneur concentrates on value-added dairy products, the business becomes sustainable. However, if they choose to compete with cooperatives in the basic product of milk, it may pose challenges to long-term sustainability, even if the business maintains total efficiency and transparency. Private entrepreneurs should prioritize value-added dairy products and avoid direct competition with cooperatives in basic products. Cooperatives and farmer producer organizations are institutional structures designed to serve the masses, which is why they focus on basic milk products.