SWOT Analysis of Dairy Farming Business

Given below is the SWOT analysis of dairy farming business:


  • The vast livestock population of the country could prove to be a vital asset for the country and unlike many other natural resources which will deplete over the years, a sustainable livestock production system will continue to propel Indian economy.
  • As the milk productivity of our animals is low, there is a vast scope for improvement of the milk production and consequently increased marketable surplus of milk for processing.
  • Purchasing power of the consumers is on the upswing with growing economy & continually increasing population of middle class. 
  • Milk consumption in India is regular part of the dietary programme irrespective of the region and hence demand is likely to rise continuously.
  • Indian dairy farming thrives largely on crop residues and agricultural byproducts keeping the input costs low. Labour cost is also fairly low making the industry fairly cost competitive.
  • Industry continues to grow and the margins are still fairly reasonable. Indian dairy farmers do not receive any subsidy and when the world dairy market opens up post-WTO negotiations, our products could compete on the price front
  • Large number of dairy plants (678 as on March 31, 2004) in public and cooperative sectors besides several others in the private sector is coming up. 
  • Vast pool of highly trained and qualified technical manpower is available at all levels to support R&D as well as industry operations.


  • hough cross breeding programmes have significantly improved animal productivity, milk production system in many parts of the country is still largely dominated by low yielding animals.
  • Poor condition of roads and erratic power supply remain a major challenge for procurement and supply of good quality raw milk. Furthermore, raw milk collection systems in certain parts of the country remain fairly underdeveloped.
  • Maintenance of cold chain is still a major handicap. For organized marketing of milk, the milk produced is required to be transported to nearby processing plant which incurs cold storage and transportation costs which are quite high.
  • Majority of producers is unaware about scientific dairy farming, clean milk production and value chain.
  • Seasonal fluctuations in milk production pattern, regional imbalance of milk supply and species-wise variation (buffalo, cow, goat etc.) in milk quality received by milk plants continue to pose serious handicaps.
  • Absence of comprehensive and reliable milk production data, impact assessment studies are almost non-existent, investments in dairy research is also not commensurate with returns and potential.


  • Excessive grazing pressure on marginal and small community lands has resulted in almost complete degradation of land.
  • Indiscriminate crossbreeding for raising milk productivity could lead to disappearance of valuable indigenous breeds.
  • Organized dairy industry handles only 15% of the milk produced. Cost effective technologies, mechanization, and quality control measures are seldom exercised in unorganized sector and remain key issues to be addressed.
  • There is a gross lack of awareness among farmers about the quality parameters, including microbiological and chemical contaminants as well as residual antibiotics.
  • Middlemen still control a very large proportion of the milk procurement. Serious efforts need to be taken to eliminate them from the supply chain.
  • Export of quality feed ingredients viz., cakes, molasses etc. is making the domestic producers rely on low energy fodders.
  • Entry of multinationals could result in a large portion of milk being diverted towards value added products which, though it augers well for the producers, is likely to affect the availability of liquid milk supply for mass consumption especially for the poor urban class. 
  • A parallel economy is thriving on adulterated liquid milk including synthetic milk in certain pockets which needs to nip in the bud.


  • Expanding market will see creation of enormous job and self employment opportunities.
  • Economy is growing at the rate of nearly 8% of GDP. Consequently, the investment opportunities are also increasing continually. 
  • Demand for dairy products is income elastic. Continued rise in middle class population will see shift in the consumption pattern in favour of value added products besides the growth in demand for liquid milk.
  • Greatly improved export potential for indigenous as well as western milk products.
  • Opening of the world market offers opportunities for utilization of byproducts of the dairy industry for manufacturing value added products for import substitution.