Reducing losses in India's dairy sector

In 2024–25, India's milk production volume reached 247.87 million tonnes, accounting for nearly a quarter of the global total. At the same time, the dairy industry faces hidden losses caused by temperature fluctuations, aging inventories in warehouses and dark stores, forced discounts ahead of expiration dates, returns, and tied-up capital in inappropriate stock-keeping units. By the time products are disposed of, enterprises have already incurred costs for procurement, processing, packaging, power supply, and logistics.

To maintain product quality, an uninterrupted cold chain is required at all stages—from primary cooling to retail. FSSAI has issued a corresponding directive, emphasizing the importance of temperature control in the handling of paneer, khoa, and other perishable products. Special attention must be paid to the last mile amid the development of organized retail and express delivery.

In addition to cooling, enterprises require accurate demand forecasting and flexible inventory management. Milk is sold fresh daily, while the assortment of value-added products varies in shelf life. Cottage cheese, paneer, and yogurt require frequent replenishment, whereas ghee, butter, and milk powder help balance seasonal fluctuations in raw material availability.

To optimize processes, it is necessary to integrate data on sales, seasonality, weather conditions, and holidays into procurement and distribution plans. The first-expiry-first-out rotation principle and batch-level tracking must be applied not only at plants but also among distributors. For value-added products, the target freshness indicator upon delivery should be at least 75 percent of the remaining shelf life. Flexible manufacturing also helps cope with seasonal raw material surpluses without forced sales.