The ghee market in Andhra Pradesh and Telangana is large with an annual consumption of around 125,000 tonnes[i] .The average growth rate in ghee consumption is over 5 per cent per annum. Given the large size and growth prospects, ghee manufacturing is an attractive opportunity, especially for entrepreneurs who are already running dairy farms, milk shops and have access to milk supplies.
Different varieties of ghee are available in the market, as can be seen from the table below.
Ghee is sold in institutional as well as retail market. In retail market, it sold in different packages such as pouch, jar, tin, bottle, and carton with size starting from 15 gms to 1 kg. In institutional market, ghee is sold in 15kg tins to sweet shops, bakeries, hotels etc.
Some of the popular brands in Andhra Pradesh/Telangana include Durga, Heritage, Sangam and Jersey. Further, there are local manufacturer and dairy shops who either sell their products through their own shops or cater to bulk buyers.
The manufacturing process comprises two steps: separation of cream from milk and extraction of ghee from the cream. The cream less milk can be sold as toned milk. One can set up a pasteurization plant to increase the shelf life of the milk and to separate cream through automated process.
Capital investment and profitability
Ghee manufacturing is a working capital intensive business. Working capital requirements are high for purchase of milk as farmers have to paid immediately/cash for the milk, whereas customers typically pay after 15 days to a month. Overall capital requirement for a 1000 Litres per day milk pasteurization and corresponding ghee manufacturing plant could be around Rs. 40 lakhs. Profitability would depend on the milk procurement price and ability to build a brand for your product.
NABARD provides incentives to dairy farmers under its Dairy Entrepreneurship Development scheme. More information on the same is available on this link. Further, both GOAP and Go Telangana also offer incentives as part of their industrial policy.
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[i] Assuming that 25% of milk consumption is towards ghee, milk annual consumption in combined Andhra Pradesh is around 13 million tonnes per annum, source National Dairy Development Board