• April 15, 2023

India’s dairy industry requires a structural change

GS 2 Government Policies & Interventions GS 3 Indian Economy & Related Issues

In Context

• India is experiencing a milk shortage, and the government is reportedly considering importing butter and ghee.

India’s dairy sector

• India’s success story in milk production was written by Dr. Verghese Kurien, known as the “Father of the White Revolution” in India
• Dairy: It is the single largest agricultural commodity contributing 5% of the national economy and employing more than 8 crore farmers directly.
• India is ranked first in milk production contributing 23% of global milk production.

Stakeholders in the sector:

•  Notably, 228 dairy cooperatives serve 17 million farmers, many of whom are likely to have their milk purchased at the right moment and for a reasonable price.This time, private competitors have taken market share from cooperatives by offering higher prices in a thriving market.

Stagnation in the sector:

• The Union Animal Husbandry Secretary recently said that cooperatives reported a 1-2 percent milk production increase in 2022-23, while the data from other players in the organised and unorganised sector point to stagnant output.

Outcomes:

Rise in milk prices

• Milk prices, which have been on the rise in the United States, may soon reach an all-time high, forcing the world’s largest producer to increase imports to increase supplies and alleviate cost-of-living pressures.

Demand supply mismatch

• Industry officials anticipate a 7 percent increase in dairy product demand this year.But milk production is likely to have increased by only 1% in the fiscal year ending in March 2023, well below the average annual growth rate of 5.6% over the past ten years.

Challenges faced by India’s Dairy sector:

•  Following factors have significantly played a role in the drying up of milk output vis-a-vis the annual growth trend of 5-6 percent.

Pandemic

• Demand destruction caused by Covid resulted in a crash in prices and dairy producers’ inability to invest in the upkeep of their cattle.
• During pandemic lockdowns, cattle reproduction suffered due to a lack of village-level veterinarians required for artificial insemination.

Lumpy skin disease

•  By all accounts, lumpy skin disease has wrought havoc. The official mortality toll of 1,900,000 cattle is likely an underestimate.Although the Centre asserts that a minimum of one-third of the livestock has been vaccinated since August and that the worst is over, the effects of the disease may linger for some time as dairy producers attempt to recoup income and capital losses.

Long-term effects

• According to government data, the disease that causes lesions and reduces milk production in cows has infected millions of cattle and killed more than 184,000 in India, including approximately 76,000 in Rajasthan.
• Farmers in Rajasthan who were able to protect their cattle through vaccinations are now complaining of lower incomes due to the disease-ravaged cattle.

Fodder inflation

• A 30% increase in fodder prices has been a crucial factor. According to ICAR scientists, 70% of the cost of milk is accounted for by fodder and feed.
• Fodder inflation is endemic, as supply has failed to keep up with demand. For decades, it has been grown on only 4 percent of farmland.
• Fodder development receives little funding in animal husbandry expenditures.

Government’s Initiatives Related to the Dairy Sector:

•  The government has implemented several measures to increase the productivity of livestock, resulting in a considerable increase in milk production.

“Dairy Sahakar” scheme

• The Union Minister of Home Affairs and Corporation inaugurated the “Dairy Sahakar” scheme in Anand, Gujarat, during the celebration of Amul’s 75th anniversary of its founding.
• NCDC will implement Dairy Sahakar with a total investment of Rs 5,000 crore to actualize the vision “from cooperation to prosperity”

Lumpi -Pro VacInd

• The National Research Centre on Equines (NRCE) and the Indian Veterinary Research Institute (IVRI) are responsible for its development.
• It is an attenuated live vaccine, similar to those used to prevent tuberculosis, measles, mumps, and rubella.

National Animal Disease Control Programme (NADCP)

•  It is a flagship program launched in September 2019 for the control of Foot-and-Mouth Disease and Brucellosis by vaccinating 100 percent of the cattle, buffalo, sheep, goat, and swine population for FMD and 100 percent of the bovine female calves aged 4 to 8 months for brucellosis in five years (2019-20 to 2023-24).

Dairy Entrepreneurship Development Scheme (DEDS)

• The department of Animal Husbandry, dairying, and fisheries is implementing DEDS to generate self-employment opportunities in the dairy sector, including activities such as the enhancement of milk production, procurement, preservation, transportation, processing, and marketing of milk through the provision of back-end capital subsidies for bankable projects.

e-GOPALA

• The web version of the National Dairy Development Board’s (NDDB) e-GOPALA application has been launched to assist dairy producers.

Launching of Dairy mark

• The National Dairy Development Board (NDDB) and Bureau of Indian Standards (BIS) collaborated to develop a dedicated ‘Dairy Mark’ logo as a unified quality mark for milk and milk products across India.
• A unified Conformity Assessment Scheme has been designed by BIS with the assistance of NDDB after extensive consultations with stakeholders.

Suggestions & way ahead:

• Population growth, rising incomes, urbanization, and dietary shifts are driving a surge in dairy product demand.
• For a sector that supports more than 80 million farmers and can provide a living for many more small and marginal farmers (120 million of them, with plots too tiny for viable farming), it is worthwhile to invest in policies that address ingrained supply constraints.Currently, there is place for all players to expand, given the current demand situation.

For producers

•  For sustainable dairy development, it is crucial that producers, the majority of whom are impoverished, are protected from price volatility; they deserve some form of price assurance.

Cooperatives

• Cooperatives revolutionized the dairy industry, but their success has not spread beyond Gujarat and Karnataka for a variety of reasons.

For private players

•  Private participants must be encouraged to invest in supply chains in this capital-intensive industry.