HURDLES & STRATEGIES FOR DAIRY SECTOR OF INDIA IN DOUBLING FARMERS INCOME

HURDLES & STRATEGIES FOR DAIRY SECTOR OF INDIA IN DOUBLING FARMERS INCOME

“If agriculture goes wrong nothing else goes right ” and “Younger people will join agriculture if it is technologically driven” Dr. M.S Swaminathan (2008) – Father of green revolution in India. Livestock production and agriculture are intrinsically linked, each being dependent on the other, and both crucial for overall food security. Livestock sector is an important subsector of the agriculture of Indian economy. It forms an important livelihood activity for most of the farmers, supporting agriculture in the form of critical inputs, contributing to the health and nutrition of the household, supplementing incomes, offering employment opportunities, and finally being a dependable “bank on hooves” in times of need. It acts as a supplementary and complementary enterprise. Livestock also serves as an insurance substitute, especially for poor rural households; it can easily be sold during time of distress. Animal husbandry promotes gender equity. The agricultural sector engages about 57% of the total working population and about 73% of the rural labour force. Livestock employed 8.8% of the agricultural work force albeit it varied widely from 3% in North-Eastern states to 40- 48% in Punjab and Haryana. NSSO’s Situation Survey 2002–03 and 2012–13 are the only sources of data on farmers’ income. The average monthly income per capita from farming increased from Rs 1,060 in 2003 to Rs 3,844 in 2013, according to the report Situational Assessment of Agricultural Households by the NSSO, a compounded annual income growth rate of 13.7%. To double the income of farmers by 2022 would require a 15% compounded income growth rate, which is a marginal increase over the achieved increase from 2003 to 2013. However, real income of farmers had been calculated on the basis of GDP deflator, showing a real growth rate of 5.24 per cent. If the more appropriate index, the Consumer Price Index for Agricultural Labourers, is used the annual growth rate of real income for farmers falls to 3.5 per cent. With this growth rate farmers’ income will double in 20 years. Therefore, in order to achieve the target of doubling farmers’ income in 6 years there is a need for much greater effort and focused attention.

India is contributing about 20.2% to the world milk production and we are growing at an annual rate of about 5.7% consistently over the last five years.Dairying is an important economic activity which contributes to about 67% of the value of output of livestock sector. Income from dairying contributes to about 25% of the income of small and marginal farmers. Dairy Development is therefore a very important developmental intervention in rural India for achieving agricultural growth with equity.
With limited resources, environmental constraints and a huge animal population with low productivity, the only way we can continue to maintain our self-sufficiency in milk and double farmers’ income is by introducing efficiencies at all levels in the dairy value chain.

Though India ranks first in milk production but in order to remain in this position it needs to take care of farmers produce right from production till it reaches to the consumers. By giving value addition to the milk, the income of the farmers can be increased. Therefore government should work to strengthen the web of processing industries. Currently New Zealand is standing in first position in the world with respect to the processing of milk and milk products whereas India has less than 20 percent of milk being processed. Therefore if our purpose is to increase farmers’ income then the more weightage should be given in developing industrial base in this sector. Encouraging processing and developing value chains will help in generating non-farm jobs for in rural areas. Today milk is the single most valued crop in terms of money in India , The farmers income can be doubled easily if we adopt dairy farming with good management practices along with marketing strategies.

Employment————

Livestock sector provides employment to 20 million people
and nearly 70 per cent of them are women. Further, dairy sector is the major source of income for an estimated 27.6 million people. Among these, 65 to 70 per cent are small, marginal farmers and land-less labor. The dairy sector supports around 10 million members / farmers through one lakh cooperative societies existing in the country. Apart from employment generated by rearing of animals, the procurement of milk and its processing also provides substantial employment. For example in Punjab, MILKFED, with its network of over 5,000 village Milk Producers’ Cooperative Societies, supports over 3 lakh Milk Producers. Further, MILKFED and its units have a work force of about 5,000 employees and gives employment to another 10,000 workers who engaged in milk procurement and technical input supply, etc. Similar number of workforce is employed in almost all the milk federations. Further, under SGSY (Swarnajayanti Gram SwarojgarYojana) , the only self-employment programme for rural areas, about 35 per cent swarojgaries opted for dairy farming as income generating activity. The incremental employment generated was 11 man-days per month and the incremental net income generated was Rs. 865 per month per person (Nationwide Study on SGSY, NIRD, 2005). Recognizing the importance of dairy farming in its substantial contribution to the agriculture economy and to the livelihoods of resource poor farmers/rural population, high priority is attached in several locations strengthening the milk marketing infrastructure, veterinary services for breed improvement and health care, extension support for capacity developing entrepreneurship, technical skills and knowledge on scientific dairy farming practices, etc. several programmes have been launched from time to time by State/ Central Governments for promoting the sector, although the impact of such programmes varied widely.

Contribution to Indian Economy ——

Dairying has become an important secondary source of income for millions of rural families and has assumed a most important role in providing employment and income generating opportunity. Indian Dairying is unique in more than one ways. Contributing about 5.3 per cent to India’s agricultural GDP, milk is a leading agricultural produce. During the post independence period, progress made in dairy sector has been spectacular. This impressive growth effort speaks volume about the co-coordinated effors of large number of milk producing farmers, scientists, planners, NGO’s and industry in achieving self-sufficiency in milk production. Dairy industry is of crucial importance to India. The country is the world. largest milk producer, accounting for more than 13% of world’s total milk production. It is the world’s largest consumer of dairy products, consuming almost 100% of its own milk production. Dairy products are a major source of cheap and nutritious food to millions of people in India and the only acceptable source of animal protein for large vegetarian segment of Indian population, particularly among the landless, small and marginal farmers and women. Dairying has been considered as one of the activities aimed at alleviating the poverty and unemployment especially in the rural areas in the rain-fed and drought-prone regions. In India, about three-fourth of the population live in rural areas and about 38% of them are poor. In 1986-87, about 73% of rural households own livestock. Small and marginal farmers account for three-quarters of these households owning livestock, raising 56% of the bovine and 66% of the sheep population. According to the National Sample Survey of 1993-94, livestock sector produces regular employment to about 9.8 million persons in principal status and 8.6 million in subsidiary status, which constitute about 5% of the total work force. The progress in this sector will result in a more balanced development of the rural economy. This impact of Dairy Industry can be categorized into the following:

• Social impact • Economic impact • Impact on infrastructure • Impact on improved food aid security and nutrition.

Opportunities And Challenges in The Indian Dairy Industry
Dairy industry is of crucial importance to India. The country is the worlds largest milk producer, accounting for more than 13% of worlds total milk production. It is the worlds largest consumer of dairy products, consuming almost 100% of its own milk production. Dairy products are a major source of cheap and nutritious food to millions of people in India and the only acceptable source of animal protein for large vegetarian segment of Indian population, particularly among the landless, small and marginal farmers and women. Dairying has been considered as one of the activities aimed at alleviating the poverty and unemployment especially in the rural areas in the rain-fed and drought-prone regions. In India, about three-fourth of the population live in rural areas and about 38% of them are poor. In 1986-87, about 73% of rural households own livestock. Small and marginal farmers account for three-quarters of these households owning livestock, raising 56% of the bovine and 66% of the sheep population. According to the National Sample Survey of 1993-94, livestock sector produces regular employment to about 9.8 million persons in principal status and 8.6 million in subsidiary status, which constitute about 5% of the total work force. The progress in this sector will result in a more balanced development of the rural economy.

Policy—–

The total amount of milk produced has more than tripled from 23 million tonnes back in 1973 to 74.70 million tonnes 26 years later in 1998. The tremendous rise in milk production is primarily the fallout of the dairy farming policy reflected in Operation Flood. Following the success of dairy farming policy, the Government has set up a dairy processing policy, reflected in the Milk and Milk Products Order. In addition, the Government uses a variety of import restrictions to protect its domestic dairy market.

Milk Processing—–

The milk processing industry is small compared to the huge amount of milk produced every year. Only 10% of all the milk is delivered to some 400 dairy plants. A specific Indian phenomenon is the unorganised sector of milkmen, vendors who collect the milk from local producers and sell the milk in both, urban and non-urban areas, which handles around 65-70% of the national milk production. In the organised dairy industry, the cooperative milk processors have a 60% market share. The cooperative dairies process 90% of the collected milk as liquid milk whereas the private dairies process and sell only 20% of the milk collected as liquid milk and 80% for other dairy products with a focus on
value-added products.

Domestic Consumption—–—

The huge volume of milk produced in India is consumed almost entirely by the Indian population itself, in a 50-50 division between urban and nonurban areas. Increasingly, important consumers of the dairy industry are fast-food chains and food and non-food industries using dairy ingredients in a wide range of products.

Trade—–

In spite of having largest milk production, India is a very minor player in the world market. India was primarily an import dependent country till early seventies. Most of the demand-supply gaps of liquid milk requirements for urban consumers were met by importing anhydrous milk fat / butter and dry milk powders. But with the onset of Operation Flood Programme, the scenario dramatically changed andcommercial imports of dairy products came to a halt except occasional imports of very small quantities. In the 1990s, India started exporting surplus dairy commodities, such as SMP, WMP, butter and ghee. The Agricultural and Processed Food Products Export Development Authority (APEDA) regulated the export and import of dairy products till early 1990s. However, in the new EXIM Policy announced in April 2000, the Union Government has allowed free import and export of most dairy products.
The major destinations for Indian dairy products are Bangladesh (23.1%), UAE (15.4%), US (15.6%) and Philippines (8.9%). In terms of products, SMP is the most important product accounting for about 63% of total export volume, followed by ghee and butter (11.7%) and WMP. Export figures clearly demonstrate that the Indian dairy export is still in its infancy and the surpluses are occasional. Indigenous milk products and desserts are becoming popular with the ethnic population spread all over the world. Therefore, the export demand for these products will increase and hence, there is a great potential for export.
On the other hand, there has been a sharp increase in import of dairy products (especially milk powders) after trade liberalisation. As per the latest report of Foreign Trade Statistics of December 2004, the imports of dairy products (milk and cream) has reached a cumulative total of 22.145 million tonnes for the period April – March 2004, as compared to only 1473 million tonnes for the same period during the previous year. The main reasons for sharp rise in imports are huge export subsidies given by developed countries (mainly the US and EU). India has recently concluded a tariff rate quota to deal with US, EU and Australia on imposing custom duty of 15% on imports of SMP and WMP upto 10,000 tonnes and 60% on imports beyond this level.

Key Areas of Concern in the Dairy Industry——-

1. Competitiveness, cost of production, productivity of animals etc. The demand for quality dairy products is rising and production is also increasing in many developing countries. The countries which are expected to benefit most from any increase in world demand for dairy products are those which have low cost of production. Therefore, in order to increase the competitiveness of Indian dairy industry, efforts should be made to reduce cost of production. Increasing productivity of animals, better health care and breeding facilities and management of dairy animals can reduce the cost of milk production. The Government and dairy industry can play a vital role in this direction.
2. Production, processing and marketing infrastructure If India has to emerge as an exporting country, it is imperative that we should develop proper production, processing and marketing infrastructure, which is capable of meeting international quality requirements. A comprehensive strategy for producing quality and safe dairy products should be formulated with suitable legal backup.
3. Focus on buffalo milk based speciality Dairy industry in India is also unique with regard to availability of large proportion of buffalo milk. Thus, India can focus on buffalo milk based speciality products, like Mozzarella cheese, tailored to meet the needs of the target consumers.
4. Import of value-added products and export of lower value products With the trade liberalisation, despite the attempts of Indian companies to develop their product range, it could well be that in the future, more value-added products will be imported and lower value products will be exported. The industry has to prepare themselves to meet the challenges.
5. Provisions of SPS and TBT At the international level, we have to ensure that provisions of SPS and TBT are based on application of sound scientific principles and should become defacto barriers to trade. Operation Flood Era Dairy sector witnessed a spectacular growth between 1971-1996, i.e. Operation Flood era. An integrated cooperative dairy development programme on the proven model of Anand pattern was implemented in three phases. The National Dairy Development Board was designated by the Government of India as the implementing agency. The major objective was to provide an assured market round the year to the rural milk producers and to establish linkage between rural milk production and urban market through modern technology and professional management. Milk production grew from 21 million tonnes in 1970 to nearly 69 million tonnes in 1996 – more than three fold, at the compound growth rate of 4.5 per cent. Some ten million farmers were enrolled as members in about 73000 milk cooperative societies. By 1996, milk cooperatives attained a dominating share of the Indian dairy market – butter 96%, pasteurized liquid milk over 90%, milk powder 59% and processed cheese 85%. India was reckoned as a major threat in the dairying world. In retrospect, it was by no means an easy task. Let us all salute the visionary and the architect of the white revolution in India, Dr. Verghese Kurien, without whose dynamic leadership all this may not have been possible. The dairy cooperative movement has continued to grow in thepost Operation Flood-era.

New Challenges of Globalisation and Trade—

Liberalisation – Perspective 2030 The NDDB has recently put in place Perspective 2030″ to enable the cooperatives to meet the new challenges of globalization and trade liberalization. Like other major dairying countries of the world, the Indian cooperatives are expected to play a predominant role in the dairy industry in future as well. However, India is in the mean time, attaining its past glory and is once again becoming DOODH KA SAGAR. But, what percentage of this SAGAR is handled by the cooperatives – just a little over 27%. Since liberalization of the dairy sector in 1991, a very large number of private sector companies / firms have, despite MMPO, established dairy factories in the country. The share of the total milk processing capacity by private sector is 44% of total installed capacity of 73 MLPD (Million Litres Per Day) in the country. Therefore, the total share of the organized sector, both cooperatives as well as the private sector is barely 12%. What is, therefore, disquieting is that as much as 88% share of the total milk production is commanded by the unorganized sector – who specializes in selling sub-standard, unpasteurised milk more often than not adulterated with harmful chemicals. Besides, growth in milk production is likely to continue at the present rate of 4.4% in the near future. Who is going to handle this incremental milk? We must bear in mind is both income and price what we must bear in mind both income & price elasticity account for approximatily 15% of the total expenditure of food.Demand for milk, at current rate of income growth is estimated to grow at 7% per annum. Interestingly, demand for milk is expected to grow steadily over the next two decades as the low income rural and urban families who have higher expenditure elasticity would also increase their income due to new economic environment. Let us now look at some other economic indicators. According to the World Bank, India is the fourth largest economy in the world going by the purchasing power parity estimates. Further, India has been identified as among the first 10 emerging markets in the world. India has the vastest domestic market in the world with over one billion consumers – a majority of whom are vegetarians with drinking of milk as habit. The untapped potential of the dairy sector is immense and opportunity to set up a new dairy venture is great.

In order to full fill the dream of our PM to double the farmers income by 2022, it is very necessary to know the hurdles in dairy sector to achieve this target . here are some prominent hurdles as given below

Hurdles in Dairy Sector To Double The Farmers Income——-

Dairy sector act as an engine for agricultural growth. Doubling the farmers’ income would require addressing challenges availability of high yielding germplasm, shortage of feed and fodder, frequent occurrence of some deadly diseases etc. The sector has remained underinvested; and neglected by the financial and extension institutions. Livestock markets are under-developed, which is a significant barrier to the commercialization of livestock production. Besides, the sector will also come under significant pressure of increasing globalization of agri-food markets. Major hurdles in dairy sector to double the farmer’s income are listed below.

1. Improving productivity in a huge population of low-producing animals is one of the major challenges. The average annual milk yield of Indian cattle is 1172 kg which is only about 50% of the global average. Likewise the meat yield of most species is 20-60% lower than the world average.
2. The deficit of dry fodder, concentrates and green fodder currently is 10, 33 and 35%, respectively. Only 25% of forage seeds are available, that too of 15-20 years old varieties. Nearly 4% of total cultivated area utilized for fodder production is nearly constant from last three decades. The common grazing lands too have been deteriorating quantitatively and qualitatively.
3. Insufficient prophylactic vaccination and deworming. Frequent outbreaks of diseases like FMD, BQ, PPR, Brucellosis, Swine fever and Avian Influenza etc. continue to reduce productivity and production.
4. Available veterinary support in terms of infrastructure (for hospitals and diagnostic labs) and technical manpower are insufficient.
5. Livestock sector receives only about 12% of the total public expenditure on agriculture and allied sectors and about 4-5% of the total institutional credit flowing to agriculture and allied sectors. Insufficient funding, subsidy and bank loan as compared to other agriculture sectors
6. Insufficient Livestock insurance coverage- Only 6% of the animal heads are provided insurance cover.
7. Livestock extension- Livestock extension remains grossly neglected. Only about 5% of the farm households in India do access information on livestock against 40.4% for crop farming.
8. Organized slaughtering facilities are too inadequate.
9. Lack of access to organized markets and meager profits distract farmers from investing into improved technologies and quality inputs. Informal market intermediaries often exploit the producers.

Recommendations to double the farmers income through livestock sector——–
In order to achieve the goal of doubling farmers income by 2022, here are some suggestion——

1. Increasing incomes by improving productivity along with stabilizing income and risk management through holistic approach.
2. Improving productivity in a huge population of low-producing animals Crossbreeding, Upgrading and Selective breeding are the most effective way for improving productivity. Crossbreeding of indigenous species with exotic stocks to enhance genetic potential of different species has been successful only to a limited extent. Distribution of improved bulls can be practiced in remote areas where A.I. facility is not available.
3. Increasing funding, subsidy and bank loan- Bulk of the investment for livestock development comes from the state governments. The central government contributes about 10% to the total investment. There is hardly any private sector investment in animal husbandry. Investment linked tax incentives and attractive credit facility to private investors are missing which is needed to increase.
4. ‘National Dairy Plan’ (NDP) should be implemented- as a National Project.
5. Systematic conservation, genetic improvement and sustainable utilization of indigenous livestock breeds.
6. Fodder and Feed development- Since Fodder and Feed contribute 60-70% of total recurring expenditure, thus, economic feeding will increase the profitability. Fodder Development Program along with fodder bank should be designed in every district.
7. Wider and effective immunization for important economic diseases and compulsory deworming programme.
8. Building dairy cooperative network – like AMUL, URMUL etc. Besides handling liquid milk along with value-added products formation fetches higher price.
9. Promoting quality livestock products-Testing of milk for safety and quality parameters at the collection centres to get higher price. Establish food testing laboratories duly accredited by the Food Safety and Standards Authority of India (FSSAI) to check adulteration.
10. Organized slaughtering facilities- Inedible offal’s and animal wastes from the meat plant have large potential to be used as valuable proteins/materials for export.
11. Strengthening value addition and processing facilities-Adding value to livestock by-products increases profitability.
12. Compulsory Livestock insurance- Livestock insurance provided by the public sector insurance companies could cover only about 6% of the animal heads. Innovative and acceptable insurance models may be designed to evolve a suitable scheme for various species.
13. Promoting contract livestock and poultry farming- Cooperatives and agribusiness firms can promote contract livestock and poultry farming including risk coverage.
14. Women Livestock Producer Training -Livestock production activities are largely in the hands of women. Appropriate policy and institutional arrangements would facilitate availing credit, insurance and other inputs and marketing services. Training women would reduce drudgery to women and improve animal productivity and enhance their economic returns.
15. Strengthening Livestock extension services- It has been observed that farmers who use information from extension services have 80 per cent higher net income. Livestock extension remains grossly neglected. Only about 5% of the farm households in India do access information on livestock against 40.4% for crop farming. Building up an exclusive cadre of livestock extension workers, establishment of KVKs exclusively for livestock activities and strengthening ATMA with AH experts.
16. Public–Private-Partnership (PPP) – Public–Private-Partnership (PPP) in extension should be promoted for convergence and sharing of resources.
17. Livestock economics, business management and market intelligence should be strengthened.
18. Biotechnology is set to play critical role to improve livestock production
19. Review of current scenario of farm credit and subsidy disbursement system Gradually phase out all subsidies and only transfer money to farmers, calculating aggregate measure of support. This improves efficiency of govt investments.
20. Implementing ambitious Agribusiness Hubs and establishing Special Livestock Zones (SLZ) Model like AMUL for milk production and Nammakal model for poultry production all over the country.
21. ICT-based agricultural extension brings incredible opportunities and has the potential of enabling the empowerment of farming communities.
22. Adopting Integrated and diversified Farming System- Diversification of animal husbandry activity like duck cum rice farming, duck cum fish farming etc. Diversification can be a major game changer. It can be of three types, viz. Product (high value enterprises), process (precision farming), and time diversification (delinking from seasonality).
23. Fix minimum support price (MSP) for livestock products- Farmer is mainly concerned with the profit he gets from a particular commodity. Upward push in MSP in favour of proposed diversification livestock products will be a practical option to achieve this objective. Better market price realization is essential. 24. Integrating all central and state subsidies- instead of reducing costs of inputs, need to be targeted to empower farmers through infrastructure development in rural areas to promote agribusiness, food processing, dairy, poultry, fisheries and enterprises etc.
24. Strengthening Organic Food Program and Organic livestock and poultry farming- Major parts of India such as NER, HP, J&K, Uttarakhand, MP, Chhatisgarh, Jharkhand, which are organic by default, must be made Organic by Process for the producers to get advantage of market value.
25. Climate change adaptation- The goal of increasing productivity without impacting environment can be attained through diversification and selection of inputs and management practices that foster positive ecological relationships and biological processes within the entire agro-ecosystem.
26. Scientific validation and adopting proven indigenous technical knowledge (ITK) to improve productivity.

All the ongoing schemes recommended for continuation should be classified under three mega schemes; a) Animal production b) Livestock Health, and c) Dairy development. The
strategies outlined above rest on four critical pillars—technology, institutions, infrastructure, and incentive structure. Increasing incomes by improving productivity along with stabilizing income and risk management through holistic approach. Thus, it is concluded that genetic improvement of poor yielding livestock through crossbreeding, upgrading and selective breeding to maximize their production along with local adaptability, economic feeding practices, proper health care and management practices will lead to optimization of production. MSP for livestock products, market development, product processing, packaging, value addition, cold storage facilities, easy availability of high yielding germplasm, livestock insurance, adopting diversified and integrated farming, contract livestock farming, adopting PPP model, strengthening extension services, repetition of AMUL co-operative model for milk production and Nammakal model for poultry production, increasing backyard poultry farming, promoting organic farming to specific areas along with increasing funding, subsidy and easy availability of bank loan for livestock farming are the key ways to double the farmers income. Farmer is not a labour or poor among the poorest, he is the ANNADATA in real sense. Agriculturer (Farmer) needed to transform into entrepreneur to double the income adopting innovative approach and technology.

Compiled  & Shared by- Team, LITD (Livestock Institute of Training & Development)

 

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Reference-On Request.

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