Challenges of the Diary sector in India

Challenges of the Diary sector in India

Raj Kumar and Kuldeep Kumar

Assistant Professor, School of Agricultural Sciences, IIMT University, Meerut, Uttar Pradesh-250001

Corresponding Author: kraj5408@gmail.com

 

India now has indisputably the world’s biggest dairy industry-in terms of milk production; during 2022-23. India produced close to 230.58 million tonnes of milk, close to 50% than the US and more than three times as much as the much-heralded new growth champ, China.

India ranks 1^st in the world in terms of total milk production. (Source: FAO). The milk production has increased by 3.83% over the previous year (2021-22). The per-capita availably of milk is 459 grams per day. Dairy is one of the biggest agri- businesses in India and a significant contributor to the Indian economy.  Organizations like Amul, Mother Dairy, Kwality Limited, etc. have played a pivotal role in expanding the production. Amul today has over 3.6 million milk producers nationwide.

The sector has been performing well since the onset of operation flood in the 1970s. It is testified by India’s occupation of top spot in terms of milk production. However, acquisition of a top position doesn’t mean the sector is devoid of challenges. Indian dairy farmers are dealing with fragmented supply chains, poor returns, and high price sensitivity, all of which make the sector less lucrative.

Furthermore, the pandemic has created additional stress on the sector that demands immediate reform to enhance the income potential and resilience in the sector.

Milk Production and per capita availability of milk in India
Year	Production (Million Tonnes)	Per Capita Availability (gms/day)
2010-11	121.8	281
2011-12	127.9	290
2012-13	132.4	299
2013-14	137.7	307
2014-15	146.3	322
2015-16	155.5	337
2016-17	165.4	355
2017-18	176.3	375
2018-19	187.7	394
2019-20	198.4	406
2020-21	210.0	427
2021-22	221.1	444
2022-23	230.6	459
Source: Basic Animal Husbandry Statistics, MoFAHD, DAHD, GoI

Areas of Milk Production: Leading milk producing states (2022-23)

They together contribute 53.08% of total Milk production in the country. (Source: DAHD-Govt. of India)

EXPORT SCENARIO:

India’s Export of Dairy products was 67,572.99 MT to the world for the worth Rs. 2,269.85 Crores/ 284.65 USD Millions during the year 2022-23.

Major Export Destinations (2022-23): Bangladesh United Arab Emts, Saudi Arab , USA and Bhutan

The Dairy Industry in India is mainly divided into two segments – organized sector and unorganized sector. The organized sector is more modern and efficient as compared to the unorganized sector. The organized sector is dominated by co-operatives, private companies and corporate houses. The unorganized sector is made up of small dairy farmers who produce milk mainly for their own consumption or for sale in the local market.

Objectives of Dairy Sector in India

• Creating a flood of Milk by Increase production.
• Increase the incomes of the rural population.
• Provide milk to consumers at fair prices.

SIGNIFICANCE OF THE DAIRY SECTOR IN INDIA

• Tackling agricultural uncertainties: Poor and landless farmers actively engage in dairying as a vital source of income in developing economies.Farmers keep 2-5 milk animals for livelihood. They provide great support to them, especially during drought and flood. Further, dairying is not a seasonal occupation in nature, like agriculture.
• Nutritional Support: The milk and milk products have immensely helped India in reducing the malnutrition and undernourishment levels in the country. Thus, the dairy sector is indispensable for meeting the nutritional requirement of the country’s rising population.
• Employment Generation: It is a significant contributor to farmers’ income as approximately 70 million farmers are directly involved in dairying.
• Reduces Import Bill:Operation Flood (also called as White Revolution) converted India from a milk importer to the world’s largest producer.
  • The program launched in 1970 and adopted a multi-pronged approach. This included tax incentives, food quality standards, subsidies on inputs, infrastructure provisions such as cold chain and electrification.
  • All this helped in reducing import bills and made India an exporter. The country exported dairy products worth $187 Million in 2019-20.
• Women Empowerment: Female population comprises around 69% of the sector’s workforce. They are dependent on the sector for their livelihood. Therefore, the dairy sector’s development automatically augments women’s empowerment.
• Boosting other sectors: The dairy sector provides cow dung which is used as an organic manure for the agricultural sector. Further, the sector provides raw materials to manufacture processed foods.
• For instance, the whey protein powder is an extract from the watery portion of milk that separates from the curds during the cheese-making process.
• As a result, the dairy industry is crucial to supplying the nation’s growing population with the nutrients it needs.

HOW DID THE PANDEMIC IMPACT THE DAIRY SECTOR IN INDIA?

• In the first wave, agriculture and allied sectors put up a spectacular performance. It showed an annual growth of 4 % while the economy contracted by(-) 7.2 % in 2020-21.
• However, the dairy sector could not replicate this good performance in the second wave.

CHALLENGES OF DAIRY SECTOR

A. MAJOR CHALLANGES

1. Shortage of feed/fodder

When it comes to using the grain and fodder that are readily available, there are too many inefficient animals competing with profitable dairy animals.

The amount of grazing land is being drastically reduced each year as a result of industrial growth, which causes a shortage of feeds and fodder to meet demand.

Dairy sector animals’ performance is hampered by the widening feed and fodder supply-demand mismatch

Additionally, providing dairy cattle with the feed of inadequate quality limits the system for animal production.

The small and marginal farmers, as well as the agricultural laborers working on the growth of the dairy sector, have limited financial resources, which leads to inadequate nutrition.

Mineral deficiency disorders are caused by a mineral mixture that is not supplemented. High-cost feeding lowers the dairy sector revenues.

2. Hygiene Conditions

Many cattle owners neglect to give their animals the required protection, leaving them vulnerable to harsh weather conditions.

Mastitis is brought on by the unhygienic environment in the milking parlors and cattle sheds.

Milk and other products lose quality while stored and deteriorate due to unhygienic milk manufacturing.

3. Health

Facilities for veterinary treatment are scattered throughout remote areas. Because of the larger ratio between the population of cattle and veterinary hospitals, animals receive insufficient health care.

An excessive amount of mortality occurs in calves, especially in buffalo, as a result of the lack of a regular and periodic immunization schedule and a regular deworming program that is not carried out according to plan.

There is not a sufficient level of protection against many cow illnesses.

4. Education and Training

The production of safe dairy sector products could be achieved through intensive education and training programs on excellent dairy practices, but for this to happen, they must be participatory.

For all of the employees to grasp what they are doing and feel a sense of ownership, education, and training are crucial in this regard.

However, creating and putting such initiatives into action in the dairy sector calls for a strong commitment from the management, which can be a roadblock at times.

5. Fragmented Supply Chain

Maintaining quality and quantity within a diverse supply base is the primary difficulty in the dairy sector.

Dairy sector requires more intricate supply chain operations and logistics due to its perishable nature to maintain freshness and safety.

6. Poor returns

There is no MSP (Minimum Support Price) for milk unlike 24 major agricultural commodities in the country including wheat and rice.

Further, dairy sector cooperatives are not a preferred choice for landless or small farmers.

he cooperatives adopt a fat-based pricing policy which is 20 to 30% less than the price in the open market.

7. Fragmented Supply Chain: The fundamental challenge in dairy is maintaining quality and quantity within a diversified supply base. Due to its perishable nature, dairy requires more complex supply chain operations and logistics to ensure freshness and safety.

The sector also witnesses adulteration practices and overuse of antibiotics to boost production.

8. Price Sensitivity:Milk producers are highly susceptible to even minor shocks.  For instance, small changes in the employment and income of consumers can leave a significant impact on milk demand.
9. Unorganised Nature: The majority of cattle raisers are unorganised unlike sugarcane, wheat, and rice-producing farmers. This nature further inhibits the creation of political clout to advocate for their rights.
10. Data Deficiency:There is no official and periodical estimate of the cost of milk production. Even though, the value of milk produced outweighs the combined value of the output of wheat and rice in India.
11. Poor returns: There is no MSP (Minimum Support Price) for milk unlike 24 major agricultural commodities in the country including wheat and rice. Further, dairy cooperatives are not a preferred choice for landless or small farmers.

• The cooperatives adopt a fat-based pricing policy which is 20 to 30 % less than the price in the open market.
• Further, dairy cooperatives buy more than 75% of milk at its lower price band.

12. Competition from alternatives: The traditional cow and buffalo milk is shunned by some consumers for more eco-friendly alternatives like ‘Soy Milk’ or ‘Almond milk’. They believe that the carbon footprint of plant-based milk products is much lesser than the traditional dairy products.
13. ASSOCIATED ISSUES/CHALLANGES
14. Invisible Labour:Farmers keep two to five in-milk animals for livelihood. In this setup, unpaid female family labour supplies a major part of the labour requirement for milk production.
    The landless and marginal farmers among them have no livelihood options to fall back when they fall short of buyers for milk.
15. Informal Nature of Dairy Sector:Unlike sugarcane, wheat, and rice-producing farmers, cattle raisers are unorganised and do not have the political clout to advocate for their rights.
16. Lack of Remunerative Pricing:Though the value of milk produced outweighs the combined value of the output of wheat and rice in India, there is no official and periodical estimate of the cost of production and Minimum Support Price for milk.
17. Negative Impact of Economies of Scale:Even though dairy cooperatives handle about 40 percent of the total marketable surplus of the milk in the country, they are not a preferred option of landless or small farmers.
    This is because more than 75 percent of the milk bought by dairy cooperatives is at its lower price band.

IMPACT OF PANDEMIC

1. First, the threat of disease has restrained the door-to-door sale of liquid milk to households. This has forced the farmers to sell the entire produce to dairy cooperatives at a much lower price.
2. Second, the lockdown had led to the closure of shops. This has reduced the demand for milk and milk products.
3. Third, the severe shortage of fodder and cattle feed has pushed up the input cost.
4. Fourth, private veterinary services have almost stopped due to Covid-19. This has led to the death of milch animals.

GOVERNMENT INITIATIVES

1. Rashtriya Gokul Mission

It was started in December 2014 to improve the genetics of the nondescript bovine population and develop and conserve indigenous breeds through selective breeding in the breeding tract.

The scheme comprises two components namely National Program for Bovine Breeding (NPBB) and National Mission on Bovine Productivity (NMBP).

The scheme aims for the development and conservation of indigenous breeds, enhancing milk production and productivity of bovine population.

 Increase the number of disease-free, high genetic merit females and stop the spread of diseases. Distribute disease-free, high genetic merit bulls for natural service. Arrange for quality artificial insemination (AI) services to be provided at farmers’ doorsteps.

Gokul Gram

The Rashtriya Gokul Mission also plans to build integrated cattle development centres called “Gokul Grams” to promote indigenous breeds, up to 40% of which will be unique breeds.

Major Achievements/Interventions of Rashtriya Gokul Mission

• Nationwide Artificial Insemination Programme- As on date 6.21 crore animals have been covered, 7.96 crores Artificial Insemination have been performed and 4.118 crores farmers benefitted under the programme.
• Promotion of IVF Technology in the country: As on date 19124 viable embryos have been produced out of this 10331 embryos transferred and 1621 calves born under the programme.
• Sex sorted semen production: Sex sorted semen production has been introduced in the country for production of only female calves up to 90% accuracy. Under the programme, subsidy of Rs 750 or 50% of the cost of sorted semen on assured pregnancy is available to farmers.
• DNA based Genomic selection:National Dairy Development Board has developed INDUSCHIP for selection of elite animals of indigenous breeds and 28315 animals have been genotyped using the chip for creating referral population. For the first time in the World, BUFFCHIP has been developed for genomic selection of buffaloes and so far, 8000 buffaloes have been genotyped for creating referral population.
• Animal Identification and traceability: 5 crore animals (cattle, buffalo, sheep, goats and pigs) are being identified and registered using polyurethane tags with 12 digit UID No.
• Progeny testing and Pedigree selection:Progeny Testing Programme has been implemented for Gir, Shaiwal indigenous breed of cattle and Murrah, Mehsana indigenous breed of buffalo.
• National Digital Livestock Mission: Department of Animal Husbandry & Dairying has taken up a digital mission, “National Digital Livestock Mission (NDLM) with NDDB. This will help in improving the productivity of the animals, control diseases that affect both animals and humans, ensure quality livestock and livestock both for domestic and export markets.
• Breed Multiplication Farms: Subsidy of 50% (up to Rs 2 crore per farm) on capital cost (excluding land cost) is provided to private entrepreneurs under this scheme for establishment of breed multiplication farms. As on date the Department has approved establishment of 111 Breed Multiplication Farm

PASHU SANJIVNI

An animal wellness program that includes the issuance of Animal Health Cards (also known as “Nakul Swasthya Patra”), UID identification, and the uploading of information to a national database.

Advanced Reproductive Technology

To increase the supply of disease-free female cattle, assisted reproductive techniques such as in-vitro fertilization (IVF), multiple ovulation embryo transfers (MOET), and sex sorting of semen should be used.

NEED TO PROTECT DAIRY SECTOR

• In the farm-dependent population comprising cultivators and agricultural labourers, those involved in dairying and livestock constitute 70 million.
  Moreover, in the total workforce of 7.7 million engaged exclusively in raising cattle and buffalo, 69 per cent of them are female workers.
• In the Gross Value Added (GVA) from agriculture, the livestock sector contributed 28 per cent in 2019-20. A growth rate of 6 per cent per annum in milk production provides a great support to farmers, especially during drought and flood.
• Milk production rises during crop failures due to natural calamities because farmers bank more on animal husbandry then.

WAY FORWARD

Increasing Productivity: There is a need to increase the productivity of animals, better health care and breeding facilities and management of dairy animals. This can reduce the cost of milk production.

• Also, milk production and productivity can be enhanced by ensuring the availability of veterinary services, artificial insemination (AI), feed and farmer education.
• The Government and dairy industry can play a vital role in this direction.

Augmenting Production, Processing and Marketing Infrastructure: If India has to emerge as a dairy exporting country, it is imperative to develop proper production, processing and marketing infrastructure, which is capable of meeting international quality requirements.

• Thus, there is a need for a comprehensive strategy for producing quality and safe dairy products that should be formulated with suitable legal backup.
• Further, to address the infrastructure deficit in rural areas and address the power shortage, there is a need to invest in solar powered dairy processing units.
• Also, there is a need to strengthen dairy cooperatives. In this pursuit, the government should promote farmer producer organizations.