CHALLENGES & SOLUTIONS OF DAIRY SECTOR IN INDIA

CHALLENGES & SOLUTIONS OF DAIRY SECTOR IN INDIA

DR.HIMANSHU PRATAP SINGH,DAIRY CONSULTANT,INDORE

World Milk Day was celebrated on 1st June while National Milk day is celebrated on 26th November. Both days recognize the importance of milk for the health and well-being of an individual. Apart from nutritional benefits for health, the dairy sector in India is a crucial source of employment generation and a steady income for the majority of small and marginal farmers.

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.

Dairy sector is undergoing a number of changes and challenges all over the world . Factors such as access to technological innovations, improvement in infrastructural facilities and creation of modern era marketing insights have been quite significant to give a strong boost to dairy development. The changing trend of global dairy industry is noteworthy. This sector imparts a major socio-economic benefit for rural India. This benefit can be enhanced further while capturing the large unorganized market base of Indian dairy sector. Accordingly, the interest is to explore sustainable model of dairy farming especially with respect to small, marginal and landless farmers and opportunity in market expansion for dairy industry. Study would include sector specific constraints, opportunities, advantage and disadvantage with respect to trade policy, growing demand and future prospect of both developed and developing countries.

CHALLENGES AND OPPORTUNITIES OF DAIRY SECTOR: GLOBAL PERSPECTIVE

 

The major stakeholders of dairy industry are milk producers, milk processors, marketers, retailers and consumers. Milk producers, value chain and consumers are equally essential in development of dairy sector. Major countries in this sector are found to pay attention as per their priority. Countries like Denmark, the Netherlands, Australia, China and many other are found to have ‘Milk Producers based focus’ in their priority. However, Israel, India, Brazil and many other countries have taken a cue towards ‘Value Chain based’ dairy development activity. On the other hand, Italy, Sweden and a few such countries have taken up ‘Customer based focus’. However, Germany is probably the only country which has considered all the factors i.e. milk producers, value chain and customers in their consideration for development of dairy sector.

Milk Producers-

In view of present day requirement, milk producers need to adopt evolving technology and improved farm management practices. This technology and management practices improve farm productivity (Khanal et al. 2010). In this regard, ‘datafication’ enables farmers to avail quantifiable information which helps to measure, monitor operations and act accordingly (Anonymous 2017a). However, producers are subsidized in many developed countries like USA, Mexico etc. which leads to encouragement of mass production (Knips 2005). Export subsidies are given in these countries apart from creating tariff and non-tariff barrier. As a result, producers of developing countries face stiff challenge to match the local price against the cheap import price (from developed countries).The realities are being faced by poor small scale farmers of underdeveloped countries like Kenya, Dominican Republic, Jamaica and so on (Knips 2005).Export subsidies helped European Union exporters to enter and grab market in developing countries while offering lower pricing. The World Trade Organisation’s decision to end export subsidies is good news for farmers and consumers of underdeveloped & developing countries (Anonymous 2017b). In addition, cost minimization, capital investment minimization (per production unit) and increasing milk production are some of the common techniques which help small as well as medium herds for doing better business performance. Simultaneously, productivity and management skill help to create business sustainability.

 

Milk Processors

 

There is increasing consumer demand for protein rich, healthy and ‘clean label’ milk products. Present day consumers are in search of ‘functional foods’ (Anonymous 2017a). Demand for milk protein through formulated dairy based products is on increasing trend especially for sports personnel, senior citizens, babies and toddlers (Anonymous 2017c). Local marketers need to identify and utilize consumer insights to generate increased value for consumers. There is simultaneous requirement to establish safe supply chain similar to block chain along with well-maintained supply chain documentation. This can be kept available to customers through tamper proof ledger.

 

Milk and Milk Product Retailers

 

The changing consumer trends such as healthy snacks, protein rich food and frequent food consumption outside the home and increasing online shopping are quite common in present day food habits. Dairy products are in good demand as these products are cheap source of protein, palatable in taste and available at ease. In fact, retailers need to target customers with tailored offers with required inputs from databank. Retailers also have to match supply and demand even in smaller stores through just-in-time inventory management.

 

Adaptation to Challenges and Opportunities

 

Dairy market faces a volatile market like other agriculture commodities (Weber et al. 2012). This necessitates the balancing in supply and market demand. While looking towards this balancing, there is a need of consideration for both domestic and global markets. Storing milk in form of higher shelf life products can be a supportive option. It is accepted that milk production does not relate with consumption trend. Hence, there is need of pro-active planning in balancing inventories through traders. The changing patterns of consumer demand have influenced food production and consumption at various stages of value chain (Olutosin 2018). It has lead to a number of new value drivers for consumers in course of making food choices. Evolving drivers of health and wellness, safe food product, social impact and experience have surpassed the ‘Traditional’ value drivers like price, taste and convenience (Anonymous 2017a). In fact, purchase decisions are getting increasingly based on ‘product plus’ factors such as specific ingredients, processing method of the product and corporate values of the manufacturer and retailer, marketing techniques and so on. Now, consumers have access to social media and communication linkage where they can express their opinion. In view of today’s competitive market, corporate should have the mechanism to provide consumers with relevant information in an open, unbiased and transparent manner. This is again a challenging task. In this regard, importance of 4-Ps (i.e. Product, Price, Place and Promotion) as marketing tool can be successfully adopted. A Vietnamese milk corporation, Vinamilk, gained significant market share through proper application of marketing mix of 4Ps in Vietnamese dairy market (Dang 2014). Branding has been used as an effective marketing tool in developed countries. Chimboza and Mutandwa (2007) assessed the level of brand awareness along with relevant factors responsible towards brand preference of dairy products, both in Chitungwiza and Harare urban markets in Zimbabwe. Customer based brand equity and its’ strengthening through marketing communication are quite significant in present day organization (Keller 2009). However, all four key determinants, namely, product quality along with attractive packaging, price, availability of product and promotion have been considered as responsive marketing strategies (Chimboza and Mutandwa 2007). A series of key factors namely, i) Population growth, ii) Urbanization, iii) Income growth, iv) Increasing middle class income, v) Longer life span etc. have led the increasing demand for dairy products, especially in developing countries (Daryanto and Ibu 2014). However, faster growth in consumption of dairy products is observed in developing countries mainly due to increasing population awareness and education. Apart from supply and demand related factor, milk price is largely dependent on cost of milk production (Ghule et al. 2012). Both direct and total costs of milk production have been estimated as a function of distance. Although milk prices and costs are found higher with increased distance of production areas, but the increment remains lesser than transportation costs (Babb 1981). Distance between place of production and marketing has a significant role in livestock farming. Cost of nutrient management system is a major part in computing cost of milk production. Margin over feed cost is a significant indicator for dairy farmers’ financial health of the herd. The nutrient management cost gets escalated with incorporation of environmental regulations to the dairy farm. Environmental factors are also pertinent in livestock farming (Gertenbach). Cost of production and involvement of supply channels including retailers are important factors in dairy business like other business sectors (Doyon et al. 2008). Technical and socio-economic factors influence the cost of the milk production and the profitability of the enterprise (Gunarathne et al. 2015). Impact from the socio-economic factors on the profitability of small capacity dairy farmers has been observed in Zambia. Profitability of dairy business depends on many factors like milk pricing system, farm location, farm size, etc. (Rhone et al. 2008). Increase in level of education, dairy cow herd size and reduction in market distance can lead to better profitability of small dairy enterprises (Mumba et al. 2012). High feed cost, inadequate availability of pastureland and water can affect the growth of milk production (Ngongoni et al. 2006). Availability of arable land is a limiting factor for growth in milk production. All these factors emphasize the need of a policy for efficient use of the land to improve the milk production-to-land ratio (D’Haese et al. 2009). With the progress of civilization, availability of land and water for livestock agriculture is getting reduced. FAO has noted a challenge to avoid further environmental damage while maintaining growth of livestock production (Zering et al. 2012). Management practices under tropical and temperate climate always have been a challenge to dairy farming. These management practices consider a few core areas, namely, i) fodder and feed production, ii) feeding management, iii) herd management, iv) housing system, v) milking management and vi) general farm management (John 2009). Dairy sector can contribute significantly to a country’s GDP. Dairy Industry of Kenya contributes more than 15 % of the agricultural GDP and 3.5 % of total GDP (Muriithi 2014). A National Policy would be helpful in this aspect. Formulation of national policy would require inputs on the regional problems and respective solutions too (Block 2009).

 

CHALLENGES AND OPPORTUNITIES OF DAIRY SECTOR: NATIONAL PERSPECTIVE

 

India, the largest milk producer (Milk production: 187.7 Million Tons in 2018-19, Basic Animal Husbandry Statistics 2019, Government of India) of the world, has a unique way of milk production, its processing, sales and marketing, and consumption of milk. However, average milk yield and average farm size scenario are different in Indian dairy farming in comparison to developed countries like USA or Poland. Average milk yield (kg/ cow/year) in India, USA and Poland is 1248, 9633 and 5504 respectively and average farm size (cows/farm) in India, USA and Poland is 2, 182 and 8 respectively (Hemme et al. 2015).Apart from the absence of quality breed and business scale, tropical and temperate climate have posed additional challenges to Indian dairy farming. The situations get more pronounced in dry region of Western India (Kant et al. 2015). A few major challenges faced by Indian Dairy sector are as follows: Infrastructure: Adequate numbers of chilling centers are not available at village level. Efficient cold chain distribution network is also absent (Meena et al. 2017). Besides, there is need of proper infrastructure and manufacturing facilities for value added Products. Feed and fodder: Shortage of supply of feed and fodder occurs mainly due to reduction in grazing land. In addition, a significant requirement of feed and fodder gets added due to unproductive animals. Small, marginal farmers and landless laborers engaged in dairy farming cannot afford to buy expensive feed and fodder. Further, non-supplementation of mineral mixture causes mineral deficiency diseases and metabolic disorders. Higher feeding cost decreases the profit of the dairy industry (Moran 2005).

 

 Breeding system

Experts have identified two issues with Indian cattle breeds: a) most of the breeds require prolonged period to attain maturity and b) they usually have increased calving interval. These factors affect efficiency of animal performance.

 Education and Training:

Education and training on Good Manufacturing Practices is an essential requirement for the farm employees .

Animal Health: Adequate Veterinary health care, proper vaccination and regular deworming need to be ensured for sustainable production.

Hygiene Conditions:

Unhygienic farming practice leads to disease of cattle and buffalo. This also leads to compromise in the quality of milk resulting in spoilage of both milk and milk products.

Farmers’ Milk Selling Price: It is often noted that milk producers do not get the legitimate price of milk due to presence of middleman and vendors in the supply chain. In this regard, Milk Co-operatives need to come forward. With reduction of unorganized dairy sector, this problem can be reduced. Structured marketing facilities and extension services can improve the situation further. Indian farmers may face the tough time due to import of milk and milk products under WTO. Hence, cost reduction both in milk production and processing is needed for the survival of farmers. Production of valueadded products shall give better return to the dairy entrepreneurs. Production of low and high fat milk for consumption of general customers and selected customers respectively can fetch better revenue for dairy farmers (Hegde 2001). Farmer producers can avail better price margin when they can sell their produce directly to consumers. The similar observation was found from the survey conducted sometimes ago (Verma et al.1997). Milk was supplied to consumers, Halwai and vendor at an average price of Rs.5.68 per litre, Rs.4.75 per litre and Rs.4.04 per litre, respectively. It indicates that the dominance of middleman becomes prominent in absence of co-operative infrastructure. Middleman exploits needy milk producers (Shah 2000). Cost structure of milk production, breed variety, maintenance of animals etc. have significant impact on profitability and sustainability of concerned enterprises. Adequate attention and continual improvement are needed for these aspects (Reddy et al. 2004). Infrastructure and facility, size of farm, processing capacity, quality as well as cost of milk production are integral part in global competition (Ohlan 2012). Growing demand for healthy products has made the milk and milk products more popular. Various combinations of fat and solids-non-fat have made full-cream milk, standardized milk, toned milk and skimmed milk to find its’ usage with expected market value. In addition, value added products like ice cream, ghee etc. can earn better business margin (Nicholson and Stephenson 2007). Population growth, increasing income, changing habits of food consumption, higher income elasticity for dairy products have helped to increase demand of milk or create opportunities for growth of dairy sector (Rajeshwaran et al. 2015). Growth rate of milk production is expected to be at the rate of 4.4% in coming times in India. However, demand for milk is estimated to grow at 7% per annum. Demand for milk shall further grow over the coming years due to higher expenditure elasticity of low income rural and urban families (Karmakar and Banerjee 2006). India’s dairy industry is projected to grow at 15 % compound annual growth rate during 2016-2020. It may reach market value of Rs 9.4 trillion on rising consumerism (The Press Trust of India Ltd. 2017). India, in spite of being largest producer of milk, has insignificant share in global trade (Landes et al. 2017). Indian companies have the interest in exporting ethnic sweets and ready-to-eat milk products. It has implemented export inspection system, but it is not able to do export due to sanitary and phytosanitary issues (Mukherjee et al. 2019).

 

Socio Economic Impact

 

Dairy sector has sustainable contribution in generating employment opportunities. As per Shri Radha Mohan Singh, the former Union Agriculture and Farmers Welfare Minister, dairy supports livelihood to 60 million farmers in India. Out of this, two third are small, marginal and landless labourers (Press Information Bureau 2016). Dairy Farming supplements the earning of small and marginal farmers (Jaiswal et al. 2018). It is a significant contributor to the disposable income of farm households (Singh and Joshi 2008). Dairy Sector not only generates employment opportunities but also supports ecological balance and sustainability (Dhanabalan 2009). Demand for food of animal origins to grow higher in developing countries due to increasing human population, rising per capita income and increasing urbanization (Willaarts et al. 2013). Apart from improvement in productivity or yield, adequate attention is needed towards utilization of cow dung in bio-compost, vermin-compost and bio-gas production (Abubakar et al. 2012).Cow dung available from slaughter house is another potential source which may be used for bio-gas production (Johnson et al.2018).It would reduce greenhouse gas effect also. Availability of abattoir for culling of unproductive animal and its’ subsequent utilization is another opportunity to make this sector economically sustainable. Opportunities for investment and subsequent employment in Dairy sector in North East India are quite high. This region, with multiple states having international border, has unique opportunity for developing business relations with South-Asian countries. Act East Policy of the Government of India, Free Trade Agreement with ASEAN, Pan Asian Highway etc. may be found favorable in this aspect. Market reports indicate the growing interest from co-operatives and the private sector to look for investment and expansion of their existing set up in this region. However, improvement is needed with respect to low surplus production at farmers’ end, inadequate marketing infrastructure and inefficient supply chain system.

 

Impact from Trade Policy The two key challenges to dairy sector from emerging trade regime are:

 

1. a) Balancing the interests of producers and consumers b) Balancing the interests of the nation versus sector (Jayakrishna and Rajasekaran 2015). Balancing the interests of producers and consumers: Expert opinion may be in favour of trade liberalization to address price volatility and levels. Observations from a few countries indicate an insular approach which reduces the effects of volatility. India needs to find a middle path which can safeguard the interests of both producers and consumers. Balancing the interests of the nation versus sector: Bilateral Trade and Investment Agreement (BTIA) with the European Union includes jobs and growth in favor of National interest. It induces favorable changes in regulations like data security and movement of professionals. This will benefit a few key sectors in India. On the contrary, BTIA is not in the interest of Indian milk producers as they will not get any protection against the subsidized exports. Further, Indian dairies will find it difficult to meet the stringent sanitary and phytosanitary regulations (Das 2008). Similarly, the Free Trade Agreement (FTA) with New Zealand can also impact the interests of India’s dairy sector (Saraswat et al. 2018, Jha 2019). Increase in import can affect the domestic production and status of India’s self-sufficiency .Although WTO aims to remove non-tariff barriers including quota restriction, quality issues, direct subsidies etc. but actually, the EU and United States are utilizing this tool to manipulate while putting restriction to free and fair competition (Joshi 2015).

 

About the Dairy Sector in India

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 of cattle and buffalo, 69 per cent of them are female workers, which is 5.72 per cent of the total female workforce in the country, of which 93 per cent live in rural areas. Unpaid female family labour supplies a major part of the labour requirement for milk production. Farmers keep two to five in-milk animals for livelihood. The landless and marginal farmers among them have no livelihood options to fall back when they fall short of buyers for milk.

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. However, given the nature of production and sale of milk in India, milk producers are highly susceptible to even minor shocks as the demand for milk and milk products are sensitive to changes in the employment and income of consumers.

The second wave of pandemic has thrown the milk producers from the frying pan to fire. Unlike sugarcane, wheat, and rice-producing farmers, cattle raisers are unorganised and do not have the political clout to advocate for their rights. 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. The CACP performs annually for 24 major agricultural commodities in the country including wheat and rice.

Even though dairy cooperatives handle about 40 per cent 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, on average, fat-based pricing in dairy cooperatives is 20 to 30 per cent less than the price in the open market. For instance, buffalo milk fetches Rs 65/kg in the open market in Jaipur city, while the price in dairy cooperative ranges between Rs 35/kg and 55/kg depending on the fat content of the milk. More than 75 per cent of the milk bought by dairy cooperatives is at its lower price band. Moreover, in the early lactation phase (the most productive period in terms of quantity of milk) fat content in the milk is relatively low and farmers often manage their livelihood by selling the milk in the open market at a higher price during the early cycle of lactation. Milk vendors and individual buyers pay by quantity and not by its fat content. During the pandemic, there has been a self-imposed ban on door-to-door sale of liquid milk by households both in urban and rural areas, forcing farmers to sell the entire produce to dairy cooperatives at a much lower price.

 

• Dairy is one of the biggest agri- businesses in India and a significant contributor to the Indian economy.
• It is the largest single agricultural commodity with a 4 % share in the economy.
• India is thelargest producer of milk globally with 188 million MT production in 2019-20. It produces over one-fifth of the global milk production.
  • Organizations like Amul, Mother Dairy, Kwality Limited, have played a pivotal role in expanding the production. Amul today has over 3.6 million milk producers nationwide.
  • Further, there has been a proliferation of private dairy enterprises that now account for more than 60 % of dairy processing capacity in the country.
• In the Gross Value Added (GVA) from agriculture, the livestock sector contributed 28 percent in 2019-20. Further, India witnesses a 6% growth rate in milk production every year.
• The dairy sector serves a wide range of consumer needs too – from protein supplements and health foods to indulgence foods such as yogurt and ice creams.

Significance of the Dairy Sector in India

• Tackling agricultural uncertainties: 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 associated 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.

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 Faced by Sector

• 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.
• 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.
• 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.
• 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.
• 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.
• 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.

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 for the dairy sector in India

The government introduced various initiatives to boost the dairy sector in India. Such as,

• Rashtriya Gokul Mission: It was launched in 2014 under the National Programme for Bovine Breeding and Dairy Development.
• Objectives:
  • Development and conservation of indigenous breeds
  • Breed improvement programme for indigenous cattle breeds to improve their genetic makeup and increase the stock
  • Enhancement of milk production and productivity
  • Upgradation of nondescript cattle using elite indigenous breeds like Gir, Sahiwal, Rathi, Deoni, Tharparkar, Red Sindhi and
  • Distribution of disease-free high genetic merit bulls for natural service.
• The government has launched aNationwide AI (artificial insemination) program. It targets to augment annual milk productivity from 1,860 kg/per animal to 3,000 kg/per animal upon its completion.
• The government launched the National Livestock Mission in 2014-15. It broadly covers all the activities required to ensure quantitative and qualitative improvement in livestock production systems and capacity building of all stakeholders. The major objectives of the mission:
  • Reduce the gap in demand and availability of feed and fodder,
  • Conservation and improvement of indigenous breeds,
  • Ensure higher productivity and production in a sustainable and environmentally friendly manner
  • Enhance livelihood opportunities and increase awareness
• The government established a Dairy Processing & Infrastructure Development Fund (DIDF) in 2017. It aims to modernize the milk processing plants and create additional infrastructure for processing more milk.
• The dairy farmers have been included in the Kisan Credit Card (KCC) programme. It provides adequate and timely credit support from the banking system to the farmers for their cultivation and other needs.
• Similarly, dairying was brought under MGNREGA to compensate farmers for the income loss due to Covid-19.

Suggestions

• The government should support start-ups that come up with a solution-oriented approach.
  • For instance, Country Delightis a Haryana-based dairy-tech company that is providing quality milk at consumers’ doorstep.
  • The milk undergoes 26 quality tests and farmers deliver it directly. This ensures good quality and optimum pricing.
• The producers should be given the requisite support to enter into value-added segments such as ice cream, yogurt, cheese, and whey. These segments show profit margins of 20%, which is much higher than the 3-5% margin in the case of simple milk produce.
• The dairy farmers must be given a stable market and remunerative price for the milk. For the price, a greater weightage should be accorded to the quantity of milk than its fat content.
• The government should focus on ahub and spoke model. Under this, the main farm (hub) should have all integrated facilities for milking, feed production, and milk processing.
  • The connected farms (spokes) should have a basic infrastructure for milking and cattle management. The hub should also provide technical, veterinary, and training support to their spokes for inclusive development.

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 organisations.

 

Conclusion

The current situation demands a sustainable development of the dairy sector. This development should be in line with the environmental, nutritional, and socio-economic demands of the country. Government should take robust steps in order to make dairy farming more lucrative for the small and marginalized farmers.

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