Dairy Industry in India

Dairy Industry in India has come a long way over the years from a low volume of 55.6 million tons in 1991-92 to 176.3 million tons in 2017-18, at an average annual growth rate of 4.5%. Indian dairy sector is uniquely characterised more by ‘production by masses’ rather than ‘mass production’. Dairying provides a remunerative outlet for family labour, so farmers’ families are encouraged to take up dairying as an occupation subsidiary to agriculture. Other than income generation and livelihood security, dairying also ensures nutritional security for the family addressing issues like malnutrition.

Dairy Industry in India

Indian Dairy Industry which includes milk production, collection, processing, distribution and marketing. It plays a seminal role in the rural economy, second only to agriculture. Contrary to many developed countries, dairying in India is more than a business activity. It has broader social and economic dimensions. Over 71 million of 147 million households in the country depend on dairy for their livelihood. Out of these households, nearly 75% are small, marginal and landless farmers with an average herd size of 2-8 animals.

The livestock sector contributes nearly 26% to rural income in the case of the poorest households and about 12% in the case of overall rural income. Dairying provides a remunerative outlet for family labor, so farmers’ families are encouraged to take up dairying as an occupation subsidiary to agriculture. Other than income generation and livelihood security, dairying also ensures nutritional security for the family addressing issues like malnutrition.

Studies show that households owning milk animals in rural areas consume almost three times more milk than families which are not into dairying. Indian dairy sector is uniquely characterised more by production by masses’ rather than ‘mass production contrary to leading milk-producing countries in the world, nearly 95% of milk producers in the country hold only one to five animals per household.

Dairy Industry – The Scenario

Milk production in India has come a long way over the years from a low volume of 55.6 million tons in 1991-92 to 176.3 million tons in 2017-18, at an average annual growth rate of 4.5 percent. But, due to various socio-economic factors, there exists wide inter-state variability in milk production. While the per capita availability of milk is 375 grams per day at the all-India levels, it varies between 71 grams per day in Assam to 1120 grams per day in Punjab.

With record production and 1.3 billion population, India is the world’s largest producer and consumer of milk accounting for nearly 19% of the world’s milk production. Most of the milk production comes from over 125 million milch animals (in-milk and dry cows and buffaloes) that are generally reared under poor conditions lacking scientific requirements.

No wonder, the Indian dairy industry is struggling with low productivity of animals which is estimated at 1806 kg per year, as against the world average of 2310 kg. But, the vast diverse population of cattle and buffaloes offers great prospects for increasing milk production in India. It is blessed with a huge biodiversity of 43 indigenous cattle breeds and 13 buffalo breeds that have survived over the last hundreds of years. Hence, a strategy is under implementation to enhance the average productivity of select breeds.

At the consumption level, about 48 percent of the total milk produced in India is either consumed at the producer level or supplied to non-producers in the nearby rural areas. The remaining 52 percent milk is marketable surplus available for sale to consumers in urban areas, Out of this surplus quantity, it is estimated that nearly 40% of the milk sold is handled by the organized sector (20% each by co-operatives and private sector dairies); whereas remaining 60 percent handled by the unorganized sector.

We need to improve this situation by bringing more and more dairy farmers into the fold of dairy cooperatives. Studies have indicated that intervention in dairy co-operatives has increased farmers’ income, created employment opportunities, easing the availability of credit to poor farmers, led to the empowerment of women, enhanced nutritional security, and also increased the flow of new technology. Sustained efforts at the institutional level have brought 15.6 million farmers under the ambit of over 1,86,000 village-level dairy societies up to March 2018.

There are 210 Dairy Co-operative Milk Unions and five major Milk Producer Companies that produce about 442 lakh kilogram of milk per day. Women members of the dairy cooperative societies are also being encouraged to assume leadership roles. As a result, the total number of women in co-operatives across the country was 4.9 million in nearly 33,000 women dairy co-operatives which is 29.5 percent of total dairy farmers (as on 31 March 2018). Despite immense utility and impact, dairy co-operatives are facing several constraints and challenges mainly due to state co-operative laws.

Hence, the Government of India launched a central sector scheme in 2016-17 to support state co-operative dairy federations in providing a stable market access to farmers. A corpus fund of Rs. 300 crore has been kept in perpetuity with National Dairy Development Board (NDDB) to provide soft loan as working capital to dairy federations. Moving further, the formation of Farmer Producer Companies in dairy sector has mobilized farmers to enhance their capacity as producers and marketing professionals. Producer companies help in creating sustainable rural employment through dairying for small and marginal farmers and landless labourers.

Plan for Prosperity in Dairy Industry

The Union Government, in pursuance of its commitment for doubling farmers’ income by 2022. It prepared and implemented a holistic “National Action Plan for Dairy Development for 2022” in 2018. The Action Plan is designed with strategies that specifically address key challenges faced by the dairy industry in India:

• Low productivity of Indian bovines
• Imbalanced feeding to animals
• Limited access of milk producers to organized sector
• Age-old infrastructure operating on absolute technology
• Lack of organized credit system
• Lack of manufacturing facilities for value-added products
• Lack of efficient chilling infrastructure at the village level
• Lack of penetration in smaller cities/towns in terms of milk marketing
• Lack of efficient cold chain distribution network.

To address the first issue, Artificial Insemination (Al) network needs to be expanded to bring more female bovines under the ambit of Al services, along with improving the efficiency of current Al delivery services. We need to extend the coverage of Al to about 65 percent of the total breedable bovines by 2021-22 from the present 26 percent. Recently, Prime Minister has launched the ‘National Artificial Insemination Program’ to cover the entire country with quality Al services.

Various breed development interventions are being implemented under Union Government schemes, such as National Dairy Plan (Phase 1) and Rashtriya Gokul Mission. Modern technologies like sexing of semen are being taken up to regulate the sex ratio and to produce large number of progenies of only female sex. Female sex-sorted semen will be made available to farmers to produce more high genetic merit heifers.

The sex-sorted semen technology will be standardized for indigenous breeds such as Sahiwal, Hariana, Red Sindhi, Rathi, and Gir during the initial phases. Further, a National Bovine Genomics Centre for Indigenous Breeds (NBGC-IB) is being set up to pave way for systematic and fast-paced improvement of precious indigenous animal resources using highly precise gene technology.

Currently, NADB has initiated talks with the World Bank and concerned government departments to launch the second phase of the Plan. It will have a projected outlay of about 8,000 crores. The second phase will primarily focus on developing milk processing infrastructure and establishing of milk quality testing equipment at critical points of procurement areas. We have 3.20 lakh potential villages with respect to Dairy Industry development.

Way Forward – Dairy Industry

At present, the three drivers of demand, that is, population growth, urbanization, and income growth are very strongly in operation due to which the demand for milk and milk products is rising steadily. With recent measures and steps taken by the Government, it is hoped that targets of increase in milk production will be achieved but some issues need to be taken into account. We must transform our Dairy Industry into a technology-driven mode having an organized status.

As far as the availability of modern dairy equipment is considered, India’s recent progress is remarkable, but we still depend on imports for advanced machinery. Equipment for packaging butter, cheese, paneer, and other traditional products needs attention and necessary action. Further, the fiscal benefits of the food processing sector should also be extended to dairying. Experts also demand exemption of income tax for Dairy Industry co-operative societies on the pattern of exemption to agricultural income.

Further, milk prices paid to farmers also need to be raised so as to make dairying a sustainable livelihood option in the future. The role of women in dairying is well-known and documented. Women’s engagement in Dairy Industry activities at the household level is about 60-70%, but it needs support and strengthening at the cooperative societies’ level. The involvement of women in cooperatives provides them with economic and financial empowerment. At the institutional level also various studies have indicated that co-operatives managed by women are generally better performers.

At present, India’s share in global Dairy Industry trade is just 1%, which needs to be enhanced by technology infusion and quality management. We need exclusive and dedicated efforts to transform Indian dairying into a globally competitive enterprise with the welfare of farmers at the core.