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RSTV: POLICY WATCH- DAIRY SECTOR IN INDIA

POLICY_WATCH

Introduction:

The Union Cabinet has approved 4,458 crore scheme for the dairy sector. The move will benefit as many as 95 lakh milk producers. The Cabinet Committee on Economic Affairs, has also given its approval for upward revision of interest subvention to 2.5% per annum under the scheme Dairy Processing and Infrastructure Development Fund with the revised outlay of Rs 11,184 Cr.

Milk Production in India:

  • India is the largest producer of milk.
  • The value of milk is more than that of rice and wheat combined.
  • So, it is India’s biggest agri-produce.
  • It is a source of income to small and landless agri-hou
  • 70 per cent of those earning their livelihood from milk are women.
  • Small and marginal farmers own 33 percent of land and about 60 percent of female cattle and buffaloes.
  • Some 75 percent of rural households own, on average, two to four animals.
  • Dairying is a part of the farming system, not a separate enterprise. Feed is mostly residual from crops, whereas cow dung is important for manure.
  • Dairying provides a source of regular income, whereas income from agriculture is seasonal. This regular source of income has a huge impact on minimizing risks to income. There is some indication that areas where dairy is well developed have less incidence of farmer suicide.
  • About a third of rural incomes are dependent upon dairying.
  • Livestock is a security asset to be sold in times of crisis.

Factor conditions

  • Factor conditions for dairying entail the quality of animals, human resources and technical skills, land availability, capital, credit, infrastructure and other inputs relevant to the value chain, as the following explains.
  • The quality of animals is critical in determining its milk productivity and hence overall production. Currently, low productivity per animal hinders development of the dairy sector. Despite being the world’s largest milk producer, India’s productivity per animal is very low, at 987 kg per lactation, compared with the global average of 2 038 kg per lactation.
  • The low productivity is a result of ineffective cattle and buffalo breeding programmes, limited extension and management on dairy enterprise development, traditional feeding practices that are not based on scientific feeding methods, and limited availability and affordability of quality feed and fodder. In addition, the limited supply of quality animals is exacerbated by policies limiting interstate movement of animals. Indigenous cattle and buffalo make up 45 percent of the country’s total milch population, in contrast to the cross-bred cows at 10 percent.
  • Animal health and breeding services provision, veterinary infrastructure development and vaccinations are the responsibility of the state government. These services have traditionally been provided for free or at a very subsidized rate. In the past few years, there has been increasing awareness that the state pays heavily to offer these services, which are easily available to farmers (Ahuja et al.). Consequently, many states have instituted partial or full-cost recovery fees for providing the services.
  • Despite these initiatives, the availability of services remains limited. Currently, AI services cover only 15 percent of the breedable animals. Cattle and buffalo breeding programmes have been initiated but have not had the desired impact because of a lack of coordination between the different state departments.
  • Crop residues are the single largest bulk feed material available to farmers for feeding livestock, specifically ruminants. They include coarse straws, fine straws, leguminous straws, pulses straws and sugarcane tops.
  • Fodder from common property resources is another major source of feed for animals. But lack of efficient management of common property resources is a major constraint in availability of these resources for fodder. The area under cultivated fodder production is limited only to 5 percent of the total cultivable land.
  • Concentrates used for fodder include coarse grains, such as maize, sorghum, bajra and other millets, and other cereal by-products, such as rice bran/polish and various oil meals, including groundnut cake, mustard cake, coconut cake, soybean meal, cotton seed meal and sesame cake.
  • The escalating price of feed ingredients is a major cause for concern. In many states, cooperatives are involved in producing feed concentrate and selling to farmers at subsidized rates.
  • Scarcity of fodder resources is likely to be a major constraint in the development of the dairy sector unless adequate measures are undertaken to augment them.
  • Another important issue regarding feed is the lack of regulations to ensure quality. In the absence of a coherent policy, all kinds of substandard feeds are available in the market.
  • Formal/informal credit: Lack of access to credit to expand the herd is a critical problem for farmers. There is little access to formal credit through the cooperatives. Informal credit is available from private traders and agents of private companies, but the interest rate is very high. And these loans may or may not be linked to dairy activity. When taking a loan from a trader, the farmer is then tied to selling the milk to that trader, often at a low rate.
  • Vaccines/medicines: The Government and the private sector are involved in producing medicines and vaccines. However, quality control is a critical issue. An important policy question is whether the government should be involved in the manufacturing and production of vaccines or should it instead take on a regulatory role to ensure quality and availability at a reasonable price.

Government initiatives:

  • National Programme for Bovine Breeding
  • Rashtriya Gokul Mission
  • National Bovine Genetic Centre
  • Quality Mark
  • National Kamdhenu Bredding Centres
  • E-Pashuhaat portal
  • National Programme for Dairy Development (NPDD)
  • Dairy Entrepreneurship Development Scheme (DEDS)
  • National Dairy Plan-I (NDP-I)
  • Dairy Processing and Infrastructure Development Fund (DIDF)
  • Supporting Dairy Cooperatives and Farmer Producer Organizations engaged in dairy activities (SDCFPO)

Challenges faced:

  • Indian cattle and buffaloes have among the lowest productivity.
  • Similarly there is a shortage of organized dairy farms and there is a need of high degree of investment to take dairy industry to global standards.
  • Improving productivity of farm animals is one of the major challenges
  • Crossbreeding of indigenous species with exotic stocks to enhance genetic potential of different species has been successful only to a limited extent.
  • The sector will also come under significant adjustment pressure to the emerging market forces. Though globalization will create avenues for increased participation in international trade, stringent food safety and quality norms would be required.
  • Access to markets is critical to speed up commercialization. Lack of access to markets may act as a disincentive to farmers to adopt improved technologies and quality inputs.