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Sansad TV: Increasing demand challenges the dairy sector

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  • White revolution period intended to make India a self-dependent nation in milk production. Today, India is the world’s largest producer of milk and Dr Verghese Kurien is known as the father of the White Revolution in India.
  • The huge increase in milk supply through concerted efforts on a cooperative level is known as the White Revolution.
  • Forty-eight years after Operation Flood– that made India the world’s largest milk producer – India continues to be on the lookout for the next breakthrough in agricultural produce and productivity.
  • White Revolution 2.0 has effectuated dairy firms’ marketing strategy for milk and milk products, resuscitating the outlook of product-market mix.

Milk production in India:

  • India emerged as the largest milk producer and consumer in 2019.
  • Niti Aayog estimates that the country is expected to increase its milk production to 330 million metric tonnes (mt) in 2033–34 from the current level of 176 mt.
  • Currently India has 17% of world output of dairy products, surpassing USA in 1998 as world’s largest producer of dairy. All this was achieved by operation Flood which was launched in 1970’s.
  • According to market research company IMARC, the milk and dairy products industry reached Rs7.9 lakh crore in 2017.
  • In 2016, the milk sector alone was valued at Rs3 lakh crore and is projected to scale Rs7.3 lakh crore by 2021.
  • The per capita milk availability in India has gone up from 126 gm per day in 1960 to 359 gm per day in 2015.

Potential of White Revolution 2.0:

  • Post-liberalisation and Milk and Milk Products Order (2002) was abolished, dairy businesses observed a radical shift toward a strategic product diversification towards functional and traceable foods like nutrition-based health drinks, packaged milk products (such as paneer), and frozen/probiotic products and so on.
  • White revolution 2.0 can strengthen the scope of vertical integration between cattle feed industries, dairy machinery firms, producer cooperatives unions, state marketing federations, advertising and marketing firms, logistics and distribution agencies.
  • The dairy industry in India is unique. With six lakh villages housing about 90 crore people, dairying is not just a large economic activity but also an integral part of our social and cultural heritage
  • Can help small farmers to reduce dependence on crop sales
  • Can increase source of income of farmers in low yielding areas like Marathwada, Bundelkhand etc
  • India is surrounded by countries and regions that are milk-deficient, such as the Middle East, South Asia and Southeast Asia.
  • There is ample scope for export of value-added milk products to Bangladesh, China, Singapore, Thailand, Malaysia, Philippines, Japan, the UAE, Oman and other gulf countries, all of which are located close to India.
  • At present, the population of South Asia alone is growing at 1.3 per cent a year; it is likely to be 2.2 billion by 2050. This presents an opportunity for India’s dairy industry

Challenges to White Revolution 2.0:

  • The Indian cows and buffaloes are generally low yielding and non-descript because of the lack of healthy cattle-feed and fodder, tropical heat and diseases.
  • Despite lack of water and gradually declining arable land, dairy farming is on the rise.
  • Free trade agreements, or FTAs, for instance, will allow EU government-subsidised products to be imported from Europe with little entry barriers. This will pose a big challenge to cow-farmers.
  • Due to unhygienic production, handling conditions and high temperatures, the quality of milk is adversely affected.
  • Because of inadequate marketing facilities, most of the marketable surplus is sold in the form of ghee which is the least remunerative of all milk products.

Measures needed:

  • Increase in the market share depends on how dairy firms’ capabilities and their resources are utilised given the opportunities and threats emanating from emerging markets economies.
  • Contract/corporate dairying and emerging global dairy trade are required to rope in dairy supply chains stakeholders in order to expand their outreach and “on-the-go” product positioning into the target segment.
  • Digital technology-enabled dairy firms need to identify their compatible partners and competitors for co-creation through product-process innovation via relationship/value-based marketing.
  • Freshness in milk, and convenience to store milk or milk products can be a technology innovation brought in by large dairy firms in association start-ups.
  • Education and Training at Panchayat level for small and medium size farmers
  • Subsidizing cattle production and encouraging cattle markets
  • Facility of logistics for produced milk
  • Improved Veterinary facility specially in artificial insemination of cattle
  • Encouraging private sector firm to procure dairy produced at rural level
  • Low interest loans for small and medium scale farmers for cattle purchase
  • Encouraging rural women to take up animal husbandry
  • Insurance of cattle against diseases like Anthrax, Foot and Mouth, Peste des Ruminantes, etc.
  • Nurture dairy entrepreneurs through effective training of youth at the village level coupled with dedicated leadership and professional management of farmers’ institutions.