Dairy industry in India

• India emerged as the largest milk producer and consumer in 2019.
• 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 million engaged exclusively in raising of cattleand 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.
• 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.
• 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.

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.

Government initiatives for the diary sector:

• 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)

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.
• Agricultural practices, sanitation, quality of drinking water & fodder, type and quality of pipelines – all of these need to be aligned to the goal of healthy milk

The Government initiatives can ensure sustainable growth of the dairy sector as well as boost incomes of millions of small and marginal dairy farmers. Linking the animal husbandry with food processing industry, agriculture, researches & patents has all the possible potential to make India a nutritional power house of the world. Animal husbandry is the imperative hope, definite desire and urgent panacea for India as well as the world.

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.
• Market structure, conduct, and performance has dramatically changed post 2000s. Besides the established cooperative federations like Amul, other state cooperative federations and multinationals (namely, Nestle, Danon, and Lactalis) are aggressively harnessing the untapped business potential.
• 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:

• India may consider reducing GST on ghee and milk fat, from 12% to 5% to bring it at par with the GST rate for SMP. This has been a long-standing demand of the dairy industry and will ultimately benefit milk producers, increase rural incomes, spur demand and hasten economic recovery.
• 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.
• Agricultural practices, sanitation, quality of drinking water & fodder, type and quality of pipelines – all of these need to be aligned to the goal of healthy milk

“A cooperative is an organization established for the purpose of purchasing and marketing the products of its members, i.e., shareholders, and/or procuring supplies for resale to the members, whose profits are distributed to the members (in the form of patronage dividends), not on the basis of the members’ equity investment in the cooperative, but in proportion to their patronage of it, i.e., the amount of business that each member transacts with it”.

Need to setup cooperatives for women farmers in dairy industry:

• Cooperatives enhance backward and forward linkages in the dairy value chain, paving the way for freeing small farmers from the clutches of middlemen, and guaranteed minimum procurement price for milk.
• A study by the International Development Research Centre (IDRC) indicates that 93% of women farmers who receive training alongside financial support succeed in their ventures, compared to the 57% success rate of those who receive financial aid alone.
• According to latest data, there are more than 1,90,000 dairy cooperative societies across the country, with approximately 6 million women members.
• Increased Income: A study conducted on Women Dairy Cooperative Society (WDCS) members across Rajasthan showed that with the income generated through dairying, 31% of the women had converted their mud houses to cement structures, while 39% had constructed concrete sheds for their cattle.
• Provides Leadership lessons: Importantly, women-led cooperatives also provide fertile ground for grooming women from rural areas for leadership positions.
• Breaks barriers: In many instances, this becomes the first step for women in breaking free from traditional practices.
• Defeats Information Asymmetry: The presence of collectives in the form of cooperatives and milk unions plays a significant role in enhancing the knowledge and bargaining power of women

Measures needed

• The National Dairy Development Board (NDDB) now organises farmer’s orientation programmes across the country, under which women farmers are trained in scientific best practices on animal health, fodder quality, clean milk production, and accounts management. This must be further pushed with vigour to all states.
• NDDB has played a proactive role in setting up women-led producer enterprises like Shreeja Mahila Milk Producer Company, which was started with 24 women and now has more than 90,000 members, with an annual turnover of approximately ₹450 crore. Such cooperatives must be emulated across the breadth and width of the country.
• This is a great opportunity for the State governments to promote dairy business in those districts where milk production and milk availability are less than the national average. They can facilitate the promotion of the cooperative model in these regions, to channelise and formalise milk procurement, which will help millions of people to be gainfully employed.
• The Finance Minister recently announced an outlay ₹15,000 crore for Animal Husbandry Infrastructure Development Fund, which will be used for supporting private investments in dairy processing and value addition, and cattle feed infrastructure. This will not only give a boost to local manufacturing and consumption of locally produced goods but will also help the national consumer become “vocal for local”; thus taking India forward on the path of self-reliance.

The dairy sector plays a vital role in achieving the Sustainable Development Goals (SDGs) — especially SDG 1-No poverty, SDG 3-Good health, SDG 5-Gender equality, SDG 8-Good jobs and economic growth, and SDG 10-Reduced inequalities — and it helps in improving lives and transforming the global economy.

Strengthening cooperative milk business across these regions will help generate alternative employment opportunities, especially for women and economically disadvantaged communities. A flourishing dairy sector will help rural India become self-reliant and will also contribute to doubling farmers’ income.

Sustenance of dairy industry during CoVID-19:

• To enhance the marketing of milk and milk products, many dairy organisations, initiated home delivery of milk and milk products through mobile carts, vans, e-commerce, etc.
• All these measures helped stabilise milk sales, opening up opportunities to use e-commerce.
• Many smart and progressive dairy farmers converted their surplus milk into khoa, paneer, ghee, etc, and sold it to the neighbourhood markets through informal channels.
• The US is contemplating to purchase milk, convert it into commodities which could be used as international humanitarian aid.
• All these measures helped sustain dairy industry.

Changing dynamics of dairy sector due to pandemic

• 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 lessthan 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 priceduring the early cycle of lactation.
• Milk vendors and individual buyers pay by quantity and not by its fat content.
• The recent crisis of low milk prices is due to the destruction of demand in the hotel, restaurant and catering sectors, which consume about 25% of the total marketable surplus.
• During the pandemic, there has been a self-imposed ban on door-to-door sale of liquid milkby households both in urban and rural areas, forcing farmers to sell the entire produce to dairy cooperatives at a much lower price.
• The closure of shops had cut down the demand for milk and milk products while severe shortage of fodder and cattle feed has pushed up the input cost.
• Further, private veterinary services have almost stoppeddue to Covid-19, which has led to the death of milch animals.

Ways for holistic development of dairy sector

• Dairy farmers need the following to continue their vocation:
  • One, a stable market and remunerative price(ignoring fat content or giving more weightage to the quantity of milk) for liquid milk;
  • two, uninterrupted supply of fodderand cattle feed at a reasonable price;
  • three, regular supply of veterinary servicesand medicines.
• The government has launched the FMD vaccination programme and 1.5 crore cows and buffaloes have been vaccinated.
  • Once India is declared free of FMD by the Paris based intergovernmental World Organisation for Animal Health (OIE), Indian dairy and meat exports will not face non-tariff barriers.
  • This can open up export markets for Indian dairy and meat.
• In 2019-20, India earned just $86.73 million from the export of dairy products. In the next 5-10 years, if India can get FMD free status, several products like buffalo mozzarella cheese, ghee etc. can be exported to the US and the European Union.
• There is a large scope of attracting private investment in the milk sector. For that, the government should release data on existing capacity in each district of India.
• Once schools reopen, states must consider providing milk and eggs to students under the mid-day meal scheme so that locally produced and unadulterated food is made available to children of the poor, who form the majority of students in government schools.

Covid-19 pandemic has thrown up the real possibility for our dairy industry to benefit as large sections of consumers may shift from meat-based to dairy-based protein. Covid-19 has made people more aware of the need to adopt a healthy diet. Covid-19 crisis has witnessed reverse migration of labour force from urban to rural areas leading to social disruptions. On the positive side, we can look at this as an opportunity; these workers can be encouraged and incentivized to join their family agriculture/dairy farms.

Technology can strengthen the Diary sector

• Biotechnology
  • Biotechnology is a relatively emerging field in the dairy industry.
  • However, it is being touted as one of the most disrupting dairy technology of the future.
  • The potential of dairy biotechnology lies in the areas such as increasing disease resistance in livestock, scientific feeding of cows, embryo transmit technology, artificial insemination, development of new molecules and vaccines for prevention and disease management of animals, dairy enzymes/proteins/probiotics, food-grade bio-preservatives, etc.
• Cross-Breeding technology:
  • Crossbreeding has taken off in a big way because of the advancements in reproductive technologies like In vitro fertilization (IVF), embryo transfer process, and artificial insemination.
  • Out of these processes, IVF and artificial insemination have proven to be the most popular and effective methods.
• Health Tracking Devices for Cattle:
  • Health disorders reduce the productivity, longevity and reproductivity of cattle.
  • Every year, farmers cough up huge amounts of money on their cattle’s health and wellness. However, thanks to wearable animal gadgets which are akin to human fitness trackers, farmers can track, monitor and manage cattle’s health, nutrition, behaviour, pregnancy, milking frequency, milk production anomaly and activity level in real-time.
  • These smart animal trackers can be implanted in the cattle’s ears, tail, legs, neck or any part of the body.
  • Last year, Karnataka government had implanted GPS-enabled digital chips in the ears of 56 lakh animals across the state to track their health and early diagnosis of medical condition.
• Robotic milking machines:
  • Robotic milking machines are enabling farmers to eliminate the pressure on physical labour, maintain a hygienic milking process, milk the cows anytime of the day instead of following a fixed schedule and improve the milk production.
  • The robotic milking machines have arms or cups with sensors that can be attached individually to cows’ teats.
  • The sensors can detect whether the cow or which of its teat is ready for milking or not.
• Milk Freshness:
  • Milk is a highly perishable product. In spite of treating it with pasteurization, freezing and preservation processes, it has a tendency to go stale.
  • Millions of tons of milk turns stale before timely consumption and goes waste.
  • Efforts are also being consistently made to increase the shelf life of milk without adding additives or preservatives.
  • Technology is now making it possible to detect the freshness of milk and store it for a longer period of time.
• Feed Management
  • The feed requirement of cattle depends on their health and weather.
  • For example, a sick or pregnant cow may need more nutrition. Hot and humid weather means that cattle need more glucose in their feed.
  • There are a number of feed technologies that produce formulated feed additives, supplements, premixes and base mixes to maintain optimal milk production throughout the year.
  • For example, the National Dairy Development Board (NDDB) has developed bypass protein technology to produce specially treated protein supplements that can be fed to cattle to increase milk yield and quality.
• Supply Chain Technology
  • The Indian dairy industry supply chain is quite complex owing to its dependency on a number of factors such as storage temperature, cold chains availability, weather, perishability/shelf life, first and last-mile distance, packaging, etc.
  • The fact that the Indian dairy industry is unorganized and fragmented also adds to the supply chain woes.
  • However, a number of technological innovations are taking place in the dairy supply chain in India.

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.
• Agricultural practices, sanitation, quality of drinking water & fodder, type and quality of pipelines – all of these need to be aligned to the goal of healthy milk

The Government initiatives can ensure sustainable growth of the dairy sector as well as boost incomes of millions of small and marginal dairy farmers. Linking the animal husbandry with food processing industry, agriculture, researches & patents has all the possible potential to make India a nutritional power house of the world. Animal husbandry is the imperative hope, definite desire and urgent panacea for India as well as the world.

Harvesting animals for dairy and animal-based products in India is a major source of livelihood for 150 million dairy farmers. The products are a source of nutrition and food security for a significant chunk of the population as well. The dairy sector accounts for 4.2 per cent of the national gross domestic product. Concerns of high GHG emissions from dairy sector is a cause for worry.

Contributions of Dairy sector to climate crisis in India

• Agriculture contributes approximately 16 per cent of India’s greenhouse gas (GHG) emissions which is released by cattle during dairy farming.
• Methane from ruminant belching and animal waste contribute about 75 per cent of the total GHG emissions of the dairy sector.
• The alarming loss of biodiversity is attributed to water- and energy-intensive crops needed to feed the cattle.
• India is increasingly becoming water-stressed due to exploding human and cattle population growth.
• A typical crossbred cow consumes about 1,100 litres / day.
• With this increasing demand for dairy, there is growing pressure on natural resources, including freshwater and soil.
• The three major GHGs emitted from agri-food systems, namely methane (CH₄), nitrous oxide (N₂O) and carbon dioxide (CO₂).
• Multinational companies such as Nestle and Danone have been accused of promoting water-intensive dairy industry in Punjab and the neighbouring states, which is fast depleting groundwater.
• Unsustainable dairy farming and feed production can lead to the loss of ecologically important areas, such as wetlands, and forests.
• Animal exploitation through animal farming, destruction of natural habitats, livestock-associated deforestation, hunting and trading of wildlife are the leading cause of zoonotic diseases caused by germs that spread between animals and humans.

Way forward

• Recently, Indian Council of Agricultural Research (ICAR) has developed an anti-methanogenic feed supplement ‘Harit Dhara’ (HD), which can cut down cattle methane emissions by 17-20% and can also result in higher milk production.
• In order to reduce emission intensity of milk, the sector needs to urgently act to realize the existing potentials for GHG emission reduction through technological and farm best practices interventions and solutions.
• Fostering changes in production practices that protect carbon sinks (grasslands and forest) by targeting drivers linked to degradation of natural ecosystems, agricultural expansion and deforestation.
• Dairy producers cannot ignore the climate consequences of the sector. They need to proactively ramp up production of plant-based human food alternatives to dairy products.

The dairy industry has been a subject of intense debate in recent years, fuelled by climate change crisis concerns worldwide as well as the advancement of various plant-based alternatives claiming to be more sustainable replacements. With livelihoods of 150 million at stake, policymakers will need to identify alternative employment opportunities for the displaced masses. Large-scale social forestry could be an answer to address this fall-out, with positive consequences to the planet.