February 14, 2022

 

India's low-cost milk production in need of further modern developments and keeping up with consumption

Dairy farming is an important secondary source of income for India's 70 million rural households that produce an estimated 210 million tonnes of milk annually.

 

40% of this amount is processed by private and cooperatives and is mainly consumed in India.

 

The average cattle holding has between one and two animals. The domestic milk production system is scattered over several dairy farms producing an average of less than 5kg milk per day.

 

There are other models of dairy farming in India, including large-scale farms where farmers have the ownership of cattle, and community farms with 'cow hostels' which can integrate both small and medium dairy farming operations.

 

Additionally, public–private partnership (PPP) dairy farming models need to be developed for areas that could not attract enough private investments. Further interventions are required concerning the creation of support infrastructures like a cold chain network at the farm level.

 

In terms of India's milk production, it has increased at around 4% annually, but its milk consumption has outpaced supply with a growth of around 6%. Improved breeding and innovative dairy farming have been introduced in the country so far. As for the smallholder milk production system, it requires adequate support to compete in an evolving market.

 

The average productivity of Indian cattle and buffaloes has grown over the last three decades but is still significantly lower than global standards. India's cost of milk production is around 30% lower than major milk-producing countries; this amounts to a difference of $10 per 100kg of milk production. Hence, the country's milk producers are competitive in the global market due to the low cost of milk production. Measures for enhancing fodder and milk productivity will help in further sustaining the low cost of milk production.

 

It is notable that a large share of milk production still does not conform to domestic and global food safety standards. Moreover, India also lacks professional manpower and quick service delivery to provide adequate extension and veterinary services.

 

Meanwhile, the Indian government is supporting the industry through various schemes and programmes like the National Dairy Plan (NDP) which aims to increase productivity and milk producers' access to the organised dairy market.

 

Better breeding infrastructure, optimum utilisation of the feed and fodder resources, better health care and enhanced farm management practices are some of the essential action points to enhance productivity.

 

However, availability and quality of feed and fodder are also increasingly becoming a challenge due to urbanisation and shrinking natural resources. The current deficit level of green fodder and concentrates is around 34%. There is also a supply-demand gap for quality forage seeds.

 

Institutional arrangements such as Farmer Producer Companies (FPOs) should be encouraged to increase the bargaining power of farmers. For now, village-level infrastructure has been created for milk procurement to continually bolster the supply chain.

 

On-farm technical training and extension services should also be improved, and these include training for veterinary health care, clean milk production, improved feeding practices involving local feed resources, better breeding and animal husbandry that integrates good traditional practices.

 

Additionally, regional feed-fodder banks should cater to milk production in the summer months when most Indian cattle and buffaloes tend to go dry. This can be achieved by efficient fodder production through farm mechanisation and silage production. Baled silage and dry haylage (Lucerne) can be made available across India throughout the year.

 

Private sector participation in extension services should be aligned with the public schemes and market-led practices can focus on improving resilience in the smallholder dairy farming ecosystem.

 

Deliberate efforts are required to establish PPPs for regional animal breeding centres to supply climate-resilient animals for certain agro-climatic zones and local feed-fodder systems. The government can also focus on promoting animal husbandry activities by bringing them under the corporate social responsibility ambit.

 

There is a dire need to create a robust veterinary services network. Institutional credit in the dairy production system can step up as dairy is one of the remunerative activities where cash flows are fairly positive for farmers in India.

 

Given the lack of positive progress of the Livestock Insurance Scheme, cattle insurance should be structured more efficiently, and involve product innovations and effective delivery through farmer organisations.

 

Co-operatives have been the major procurement and processing agents in India, as they work in tandem with smallholder dairy farmers. Private sector participation has also induced efficiencies and investments in the country's milk supply chain by standardising quality and stringent measures.

 

With many startups springing up in the last few years, it remains to be seen when the modernisation of India's dairy industry would enter full swing.

 

- Dr. Dinesh T. Bhosale