India, with its rich history of dairy production, has long been known for its love affair with milk. From traditional paneer in North Indian cuisine to luscious yogurts and milk in South Indian fare, dairy is an integral part of Indian culture and cuisine. However, despite being the world’s largest dairy producer and consumer, India is currently facing a looming milk shortage crisis that requires collective action to address.
Milk Production in India: From Domestication to Modernization
India’s dairy industry has come a long way, with milk production evolving from domestication to modernization. In ancient times, cows and buffaloes ruled the dairy scene, producing milk that was crucial for sustenance. However, with changing times, more productive exotic and cross-bred breeds started taking center stage. Indigenous cows, known for their nutritional value, lagged behind in terms of milk production. This shift raised concerns about long-term health and environmental effects.
The Impact of Operation Flood on India’s Dairy Industry
In the mid-to late-20th century, Operation Flood, a government-led initiative, transformed India’s dairy industry and propelled it to the top spot. Gone were the days of milk production confined to household farms – it was time for big-league dairy action. Milk production in India tripled between 1968 and 2001, reaching a staggering 80 million metric tons per year. By 2010, the dairy sector contributed a significant 20% to India’s gross agricultural output, with Gujarat emerging as the dairy capital with the highest dairy output among all states.
The Role of Small-Scale Dairy Farmers in India
One of the unique aspects of India’s dairy industry is the significant contribution of small-scale dairy farmers. Family-owned and operated farms with 10 cattle or less form the backbone of the industry, contributing to India’s self-sufficiency in milk production. These small-scale farmers play a crucial role in the economy and society, providing livelihoods for millions of rural families and ensuring the availability of milk for local consumption.
Milk Consumption in India: Regional Variances and Changing Trends
Milk consumption in India varies across different regions, with some regions guzzling milk while others sipping it moderately. In the northwest, north, central, and western regions, milk consumption is on the rise, while in the south, it’s relatively moderate. The northeastern regions, with Assam, being an exception, have low milk consumption levels. Milk is a significant source of protein for the vegetarian population in India, with rural households consuming an average of 4.333 liters per month and urban households consuming 5.422 liters per month. However, changing trends in the dairy industry are leading to increasing demand for value-added dairy products such as ghee, non-fat dried milk (NFDM), and butter.
Challenges and Safety Concerns in the Dairy Sector
Despite the growing demand for milk and dairy products in India, the dairy sector faces several challenges. One of the major concerns is the safety of milk from the unorganized sector. Consumers are increasingly turning to pasteurized milk from the formal sector due to safety issues associated with the unorganized sector. Ensuring the safety and quality of milk and dairy products is critical to address consumer concerns and maintaining the growth of the dairy industry.
Milk Trade in India: Export and Import
Milk trade in India has been a topic of discussion and debate due to various factors such as import duties, animal welfare concerns, certification requirements, and global competitiveness. In this article, we will explore the dynamics of India’s milk trade, including its exports and imports, the challenges it faces, and the need for collective action to address the milk shortage crisis.
India’s Dairy Imports
India has been negotiating in the Regional Comprehensive Economic Partnership to relax import duties on whey and cheese, which are among its biggest dairy imports. However, domestic dairy producers, including the iconic brand Amul, have raised concerns and put up a fight against these negotiations. One of the key reasons behind this opposition is the ban on importing cheese that uses animal rennet, a substance extracted from newborn calves’ stomachs, due to animal welfare concerns. This ban has been in place since 2011 and has sparked debates on ethical practices in the dairy industry. Additionally, India has certification requirements for imported dairy products, and most U.S. dairy products do not meet these requirements as they are fed on feed containing extracts of ruminant origin, making them ineligible for import. These trade discussions between India and the U.S. highlight the complexities of India’s dairy imports.
India’s Dairy Exports
Despite being a significant player in dairy production, India’s exports of dairy products are relatively low compared to its domestic consumption. High domestic consumption and global prices that are not competitive enough have contributed to this trend. However, there has been some positive progress, with India managing to export around 51,421.85 metric tons of dairy products in 2019-20, worth about ₹1,341.03 crore (around US$186.71 million). The United Arab Emirates, Bhutan, Turkey, Egypt, and the United States were among the key destinations for India’s dairy exports. While India is making moves in the global market, there are challenges that need to be addressed for further growth.
India’s Milk Shortage Crisis
India is currently facing a milk shortage crisis, which has led to discussions about importing butter and ghee to address the situation. There are three main factors contributing to this crisis. Firstly, the COVID-19 pandemic has severely impacted dairy farmers, with a sharp decline in demand, crashing prices, and reduced investment in cattle. As a result, milk production growth has slowed down to 1-2 percent, significantly lower than the usual 5-6 percent. Secondly, there is an outbreak of lumpy skin disease in livestock, with an official death count of 1.9 lakh cattle, which may be an underestimate. Vaccination efforts by the government are underway, but the recovery from income and capital losses will take time. Thirdly, fodder inflation, with fodder and feed costs constituting 70 percent of milk production costs, has also contributed to the milk shortage crisis. With fodder inflation running at 30 percent, it has become a major challenge for dairy farmers, as the supply struggles to keep up with the demand.
Private Dairy Sector’s Role
Despite the challenges, there is some positive development in the private dairy sector in India. Private players have been outpacing the combined capacity of dairy cooperatives and government dairies over the past 20 years. They have been reaching out to 17 million farmers through 228 dairy cooperatives, ensuring that farmers receive a fair price for their milk. Private players have been offering higher prices, thereby shaking up the market. However, it is crucial to ensure that small farmers receive price assurance and are not exposed to price volatility.
Unlocking Opportunities in Dairy Market Growth through Infrastructure Investment
The dairy industry is experiencing significant growth globally, with increasing demand for dairy products, including value-added dairy products, organic/farm fresh milk, and exports. This growth requires substantial infrastructure investment across various aspects, such as processing, chilling, logistics, and cattle feed. To support this growth and attract investments in the dairy sector, Central/State Governments have introduced various incentives, including the Animal Husbandry Infrastructure Development Fund (AHIDF). AHIDF, a flagship scheme by the Department of Animal Husbandry and Dairying (DAHD), Government of India, has set up a fund of INR 15,000 Cr to provide financial support for setting up new units or expanding existing units in dairy processing and related value addition infrastructure, meat processing and related value addition infrastructure, and animal feed plant. The benefits available under AHIDF include a 3% interest subvention on loans, a 2-year moratorium, and a 6-year repayment period, along with an INR 750 Cr credit guarantee.
The Need for Collective Action
To address the milk shortage crisis, it is imperative for all stakeholders, including private players, cooperatives, and government dairies, to work together in a collective effort. With the increasing demand for dairy products due to population growth, rising incomes, urbanization, and changing diets, there is ample opportunity for everyone to thrive in the dairy industry. Policies and investments should be directed toward addressing supply constraints, supporting dairy farmers, and ensuring a sustainable future for the industry. It is time for concerted action to tackle the milk shortage crisis and secure a better future for the dairy sector in India. Let’s come together and make it happen!
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