4/6/24, 6:55 PM [Burning Issue] India’s Dairy Sector: Significance, Challenges and Way Forward

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[Burning Issue] India’s Dairy Sector:

Significance, Challenges and Way Forward

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Context

India is witnessing the spread of the Lumpy Skin Disease infection which has
killed nearly 75,000 cattle in India and spread to more than 10 States and
UTs.
The scale of deaths and spatial spread of the viral infection is important for
the nation as India has the largest number of cattle in the world and is also
the largest milk producer.
At the same time, India also hosted the World Dairy Summit 2022 after a gap
of 48 years. In both these contexts, this edition of the burning issue will deal
with the Indian Dairy Sector, its contribution to the nation, its challenges and
the way forward.

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4/6/24, 6:55 PM [Burning Issue] India’s Dairy Sector: Significance, Challenges and Way Forward

Indian Dairy Sector: An Overview

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st
India ranks 1 in milk production and contributes 23 % of global milk
production. Milk production in the country has grown at a compound annual
growth rate of about 6.2 % to reach 210 million tonnes in 2020-21 from
146.31 million tonnes in 2014-15.
The top 5 milk-producing states are: Uttar Pradesh (14.9%, 31.4 MMT),
Rajasthan (14.6%, 30.7 MMT), Madhya Pradesh (8.6%, 18.0 MMT), Gujarat
(7.6%, 15.9 MMT) and Andhra Pradesh (7.0%, 14.7 MMT).
Dairy is the single largest agricultural commodity contributing 5% of the
national economy, witnessing 6.4% (CAGR) in the past 5 years.
Approximately 80 million people are employed in the dairy industry directly
or indirectly.

Significance of the Indian dairy sector

Acts as a buffer: Milk animals act as a buffer for farmers during droughts
and flood conditions. Also, milk animals are more evenly distributed among
farmers than on agricultural land.
Not a seasonal occupation: Dairying is not a seasonal occupation like
farming as milk and milk products can be produced throughout the year
thus leading to the year generation of income.
Highly nutritious: Milk is considered a ‘Whole meal’. Dairy products are
highly nutritious with high amounts of proteins and calcium, thus helping
tackle malnutrition in India. For this reason, several state governments are
trying to add Milk to their school’s Mid-day meal scheme.
Huge Employment Generation: the dairy sector employs around 80 million
people from milk-producing farmers in rural areas to milk distributors in
urban areas.
Promotes women empowerment: most of the milking work in rural areas is
done by women. They also work as collectors and suppliers of milk to village
milk collection centres. This, helps rural women earn some income and
automatically promotes women empowerment.
Boosting other sectors: the dairy sector promotes the growth of multiple
other sectors like fodder industries, organic manure manufacturing, and food
processing industries like Curd, cheese, paneer manufacturing.

Challenges being faced by the sector

Low productivity of Indian dairy animals: Improving the productivity of

farm animals is one of the major challenges. The average annual milk yield of
Indian cattle is 1172 kg which is only about 50% of the global average.

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4/6/24, 6:55 PM [Burning Issue] India’s Dairy Sector: Significance, Challenges and Way Forward

Disease outbreaks: The Frequent outbreaks of diseases like Food and

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Mouth Diseases, Black QuarterClick
infection,
Here <Influenza etc. continue to affect
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Livestock health and lowers productivity.
Limited success in cross-breeding: Crossbreeding of indigenous species
with exotic stocks to enhance the genetic potential of different species has
been successful only to a limited extent.
Supply Chain issues: which include collection, pasteurisation and
transportation of milk in a safe environment. Since 60% of the dairy industry
lies in informal dairy, it becomes difficult to ensure regular flow and quality
of milk. That is why the adulteration of milk remains a perennial issue in
India.
Unorganised Nature: The unorganised nature of the dairy farming industry
has resulted in minimal penetration of technological progress within the
sector. This has further led to consistently high wastage as well as a lack of
standardisation in terms of quality and quantity.
Data Deficiency: Informality of the sector also leads to a lack of data
regarding total milk production, wastage of milk, and financial flows in the
sector which further inhibits the formalisation of the sector.
Low returns: there have been perennial complaints from milk farmers about
low milk purchase prices paid to them by milk companies as compared to
the final milk price in the market. This leads to the cornering of profits by
companies while actual producers get poor returns.

Latest Challenge to Indian Dairy Sector- Lumpy Skin Disease

Lumpy skin disease < https://www.civilsdaily.com/news/explained-

lumpy-skin-disease-in-india/> is caused by the lumpy skin disease virus
(LSDV), which belongs to the genus capripoxvirus, a part of the poxviridae
family (smallpox and monkeypox viruses are also a part of the same family).
It is not a zoonotic virus, meaning the disease cannot spread to humans. It
is a contagious vector-borne disease spread by vectors like mosquitoes,
some biting flies, and ticks and usually affects host animals like cows and
water buffaloes.
The disease was first observed in Zambia in 1929, subsequently spreading
to most African countries extensively, followed by West Asia, South-eastern
Europe, and Central Asia, and more recently spreading to South Asia and
China in 2019.
There is a vaccine against viral infection. Indian scientists have developed an
indigenous vaccine. The ICAR-National Research Centre on Equines (ICAR-
NRCE) in collaboration with ICAR-Indian Veterinary Research Institute (IVRI)
has developed a vaccine against Lumpy Skin Disease called ‘Lumpi-
ProVacInd’

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4/6/24, 6:55 PM [Burning Issue] India’s Dairy Sector: Significance, Challenges and Way Forward

Economic implications of Lumpy on the Dairy Sector

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Milk reduction: Lumpy leads to reduced milk production as the animal
becomes weak and also loses appetite due to mouth ulceration. Milk
collection across Rajasthan is estimated to have been reduced by 3 to 4 lakh
litres per day after the onset of lumpy skin disease.
Animal wasting: The income losses can also be due to poor growth,
reduced draught power capacity and reproductive problems associated with
abortions, infertility and lack of semen for artificial insemination.
Impact of trade ban: Movement and trade bans after infection also put an
economic strain on the whole value chain.

Steps needed to improve the Indian dairy sector

(A) Steps regarding animals:

Improving artificial insemination: to improve cow breeds and thus better

milk yield per animal.
Improving animal fodder: designing animal fodder on scientific lines rather
than old dry grass-based fodder.
Improving Vaccination coverage: of milch animals against several diseases
to prevent the frequent disease outbreak in an animal thus maintaining a
sustained and healthy supply of milk.

(B) Steps related to dairy farmers:

Ensuring more prices to farmers: as they are the actual producers of the
milk. For this, rather than giving more weightage to fat percentage in milk as
a determinant of milk price, more quantity and quality to taken as
parameters.
Price support: to farmers to improve animal fodders, ensure vaccination and
afford veterinary services on time. This ensures animal health and
productivity and thus farmers’ prosperity.
More cooperatives: Forming new cooperatives of farmers to more
formalization of the dairy sector and thus better milk quality and quantity in
the market. It will also generate more data that can be used in further
planning in the dairy sector and hence better resource mobilization.

(C) Dairy sector logistics

Improve cold storage and transportation: more refrigerated trucks must

be employed for a faster and fresh delivery of dairy products.

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4/6/24, 6:55 PM [Burning Issue] India’s Dairy Sector: Significance, Challenges and Way Forward

More dairy sector-related research: should be promoted from production

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to logistics. Production data analysis and<demand
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cater better to the needs of the producers and consumers.
Promote more start-ups: and new private dairies in the dairy industry like
Country Delight, fresh to home, big basket etc. This will help increase
competition in the market and thus break the monopolies of a few big
names and bring down prices.

Case Study: AMUL: ‘Unity in Strength’ based Cooperative Model

Anand Milk Union Limited or AMUL has created its name and reputation
over the years delivering quality milk products to the entire country and now
the world.
Amul’s story started in 1946 with inspiration from Sardar Patel, when farmers
established a cooperative named ‘Kaira District Co-operative Milk Producers
Union Limited’ (KDCMPUL) in a village called Anand.
Amul has a three-tiered structure. First, every milk producer in the village is a
member of the Village Dairy Cooperative Society. These members elect their
representatives. These representatives together manage District Milk Unions,
which form the second tier.
These district milk unions take care of milk and milk products and their
processing. They sell these products to the State Milk Federation which
forms the third tier. State Milk Federation then acts as the distributor that
sells or facilitates the selling of the products in the market. The revenue gets
shared downwards in a similar fashion.
The dairy is in control of the villagers themselves. Farmer organizations come
together under one umbrella of Amul and directly sell products to
consumers through the state milk federation.
This elimination of intermediaries could ensure a good quality product at a
competitive price. This provided a stable income for marginal farmers in lean
seasons as well because there are no intermediaries to take the chunk.
This model has become a case study in business schools. It showed the
success of cooperatives. It showed how the benefits trickle down from the
market to the producer at the bottom of the pyramid. Recently, Union
Cooperative minister Amit Shah commented that the Amul model can go
beyond the milk and dairy sector and produce great results in other sectors
also.

How are Indian startups changing the dairy sector?

Several startups are working in the dairy sector to provide solutions to

several problems in this sector. Prompt Equipment is one such organisation
that provides livestock management solutions. The firm teamed up with the

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4/6/24, 6:55 PM [Burning Issue] India’s Dairy Sector: Significance, Challenges and Way Forward

Indian Institute of Technology (IIT) in Mumbai to design the ‘BovSmart’

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delivering timely information to farmers.
Another business, Stellapps Technologies (Stellapps), offers a similar
solution, which uses a wearable gadget for cattle and a mobile application to
deliver recommendations to improve herd performance. According to
Stellapps, using this approach, milk yield can be raised by 20% and calf
health costs can be decreased by up to 50 per cent. The Stellapps technology
is currently being used to track around 4.5 lakh livestock.
Stellapps, Mr. MilkMan, as well as Trinetra Wireless are three Indian start-
ups among several others that are digitalising the dairy supply chain.
With start-ups entering the industry and addressing gaps in livestock
management and supply chain, the situation is beginning to change,
ushering in a new era of growth for the industry, rooted in digitalisation.

Government schemes related to the Dairy sector

Dairy Processing and Infrastructure Development Fund: The scheme aims

to provide a subsidized loan of @6.5% to capital-stressed milk cooperatives
for primarily replacing their decades-old chilling and processing plants and
addition of value-added product plants.
Animal Husbandry infrastructure development fund: This scheme aims to
help to increase meat processing capacity and product diversification
thereby providing greater access for unorganized Dairy producers to
organise the Dairy market.
National Programme for Dairy Development: The objective of the scheme
is to create and strengthen dairy infrastructure for procurement, processing
and marketing of milk and milk products by the State Implementing
Agencies (SIAs) i.e. State Cooperative Dairy Federations/ District Cooperative
Milk Producers’ Union.
Pradhan Mantri Kisan Sampada Yojana: PM Kisan SAMPADA Yojana is a
comprehensive package which will result in the creation of modern
infrastructure with efficient supply chain management from farm gate to
retail outlet.
Kisan Credit Cards (KCC) to Livestock Farmers: The Kisan Credit Card
scheme aims at providing adequate and timely credit support from the
banking system under a single window with flexible and simplified
procedures to the animal husbandry and fisheries farmers for their working
capital requirements.

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4/6/24, 6:55 PM [Burning Issue] India’s Dairy Sector: Significance, Challenges and Way Forward

Conclusion
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The dairy sector in India has performed well in the past but still faces several
challenges.

The need of the hour is to address these challenges holistically to usher in

‘White Revolution 2.0’ in India and achieve the target of the government of a
liquid milk production capacity of 255 MMT by 2022.

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