Emerging Changes in the Indian Dairy Industry

Topics: Milk, Dairy farming, Dairy Pages: 9 (2307 words) Published: July 22, 2010
Emerging Changes in the Indian Dairy Industry
Meeta Punjabi Meeta.punjabi@fao.org UNFAO, New Delhi

Presentation Outline
• Context of the Study • Overview of the Indian Dairy Sector • Critical issues in development of Dairy Sector • Comparative Analysis of Emerging Dairy Chain Models ▫ Private Sector Model ▫ Modern Co-operative under MACS Act ▫ Traditional Co-operative

• Way Forward

Context of the Study

Context of the Study
• Indian Dairy Industry is at cross roads • Industry strongly dominated by the government sector and working in co-operative mode is going to face keen competition from private sector • Co-ops performed well in some states, but in many states, they are functioning as a parastatals, weak representative of farmer interest • Currently co-op prices serve as a bench mark for pricing of dairy • Weak co-ops competing with private sector may severely affect farmer interest • Growth potential is tremendous, can the farmers benefit from this opportunity?

Context of the Study
Critical Questions • What is the implications of these changes on the farmers – potential threats and opportunities? • Which models better serve the interest of the farmers? • How can the co-operatives be strengthened to meet the emerging changes?

Overview of the Indian Dairy Sector

Overview of the Indian Dairy Sector
Production and Productivity
• Largest milk producer in the world, 100 million MT • Value of output Rs. 1179 billion (2004 -05) (Almost equals combined output of paddy and wheat!!) • 1/5th of the world bovine population • Milch animals (45% indigenous cattle, 55 % buffaloes, and 10% cross bred cows) • Very low productivity, around 1000 kg/year(world average 2038 kg/year) • Large no. of unproductive animals, low genetic potential, poor nutrition and lack of services key factors for low productivity • Different regions – Developed, Average, Below average (eastern states of Orissa, Bihar and NE region)

Overview of the Indian Dairy Sector
Tremendous Growth through Operation Flood
• Stagnant milk production during 1950s and 60s • Major changes in the dairy policy (Operation Flood) • Linking-up rural producers with the urban consumers • Large public investment in milk processing sector through cooperatives • Growth rate of agriculture is stagnant, below 2%, livestock sector growth rate is more than 4.5% • IMPACT ON RURAL NUTRITION, EMPLOYMENT, INCOME, WOMEN EMPOWERMENT

Overview of the Indian Dairy Sector
Dairy and Livelihoods (Pro-poor impact)
• Small and marginal farmers own 33 % of land, and about 60% of female cattle and buffaloes (pro-poor impact) • 75 % of HH have 2-4 animals on average • Dairying is a part of the farming system • Feed is mostly residual from crops - cow dung used as manure • Source of regular income, crop income is seasonal – risk minimization (suicides) • Comprises about 1/3rd of the rural incomes • Livestock is a security – asset to be sold in times of crisis • KEY TO INCLUSIVE GROWTH

Overview of the Indian Dairy Sector
• 15 % of marketable surplus goes through organized sector, rest traditional unorganized sector • Organized sector until recently was only the co-operatives • Replication of the AMUL model in the rest of the country, NDDB lead agency • 3 Tier structure : Village society, district unions federated at state level (headed by IAS officer) • Model adopted with some variations in different states • Co-operatives have achieved limited success in many states

Overview of the Indian Dairy Sector
Regulatory Environment
• Dairy sector was de-licensed in 1991 • Milk and Milk Products Order 1992: some controls ▫ Collection areas/milk sheds specified ▫ Processing capacity fixed • Revised MMPO in 2002: controls stand withdrawn • Private sector investment in dairying has increased considerably • Previously, co-operatives did not have any competition from the private sector • To strengthen co-operatives (MACS Act,1995): reduce government...
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