By Dr Amrit Patel:
In India annual milk production has increased about seven times since independence and it virtually doubled since 1991-92. Milk production is expected to increase by over 4% to 127.29 million tons inÂ 2011-12Â as against 121.84 million tons inÂ 2010-11. With the increase in milk output per capita availability of milk per day also increased from 176 grams in 1990-91 to estimated 274 grams in 2010-11 which, however, is much lower than that in developed countries. Considering the pace of population growth and surge in demand for the protein rich drink, the country needs to step up milk output to 200 million tonsÂ by 2021-22.Â Thus, annual milk output has to increase by 7.5 million tons, as against the average four million tons achieved over the last 10 years. Currently, the country has to rely onÂ imports, particularly in summer to meet its domestic milk procurement.Â Exports of milk and milk products and casein products have been banned since February 18, 2011, to shore up its domestic availability.
National Dairy Plan: To meet the projected demand of 200 million tons by 2021-22, National Dairy Development Board [NDDB], Anand has formulatedÂ Â 15-year perspective National Dairy Plan [NDP] envisaging an outlay of Rs.17,300 crore. On April 19, 2012 NDP-1, a new central sector scheme was launched which accidently also coincided with the launch of country’s Twelfth Five Year Plan [20012-17]. It is a six-year plan with an outlay of Rs.2242 crore of which 80% will be financed through International Development Association and the rest will be funded by the Government of India. It is to be implemented in 14 major milk producing States viz. Uttar Pradesh, Punjab, Haryana, Gujarat, Rajasthan, Madhya Pradesh, Bihar, West Bengal, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Orissa and Kerala. It would be largely financed with loan from the International Development Association of the World Bank and implemented by NDDB through End Implementing Agencies [EIAs] located in the concerned States. NDP aims to increase the productivity of milch animals by adopting focused scientific and systematic processes and help provide rural milk producers with greater access to the organized milk processing sector.
NDP-1 aims at enhancing breeding, feeding and milk procurement to increase milk output from current level of 4% per annum to 6% in next few years. It will cover about 1.2 million milk producers in 23,800 villages andaims at increasing milk procurement by cooperatives from current level of 30% to 65% in next 15 years. The cooperative sector is, however, not growing satisfactorily. Therefore, the constitution is amended to increase transparency in the cooperative sector and facilitate setting up of producer companies or new generation cooperatives.
Cooperatives: Ten years ago, cooperatives procured 16.5 million litres a day [mlpd] of milk that was more than the 12.5 mlpd procured by organized private dairies in the country. The situation has, however, now completely reversed. Private procurement increased from 21 mlpd in 2005-06 to 40 mlpd in 2009-10 as against 21.45 mlpd to 25.87 mlpd by cooperative sector in the country in respective years. Among cooperatives, only two States of Gujarat and Karnataka have contributed 9.40 mlpd in 2005-06 and 12.71 mlpd in 2009-10 whereas cooperatives in rest of the country procured only 12.05 mlpd and 13.16 mlpd respectively. The Compound Annual Growth Rate [CAGR] during 2005-06 to 2009-10 was as high as 17.48% for private dairies as compared with 4.8% for cooperatives in the country.Â Interestingly, the CAGR for cooperatives in two States of Gujarat and Karnataka was 7.83% whereas it was as low as 2.23% for cooperatives in rest of the country.Â Â Out of total 25.87 mlpd procured by cooperatives in 2009-10, about nine mlpd is accounted for by Amul and little less than four mlpd by Nandini.
Ten years ago, there was only one private sector player, Nestle India Ltd, that was handling more than one mlpd of milk. Now there are eight, viz. Hatsun Agro Product, VRS Foods, Tirumala Dairy, Heritage Foods, Sterling Agro Industries [Nova], Bhole Baba Dairy Industries [Krishna], Dynamix Dairy Industries and Parag Milk Foods [Govardhan]. Another six dairies including Dodla Dairy, Keventer Agro, SMC Foods [Madhuudan], Creamline Dairy [Jersey], and Gopaljee Dairy procure over five lakh litres per day.Â Private sector has played a key role in the development of dairy sector in Uttar Pradesh and Tamil Nadu. They have significantly invested in creating the much needed infrastructure and establishing a network of milk production centers.
Private Sector Participation: The Government policy has been that the NDP is to be implemented by the NDDB, which is formally mandated to work only with cooperatives. This was necessary during the Operation Flood days, when only a handful of organized private dairy players existed. But since last 10 years the private sector has demonstrated excellent performance and recorded significant growth rate whereas the cooperative sector [except in Gujarat and Karnataka] has been lagging much behind despite NDDB’s serious efforts and Government’s policy interventions to develop cooperatives in the dairy sector. For example, the NDDB has not been successful performance in nurturing cooperatives in recent years, especially in the Hindi heartland States with the maximum production potential. The Government should, therefore, acknowledging the positive role of private sector, encourage private sector to participate in NDP. Besides, the preferential duty concessions, both for export and import, must be equally extended to private sector at par with cooperatives.
It is nowÂ opportune time and legitimate, when the country has to achieve 4% growth rate per annum in agriculture of which live sector itself accounted for 28.4% in 2009-10 [i] not to monopolize NDDB as the implementation agency for the NDP and [ii] more importantly, not to deliberately exclude the private sector from its participation in an ambitious program of this scale and scope, when it has been facilitating increased milk production through efficient procurement system and establishment of fresh milk processing capacities.. Government may also consider it necessary as a part of reform process in dairy sector to create a facilitating environment that can encourage NDDB to fully support and finance private dairies. This should focus on NDDB’s role in enhancing the milch animal productivity and provision of extension activities. For example, how effectively its subsidiary, a Mother Dairy as a private company competes with Amul and Nandini?
Twelfth Five Year Plan Focus:Â Despite the appreciable growth in milk production in the last six decades, the productivity of animals is still low. To achieve the targeted growth rate on the much higher current production base the Twelfth Five Year Plan must accord priority to dairy industry and facilitate to [i]Â strengthen research capacity [ii]Â improve the genetic potential of our milch animals [iii] provide quality nutritious feed and fodder at affordable price without greater stress on our scarce land and water resources [iv]Â improve veterinary and animal health care infrastructure including provision for timely vaccinations and cattle insurance [v] expand milk transport, procurement processing capacity [vi] modernize marketing systems and develop to a satisfactory level and [vi] access to formal credit mechanisms
For Indian dairies one more immediate challenge lies in managing costs. The disappearance of common grazing lands in villages, diversion of straw to alternative uses [bio-fuel, paper, packaging etc.] and increasing export of oil-meals will similarly impact hitherto free fodder and feed supplies. In the long run, dairying may have to outgrow its subsidiary status.
Growth in milk production will need substantial increase in milk handling capacity and marketing. .About 80% of milk produced in the country is still handled in the unorganized sector and only remaining 20% is shared between cooperatives and private dairies. The organized dairy sector comprising cooperatives and private sector will have to expand their coverage of milk producers and villages and improve their current share of marketable surplus from 30% to 65% by 2021-22. They will have to introduce cost-effective measures for procurement, processing and marketing. This would in turn make available larger volumes of good quality milk at competitive prices to consumers.
Regulatory and Development Authority should find a place to deal with all aspects of timely and quality supply and services at affordable prices, viz. insemination services, balanced cattle feed, veterinary medicines, dairy equipment, insurance and credit, milk procurement, processing and enforcing international quality standards of milk and milk products etc.
Comprehensive policy:Â Â The Twelfth Five Year Plan may have to focus on evolving a comprehensive policy for integrated dairy development, with a mission “Milk for Millions with sharp focus on substantially improving per capita availability” addressing the shortcomings identified hitherto in the implementation of programs and should aim at accelerating the pace of growth of the sector to match the increasing demand of milk and milk products by 2021-22. The strategy should,Â inter alia,Â concentrate on capacity building of small farmer-producers and creating facilitating environment that can encourage medium size [4 to 10 hectares] and large size [above 10 hectares] land holders to engage in commercial dairy farming as an industry in a public-private-partnership mode with an ultimate objective to improve the per capita availability of milk and animal protein at par with that of developed countries. To accomplish the strategy, adequate financial and human investment is required for massive research, extension and education efforts that can enhance animal productivity, improve product quality, induct modern technology, create better marketing facilities including export. State Governments may have to draw a road map indicating block and district-wise targets for incremental milk production, improvement in infrastructure and putting in place appropriate organizational set-up responsible and accountable to achieve the targets. Government must involve village panchayats, build their capacity andÂ train local educated unemployed youths to undertake livestock breeding, pregnancy diagnosis, disease prevention vaccinations, primary health care, forage production, feeding and other technical aspects of livestock development in rural areas, assigning 12-15 villages for each Para Veterinary assistant. The program needs to conserve community pastures and forests and promote organic farming and women empowerment.
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