Dairy Cooperatives: A model for realisation of Atmanirbhar Bharat

GOVERNANCE/ECONOMY

Topic: General Studies 2 and 3:

• Economics of animal-rearing.
  
• Government policies and issues arising out of their design and implementation.

Dairy Cooperatives: A model for realisation of Atmanirbhar Bharat

Context: The Atmanirbhar Bharat Abhiyan aimed at making India self-reliant in the post-Covid-19 economic reconstruction. 

Self-reliance is thought to be achieved by giving thrust on two themes: ‘vocal for local’ and ‘local to global’. 

Did You Know? 

• India has been the largest milk producer country of the world for the last 22 years.  
• Currently, milk production of India stands at around 188 million metric tonnes (MMT)—in 2018-19, which is around 21% of world milk production. 

Significance of Milk Sector 

• Contributes to around 4.5% of national GDP 
• It is primary source of income for about 100 million rural households—mostly landless, small or marginal farmers. 
• Of the total value of the agricultural economy, around 28% (Rs 8 lakh crore, or $110 billion) is contributed by dairying. 
•  Milk production in India has been growing at a CAGR of 4.5% over the past 20 years, compared to less than 2% CAGR of the world. This high growth has enabled India to absorb the growing population especially in rural areas 

Milk Sector & Self-reliance 

• Self-sufficiency in milk production was achieved decades ago. 
• During the early 1970s, milk production of India was just one-third that of the US and one-eighth of Europe 
• At present, India’s milk production is double that of the US and 25% more than Europe’s. 

How was this self-reliance achieved? 

• During the 1970s, most dairy farmers did not receive remunerative returns due to the long chain of middlemen and lack of access to organised markets.  
• The scenario changed after the adoption of a three-tier cooperative model, popularly referred to as the Amul model with the three-phase implementations of Operation Flood 
• This not only led to India becoming the largest producer of milk but also largest consumer of milk globally 
• India’s per capita milk availability is around 400 gm per day per person, which is higher than global average of less than 300 gm per day per person. 

What needs to be done to sustain India’s self-sufficiency in milk production? 

1. Supporting Private investments

• Indian dairy cooperatives and private players could create additional milk processing capacity of 4.5-4.8 crore litre per day in the next decade.  
• To facilitate this growth, a financial package for dairy and fisheries was announced by Union government during lockdown. 
• This includes the creation of the Animal Husbandry Infrastructure Development Fund (AHIDF) worth Rs 15,000 crore to support private investment in dairy processing, value addition and cattle feed infrastructure.  
• The proposed fund should be channelised through the National Dairy Development Board (NDDB). 

2. Extension of the KisanCredit Card scheme to dairy farmers

• The government that has announced this extension should implement it effectively at ground level 
• This will ensure cash flow and meet the working capital requirement of small farmers. 

3. Holistic Approach

• A holistic approach is needed to bring unorganised farmers into the fold of the organised sector.  
• This desires convergence across policies, strengthening Krishi Vigyan Kendras (KVKs), common service centres (CSCs), business correspondents (BCs) commodity exchanges and digital markets.  
• The thrust should be on ensuring that dairy farmers get a reasonable share of the earnings that the private players receive through value addition.  
• The dairy sector also needs to have its adequate share in the proposed creation of 10,000 farmer producer organisations (FPOs) as part of national policy so that gglomerating FPOs can come up for better convergence. 

4. Protecting Dairy Farmers from foreign players

• Allowing cheaper import from milk-surplus economically-developed countries would hit Indian dairy farmers hard. 
• India withdrew from the Regional Comprehensive Economic Partnership (RCEP) negotiations citing apprehensions about cheaper dairy imports impacting the domestic dairy sector. 

Connecting the dots 

• RCEP 
• 97th Constitutional Amendment Act