Crisis in Dairy Sector

ECONOMY/ GOVERNANCE

Topic:

• GS-3: Indian Economy and issues relating to planning, mobilization, of resources
• GS-2: Government policies and interventions for development in various sectors

Crisis in Dairy Sector

Significance of Dairy Sector

• Livelihood: In the farm-dependent population comprising cultivators and agricultural labourers, those involved in dairying and livestock constitute 70 million.
• Women Empowerment: Moreover, in the total workforce of 7.7 million engaged exclusively in raising of cattle and buffalo, 69 per cent of them are female workers, which is 5.72 per cent of the total female workforce in the country, of which 93 per cent live in rural areas.
• Economic Growth: In the Gross Value Added (GVA) from agriculture, the livestock sector contributed 28 per cent in 2019-20. 
• Provides Safety Net: A growth rate of 6 per cent per annum in milk production provides a great support to farmers, especially during drought and flood. Milk production rises during crop failures due to natural calamities because farmers bank more on animal husbandry then.

Issues

1. High Susceptibility: Milk producers are highly susceptible to even minor shocks as the demand for milk and milk products are sensitive to changes in the employment and income of consumers.
2. Lacks Political Clout: Unlike sugarcane, wheat, and rice-producing farmers, cattle raisers are unorganised and do not have the political clout to advocate for their rights.
3. No MSP: There is no official and periodical estimate of the cost of production and Minimum Support Price for milk.
4. Low Prices offered by Cooperatives: Even though dairy cooperatives handle about 40% of the total marketable surplus of the milk in the country, they are not a preferred option of landless or small farmers. This is because, on average, fat-based pricing in dairy cooperatives is 20 to 30% less than the price in the open market.
5. Shortage manpower: In August 2020, the Animal Husbandry and Dairying department reported a requirement of 2.02 lakh artificial insemination (AI) technicians in India whereas the availability is only 1.16 lakh. 
6. Slow disbursal of Loans: Out of the total 1.5 crore farmers in 230 milk unions in India, not even one-fourth of the dairy farmers’ loan applications had been forwarded to banks as of October 3, 2020.
7. Inadequate measures by government: Dairying was brought under MGNREGA to compensate farmers for the income loss due to Covid-19. However, the budgetary allocation for 2021-22 was curtailed by 34.5 per cent in relation to the revised estimates for 2020-21. 
8. COVID-19 impacts
   • Increased Cost & Reduced demand: The closure of shops had cut down the demand for milk and milk products while severe shortage of fodder and cattle feed has pushed up the input cost. 
   • Reduced Buyers: During the pandemic, there has been a self-imposed ban on door-to-door sale of liquid milk by households both in urban and rural areas, forcing farmers to sell the entire produce to dairy cooperatives at a much lower price.
   • Reduced access to Veterinary service: Further, private veterinary services have almost stopped due to Covid-19, which has led to the death of milch animals

Way Forward

Dairy farmers need the following to continue their vocation: 

• One, a stable market and remunerative price (ignoring fat content or giving more weightage to the quantity of milk) for liquid milk; 

• Two, uninterrupted supply of fodder and cattle feed at a reasonable price; and 

• Three, regular supply of veterinary services and medicines

Connecting the dots:

• Women and Dairy Cooperatives

• Impact of RCEP on India’s dairy sector
• How India can push its dairy cart ahead