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Dairy Industry Key To Enhancing Rural Prosperity

Monday, March 28, 2016
By Dominic Rebello

The industry currently contributes to around 33% of the value of agricultural production in India and is growing at a  CAGR of over 20%. And unlike other agricultural crops where income is largely seasonal, milk provides a regular cash-flow on a daily or fortnightly basis. What is needed is good procurement, remunerative pricing of milk for farmers, and good distribution of milk to consumption centres

The “demand for dairy products in India is likely to grow in the coming years. It has been considered as one of the activities aimed at alleviating poverty and unemployment especially in the rural areas. Dairy, in effect, could become a great tool for equitable growth and income distribution. Thus, it is necessary to give impetus to this industry to continue reaping its economic benefits, said  IMC President,  Dilip Piramal in his inaugural address  at a panel discussion organised by the Indian Merchants Chamber on the ‘Indian Dairy Industry and its Relevance to the Economy’ last week.

An esteemed panel comprising comprising industry head honchos were present and provided insight into the competitive landscape of the dairy sector. All were confident that milk could play a significant role in the coming months and years towards enhancing rural prosperity.

T. Nanda Kumar, Chairman of the National Dairy Development Board (NDDB), also a panelist, revealed that the cooperative sector of this industry has been growing over 19.6% CAGR, while the processed milk industry has been growing at 22%. The Dairy industry currently contributes to around 33% of the value of agricultural production in India.  He also stated that the prime minister's vision of doubling the farmers’ income by 2022 was possible only if dairy income were added to his other agricultural income sources.

Another panelist, R. S. Sodhi, Managing Director of the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF which markets products under the Amul brand) spoke about the tremendous relevance of the Amul model in this country.  He pointed out how the milk cooperatives in Gujarat remain the only industry in the world which gave back almost 80% of the market price of milk, back to the farmer, as against 30% globally. Other milk cooperatives also ensured that the farmer got a return of around 70% of the market price. This way the farmer earns more and is incentivised to produce more milk. This in turn helps meet the rapidly growing demand for milk, thanks to the nutritional needs of much of India as also the gradual shift from cereals to milk products on account of growing affluence of people on an average.

Mahesh Pathak, Principal Secretary, Animal Husbandry, Dairy Development & Fisheries, Govt. of Maharashtra said that Maharashtra was confronted with the urgent need for good quality fodder and the need to promote integrated dairy plants. He bemoaned the poor quality of milk being supplied in some urban areas on account of malpractices like adulteration, by some unscrupulous elements.

Madan Sabnavis, Chief Economist, CARE, also a panelist spoke about the 4 pillars which made the Milk industry both unique and relevant to India. The first pillar was milk output which has been growing at a healthy pace. The second pillar was the surging demand for milk, which in turn went hand in hand with increased milk production. Demand had been growing both because of increasing population on one hand, and increasing prosperity on the other, which made people focus more on nutritional intake.  Milk remained one of the primary sources of nutrition in India. The third pillar the enormous employment that the backyard cattle rearing model provided in India.  This in turn provided livelihood to countless millions.  The fourth pillar is that even though milk prices have kept increasing, it has been done in a planned manner -- gently and consistently -- which in turn has ensured that there is little consumer resistance against such price increases.

T. Nanda Kumar, Chairman, National Dairy Development Board (NDDB);  R. S. Sodhi, Managing Director, Gujarat Co-operative Milk Marketing Federation Ltd.  (Amul);  Dilip Piramal, President, IMC;  R. N Bhaskar, Consulting Editor, The Free Press Journal;  Mahesh Pathak, Principal Secretary, Animal Husbandry, Dairy Development & Fisheries, Govt. of Maharashtra and  Madan Sabnavis, Chief Economist, CARE

The panellists talked about how the cooperative milk industry would soon spread to Uttar Pradesh, Jharkhand, and to East and Northeast India.  Technology is bound to play an important role in bringing transparency and improving the quality of management at the collection centres. Technology would make milking of cattle easier and more hygienic for farmers. More remunerative prices would in turn encourage more production of milk. Unlike other agricultural crops where income is largely seasonal, milk provides a regular cashflow on a daily or fortnightly basis. What is needed is good procurement, remunerative pricing of milk for farmers, and good distribution of milk to consumption centres.

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