India: Dairy giant walking barefoot 1                      (20 point note and discussion issues for participants)         ...
5. USDA Oct’07 report forecasted milk production in MY 2008/09 in India to increase          by 3% to 102 million tons.   ...
thrive under adverse climatic and feed conditions. Contribution of buffalo in Milk           production also puts India in...
15. In terms of livestock service delivery, India has robust government network of    26,717 Polyclinics/Hospitals/ Dispen...
Issue: Quality chain management, Farm input / environment management, Training ofproducer trainers.                       ...
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India dairy giant

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India dairy giant

  1. 1. India: Dairy giant walking barefoot 1 (20 point note and discussion issues for participants) FAO-RAP Technical meeting on “Designing Effective Country-Specific Dairy Strategies” 17-20 Nov’2008 Prepared by: M Islam Barbaruah & A.K.JosephDairying is a state subject in India and considerable diversity exists within the country. It is therefore extremely difficultto draw a uniform pattern for the country as a whole. Incentives, taxes and subsidies, to a great extent vary from stateto state. Another important aspect is that, GOI is now giving more focus on decentralized planning involvingdemocratic institutions at village level called ‘Panchayat’ and they are going to play increasing roles in dairydevelopment. 1. The dairy sector in India is predominantly smallholder and unorganized in nature. The unorganized sector accounts for >50% of total production and handles >77% of the milk marketed (2005 - 06). ( Total house hold in Prod->67 m out of this 11 m can be characterized as cattle farmers with av.2-3 animals ) Issue: (i) Enabling the unorganized sector to conform to the food laws, streamlining and capacity building of the unorganized sector. 2. 17% of small or marginal farmers and landless laborers are grouped into cooperatives (~110000 in numbers) which handles around 15% of the surplus. (About 20.33 million producer house holds forming about 30% of the total are covered by the organized sector milk marketing) Issue: Ways to strengthen the dairy Cooperatives. 3. Encouraging post liberalization growth of organized private sector which handles ~ 14% of the surplus2. There is presence of multinationals with promising investment plan. E.g. Nestle ( Swiss ), Fonterra ( New Zealand ), Bongrain ( France Brand – Debon) Issue: Investment promotion, better price spread, Process innovation (including in the areas of procurement & Processing) & Product development for niche segments. 4. The sector is closely linked / complementary to agriculture providing income, employment and nutrition to a society with high prevalence of vegetarianism. Issue: Alignment of dairy development policy with the Agriculture policy Livelihood security1 Title from Special India edition (2006) of ZuivelZicht2 New dairy plan capacity approved under MMPO Act has already exceeded 100 million liter per day ( lpd) Page 1 of 5
  2. 2. 5. USDA Oct’07 report forecasted milk production in MY 2008/09 in India to increase by 3% to 102 million tons. Issue: Efficient milk marketing, price spread and competitiveness 6. The leadership in production (~15% of world production) is largely due to the number of animals3. The per animal productivity in Indian dairy animal is the lowest in the world. Issue: Quality animal Vis a Vis Quantity of Animals. (Breeder involvement in breed development) Animal identification and Field Performance Recording Productivity enhancement (Breeding, nutrition, health, management and extension) Cross breeding through Artificial insemination (AI) Vis a Vis selective natural breeding through graded animals Conservation and improvement of indigenous cattle and buffalo breeds 7. Dairy animals are largely fed on crop residues and high producing animals are supplemented with mostly home mixed concentrate feed. Issues: Rejuvenation of common property resources and other environmental asset of poor Integration of fodder production with crop production. Quality control of feed and feed ingredients / Prevention of adulteration of feed ingredients. Augmentation of compounded feed4 industry. 8. Recorded incidence of exports impacting domestic prices during early part of 2007 forcing government to ban export of certain milk products till 30 Sept of that year. There are cases of increasing export of oil meal resulting in high cattle feed price. Issue: Institutional capacity building for market intelligence and designing of policy instruments 9. Buffaloes – population of which is showing a growing trend than cows, contribute more than 57% of milk production. The preference is largely due to fat based pricing system (buffalo milk is high in fat content) and its ability to convert coarse feed and3 57% of world buffalo population and 16% of world cattle population.4 Current market for compound feed in India is estimated at 5.5 million tons. Page 2 of 5
  3. 3. thrive under adverse climatic and feed conditions. Contribution of buffalo in Milk production also puts India in to a disadvantageous position more particularly against nations who are positioning cow milk as more healthy than buffalo milk. Issue: Buffalo Vis a Vis cow 10. Tariff and sanitary restrictions imposed on the import /export of dairy products effectively restrict trade in dairy products. Issue: Preparedness for trade and globalization 11. Dairy cooperatives cover around 15% of milk animal owning household and procure around 9% of milk production. Milk is primarily produced in countries west region. Punjab one of the highest producing state is a role model for contract farming. Issue: Is cooperative the only solution? 12. Of India’s total production, no less than 65% is consumed unpasteurised. Out of this 44% is consumed in the rural areas where it is produced and 21% is sold to urban consumers. Quality, pasteurized milk is sold in barely 778 out of 3700 cities and towns in India. ( National Milk Grid cover 700+ towns only ) Issue: Food safety & efficiency in urban milk distribution Augmentation of efficient small scale processing 13. At the backdrop of hardly any subsidy, 20 cents a liter (Av.Cost of Production 14.75US$ per 100 kg) farm gate price of milk in India is one of the lowest in the world. Issue: Sustainability of cost competitiveness Cluster development & Integration 14. Consumer demand for dairy products in India is estimated to be worth EUR 13.54 billion. This demand grew by an average 7.6% per year between 1996-2002. (Against the per capita availability: 241gm (05-06). Dairy products have considerable symbolic value in Hindu5 religious and social life. There is emergence of new markets viz. Food service institutional market, Parlour market, Ingredient6 market etc. Issue: Understanding and coping up with changing demand pattern (Innovation / Market oriented production) Availability and affordability of milk for lower income group.5 Approx 82% populations in India are Hindus.6 Market for dairy products used as raw material for pharmaceutical and allied industries. Page 3 of 5
  4. 4. 15. In terms of livestock service delivery, India has robust government network of 26,717 Polyclinics/Hospitals/ Dispensaries and 28,195 Veterinary aid centers (including Stockmen Centres/mobile dispensaries). These are supported by about 250 disease diagnostic laboratories. Issues: Disease surveillance, reporting & disaster management (Prevalence of fire-fighting approach) Inefficiency & inadequate herd health management orientation in veterinary service delivery 16. Dairy cow herd in India is decreasing by an average of 1% per year mainly because of economic reasons. Increasing meat demand is leading to increase in mostly unauthorized slaughter of productive dairy animals. Issue: Exploitation of the growing demand of beef. 17. Milk production is increasingly becoming a major objective of bovine rearing in India. There is marked replacement of animal power with mechanical power. Issue: Animal traction Vis a Vis Agricultural intensification. 18. Out of 18million people who are employed by dairy industry in India (excluding employment in secondary market level), 70% are woman and 67% have no access to land, credit or technology. Issue: Women empowerment, Land reform & village level extension & ED 19. In India, at least 9 ministries have the power to legislate on milk products (Production, recipe, Labeling etc.). Many states have different line departments that look after Dairy, Animal Husbandry and Agriculture separately.Issue: Multiplicity of regulation & Enforcement agencies Coordination and cooperation between departments. Leadership development at all level with cross functional knowledge. 20. Quality of milk produced in India is not particularly high; the infrastructure of laboratories to study aspects other than standard constituents is inadequate. Increasing FDI in value added sectors indicates milk procurement based on fat is likely to shift to procurement based on microbial load. Page 4 of 5
  5. 5. Issue: Quality chain management, Farm input / environment management, Training ofproducer trainers. Page 5 of 5

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