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Dairy & Ruminant

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Animal Health

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Livestock Production
Monday, March 24, 2008 5:44:58 PM
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Emerging changes in the Indian dairy industry

Meeta Punjabi



India's dairy industry is largely dominated by the government sector and working in co-operative mode, but it is going to face keen competition from the private sector in the coming years. Dairy co-ops performed well in some states but in many other states, these institutions are weak representatives of farmer interest as there is strong government interference. Due to heavy government interference and weak democracy at village level, co-ops have achieved limited success in various states.


In addition, private companies take co-op price as a benchmark for farmer milk price, which would severely affect farmer interest.


India is the world's largest milk producer, producing about 100 million tonnes of milk per year. India also has 1/5 of the world bovine population but milk productivity per animal is very low, which is caused by low genetic potential and poor nutrition.



Dairy and livelihoods


Dairying in India is a small farmer activity. Small and marginal farmers own less than 2-hectares of land, and about 60 percent of female cattle and buffaloes. Dairying is a part of the farming system and it gives regular income to the farmer throughout the year, comprising 1/3 of rural incomes. Livestock is also a security, as they can be sold in times of crisis and is the key to inclusive growth.



Regulatory environment


Due to government interference, co-ops did not have any competition until recently. To strengthen co-ops in the face of private competition, MACS (Mutually Aided Co-operative Societies) Act was passed in 1995 with the objective of minimising government interference and strengthening democratic societies at the village level. Key features of MACS include,

    • Two tier, village level and union level, no state federation
    • No government control in administration
    • Democracy at the village and union level
    • Freedom in setting prices


Future potential


With increasing incomes and population, the dairy industry is likely to achieve significant growth in the coming years.



Critical issues


Knowing the weakness of dairy production chain is important, and issues to take note of includes,

    • Breeding
    • Health/Extension
    • Feed
    • Credit

Marketing is another issue, as its two major channels are of an organised channel that is mostly the co-op and the traditional channel where traders procure milk from rural areas and sell in urban areas. Milk prices are set by the co-ops and it leads to high prices, as fat content in milk is highly valued in India. Milk quality is another issue and there have been efforts from the government to improve this aspect.


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Article made possible through the contribution of Food and Agriculture Organisation of the United Nations.

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