Making Dairy Farming Profitable

“ Farmers must be advised to expand, intensify and modernize dairy production systems by replacing low milk producing animals. Enhanced production can be achieved through selective breeding and providing recommended amounts of feed and fodder combining modern management practices to decrease the cost of milk production.

D ifferent views are being expressed by the press and media in recent time about the falling milk prices in India by about ₹ 5-10 per litre. Across some milk surplus states in Western and Northern India, a few milk producer organizations were seen spilling milk on roads more for propaganda under the guided influence of some vested interests rather than their becoming keen in the welfare of the farmers. The cooperative milk plants have not reduced the procurement price inspite of market discrepancies in milk pricing. The spirit of cooperative culture is truly working in India.

It is now well established that the fall in the prices of milk witnessed now has largely been influenced by the lower demands of skim milk powder at low price offered in the international trade. The current international price for skim milk powder ranges between ₹ 135/- to ₹ 150/- per kg.

In order to mitigate the worrisome situation with regard to low milk prices, some State Governments in India have announced a subsidy of ₹ 50/- per kg for export of milk powder from Cooperative Milk Unions. The Gujarat Government has offered a one time subsidy of ₹ 300 crore for export of milk powder lying in the stocks of Gujarat cooperative dairy plants. The private dairy sector which handles similar or higher quantities of milk in comparison with those of cooperative sector is kept out from the proposed subsidies although their role in the value addition of milk and welfare of farmers cannot be under estimated. It should be remembered that only 21 per cent of India’s milk production gets processed through the organized sector and the balance is handled by the small yet unorganized players whose motive is to make hay while sun shines. The country must plan development of infrastructure for handling larger volumes of milk for processing and marketing to help the milk producers in true sense to save them from exploitation.

The stocks of SMP and Ghee piled up in the warehouses of dairy plants have now started receding showing positive indications. The marketing experts dealing in the trading of SMP believe that the depressed prices of SMP will not remain as a long time phenomena. There are suggestions that the Government may identify a notified agency to take all the surplus stocks under their possession for future merchandise exports. Unless the money locked in the form of SMP and ghee is realized, the dairy plants may not be in a position to pay higher milk prices and to incentivize milk production, collection and marketing.

Dairy experts do not subscribe to the views of some people that India is over producing milk more than the demand. The demand for higher milk consumption in about 120 districts of the country must be fulfilled where malnutrition is reported to be very high. In some states, milk solids have been introduced in the school mid day meal schemes, sponsored by the central and state governments.

Surplus stocks of SMP can be supplied to the friendly developing countries as a part of social responsibility by the Govt. of India. The industry may also investigate the possibilities of converting available SMP into value added products like Cheese, Curd, Chocolates, Ice-creams, milk sweets, special dietetic foods for supply to hospitals and armed forces.

The GST on Ghee levied @ 12 per cent at present can be reduced to 5 per cent or below to promote its consumption at home. Reduction in the GST on ghee shall create a good demand for it being a product of mass consumption to alleviate the problem of mal nutrition and guarantee nutritional adequacy.

India would urgently need to look at the cost of milk production to evaluate whether we are in a position to make the dairy sector competitive in the global markets. Dairy farming in India can become sustainable only when the per day milk production per animal can be increased substantially. The experiences of Punjab and Haryana farmers show that to meet the overall expenditure on milk, each cow must produce atleast 7 litres of milk and buffaloes 6 litres milk per day to meet the expenditure on feeds and fodders, beside meeting the recurring and nonrecurring expenditure. The average cost of concentrate feed presently being charged varies between ₹ 18 and 20 per kg. The components which constitute the concentrate feed do attract different kinds of taxes making the feeds quite expensive. There are now reports available on improvements in the productivity of the native cow breeds because of reasonable prices paid to milk producers. The consumers are paying remunerative price for fresh, wholesome milk with assured quality and safety compliances and introduction of doorstep delivery system.

A faulty yet undecided pricing policy would influence the production of quality milk in the country. There is a need for undertaking cost benefit analysis of dairy farming in different zones of the country to help making long term decisions. Dairying sector has emerged as a great source of livelihood by generating employment in rural areas particularly among the landless, small & marginal farmers and women.

The peri-urban dairy farming system around the urban areas has emerged as a lucrative business model attracting large investments and as an alternative to substandard milk being supplied by the itinerant traders in the cities and towns.

There is always a need for motivating and training of dairy farmers in the adoption of scientific management practices, breeding and rearing of milch animals and by ensuring better veterinary care and milking performance.

Farmers must be advised to expand, intensify and modernize dairy production systems by replacing low milk producing animals. Enhanced production can be achieved through selective breeding and providing recommended amounts of feed and fodder combining modern management practices to decrease the cost of milk production.

The Government development programmes should continue to promote dairying and to finance milk producers with low interest loans to purchase high yielding milch animals in order to release them from the clutches of unscrupulous money lenders and diminish the burden of indebtedness on farm families. All out efforts should be made to make Indian dairying profitable and to double farmers’ income.