Looming Threats for Indian Dairying

It is with a heavy heart and profound sadness that we mourn the passing away of the advertising legend, Mr. Sylvester daCunha. He began his own advertising agency in the late 1960's and brought the Amul girl to life. The evergreen mascot of Amul who soon became the voice of the nation with her bold and satirical commentary is not only an integral part of Indian advertising history but has also won millions of hearts across the world. Apart from conceptualizing the Amul girl and her commentary over the years, he has also been pivotal in designing the branding strategies for many key dairy products in India. The farmers associated with Amul shall be indebted to him, for his unmatchable contribution in building brand Amul. The recipient of the "Dr. Kurien Award" from Indian Dairy Association in 2001-02, Mr. Sylvester daCunha has left behind a legacy that will be cherished and remembered forever.

It is a well-established fact that dairying is the chariot shouldering the colossal weight of Bharat (Rural India) and as India marches towards global dairy supremacy it is vitally important that various systemic changes must come into force for the rapid advancement of dairying and animal husbandry in the country.

Till now, the growth in the dairy sector has been demandbased and self-driven. Despite low budgetary allocations in the sector, its growth rate has been very consistent. Dairying and animal husbandry sector accounts to 30% of the total agricultural GDP in India and 5.2% of the National GDP. Notwithstanding its significant contribution, the sector is yet to receive proportionate budgetary resources. To give an example, in FY 2023-24, the Ministry of Animal Husbandry and Dairy was allocated an amount of Rs. 6500 cr out of a total agricultural budget of Rs. 1.215 lakh cr i.e., only 5.4% share in the total and agricultural budget. One can only imagine the kind of growth that this sector can potentially achieve if it is allocated appropriate funds and resources every year.

The traditional resource allocation is based on the budgetary outlay that was developed 50 years ago, while implementing Green Revolution in India. Aimed at increasing agricultural productivity and alleviating food shortages the Green Revolution had a significant impact on India's agricultural sector and played a crucial role in transforming the country's agricultural landscape. However, the contributions within the agricultural and allied sectors have changed drastically in the last five decades. Crops have stagnated at approximately 2% growth rate per annum whereas milk, poultry and fisheries have shown a growth of 10%, 22% and 12% respectively per annum, much higher than the growth of resources received by these sectors over the years. The relevance of different components within this sector has also changed.

In the early 1970's cereals contributed to almost 37% of the agricultural sector which has now come down to approximately 16%. The contribution of milk and poultry has increased from 10% and 2% in 1970's to 24% and 10% currently. However, a proportionate rise has not been observed in the amount allocated in the union budget for infusion of capital and development of required infrastructure.

Similarly, there is a lot of realignment required for providing adequate developmental resources for the allied sectors in India. For instance, a couple of years ago, veterinary colleges that were a part of agricultural universities were separated with the idea of drawing more focus on developing skilled manpower and better employment opportunities. However, the resource allocation did not see a proportionate increase for the separate educational institutions created.

Each state in India has a different narrative when it comes to allocation of budgetary resources for dairying and animal husbandry. On one hand we have states like Punjab and Tamil Nadu that are in tandem with the national scenario and have allocations amounting to 4.82% and 6% of the state agricultural budget. On the other hand, we have neighboring states of Haryana and Andra Pradesh with a total contribution of 17% and 13.6% marked out for dairying and allied sectors

It is imperative now that the stakeholders actively persuade the policy makers and the government to get the much required resources for dairy, animal husbandry and allied sectors to carve out smooth growth trajectory for the future of Bharat.

The Indian dairy scenario that experienced some major instability in the last financial year is finally coming back to normalcy, in terms of growth and stock position. Intermittent rainfall across the country and moderate temperature in the last 2 months were the saving grace in improving the milk procurement levels. Consumer prices as well as the procurement prices for the farmers showed some stability in the last 3 months.

With the stock position normalizing, the domestic trade prices also softened. Dairy co-operatives that hold the maximum share in the Indian dairy sector experienced consistent growth in this financial year.

Exorbitantly high inflation observed in the feed and fodder prices was the primary reason behind the declining levels of milk production. Feed and fodder contribute to almost 70% of cost of production for a farmer and rising prices constrained the farmers from investing more in infrastructural expansion. The continuous lack of investment during the pandemic showed its impact on milk procurement levels in the last financial year. However, fodder inflation reduced from 24% to 17% in the previous 3 months and feed inflation turned negative in April 2023 - a healthy sign for the milk procurement levels in the long run.

On the ground level also, proactive intervention like interest subvention for infusion of working capital, vaccination drives. Timely treatment of cattle impacted from lumpy skin disease and ensuring a more conducive environment were factors that additionally helped in stabilizing the milk production levels.

With the onset of the yearly cyclical lean period in the current financial year, we anticipate another bout of short supplies in the domestic market, but definitely manageable not as alarming as last year and will not
impact prices.