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Context

India is witnessing the spread of the Lumpy Skin Disease infection which has killed nearly 75,000 cattle in India and spread to more than 10 States and UTs.
The scale of deaths and spatial spread of the viral infection is important for the nation as India has the largest number of cattle in the world and is also the largest milk producer.
At the same time, India also hosted the World Dairy Summit 2022 after a gap of 48 years. In both these contexts, this edition of the burning issue will deal with the Indian Dairy Sector, its contribution to the nation, its challenges and the way forward.

Indian Dairy Sector: An Overview

India ranks 1^st in milk production and contributes 23 % of global milk production. Milk production in the country has grown at a compound annual growth rate of about 6.2 % to reach 210 million tonnes in 2020-21 from 146.31 million tonnes in 2014-15.
The top 5 milk-producing states are: Uttar Pradesh (14.9%, 31.4 MMT), Rajasthan (14.6%, 30.7 MMT), Madhya Pradesh (8.6%, 18.0 MMT), Gujarat (7.6%, 15.9 MMT) and Andhra Pradesh (7.0%, 14.7 MMT).
Dairy is the single largest agricultural commodity contributing 5% of the national economy, witnessing 6.4% (CAGR) in the past 5 years.
Approximately 80 million people are employed in the dairy industry directly or indirectly.

Significance of the Indian dairy sector

Acts as a buffer: Milk animals act as a buffer for farmers during droughts and flood conditions. Also, milk animals are more evenly distributed among farmers than on agricultural land.
Not a seasonal occupation: Dairying is not a seasonal occupation like farming as milk and milk products can be produced throughout the year thus leading to the year generation of income.
Highly nutritious: Milk is considered a ‘Whole meal’. Dairy products are highly nutritious with high amounts of proteins and calcium, thus helping tackle malnutrition in India. For this reason, several state governments are trying to add Milk to their school’s Mid-day meal scheme.
Huge Employment Generation: the dairy sector employs around 80 million people from milk-producing farmers in rural areas to milk distributors in urban areas.
Promotes women empowerment: most of the milking work in rural areas is done by women. They also work as collectors and suppliers of milk to village milk collection centres. This, helps rural women earn some income and automatically promotes women empowerment.
Boosting other sectors: the dairy sector promotes the growth of multiple other sectors like fodder industries, organic manure manufacturing, and food processing industries like Curd, cheese, paneer manufacturing.

Challenges being faced by the sector

Low productivity of Indian dairy animals: Improving the productivity of farm animals is one of the major challenges. The average annual milk yield of Indian cattle is 1172 kg which is only about 50% of the global average.
Disease outbreaks: The Frequent outbreaks of diseases like Food and Mouth Diseases, Black Quarter infection, Influenza etc. continue to affect Livestock health and lowers productivity.
Limited success in cross-breeding: Crossbreeding of indigenous species with exotic stocks to enhance the genetic potential of different species has been successful only to a limited extent.
Supply Chain issues: which include collection, pasteurisation and transportation of milk in a safe environment. Since 60% of the dairy industry lies in informal dairy, it becomes difficult to ensure regular flow and quality of milk. That is why the adulteration of milk remains a perennial issue in India.
Unorganised Nature: The unorganised nature of the dairy farming industry has resulted in minimal penetration of technological progress within the sector. This has further led to consistently high wastage as well as a lack of standardisation in terms of quality and quantity.
Data Deficiency: Informality of the sector also leads to a lack of data regarding total milk production, wastage of milk, and financial flows in the sector which further inhibits the formalisation of the sector.
Low returns: there have been perennial complaints from milk farmers about low milk purchase prices paid to them by milk companies as compared to the final milk price in the market. This leads to the cornering of profits by companies while actual producers get poor returns.

Latest Challenge to Indian Dairy Sector- Lumpy Skin Disease

Lumpy skin disease is caused by the lumpy skin disease virus (LSDV), which belongs to the genus capripoxvirus, a part of the poxviridae family (smallpox and monkeypox viruses are also a part of the same family).
It is not a zoonotic virus, meaning the disease cannot spread to humans. It is a contagious vector-borne disease spread by vectors like mosquitoes, some biting flies, and ticks and usually affects host animals like cows and water buffaloes.
The disease was first observed in Zambia in 1929, subsequently spreading to most African countries extensively, followed by West Asia, South-eastern Europe, and Central Asia, and more recently spreading to South Asia and China in 2019.
There is a vaccine against viral infection. Indian scientists have developed an indigenous vaccine. The ICAR-National Research Centre on Equines (ICAR-NRCE) in collaboration with ICAR-Indian Veterinary Research Institute (IVRI) has developed a vaccine against Lumpy Skin Disease called ‘Lumpi-ProVacInd’

Economic implications of Lumpy on the Dairy Sector

Milk reduction: Lumpy leads to reduced milk production as the animal becomes weak and also loses appetite due to mouth ulceration. Milk collection across Rajasthan is estimated to have been reduced by 3 to 4 lakh litres per day after the onset of lumpy skin disease.
Animal wasting: The income losses can also be due to poor growth, reduced draught power capacity and reproductive problems associated with abortions, infertility and lack of semen for artificial insemination.
Impact of trade ban: Movement and trade bans after infection also put an economic strain on the whole value chain.

Steps needed to improve the Indian dairy sector

(A) Steps regarding animals:

Improving artificial insemination: to improve cow breeds and thus better milk yield per animal.
Improving animal fodder: designing animal fodder on scientific lines rather than old dry grass-based fodder.
Improving Vaccination coverage: of milch animals against several diseases to prevent the frequent disease outbreak in an animal thus maintaining a sustained and healthy supply of milk.

(B) Steps related to dairy farmers:

Ensuring more prices to farmers: as they are the actual producers of the milk. For this, rather than giving more weightage to fat percentage in milk as a determinant of milk price, more quantity and quality to taken as parameters.
Price support: to farmers to improve animal fodders, ensure vaccination and afford veterinary services on time. This ensures animal health and productivity and thus farmers’ prosperity.
More cooperatives: Forming new cooperatives of farmers to more formalization of the dairy sector and thus better milk quality and quantity in the market. It will also generate more data that can be used in further planning in the dairy sector and hence better resource mobilization.

(C) Dairy sector logistics

Improve cold storage and transportation: more refrigerated trucks must be employed for a faster and fresh delivery of dairy products.
More dairy sector-related research: should be promoted from production to logistics. Production data analysis and demand analysis should be done to cater better to the needs of the producers and consumers.
Promote more start-ups: and new private dairies in the dairy industry like Country Delight, fresh to home, big basket etc. This will help increase competition in the market and thus break the monopolies of a few big names and bring down prices.

Case Study: AMUL: ‘Unity in Strength’ based Cooperative Model

Anand Milk Union Limited or AMUL has created its name and reputation over the years delivering quality milk products to the entire country and now the world.
Amul’s story started in 1946 with inspiration from Sardar Patel, when farmers established a cooperative named ‘Kaira District Co-operative Milk Producers Union Limited’ (KDCMPUL) in a village called Anand.
Amul has a three-tiered structure. First, every milk producer in the village is a member of the Village Dairy Cooperative Society. These members elect their representatives. These representatives together manage District Milk Unions, which form the second tier.
These district milk unions take care of milk and milk products and their processing. They sell these products to the State Milk Federation which forms the third tier. State Milk Federation then acts as the distributor that sells or facilitates the selling of the products in the market. The revenue gets shared downwards in a similar fashion.
The dairy is in control of the villagers themselves. Farmer organizations come together under one umbrella of Amul and directly sell products to consumers through the state milk federation.
This elimination of intermediaries could ensure a good quality product at a competitive price. This provided a stable income for marginal farmers in lean seasons as well because there are no intermediaries to take the chunk.
This model has become a case study in business schools. It showed the success of cooperatives. It showed how the benefits trickle down from the market to the producer at the bottom of the pyramid. Recently, Union Cooperative minister Amit Shah commented that the Amul model can go beyond the milk and dairy sector and produce great results in other sectors also.

How are Indian startups changing the dairy sector?

Several startups are working in the dairy sector to provide solutions to several problems in this sector. Prompt Equipment is one such organisation that provides livestock management solutions. The firm teamed up with the Indian Institute of Technology (IIT) in Mumbai to design the ‘BovSmart’ wearable belt. The belt uses AI and IoT for tracking livestock breeding and delivering timely information to farmers.
Another business, Stellapps Technologies (Stellapps), offers a similar solution, which uses a wearable gadget for cattle and a mobile application to deliver recommendations to improve herd performance. According to Stellapps, using this approach, milk yield can be raised by 20% and calf health costs can be decreased by up to 50 per cent. The Stellapps technology is currently being used to track around 4.5 lakh livestock.
Stellapps, Mr. MilkMan, as well as Trinetra Wireless are three Indian start-ups among several others that are digitalising the dairy supply chain.
With start-ups entering the industry and addressing gaps in livestock management and supply chain, the situation is beginning to change, ushering in a new era of growth for the industry, rooted in digitalisation.

Government schemes related to the Dairy sector

Dairy Processing and Infrastructure Development Fund: The scheme aims to provide a subsidized loan of @6.5% to capital-stressed milk cooperatives for primarily replacing their decades-old chilling and processing plants and addition of value-added product plants.
Animal Husbandry infrastructure development fund: This scheme aims to help to increase meat processing capacity and product diversification thereby providing greater access for unorganized Dairy producers to organise the Dairy market.
National Programme for Dairy Development: The objective of the scheme is to create and strengthen dairy infrastructure for procurement, processing and marketing of milk and milk products by the State Implementing Agencies (SIAs) i.e. State Cooperative Dairy Federations/ District Cooperative Milk Producers’ Union.
Pradhan Mantri Kisan Sampada Yojana: PM Kisan SAMPADA Yojana is a comprehensive package which will result in the creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet.
Kisan Credit Cards (KCC) to Livestock Farmers: The Kisan Credit Card scheme aims at providing adequate and timely credit support from the banking system under a single window with flexible and simplified procedures to the animal husbandry and fisheries farmers for their working capital requirements.

Conclusion

The dairy sector in India has performed well in the past but still faces several challenges.

The need of the hour is to address these challenges holistically to usher in ‘White Revolution 2.0’ in India and achieve the target of the government of a liquid milk production capacity of 255 MMT by 2022.