India’s dairy sector has helped boost the rural economy and improve livelihoods

World Milk Day was established by the Food and Agriculture Organization of the United Nations (FAO) on June 1, 2001, to recognize the importance of milk as a global food. This year we celebrate the 20th anniversary of World Milk Day. This day is an opportunity to learn about the importance and benefits of milk in terms of health and nutrition and the importance of the dairy sector in the global economy.

This sector also plays an important role in achieving food security, reducing global poverty, creating job opportunities for women and providing a regular source of income to rural households. Additionally, in developing economies, poor and landless farmers actively engage in dairy farming as a key livelihood. According to the 2018 FAO report, more than 500 million poor people depend mainly on livestock, and many of them are small, marginal dairy farmers.

In addition, dairy development helps stimulate rural economic growth and empower rural women. In addition, 160 million children worldwide benefit from milk through school feeding programs (
Bulletin of the International Dairy Federation , 2020). The dairy sector plays a vital role in achieving the Sustainable Development Goals (SDGs) – in particular SDG 1-No poverty, SDG 3-Good health, SDG 5-Gender equality, SDG 8-Good Jobs and Economic Growth and SDG 10-Reduced Inequalities – and this is helping to improve lives and transform the global economy.

From deficit to surplus

Apart from being an important sector globally, the dairy industry is equally important in developing economies like India, to provide nutritional support, reduce rural poverty, inequality, ensure food security millions of rural households and stimulate economic growth, especially in rural areas.

In the 1950s and 1960s, India was a milk-deficit country, depending mainly on imports. In 1965, the Indian government established the National Dairy Development Board to spearhead the development of India’s dairy sector. In 1970, the government launched Operation Flood (OF), the largest dairy development program in the world, the aim of which was to improve milk production in the country.

In 1998, India overtook the United States to become the world’s largest milk producer, and it contributed 22% of global milk production in 2018. Between 1991 and 2018, milk availability per capita increased from 178 (g/day) to 394 (g/day). During this period, milk production in India increased from 55.6 million tons to 187.7 million tons, and increased by 4% per year.

According to the 2018 report by the NITI Aayog Task Force, milk production in India will increase to about 330 million tons in 2032-33, and milk supply will exceed milk demand by 38 million tons in 2032-33. In line with the Vision 2022 report of the National Action Plan for the Development of the Dairy Industry, it is envisaged to increase the supply and processing of milk through the establishment of dairy infrastructure at the village level. Under this plan, organized milk handling is to be increased to 41% by 2022 and 50% by 2023-24. Milk purchases by cooperatives will increase from 10% in 2020 to 20% in 2023, and milk purchases by the private sector will increase from 10% to 30% over the same period.

Jobs and income

The dairy sector is one of the crucial sectors of the Indian economy which not only provides employment to millions of rural households but also contributes to the economy. Among livestock products, milk occupies the highest share and accounted for 67.2% of the livestock sector in 2017.

Also, there is an interesting note here that milk and dairy products contributed over 20.6% of the combined production of paddy, wheat and pulses in 2017. Each year, 8.4 million farmers depend on the dairy sector for their livelihood, 71 percent of whom are women (Agriculture Skill Council of India). Moreover, in a year, agricultural production employs rural labor for 90 to 120 days, but dairy products offer alternative employment opportunities throughout the 365 days of the year.

India is self-sufficient in dairy production as 73 million dairy farmers are engaged in the dairy sector, especially women. In terms of benefits to the farmer, around 60% of the consumer price of milk accrues to the farmer, which is the highest among major dairy producing countries (International Farm Comparison Network, Dairy Report, 2018 ). The data shows that 10 states in India produce 81% of the milk, and the rest of the states and union territories produce the remaining 19%.

Similarly, only nine states have achieved per capita milk availability at the national level. The government should devise an appropriate dairy development policy to improve dairy production in potential districts and states. Therefore, the promotion of dairy products to smallholders and landless farmers is necessary to increase the availability of milk and will also help reduce nutrition-related problems in milk-deficit regions of the country.

dairy company

The recent Covid-19 pandemic has affected different sectors of the economy and reduced job opportunities, especially for migrant workers. According to the 2011 census, India has 45.36 million internal migrants, which include both intra-state and inter-state migrants; the latter have been the hardest hit, due to pandemic-imposed restrictions on interstate movement. When these migrant workers return home, this reverse migration will create new challenges for them, as the lack of job prospects at the village level will make their lives more difficult.

This is a great opportunity for state governments to promote the dairy industry in districts where milk production and availability is below the national average. They can facilitate the promotion of the cooperative model in these regions, channeling and formalizing the supply of milk, which will help millions of people to find gainful employment.

They can channel funds from different central government programs such as Dairy Entrepreneurship Development Scheme (DEDS), National Program for Dairy Development (NPDD) and DIDF (Dairy Processing & Infrastructure Development Fund), for the same; a budget provision of ₹3,289 crore has been made exclusively for livestock and dairy industry, for the year 2020-21.

The Minister of Finance recently announced an expenditure of ₹15,000 crore for the Livestock Infrastructure Development Fund, which will be used to support private investment in dairy processing and value addition, and feed infrastructure livestock. This will not only boost local manufacturing and consumption of locally produced goods, but will also help the domestic consumer become “vocal for local”; thus advancing India on the road to self-reliance.

Role of technology

This lockdown has gradually established the role of technology in the agriculture and farming industry – whether it’s Ninjacart (technology-driven supply chain platform) that directly connects thousands from producers to consumers or Amul which has increased both its milk supply (15 percent) and processing during the lockdown period. Technology has played a crucial role in turning these uncertain times into opportunities for growth. Thus, apart from building milk supply infrastructure in milk-deficit states and districts, efforts should also be made for the penetration of appropriate technologies in these regions.

On this milk day, we hope to usher in a new era of development for the dairy sector, which will reduce poverty, unemployment and inequality in the most disadvantaged regions of the country. In addition, strengthening cooperative dairy enterprises in these regions will help create alternative employment opportunities, especially for women and economically disadvantaged communities. A thriving dairy sector will help rural India become self-reliant and will also help double farmers’ incomes.

The authors are with Verghese Kurien Center of Excellence, IRMA, Anand. Views are personal

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