India's white revolution: Will it dazzle?

The largest milk producer in the world, India, produces a record level of 94 million tonnes. The country accounts for more than 14 per cent of the global output and around 57 per cent of Asia's production.

The largest pool of milch animals in the world (around 200 million cattle and 200 million buffalo population) could pave the way for India to emerge as a major exporter on the global front. The growth rate of four to five per cent, which has been consistently experienced in the recent past, is also a force to reckon with especially when the same is registered in the face of a number of hurdles that loom large before this sector and during the ongoing financial crisis. It should not be forgotten that this dairy sector is contributing significantly to the gross domestic product (GDP) pool of the country, nearly to the extent of Rs 1 trillion. India is still one of the cheapest producers in the world [per litre of milk- indicator-wise] at 27 cents, when compared against US's 63 cents and Japan's $ 2.8. The future of India's dairy sector is not a bleak one, in as much as a lot can be done as this sector is coming out with innovative products. Firms are investing heavily in research areas so as to develop new products for which the latent demand is already there.

GOOD GOING?  In India, this sector is progressing very commendably. The growth rate is around Rs. 500 billion per annum. What is more, India's dairy industry provides regular employment to 9.9 million people in the principle status and 8.8 million people in the subsidiary bracket (thus jointly claiming around 6 per cent of the total workforce) and accounting for one- fourth of country's agricultural output. The organised sector handles (cooperative and private dairy plants taken together) around 20 per cent of the milk market whereas rest is handled by the unorganised sector.

 CALLING SPECIFIC ATTENTION:  Milk production has grown manifolds over the last couple of years. The requirement at this stage is to seize the prevalent market situation. But it is very clear that the capturing of a huge market cannot happen overnight. Clear cut short term and long term policies to improve the scenario are required, in as much as the dairy sector as of now is full of criss-crossing factors that pulls down the growth rate. World-class performance is yet to be practically witnessed. But the fact remains that the country has the necessary talents. The only thing that is lacking is a well-defined policy, backed by solid implementation. This sector suffers from low milk yield per cow - mainly due to inadequate improvements in breeding and poor veterinary services. Lack of feed and fodder, frequent diseases and of course, lack of improved breeds.

The growth rate of production cannot also be compared favourably with the biggies. Low yield from cattle, most of which are indigenous, exists as the main reason for insufficient production coupled with the loss of cattle population due to natural disasters like drought and flood. Slow pace in the replacement of local cows with genetically improved crossbreeds and lack of adequate exposure to green fodder affects the productivity factor. If the gaps are suitably bridged, the country can emerge as a good player in the international markets and can exploit the rising demand for dairy products. 

NO QUESTION OF COMPLACENCY:  The time is ripe for taking appropriate strategies to counter the ongoing problems while keeping in view the very need to march forward on this front. Developing new partnerships with governments as well as suppliers for access to latest technology, related advice and perspective can be rewarding. Low cost and high quality operations are talk of the town.

In fact a change in attitude as well as traditional look is overdue.  For example, so far as cattle farming are concerned, the cultivation of green fodder is more important than grazing land. Grazing land helps reduce cost of feed but cultivating green fodder in fallow land could help meet the bulk of our demand for milk and processed milk. Scarcity of green fodder affects productivity of cows. Hybrid varieties of Napier grass may be commercially cultivated to cater to the needs of green fodder supply. It may be noted here that a number of countries in Europe preserve fodder after cultivation during summer. Cultivating fodder along roads, highways, river embankments, government owned lands, as well as crop combination can further ease the shortage that is being faced in some regions on this score.

Again, by improving local breeds a higher quantum can be obtained, whereas the yield could be much more (20 litres a day) if highly crossbreed cows are there. Livestock services require betterment for providing artificial insemination, veterinary as well as extension services. Any national policy would be effective in as much as use of inappropriate breeds, weak infrastructure, poor service delivery, incompetent breeding farms and technical knowledge gap do not stand in the way.

TIME TO HAVE A PLANNED APPROACH: It has rightly been observed that the future success would go with those dairy leaders who embrace the future, are ready to squarely face the future challenges and opportunities. Risk management at every step should be the top priority.

Business diversification scopes and opportunities need to be explored expeditiously. New geographies (of course, inclusive of overseas) and new, related businesses (agri-tourism, speciality production, expanded livestock management, etc.) should be considered. Opportunities are also there to relocate production to low cost, accessible markets (e.g. Brazil, China, Eastern Europe, Bangladesh, etc ), over and above tapping the existence of the vast domestic market. Regions like Oceania, Middle East, Western Europe and North America are top markets that could offer further inroads.

COMPETITION GALORE: Retention of the markets is a very important area in this score. Clearly speaking, the entire sector needs to be revamped in such a manner that India becomes the true leader of the global sector - encouraging the processors to obtain accreditation from international agencies. Raw materials and processing standards should be at par with international standards.

 TIME AND BETTER COST CAN ENSURE QUALITY:  There is a need for supply chain interventions like promoting direct linkages over space and time between the producer and the processor, modernisation drives, establishing backward-forward linkages, among others. Exploring the upcoming opportunities essentially calls for adoption of steps like: safe/secure packaging; treatment to maximise the shelf life and establishing cold chain from manufacturer to retailer.

Needless to say that in every such sphere the human factor plays the dominant role and continuous training/up gradation of skills is a dire necessity, not only to the existing manpower but newcomers as well. This is backed ably by food safety/hygiene criterion.

The lacklustre performance of India is mainly because of the fact that research-backed products are very scanty in number. The country is still unsuccessful at producing high quality cheese or cream from buffalo milk despite its superior health properties. Increased funding of research is a must given the strong, ever-increasing demand for dairy products and public support for technology. Public and private funds available for dairy-related research must be effectively made use of. Ignorance has no place in today's fiercely competitive world.

In fact, India's local dairy industry potential remains still largely untapped despite the highest number of bovine population. It is better to remember that importing of huge quantity of milk powder cannot provide any lasting solution.

Dr BK Mukhopadhyay is a management economist.

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