Dairy industry must address challenges related to quality, productivity, process upgrade, supply chain and innovation.
By Rakesh Mohan Joshi
Indians were the first people who domesticated cows and knew about milk, as early as 2000 BC, as evident from information published by the International Dairy Federation, Brussels, whereas cow was domesticated for milk in the Europe only after 500 AD. This international reference from a Europe-based world’s apex dairy association is necessitated here as there would be no dearth of western-influenced indigenous intellectuals and historians with over-scientific bent of mind who would question any reference from our own ancient Indian texts such as the Vedas, Bhagavad Gita or Ramayana. Not only India’s traditional knowledge on milk and milk production is unparalleled in the world, our consumption habits as well are.
India traditionally had the practice of boiling milk before drinking, both for health safety and enhancing its shelf life. On the other hand, milk had been consumed as chilled in the West. It was only in 1862 that the French microbiologist Louis Pasteur invented pasteurisation both to preserve milk and make it safe for human consumption, as it destroys pathogens, especially mycobacterium tuberculosis. The packing of milk in bottles was started in 1884 in New York by Dr Hervey D Thatcher. Interestingly, people in China and many South East Asian countries were not aware of milk till the last century, and the Chinese are characterised by the highest percentage of lactose intolerance.
From a net importer of dairy products a few decades ago, India has a come a long way to become the world’s largest milk producing country, with over 186 million metric tonnes of milk. India, the second most populous country in the world, is also the largest market of milk in the world, dwarfing the milk demand in any other market in the world. Today, India has reached to being fully (100%) self-sufficient in milk production. The credit goes to the country’s ambitious Operation Flood programme under the stewardship of Dr Verghese Kurien, and the ingenious institutional mechanism it created by way of milk cooperatives across the country.
Moreover, India is credited to provide up to 70-80% of the consumer price to dairy farmers compared with merely 25% in Australia, 33% in New Zealand and 30-40% in most parts of Europe. Interestingly, 77% of milk production in India comes from small, marginal and landless farmers. India has about 100 million farmers dependent on dairy, compared to merely 10,000 in New Zealand and 6,300 in Australia. Thus, the socio-economic impact of dairy sector is much more pronounced in India compared with any other major milk exporting country, leading to its far-reaching political repercussions.
Today, milk surplus countries such as New Zealand and Australia—which are compelled to find markets for their 93% and 25% of milk production, respectively, due to limited domestic consumption—besides a host of European nations and the US as well, are leaving no stone unturned to enter India’s vast dairy market.
Economic liberalisation under WTO trade regime and the quest to enter into one or the other FTAs—wherein duty-free and unrestrained access to foreign dairy players is granted—has created considerable pressure on the Indian milk industry and the government alike. Governments, both central and states, are under compulsion to reduce and revamp the very structure and mechanism of subsidies and the assistance provided, which is not very palatable to beneficiaries such as farmer organisations, cooperatives and industry.
However, the unobstructed entry of foreign dairy players under current circumstances would not only be disastrous for the Indian dairy industry, but also cost the livelihood of about 100 million farmers, and this is a matter of serious concern.
Interestingly, politicians in India are remarkably wittier and innovative in their approach and decision-making, compared to the bureaucracy that is unwilling to make use of its prudence and demonstrate courage to take firm decisions. This has been demonstrated at several occasions by Prime Minister Narendra Modi, such as while pulling out of the RCEP (Regional Comprehensive Economic Partnership) to safeguard the interests of Indian industry and farmers, especially the poor and marginal milkmen and women. This also demonstrates the collapse of institutional mechanism of multilateral trade negotiations to assess the issues concerning the earnings of about 100 million marginal and poor dairymen whose important source of livelihood is milk.
Since long, India has been evading economic liberalisation in dairy trade, but it is not going be sustainable in the times to come. It is time the Indian dairy industry, both cooperatives and the private sector, does some introspection into the issues hampering India’s competitiveness in the international market, and also addresses challenges related to productivity, quality, process upgrade, integrated supply chain and logistics, innovation, marketing and generic promotion of ‘Made in India’ dairy products internationally. The government, on its part, needs to develop sensitivity to the issues related to farmers, cooperatives and industry for sustenance and growth of the dairy sector.
The author is professor & chairperson (Research), Indian Institute of Foreign Trade, New Delhi. Views are personal