ECONOMIC ANALYSIS

Module 7. Outlook of dairy industry

Lesson 29
ECONOMIC FEATURES OF DAIRY SECTOR IN INDIA

Mixed farming systems, in which crops and animals are integrated on the same farm, cover some 2.5 billion hectare of land globally. These farming systems produce 92 per cent of the global milk supply. Mixed farming systems are probably the most benign from the environmental perspective because they are, at least partially, closed systems. The waste products (crop residues) of one enterprise (crop production) can be used by another enterprise (animal production), which returns its own waste (manure) back to the first enterprise. As a way of diversifying the sources of income and employment for resource-poor farmers, mixed farming offers considerable potential for poverty alleviation in rural areas. Much of what is defined as farming systems research is nothing more than a series of studies on cropping patterns, which ignore the presence of livestock. Additionally, livestock research has tended to highlight component technologies and neglect social, economic and policy issues. Interventions have been applied widely, treating complex and diverse crop–livestock systems as a single production unit. To enhance productivity, the greater use of artificial fertilizers is reducing the use of animal excreta for supplying plant nutrients. This has major implications for the sustainability of cropping systems. On the Indo-Gangetic Plain, for example, the productivity of the rice–wheat systems is threatened because of the decline in soil organic matter content. The factors contributing to these overall changes include the growing human population pressures on arable land; the mechanisation of cultivation and rural transport; the increasing availability of crop residues and by-products; the growing market for meat and milk; and government interventions to promote animal production ( Vaidyanathan, 1998 ). However, little is known about the relative contribution of these factors to the important regional variations that occur in animal densities; the ratios of work to milk animals, dairy cows to milk buffalo, large to small ruminants; and the extent of rain-fed to irrigated agriculture.

In Indian context, dairy has become more inclusive compared to crop production in the sense that has involved majority of the vulnerable segments of the society for livelihoods. Nearly two-thirds of farm households in India have been associated with livestock production, and 80 per cent of them have been small landholders (less than 2ha). About 54 and 16 percent of dairy animals are owned by the small and marginal farm households. Same group of farm households also poses maximum land holdings which clear reflects that how dairy animals and land was integrated in the Indian context. Similarly the households, who were basically landless, were also keeping about 13 percent of the dairy animals. It is also interesting to note that the distribution of dairy animals was far more even among the farm households than that of farm land suggesting that with efficient input and output support services, dairying can serve as a major economic activity for the small, marginal and landless farmers. About 36 percent households produces less than 500 liters milk, similarly another 27 percent between 500-1000 litres whereas only 15 percent households produce more than 2000 litres/annum and contribute 50 percent to the total milk production (59^th NSSO, 2003).

In order to know major sources of household level income, we have used the NSSO 59^th Situation Assessment Survey of Farmers (2002-03) unit level data. We have seen that there were four major sources of income (receipts) like crop, off-farm, dairy farming and livestock farming (excluding dairy). Livestock keeping was the major sources of receipts for landless and marginal farmers. Landless farm earned about 43 percent of their income from livestock whereas about 41 percent income was solely from dairy. If we compare the non-livestock keeping farm households vs. livestock keeping farm households, then we observe that majority of the non-livestock keeping households depended mainly on off-farm source which were uncertain, time bound and volatile in nature. Thanks to MGNAREGA scheme which helped to maintain stability at household level income.

There has been an unprecedented growth in milk production, processing and marketing. Achieving further gain calls for innovative technology. New initiatives will lead to the emergence of modern dairying as a full-fledged agribusiness for enhancing human nutrition and generating mass employment, particularly in rural areas. More intensive dairying activities can raise the purchasing power of the less privileged sections of society. Scientific dairy farming is also helping develop a symbiotic relationship between the farmer and the industry. The future if India’s dairying will, no doubt, is a hi-tech one, although its base will continue to be in the hands of millions of small and marginal farmers as well as landless labourers.

The main reasons for the world focus on India are: one, low-cost economy; and. Two, continuing economic liberalization process initiated: low inflation rate; inexpensive labour; presence of the world’s third- largest pool of technical manpower; the world’s largest democracy; a well-established independent judiciary free from government interference; and ease in communication due to widespread use of English by educated and professional class.