Issues faced by Dairy Industry

Note: The article is important for TISSNET

The second phase of the Covid-19 outbreak has made things more more harder for milk producers.

During the pandemic, householders in both urban and rural regions established a self-imposed restriction on selling liquid milk door-to-door, compelling farmers to sell their entire crop to dairy cooperatives at a significantly cheaper price.
In addition, shop closures reduced demand for milk and milk products, while a serious shortage of fodder and calf feed increased input costs. In addition, thanks to Covid-19, private veterinary services have nearly ceased, resulting in the deaths of many animals.

Because of the characteristics of milk production and sale in India, milk farmers are extremely vulnerable to even modest shocks, as demand for milk and milk products is highly sensitive to changes in customer employment and income. As a result, much work must be done to save this vital sector of the Indian economy.

The Need to Safeguard the Dairy Industry

  • Dairy and livestock workers account for 70 million of the farm-dependent population, which includes cultivators and agricultural labourers.
    • Furthermore, female workers make up 69 percent of the 7.7 million people employed just in the cattle and buffalo industry.
  • In 2019-20, the cattle sector generated 28% of agriculture’s Gross Value Added (GVA). Farmers benefit greatly from a 6% annual growth rate in milk output, particularly during droughts and floods.
  • During agricultural failures caused by natural disasters, milk production rises because farmers place a greater emphasis on animal husbandry.
  • Invisible Labor: For a living, farmers raise two to five in-milk cows. Uncompensated female family labour provides a significant portion of the labour required for milk production in this situation.
    • Once they run out of milk purchasers, the landless and marginal farmers among them have no alternative livelihood options.
  • Informal Nature of Dairy Sector: Cattle breeders, unlike sugarcane, wheat, and rice farmers, are disorganized and lack the political strength to lobby for their rights.
  • Lack of Remunerative Pricing: Despite the fact that the worth of milk produced in India exceeds the combined value of wheat and rice outputs, there is no official and timely assessment of the cost of production and Minimum Support Price for milk.
  • Economies of scale have a negative impact: Despite the fact that dairy cooperatives manage around 40% of the country’s total commercial excess of milk, they are not a preferred alternative for landless or small farmers.
    • This is due to the fact that more than 75% of the milk purchased by dairy cooperatives is in the lower price range.
  • Government’s Attempts that are Half-hearted: In August 2020, the ministry reported a demand for 2.02 lakh artificial insemination (AI) specialists in India, but only 1.16 lakh were available.
    • The Kisan Credit Card scheme has been expanded to cover dairy farmers. Since about October 2020, only one-fourth of the dairy farmers’ loan applications had been submitted to banks out of a maximum of 1.5 crore farmers in 230 milk unions across India.
    • To recompense farmers for the income loss caused by Covid-19, dairying was incorporated under MGNREGA. The financial allotment for 2021-22, on the other hand, was reduced by 34.5 percent.


  • Enhancing Animal Productivity: There is a need to improve animal productivity, health care, breeding facilities, and dairy animal administration. Milk production costs could be reduced as a result of this.
    • Furthermore, by guaranteeing the accessibility of veterinary services, artificial insemination (AI), feed, and farmer education, milk production and productivity can be improved.
    • The government and the dairy business can both help in this regard.
  • Improving Production, Processing, and Marketing Infrastructure: If India is to become a dairy exporting country, it must invest in sufficient production, processing, and marketing infrastructure that can match international quality standards.
    • As a result, a comprehensive plan for producing high-quality, safe dairy products is required, which should be created with adequate legal backing.
    • In addition, there is a need to engage in solar-powered dairy processing plants to alleviate the infrastructural shortfall in rural areas as well as the electricity constraint.
    • In addition, dairy cooperatives must be strengthened. The government should support farmer producer organisations in this endeavour.


The dairy industry has emerged as a lifesaver for India’s rural economy during the last few decades. The dairy sector, meanwhile, has become one of the most vulnerable sectors of the rural economy due to the high price elasticity of milk and milk products.
As a result, considering the significance of the dairy sector to both farmers and consumers, governments at all levels must address the situation and provide a detailed approach for the sector’s overall growth.

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