Editorial Notes

[Editorial Notes] Dairy cooperatives model for Atma Nirbhar Bharat

Based on various parameters like urbanisation, demand of milk and milk products, productivity of milch animals, etc. NITI Aayog estimates that India may produce around 330 MMT milk per year by 2033-34.
By IASToppers
July 21, 2020

Contents

  • Introduction
  • Background
  • Present scenario
  • Animal Husbandry Infrastructure Development Fund
  • Expected Capacity
  • Way Forward
  • Conclusion

Dairy cooperatives model for Atma Nirbhar Bharat

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Introduction:

PM Modi announced a mega economic stimulus package on May 12, 2020, amounting to Rs 20 lakh crore, under the Atma Nirbhar Bharat Abhiyan. The focus of the package is about achieving self-reliance by giving thrust on two themes: vocal for local and local to global. Agriculture and allied sectors such as animal husbandry and especially dairying, are an example of Atma Nirbharta where self-sufficiency (in milk production) was achieved decades ago.

Background:

  • During early 1970s, milk production of India was just one-third that of the US and one-eighth of Europe.
  • India’s milk production is double that of the US and 25% more than Europe’s at present.
  • During the 1970s, most dairy farmers did not receive remunerative returns due to the long chain of middlemen and lack of access to organised markets.
  • The scenario changed after adoption of a three-tier cooperative model (referred as Amul model) with the three-phase implementations of Operation Flood I, II and III (1970-1996) under the leadership of Dr V Kurien.
  • This enabled our country to be self-sufficient in milk production, while other Asian countries are still dependent on import of milk products.

Present scenario:

  • Dairy and animal husbandry sector contributes to around 4.5% of national GDP, and is a primary source of income for about 100 million rural households—mostly landless, small or marginal farmers.
  • India has been the largest milk producer country of the world for the last 22 years and the fastest growing markets for branded dairy products.
  • Milk production of India stands at around 188 million metric tonnes (MMT)—in 2018-19, which is around 21% of world milk production.
  • Milk production in India has been growing at a CAGR of 4.5% over the past 20 years, compared to less than 2% CAGR of the world.
  • Of the total value of the agricultural economy, around 28% (Rs 8 lakh crore or $110 billion) is contributed by dairying.
  • The total value of milk production is more than total value of all pulses and grain put together.

Animal Husbandry Infrastructure Development Fund:

  • Cabinet has approved setting up of Animal Husbandry Infrastructure Development Fund (AHIDF) amounting to Rs. 15000 crores.
  • Govt. earlier approved Dairy Infrastructure Development Fund worth Rs. 10,000 crores for incentivizing investment by the cooperative sector for development of dairy infrastructure.
  • AHIDF would incentive infrastructure investments in dairy, meat processing and animal feed plants.
  • The eligible beneficiaries under the Scheme would be Farmer Producer Organizations (FPOs), MSMEsSection 8 Companies, Private Companies and individual entrepreneur with only 10% margin money contribution by them.
  • The balance 90% would be loan component to be made available to them by scheduled banks.
  • Govt. will provide 3% interest subvention to eligible beneficiaries and there will be 2 years’ moratorium period for repayment of the loan with 6 years’ repayment period thereafter.
  • A Credit Guarantee Fund of Rs. 750 crores will be set up to be managed by NABARD which would provide up to 25% credit guarantee to the projects covered under the MSME defined ceilings.
  • It would support private investment in dairy processing, value addition and cattle feed infrastructure.
  • The proposed fund should be channelised through National Dairy Development Board (NDDB).

Expected capacity:

  • Based on various parameters like urbanisation, demand of milk and milk products, productivity of milch animals, etc., the NITI Aayog estimates that India may produce around 330 MMT milk per year by 2033-34.
  • Indian dairy cooperatives and private players could create additional milk processing capacity of 4.5-4.8 crore litre per day in the next decade.
  • India’s milk processing capacity would be enhanced from the current 12 crore litres per day to around 17 crore litres per day.
  • It is estimated that if 1 lakh litres of milk is procured and distributed to organised players, around 6,000 people get employment annually, and the AHIDF has potential to create around 30 lakh jobs.

Way Forward:

  • The extension of the Kisan Credit Card scheme to dairy farmers will also ensure cash flow and meet the working capital requirement of small farmers.
  • A cluster-based approach scheme for micro food entrepreneurs with an outlay of Rs 10,000 crore would encourage small entrepreneurs to procure raw material from local resources and markets.
  • To sustain India’s self-sufficiency in milk production, the dairy sector needs to have its adequate share in the proposed creation of 10,000 farmer producer organisations (FPOs).
  • The unorganised farmers are needed to be brought into the fold of the organised sector.
  • This requires strengthening Krishi Vigyan Kendras (KVKs), common service centres (CSCs), business correspondents (BCs) commodity exchanges and digital markets.

Conclusion:

India needs to maintains its Atma-Nirbhar position in all agricultural produce, including Dairy sector. India’s withdrawal from Regional Comprehensive Economic Partnership (RCEP) negotiations citing apprehensions about cheaper dairy imports impacting domestic dairy sector is aimed at curbing cheaper imports of dairy products and its commitment towards achieving and sustaining Atma-Nirbharta.  The thrust will ensure that dairy farmers get a reasonable share of the earnings that the private players receive through value addition.

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