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Dairy Sector Holds Bright Scope

By DILIP RATH
Chairman National Dairy Development Board
 
The Covid-19 Pandemic has spread across 212 countries affecting over 42 lakh people. The situation has been deteriorating across the globe especially with large number cases reported in European Countries, USA and Asia. 
 
In India, the pandemic has thrown up challenges to the dairy sector across all the States, including Odisha. When the entire country has been under lockdown, it impacted many sectors including farm sector. But the dairy industry has proved to be more resilient than many other sectors in terms of the extent of supply chain disruptions. 
 
Due to lockdown restrictions, both milk procurement and sales of milk were impacted in several parts of the country due to supply chain disruptions. Post lockdown till end of April, 2020, there was a noticeable decline in demand for liquid milk by around 15% whereas cooperative milk procurement declined by around 4%. 
 
Despite many odds, the cooperative model in India went out of the way to protect the milk producers. The dairy cooperatives decided to stand by the farmers. Though there was a dip in sale, cooperatives did not discourage supply and they continued to procure milk from the farmers which resulted in surplus milk. This additional milk has been converted into skimmed milk powder, which can later be used for export or for domestic consumption. 
 
As regards Odisha, the share of agriculture and allied sector in the State economy is less than 15%, with about 50% of the rural population dependent on this sector. Livestock contributes about 15% to the agriculture and allied sector, as compared to about 30% at the national level. The share of dairying in livestock sector is about 40% as against 67% in the country. 
 
In Odisha, there are about 3 million milch animals of which cows comprises of about 95%. The State has predominantly indigenous cows, which are largely low yielders. The milk production in the State was estimated at about 2.31 million tonnes, translating into 63 lakh kg per day (LKGPD) contributing just over 1% to the Country’s production in 2018-19.  The estimated marketable surplus was 37 LKGPD during the same period.  
 
There are about 6,000 dairy cooperative societies affiliated to 12 milk unions with over 3 lakh members under the ambit of Orissa State Cooperative Milk Producers Federation Ltd (OMFED) in the State. These dairy cooperatives were collectively procuring about 5 Lakh Kg Per day of milk across 30 districts during 2015-16 to 2018-19. The network of dairy cooperatives in the State is relatively stronger in some Central and Northern districts such as Cuttack, Balasore, Puri, Sambalpur, Bolangir, Kalahandi, and Nuapada  as they together contribute more than 90% of State’s cooperative milk procurement. 
 
 
The lockdown measures impacted many critical sectors of the state economy including dairy. Information collected by National Dairy Development Board (NDDB) from the dairy cooperatives (see graph) showed a decline in daily liquid milk sales by dairy cooperatives by about 42% in the Covid-19 lockdown period between March 1-15 and April 22-30 and procurement dropped by 27%. The decline in liquid milk sale was mostly due to restricted hours of opening of the booths/ outlets, closure of the tea-stalls, hotels, restaurants and coffee shops, which are major channel for liquid milk sales. 
 
The major issue faced by the dairy cooperatives (and hence ultimately the farmers) is drastic fall in liquid milk sale which in turn is translated in to lowering of procurement, both by the cooperatives and private dairy players. The milk procurement has plunged in spite of the fact that April is usually the flush season in the state. This has forced the Federation to procure only the volume, which they could sell. The farmers are in stress due to the blockage of their avenues to sell milk. Despite several challenges, the state cooperatives have kept the producer prices unchanged. 
 
Further, Odisha normally not being a milk surplus state, has a drying capacity of only 5 MT per day. Hence unlike the neighbouring State of Bihar, it is unable to convert additional milk into commodities within the State. Also, not much headway was made when the State Federation tried to get additional volume of milk converted by the neighbouring Federations to ensure at least the pre-Covid procurement level. 
 
Pragati and Milk Mantra are two major private players in the State. Both the private dairies have exhibited commendable growth during the last few years. They have been able to capture the market share of milk and milk products, competing directly with OMFED. After the arrival of these two players with aggressive advertisements and eye catching packaging along with good quality assurance, market share got reshuffled in the State. Both these dairies tried to reach out to rural and semi-urban areas extensively. The higher incentives along with compensation for leaked packets to the Distributor by these private players made a difference. Milk Mantra came up with innovative variants with Haldi and the like to cater to the demand of present day consumer. Nevertheless, their liquid milk sale also dropped considerably. The primary reason behind this decline is the closure of the tea stalls which constituted a major channel for milk purchase for both these dairies. This has resulted in curtailing their procurement volume, limiting the sale channel options for the dairy farmers in the State. 
 
Due to lockdown, farmers are not in position to sell the entire quantity of surplus milk, resulting decline in disposable income. Therefore, they cannot afford to spend on veterinary services even if available. If corrective steps are not taken on time, it will result in to serious problem impacting productivity and reproductive efficiency of dairy animals. Considering the situation, propagation of an alternative approach like Ethno Veterinary Medicine (EVM) which is cost-effective, efficacious and farmer friendly and can be easily adopted to manage many common ailments are being promoted by NDDB.  
 
Covid-19 pandemic has thrown up the real possibility for the dairy industry in the State to benefit as large sections of consumers may shift from meat/poultry -based to dairy-based protein. The sale of dairy products like dahi, yoghurt, probiotic products and paneer may increase. OMFED must reorient its strategies to augment sale of these products.  The Federation also need to expand and intensify their home delivery operation across major cities in the State. Further, e-commerce business through developing appropriate web and mobile based applications may be promoted by OMFED to link to consumers. 
 
At the village level, dairy farmers may be encouraged to convert the unsold milk into reasonably long shelf-life products like ghee and khoa and sell it to nearby markets /bhandar. 
 
The State Government may also take initiative to make best use of unsold milk of organized dairy sector for relief measures, during the crisis. It can be distributed to displaced families, migrant labourers in shelter homes and for supplies to hospitals. 
 
During this period of pandemic, the dairy animals must be looked after well because any compromise on their feeding and health care would impact their reproductive efficiency and productivity. Both governments and dairy cooperatives should provide the inputs and services required to the farmers on subsidised rates or deferred payments basis so that any disruption in maintaining the supply of milk can be avoided. Odisha has been witnessing migration of substantial number of migrant labourers from various States, who may be encouraged and incentivised to join their family agriculture/dairy farms by creating favourable opportunities. 


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