11 months ago
India's Dairy Industry Faces Trade and Modernization Challenges
Imagine India makes lots of milk, more than anyone else!
But most farmers have only a few cows and don't make much money.
Now, other countries want to sell their milk here.
Some people think this could hurt Indian farmers who are already struggling.
The government is trying to help farmers by modernizing farming, but they need to decide if they want to let in milk from other countries to protect local farmers.
It's a bit like choosing whether to let in new toys when you already have plenty at home.
India is the world's largest milk producer, but has low yields per cow compared to other nations.
The Indian government is under pressure to open up its dairy sector for trade with the US.
Many Indian dairy farmers use outdated farming practices.
Modernizing dairy practices and better genetics could boost production and farmer profits.
Opening up the dairy market might flood the market with cheap imports, hurting local farmers
- Who
- Indian dairy farmers and the government
- What
- Debate on modernizing the dairy sector and trade deals
- Where
- India, specifically referencing states like Tamil Nadu and Gujarat; and comparing to US, New Zealand, and Australia
- When
- The story unfolds in March 2024, and references prior events like Operation Flood in 1970.
- Why
- India is considering trade pacts and needs to balance domestic dairy interests with global competition.
Protectionist Viewpoint
Free Trade Viewpoint
Impact on Farmers
Protectionist Viewpoint
Opening the market to foreign competitors could cause social upheaval by negatively impacting the income of small dairy farmers.
Free Trade Viewpoint
Increased competition can lead to modernization, efficiency gains, and lower prices for consumers.
Self-Sufficiency
Protectionist Viewpoint
Duty-free imports will see flooding of cheap products, which may compromise India’s self-sufficiency.
Free Trade Viewpoint
N/A
Market access and growth
Protectionist Viewpoint
India should protect its domestic market and dairy farmers from foreign competition.
Free Trade Viewpoint
Foreign countries are seeking access to India’s large and growing dairy market.
Key facts
- India's Milk Production (2024-25)
- 248 million tonnes
- India's Milk Consumption (2024-25)
- 243 million tonnes
- Share of milk production in India's GDP
- 31%
- Global Milk Production Share
- India produces 26% of the world's milk
- Average herd size in the US
- 300 cows
- Average herd size in India
- 3-4 cows
Quotes
M.P. Veeramani
An executive at Akshayakalpa.
“After milking, the udder pores remain open. The animal could get infected in a dirty shed. Once infection sets in, they take months to recover and milk output drops.”
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“His father still believes growing paddy should be the main source of income and is against expanding the dairy business, despite dairy making more money.”
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R.S. Sodhi
President, Indian Dairy Association (IDA) and the former managing director of Gujarat Co-operative Milk Marketing Federation.
“In the mid-1990s, India allowed a small portion of edible oil to be imported. Cheap imports came in and Indian farmers stopped growing oil seeds and today, we import 65% of our needs.”
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“Operation Flood also made India the largest producer of milk in the world accounting for 26% of the global output.”
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K. Rathnam
Chief executive officer (CEO) of Milky Mist Dairy.
“All we need to do is to get more from less. In other words, get more milk from fewer cows.”
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“We are no match for them.”
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Sashi Kumar
Founder & CEO, Akshayakalpa.
“They do not follow any modern practices when it comes to herd and feed management.”
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“In the US, the average herd size is 300. In India, it is just three to four cows.”
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Raj Kumar
A dairy farmer.
“I want to add another five cows and eventually take the milk output to 200 litres.”
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IDA’s Sodhi
R.S. Sodhi, President, Indian Dairy Association.
“It is not surprising that the world wants access to the biggest and fastest growing dairy market.”
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Milky Mist’s Rathnam
K. Rathnam, chief executive officer (CEO) of Milky Mist Dairy.
“Allowing duty free imports will see flooding of cheap products. This will hurt milk procurement. Farmers will shift away from the dairy sector. This will compromise India’s self-sufficiency and milk prices will start rising.”
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Mukesh Saxena
Senior analyst, India Ratings & Research.
“Three years ago, Indian exports happened at break-even price levels. Now, Indian brands are beginning to get good margins. It is clear evidence that they are becoming competitive in a market dominated by global brands. India is set to become a prime player in the global dairy sector.”
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