Slow growth rate of India’s dairy sector

Ques2. What measures and initiatives have been taken by the government of India to boast its dairy sector since post-independence period? What are its consequences and why still India records slow growth rate in milk production?

In the history of dairy development, decade of ‘90s has been important on various accounts, India emerged as the largest producer of milk in the world and milk emerged as one of the biggest contributor to the value of agricultural output in the country.

The government’s role in boasting dairy sector growth and its consequesces since post-independence period can be categorised into 3 phases:

  • Phase I – The first phase began immediately after independence. Government monopolized the milk supply and distribution through the Milk Control Board. This has led to a proliferation of middle-men in the milk supply system, and finally, a decline in the share of producers in the consumer’s price of milk. This rate of growth was too low to match the growth in human population during the period and finally, the per capita availability of milk has declined during the period. Government had therefore resorted to import of milk powder to protect consumers’ interest. On account of this milk production in the country was in fact trapped in a vicious cycle of low price- production and yield of milk. This policy orientation continued, till the Third Five Year Plan.
  • Phase II – The government initiated a high allocation for Operation Flood (OF) programme in the fourth Five Year Plan. The OF programme aimed at replicating Amul type milk cooperatives, which essentially provide a favourable price to milk producers. But the role of Government in milk collection and processing as well as in import of low cost milk powder was restricted during the period.
  • Phase III –Major initiatives were- Uruguay Round of Agreements, trade was liberalized; cost efficiency and quality was perceived as important for an economy, changes in laws and government policies, government notified the Milk and Milk Product Order (MMPO) which reintroduced registration for milk processing units, introduction of the Companies (Amendment) Act 2002. During 70s, the milk production has started growing exponentially, milk availability has also increased significantly, sources of milk production have also undergone expected changes in favour of crossbred cattle.

The study notes that though India is the largest milk producer in the world, per capita milk availability is dismal 252 grams against the global average of 279 grams per day.

Slow growth rate of dairy sector may be due to following reasons:


On the production side, slow growth in productivity likely to increase demand-supply gap. There is a need to promote interventions that would increase production efficiencies – (i) Need to secure availability of fodder and high quality breeds (ii) Promoting entrepreneurship in large herd dairy farming – through PPP. There is increasing interest in Intensive dairy farming – increasing demand & farm gate price. Where as on the demand side, Indian dairy market offers diverse opportunities to tap into unique nature of the market requires entrepreneurs to study it carefully before entry.

Print Friendly, PDF & Email

Speak Your Mind

Your email address will not be published.

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>