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Though we the largest milk producing country in the world, our share in international trade is insignificant, or rather disgraceful 0.01 %. We have a serious handicap while marketing our milk products because of weaknesses in quality of our milk products on one account or the other.

Our product range is very limited, and our milk producers cannot get good prices for their produce because of lack of value addition and poor quality of our products or poor marketing. Even the best of our marketing has become complacent and happily satisfied with current activities. The leadership is clearly lacking vision and is avoiding their responsibilities toward their employers- the milk producers.

Similarly, except for a few plants in private sector, most of the plants in the private sector are unfit to meet the modern hygienic standards. Many of these plants were set up by fly by night operators who saw huge profits when the dairy sector was liberalize and when the prices of commodities like Skim Milk Powder (SMP) and Ghee were high because of huge demands against very limited production.


Now, many of these plants remain closed most of the time and or probably sick-have become burden to our limited financial resources as the investment was mostly bank loans. Some do open sometime during the time of high international prices of SMP. Since these plants had only huge profits in mind, they utilized locally available skills and crude unhygienic design to cut down the capital costs.

Some of them are not worth even to be bathrooms of modern food factories. It therefore obvious that there is an acute need to move to more efficient, more hygienic plants which can give better recoveries, cut down the costs significantly, manufacture improved quality products and are environmentally friendly (energy, water, carbon footprint, pollution etc.). It is also obvious that there are huge challenges and requires monumental efforts and thinking – best of minds – Indian as well as international.

In the light of huge challenging facing this sector, creation of Dairy Infrastructure Development Fund amounting to Rs. 10881 (Rs. 8004 Crores, the loan component to be contributed by NABBARD, Rs 2001 Crores to be raised by eligible End Borrowers, Rs 864 Crores to be contributed by the GOI as Interest Subvention of up to 2.5 % and Rs. 12 Crores as NDDB contribution. On face value this seems to be an excellent idea. The caveat is that this fund would finance only already profitable institutions in 12 states. The processing plants/unions/federations in remaining 7 states who are facing serious problems because of dated technologies, poor quality products, lack of good professionals, absence of new products, bad marketing infrastructure and lack of finance essential to become successful would be denied access to this Fund and would further deteriorate these institutions. The financial health of poor milk producers affiliated to these institutions would deteriorate further without any fault on their part.

This fund would be made available to cooperatives or producers’ institutions and other state related bodies. The processing plants under private sector and farmers depending on such plants for marketing of their produce would therefore be at enhanced disadvantage.


According to National Action Plan for Dairy Development Vision 2022, 48 % of milk produced in India is consumed by the milk producers themselves or sold to non-milk producers in the rural areas. Only remaining 52% of the total production is sold to urban consumers either through cooperative institution (40 % of 52 % i.e. only 40*52/ 100 = 20.8% of total milk produced in India is handled by organized sector. Going into more details we would note that the milk handled by cooperatives, producers’ companies and private sectors are 10.4 %, 0.52 % and 9.88 % respectively of the total milk produced in India. The balance 31.2 % of the total sent to urban market is handled by unorganized channels. In other words, even after 73 years of independence, two Operation Flood programs and one NDP project besides huge investment by states and Department of Dairy & Animal Husbandry, 79.2 % of milk produced in India does not find access to organized sector; the cooperative sector, handling only 10. 92 % and private sector handling 9.88 % of the total milk produced in the country.

The current DIDF would be benefitting only a very small portion of farmers. The poor farmers, not withstanding that they are also poor Indians, in 7 states where the cooperative unions and federations are not financially sound and similarly milk producers under private sector would continue to be denied the government support just because they were unlucky to be born in areas where the cooperative did not or could not reach. Would it not be impacting the fundamental rights of such citizen – to be treated equally and fairly?

Considering the importance of dairy sector for the development of rural sector particularly to provide massive avenue of livelihood to small farmers and land less labor, employment to rural poor, there should be continued/regular reviews and changes to ensure that no opportunity is lost in development of this hugely potential sector.

About the author:
JS Punjrath

JS Punjrath The writer, JS Punjrath had formal education from top most Institutions Cornell & Michigan State University. He remained head of the department of dairy engineering at NDRI, Karnal and played a role in the world famous operations flood along with Dr. V. Kurien. He also worked as head of Milkfed, Punjab and Cargill Sri Lanka and a consultant to World Bank and an advisor to Velocity Capital of Netherlands for setting up a large dairy projects in Ethiopia. After his retirement as Executive Director from NDDB, and he served as technical advisor to GCMMF.

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