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Has Budget laid foundation for another White Revolution?

Ajita Shashidhar     February 3, 2017

The Rs 8,000 crore dairy infrastructure fund announced in Budget 2017, comes at a time when the Rs 80,000 crore dairy industry needs it the most. The last six months, has seen milk production dip by close to 15 per cent, with milk prices having gone up by Rs 4-Rs 5 per litre.

The reason for the dip has been an almost 25 per cent increase in the input costs (such as green fodder and cattle feed), thanks to three consecutive years of drought in most parts of the country. Additionally, policies such as ban on cow slaughter have been a deterrent in milk production in states such as Maharashtra. "Once the animal starts giving low-yield, the farmer has to spend money and that doesn't help him. Unless there is a clear policy as what is to be done with unproductive animals, you will only find streets getting filled with stray animals," points out Amitabha Ray, MD, Schrieber Dynamix Dairies.

However, with the dairy infrastructure fund promising to bring in efficiencies in procurement, pasteurization, cold storage and so on, R.S. Sodhi, MD, Amul, says that the milk production will go up by five crore litres per day, and the farmers would benefit by Rs 50,000 crore per annum. "This is for the first time post Operation Flood, the dairy sector has received funding," remarks Sodhi.

Though Sodhi admits that there has been a dip in milk production due to rise in input costs, he also says, "There is no shortage of milk."  In fact, the good news has been that despite rising prices the demand for value-added milk products such as yoghurt, cheese etc. has been steadily on the rise. Therefore, the dairy sector funding, according to Dhanraj Bhagat, Partner, Grant Thornton, will not only lead to increase in income of the farmers, but would also significantly spur up the production of value-added dairy products.   

However, the need of the hour, according to Ray of Schrieber Dynamix Dairies is to focus on increasing the efficiency and quality of milk production in India, so that the largest milk producer of world can also compete internationally. "In the international market we are uncompetitive as not only our milk prices are significantly higher than the international markets, but our quality is also a huge issue. Anything that is white is considered as milk and most dairy companies are not following the right kind of procurement practices."  

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