What Indian Government is doing to boost dairy sector:

Pashu Sandesh, 22nd July 2018

India is the biggest producer and consumer of milk in the world. During the presentations, this statement looks very attractive. But the ground reality is, neither the consumer nor the producer is happy. The reason being the consumer is paying a high price for a litre of milk and also facing the problem of adulteration and on the other, the milk producer is not even getting his cost of production.

Since the start of 2018, the Indian dairy sector is going through a tough time. On one hand, our milk production is increasing at a steady pace and on the other, the procurement price of milk is declining at an alarming rate. Today the average procurement price from the producer for one litre is Rs 25-35 per litre and average price which the consumer is paying for a litre of milk is Rs 50. During the last six months, the procurement price is constantly declining while the retail price is at the same level. That’s why the producer and consumer both are in stress. The reason behind such a situation is an overproduction of milk and crash of skim milk powder (SMP) prices in the international market. As a result, there is a huge stock of about 2 lakh metric of SMP piled up in our dairies inventories.

Here comes the role of government policies, as to how efficiently they can handle such situations. Many state governments where farmers lobby is strong had done what they can, to support the dairy industry in their respective states. A few days back Gujarat government announced an export subsidy of Rs 300 crore for next six months. Recently after farmers agitation, Maharashtra government announced a minimum procurement price of Rs 25 per litre for milk. Goa, Karnataka and Kerala government are already paying a premium of Rs 5to 7 per litre of milk for the producers pouring milk in the cooperative sector. In India, the government takes the action but a little too late or only after the public start agitations.

On the 19th of July, the Central government's Ministry of Agriculture and Farmers welfare released a press note on the steps taken by the ministry to support the dairy sector. The press note read as follows-

The following steps have been taken by the Ministry of Agriculture and Farmers’ Welfare owing to the ongoing milk crisis in Maharashtra.
I. Raising Domestic Demand: The Department has been requesting various states since December 2017 to take necessary steps to encourage the supply of milk and milk products through Mid-day meal scheme and Anganwadi under ICDS scheme for nutritional support to children. Communications with Secretary, M/o Women and Child Development, Secretary, D/o School Education and Chairman Railway Board has also been done.

States like Karnataka, Bihar, Rajasthan etc, have started supply of milk/WMP/milk products to schools under ICDS programme and Rajasthan through Mid-day meal scheme.

II. Increase in import Duty: On the proposal of the Department of Agriculture and Farmers’ Welfare, the import duty of Whey milk powder has been increased from 30% to 40% and notified by DGFT on March 27, 2018.

III. Export incentive under MEIS:
• On the recommendation of the Department of Agriculture and Farmers’ Welfare, DGFT decided to provide the export incentive for milk powder and Casein etc. at 10% in its notification on July 13, 2018. This includes Nepal and Bhutan.
• Considering the present scenario, the Department has again requested to increase the export incentive for milk and milk products and Casein from 10% to 20% for the benefit of farmers.
IV. Providing working capital fund under “Support to State Cooperative Dairy Federation” scheme:
Under the scheme, a corpus of Rs 300 crore in perpetuity with NDDB is to be kept and used for providing soft loans for working capital. Under the scheme, a soft loan with simple interest at a rate of 5 % is given to various cooperatives.