India’s Ambitious Dairy Market Growth Plan: Overcoming Challenges for Sustainability and Export Expansion

India is setting its sights on an ambitious goal: increasing its domestic dairy market from Rs 13 lakh crore to Rs 30 lakh crore by 2027. This is a critical step towards strengthening India’s position as a global leader in dairy production. At the same time, the country is seeking to expand its dairy exports to neighboring nations such as Bhutan, Nepal, Bangladesh, and Sri Lanka. However, achieving these goals is not without its hurdles, particularly the rising prices of fodder and a shortage of resources, which pose significant challenges to the dairy sector's growth.

The Challenges: Fodder Shortage and Rising Costs

The shortage of fodder and the increasing costs associated with it are at the heart of the issues facing the dairy industry. The Central Government shared data with the Lok Sabha in December, revealing that the wholesale price index (WPI) for fodder had risen by 27.66% in November 2022, compared to the previous year. This sharp increase in fodder prices has led to a hike in milk prices. However, milk price increases have not kept pace with the rise in fodder costs, which significantly affects the profitability of dairy farmers. This imbalance is one of the primary concerns that need to be addressed to ensure the sustainability of India’s dairy sector.

The Indian Council of Agricultural Research (ICAR) and the Indian Grassland and Fodder Research Institute (IGFRI) have estimated that there are national deficits in the supply of various types of fodder. Green fodder is short by 11.24%, dry fodder by 23.4%, and concentrates by a concerning 28.9%. These shortages must be addressed urgently to stabilize prices and ensure a steady supply of fodder to the dairy sector.

Government Initiatives: Fodder Plus and the Role of FPOs

In response to these challenges, the Indian government is actively working to improve fodder availability through a variety of initiatives. The Department of Agriculture and Farmers Welfare has designated the National Dairy Development Board (NDDB) as the implementing agency for promoting 10,000 Farmer Producer Organizations (FPOs), including 100 FPOs dedicated primarily to fodder production. These FPOs will focus on the development of green fodder and forage, producing ready-to-eat total mixed ration feed for cattle, securing crop residues, and other activities related to animal husbandry. This approach, known as the Fodder Plus model, is designed to address the shortage of fodder while simultaneously providing market access to small and marginal farmers.

The NDDB is also working closely with various stakeholders, including milk unions, federations, and government agencies, to form Cluster-Based Business Organizations (CBBOs). By December of last year, 34 organizations had already submitted Letters of Intent for the formation of 62 FPOs, signaling a positive response from stakeholders. These efforts are crucial in ensuring the availability of quality fodder at affordable prices.

Addressing the Root Causes of Fodder Shortages

Several factors contribute to the shortage of fodder in India. One key issue is the shift in focus among farmers towards commercial crops, which has led to the degradation of grazing lands. Additionally, rising input costs, non-availability of quality fodder seeds, and the increasing demand for fodder driven by the dairy sector’s growth are all contributing factors. The National Action Plan on Fodder and Feed Security Programme highlights that feed and fodder account for up to 50% of livestock productivity. Addressing these factors is essential for ensuring the long-term sustainability of the dairy sector.

The National Action Plan also emphasizes the role of small and marginal farmers in the dairy industry. While these farmers own only 44% of agricultural land, they account for over 80% of livestock assets, making their role crucial to India’s dairy sector. Ensuring these farmers have access to quality fodder and animal husbandry support is vital for achieving the national goal of doubling farmers’ incomes.

Forecasting the Future: Fodder Shortage Projections

The future outlook for fodder availability remains concerning. According to the 34th Report of the Parliamentary Standing Committee on Agriculture, the shortage of green fodder is expected to reach around 40% by 2025. Similarly, shortages of dry fodder and concentrates are projected to be around 23% and 38%, respectively. These figures underscore the urgent need for a comprehensive strategy to address fodder shortages and stabilize the dairy sector’s growth.

State-Level Efforts: Assam’s Role in Fodder and Dairy Development

Assam’s recent partnership with the NDDB marks a significant development in addressing fodder shortages at the state level. The Assam government has signed a Memorandum of Understanding (MoU) with the NDDB to create a joint venture for establishing milk processing capacity of 10 lakh liters per day. This collaboration is seen as a beacon of hope for Assam’s dairy sector and is expected to enhance milk production and processing capacity in the region.

However, for these initiatives to be successful, ensuring the availability of sufficient and quality fodder is critical. The Strategy Paper on Feed and Fodder Sector, prepared by the Animal Husbandry and Veterinary Department of Assam, highlights the limitations of traditional feeding practices, such as using rice straw. While rice straw is high in fiber, it lacks the necessary nutrition to maintain long-term productivity in cattle. As such, there is a need to diversify fodder sources and encourage farmers to adopt more sustainable and nutritionally balanced fodder cultivation practices.

The Way Forward: Sustainable Fodder and Dairy Development

To achieve the ambitious goal of expanding India’s dairy market and increasing exports, the government must focus on the following strategies:

1. Fodder Development: Promoting fodder cultivation on a commercial scale and ensuring that farmers have access to quality seeds and affordable inputs will be crucial in addressing fodder shortages.

2. Market Linkages: Providing farmers with market access for their fodder and dairy products will help incentivize fodder cultivation and dairy farming. This could include setting up local procurement systems, supporting dairy cooperatives, and ensuring a fair price for milk.

3. Infrastructure Investment: Establishing milk processing units, cold storage, and transportation infrastructure will be essential for ensuring that milk is processed efficiently and reaches consumers, both domestically and internationally.

4. Awareness and Education: Farmers need to be educated about the rising demand for milk and the importance of quality fodder in sustaining cattle productivity. Providing them with technical knowledge on modern fodder cultivation techniques and animal husbandry practices will help boost milk production and quality.

Conclusion

India’s goal of expanding its dairy sector and achieving export growth hinges on overcoming challenges related to fodder availability and rising costs. With targeted government initiatives, such as the Fodder Plus model and the creation of Farmer Producer Organizations, along with state-level efforts like Assam’s joint venture for milk processing, there is hope for the sector’s sustainability. However, addressing the root causes of fodder shortages and ensuring market access for farmers are critical steps in securing the future of India’s dairy industry. With the right policies and investments in place, India can not only achieve its ambitious dairy market targets but also strengthen its position in the global dairy trade.

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