India has retained its leadership as the world’s largest milk producer for the last 15 years. This has been made possible by Operation Flood — which ushered in the White Revolution in India. Production estimates stand at 132.43 million tonnes for 2012-13, accounting for approximately 17 per cent of global milk production. Unlike the other major milk producing countries, the growth story in India was driven largely by small scale farmers.
Eighty per cent of Indian cattle is owned by farmers with a herd size of up to four animals. But a number of factors impact the sustenance of these traditional small farms, such as the subsidiary nature of dairying as an activity, stagnant yields, rising feed/fodder costs and a shift in rural areas towards other vocations.
Parallel to the supply side challenges, India is slated to witness a boom in dairy demand of over 6 per cent annually. However, the average annual growth in supply is only a little over 4 per cent per annum. The demand-supply interplay effect is evident in steadily rising milk prices in the recent past. We clearly need a Second White Revolution.
One of the most effective means to bridge the demand-supply gap is an innovative approach to commercial dairy farming models so that they are sustainable, inclusive and scalable. Some of these possibilities are explained below.
Large scale dairy farms Large scale integrated dairy farms can house over 1,000 high yielding cross bred cows, with automated milking, feeding, milk processing, integrated feed production and in-house breed improvement. The ownership and responsibility for the operation and maintenance of the farm lies with an anchor processor, who may enter into contract farming model with the farmers for procurement of green fodder, a key input for enhancing milk yield of cattle.
The milk is either sold to other dairies or used for processing into value added milk products at one’s own plant(s). The significant benefit of this model is efficiency in scale of operations. This model is suitable for large cooperatives and corporates.
Hub and spoke model The main farm (hub), owned by an anchor has all the integrated facilities for milking, feed production and milk processing with a cattle count of over 500 cows. The connected/ satellite farms (spokes), with 50 to 200 cattle each, have basic infrastructure for milking and cattle management and are owned by progressive dairy farmers in close proximity to the main farm. The anchor provides technical support (veterinary care, feed management, and training) to the satellite farms.
This model offers the benefits of product and process control, with low capital expenditure by the anchor. Critical to this model are the control systems that need to be put in place to ensure that farm management administration is of desired level and that milk output quality adheres to the set standards. Further, the land requirement is distributed over multiple locations. The model is socially inclusive and lends itself to quick scale-up.
Progressive dairy farmer With some support from an anchor processor, a number of progressive farmers may scale up their herds to establish mid-sized dairy farms with 200-300 cattle. Farms in this case are semi automated for milking and feeding. This is an entrepreneurship model where the anchor without incurring substantial capital expenditure benefits from an assured supply of milk of traceable, consistent and good quality.
The anchor provides technical support (veterinary care, feed management, training) and financial support (directly or through financial institutions) to the farms. This model is constrained by way of limited capital investment capability of the progressive farmers and is also challenging in terms of the anchor’s ability to monitor farm operations.
However, if replicated, this can be an excellent partnership model between farmers and processors and a win-win for all stakeholders.
This model is based on the concept of building “hostels” for cows. This helps farmers achieve economies of scale and results in superior dairy management systems.
This model envisages investment in farm infrastructure by an anchor. Cow stalls are leased out on nominal charges to farmers, who are responsible for housing of cows and managing them under guidance of the anchor. The automation level of the farms can depend on the farm size. The milk would be purchased under a buy-back arrangement by the anchor. This model enables the smallest dairy farmers to avail the benefits of technology, scale and systems.
Community Model Community ownership and management of common infrastructure for housing, breeding, feeding and milking under a cooperative/ producer company model shall be applicable here.
A number of such farms within a restricted geographical periphery can avail of technical support services on a pooling basis. Farmers and are not restricted to sell their milk to a specific entity. Milking machines, equipment, bulk coolers and milk storage facilities are owned by the community.
The strategy going forward to address the supply demand challenge needs to be aimed at strengthening supply systems which are sustainable and scalable. Drivers of success for each model need to be tested on the ground. Due to the current diversity in nature of farming systems, socio-cultural realities and climatic patterns, no single model can emerge as the answer to the search for a second White Revolution.
(The writer is President, Assocham India)