The Agriculture Story

History and Evolution of Agriculture

As we know agriculture of today, it is not more than 1000 years old.If we start from Adam and Eve,they had just an apple to eat.They were more dependent on horticulture than anything else.From Adam and Eve, we passed through various stages like Nomads,hunters and finally started settling thousand years ago and since then we have been practicing that we know as agriculture of today.800 years since then, there has been no change .Since, 200 years ago, there has been a major change , with Industrial agriculture coming into picture.Globally, there has been hardly any change in the agriculture practices since 1000 years.This is what we should know while comparing it with other industry,other sectors of the Economy. There has been hardly any change in the production side also.

Importance of Agriculture-:

Agriculture has always mattered for India.Always been a key contributor to India’s Growth Story.It matters big time now especially in the wake of Covid-19 crisis.Let me put it this way, since Independence India has witnessed Economic recession thrice in 1958,1966 and 1980.The reason was same each time,a Monsoon shock that hit agriculture.At that time agriculture was a sizable part of Economy.But what is different now is that India can be bailed from this crisis in a big way by Agriculture.In the past , Agriculture was causative but today it can be the cure for our economy.

This pandemic has brought recession all over the world.Along with that it will bring issues like financial instability, unemployment and food security Issues.Agriculture can be the one of the bright spots in the overall gloomy economic outlook.All Experts are of the view that Agriculture can give boost to Indian Economy by 0.5-1%, which is a very significant number.Agriculture can revive Indian economy by injecting much needed demand in the system.Though it is true that agriculture is only 15-17% of the GDP, it is important as it provides food security.It also provides jobs for half the country, and with migrant population moving back to villages, probably employing even higher now.

India is embarking on a different path of cashing in the era of Surplus and alleviate Agrarian distress.Our untapped demographic dividend will become our greatest strength.Agriculture is the biggest enterprise of India and 2020 could become the 19991 of agriculture.This is very much possible because India with its robust demand, with its attractive opportunities, with timely support the various state government and Central Government are providing.There is a renewed focus in this sector, with the facilitation by both the public and private sector, and above all the interest from non-traditional players.

Current Status of Indian Economy and how agriculture can be cure.

Current Status of Indian Economy

Indian economy is in a very precarious state.But there is hope in some sectors like Agriculture. Agriculture is one of the very few Shining stories .Government has also realized its importance and has started giving lot of attention to it. Agriculture may actually become the savior of Indian economy.

The Business situation in 2020 is terrible.It is like a snail in the razor blade, cannot move forward or backward.It is not only slow but also paralyzed.

The Economy has fallen down from GDP growth of 8% in 2015-2016 to 4.2 % GDP growth in 2019-2020.This is not just due to Covid-19 but also because certain policy decision that ought to have taken have not been taken.We can also see how rating of Indian economy has downgraded from 2017 Baa2 to Baa3 negative in June 2020.

The Quarterly GDP growth has fallen little by little from 8.2 % in march 2018 to 3.1% march 2020.

GFCF-: Gross fixed capital formation.This means amount of capital to create new business.It has declined from 29.1% of GDP in 31-mar-2018 to 26%in 31-Mar-20.

When GFCF starts declining , it means investors are not putting money to create more jobs,more income,more employment,As a result India suffers.

GDP Growth estimates-:

• India Ratings/Fitch-: -5.3%
• Moody’s Estimate -3.1%
• World Bank is :-3.2%
• IMF is -4.5%
• India experienced -ve GDP growth last in 1980-90 , 40 years ago .India had a GDP growth of -5.2% then.

How agriculture can be cure?

Agriculture is consistently doing good ,better (YOY) not because it is good but other sectors of economy are doing bad.

Farming is Important and it actually has saved the Economy

1. Economy has sagged so agriculture has the bigger share.
2. As 50% of people are in agriculture, any bit of money that goes into agriculture creates demand that demand goes to Industry and the Industry revives.So Agriculture is a prime mover of improving the Industry Output.
3. A rupee spent in rural India does more good than a rupee spent in Urban India.

Impressive ICOR of Agriculture-:

Another Impressive thing about Agriculture is that it has one of the most impressive ICORs .It stands third in this table and the details are highlighted in yellow.Textiles and Apparel are the Leaders in this table. ICOR stands for Increment output Capital Ratio. That is for every one rupee into the agriculture, the output ratio is calculated by how much money it can get out, how many jobs it can create.Agriculture has a very high output ratio , beaten only by Textile,Garments,Diamond,Leather Industries , as these industries are Labor intensive.However the Diamond and Garments require high input cost, thereby lowering their overall ICOR.

The Current Status of Indian Agriculture

We should be very happy to know that currently -:

• We are the second largest producer in fruits and vegetables in the world.
• We are the largest diary producer in the world.
• We are the Second largest pulses producer in the World.

But is it economic ??? I shell dwell on it as we proceed.

Agriculture has kept on diminishing from 53.1% of India’s GDP to 13.9% in 2011-12 and increased to 15.4% in 2017.

The problem with the nos. is that when 50% of population is generating only 15% of Indian GDP, it is a sign of distress.Now if we have to make Agriculture stress free,we have to take the following steps-:

1. We have to increase the share of agriculture in the GDP.
2. We have to increase the price of the agriculture products.
3. Otherwise we can move people from agriculture to other sector, so that share of population engaged in agriculture decreases from the current 50% to 40-30%.
4. We have to bring Innovation on the demand side.
5. We have to bring Innovation on the supply side.
6. We have to Make agriculture Attractive for the Youth.

Demand side Innovation

Let’s look at the case of Mahindra and Mahindra in Mumbai.They are automakers but they export around 9000 tonnes of grapes every year.For the last 15 years Mahindra has started exporting grapes.They are exporting to countries like Europe and Canada which have strict compliance and certification needs.What did Mahindra do, they mapped the supply chain.They had a focused attention on farmers and they were very transparent . In short they were able to increase the income of farmers five times.

We can look at Coke and Pepsi.When they came 20-25 years ago, when they first came to India.They did not get the type of potatoes that they wanted and hence they started contract farming.They gave seeds and contracted farmers to only sow potatoes for them, a certain kind of potatoes which was only used by them.Same thing happened with Damon’ s Diary in Pune. When McDonald wanted a certain category of cheese.We need to promote such kind of demand driven agriculture.

Supply side Innovation-:

As far as supply side is concerned, we need to make major changes on how we use water. Simply because water is limited and need to be used judiciously for our current use and to make it available for our future generation.

Make agriculture Attractive for the Youth.

To find the solution for this ,we first need to know the difference between agriculture and other Industry. Basically the big reason being that Youth do not find agriculture fancy as they do not want to do dirty things in villages, rural areas near the soil. But hydroponics can attract youth. It is free of dirt, It is new and gives the youth an opportunity to experiment.

Status of Indian Farmers-:

The agriculture in India is very traditional and Indian farmer is very backward.But we cannot blame only the Indian farmer, as we as a nation have not given them market connections to hedge the farming risk and invest in future technologies.This is changing , quite evident from the major Agriculture ordinance decisions that were made.Government interference is not good, but Government needs to make regulations where it is required and move out where it is not required.

Good and about about Ordinance on APMC-:

Although abolishing APMC is a great idea.The Govt. has finally acted on the idea of One Nation one market,One licensee to sell or purchase anywhere in India. The Industry has been asking this for 40 years. but we should not underestimate the risk. Mandis are consolidators and without the Mandis, we have to look at FPO(Farmers Producers Organisation), which can collect produce from various farmers and consolidate them.However, we have to make sure that FPO’s are run properly and make smart linkages.. So we are looking at rural management opportunities and need to staff smart people with economic understanding at the helm of the affairs.These have to be “For Profit” companies, which have to be professionally managed .

India’s Basic Advantages-:

1. A reasonable Large Landmass-:Because of this India can concentrate on agriculture and tourism.
2. Lots of animals and people-:This gives us a lot of scope for people-based business.We therefore have a lot of milk.Also having lots of animals, leads us to having lot of animal waste , which in turn can be used as Gobar Gas.
3. Lots of Sunlight-:Lots of scope in solar power technologies like rooftop solar energy.
4. An abundance of Water- Including rivers and a vast coastline.India is blessed with so much of water bu it destroys its water all the time.

Countries and their DNA

Looking at this table,India has a Land are of 32 Lacs square Km.China is 3 times India’s size.Russia is 3 times China’s size.USA and China are equal.Now looking at the water resources we can easily infer India has lot’s of water,.India’s water resources is 9.6% of India’s total area compared to China’s 2.8%,USA’s 7%,Bangladesh’s 6.4% and Russia’s 13% .This is despite the fact that Russia is 9 times the size of India . But we unfortunately do not utilize our water resource effectively.

Imports are Dangerous and Export need to be encouraged

India can be the food basket of the World

When one reads the Fortune magazine, Forbes, Economist, they all talk about growing food shortage of food all over. Can India solve this problem? Currently We are the second largest producer of horticulture crops in the world. But the export share of India in the agriculture is only 2%.Even countries like Thailand exports much more than us. Now if we look at balance of Payments, thanks to Covid-19, this is the first time since the last 10-12 years, the balance of payments is in our favor. Otherwise we keep on importing petroleum products and keep on sending our dollars out. If we want to gain dollars, we have to improve our economic security, then we have to become what China is to Industry, we have to become the food basket of the world. We have to meet the world’s food requirement. The population of the World has increased from 4.5 billion to 7 billion. Similarly, India’s population is going to increase to 1.7 billion in the foreseeable future. and counting. The no. of people are increasing, the demand for nutrition security is increasing, so who can meet the requirements? India can. India is the only country in the world, that has variety of climate from Snow clad Mountains to multi-varied seasons. We can grow anything and everything under the Sun. There is a tremendous scope here.

Importing food Items is threat to Indian Agriculture.

We as a nation have to be careful about imports, as it destroys jobs in agriculture,it destroys value in agriculture.The farmer may be intending to sell his produce at Rs 100, but due to imports that can only fetch him Rs 70 now , which ultimately may be less than the cost of production.

Terrible Return for Indian Farmers-:

The point to be noted that the Farmers are only earning Rs 3,140 per month from agriculture.

Water Usage of the India vs World

India is like a primitive world.The consumption pattern of India is very similar to that of Africa.The place where India should be trying to conserve water is Agriculture.Now if we look at develop countries, the water use of Agriculture is only 33%.With Less water , they have grown more.India has wasted water.

Consequence of wastage of water-:

1. Much of the wasted water, along with the fertilizer and pesticides penetrates deep into the ground water and pollutes it.
2. By misusing ground water , sucking them out, using it unscientifically, we are destroying the most important resource that a country can have.

Need for Introduction of Market forces,Scientific Approach in Agriculture.

A. Impact of chemicals !!!

In production side,there were couple of changes.This not only impacted agriculture but also other Industry as well.These include pesticide,insecticide and chemicals.Though the size of these industries have increased, but they have caused lot of issues to the Environment.They also penetrated deeper into soil and caused soil erosion, water depletion.

Traditionally, if you see East of India was where rice was grown.But today Punjab and Haryana are the rice producing countries of the world, which never ate rice, never produce rice.These states are producing rice, because they have plenty of water.If we look at water tables of eastern states, it is already black and depleted.

The type of agriculture we have been practicing over the years have been very unscientific, and was done to satisfy the demand and hunger of population which was ever increasing.The land was limited, the water was limited but the population was increasing.Therefore we had to use every inch of resource at our command to feed our hungry people.To mitigate the issue, green revolution was started in India, which made us self sufficient in our food needs.

But this has come at a heavy cost of water delpletion.

B.Putting Price to Inputs Especially water

We need to put a price to water,we need to put a price to human labor which takes social aspect into consideration not just rupee per hour.Purely from an Indian point of view,we must concede that in terms of resource input including human cost we are utterly inefficient. in how we produce that food which we are currently seen as sustaining the food needs of the country.

There is a lot of talk on putting proper price to resources and the most critical of them is water.But how can we price water , if we don’t measure water.Nowhere in India we measure water. The Government must introduce a a water policy which introduces water measurement and water utilization.

Paying for water is a matter of Habit and Global examples

In earlier days, while travelling in train, people use to get down the train stations stoppages and consumed water from the taps in these stations.But today, if you ask the same persons, they dont mind paying Rs 20 buying water.It is a matter of habit and Psychology.

In Singapore, the Muncipal corporation , recycles the toilet water and people consume it without any hesitation.If urban consumers are paying for water, then if politics doesn’t come in then rural India will also start paying.industry as such is already paying for water.In Maharashtra, Ratnagiri district in some villages, they have already started paying water for half n hour of tap supply , if their well dries.

If you look at Globally, in Argentina, there was a revolution in Argentina against the water taxes .But over a period of time, it will be monetized and one has to put the price of water as one of the input costs.The earlier we do, the better it will be.

Including water cost in the export price.

If we look at crops in India,two crops are known as water guzzling crops.There is politics around it, but we know.Rice and sugarcane. While the carbon footprints of vegetables and plants is lesser.For every kilo of rice that India exports,India is essentially exporting 2000 litres of water.We are still in an infancy stage to talk about water tax.But If we have to look at what types of crops are consuming lot of water, we need to do, little bit of shifting out to vegetable or other crops, you are significantly reducing the water consumption rate.

Developing Proper Export strategy considering the value of water

Reshifitng,rethinking,combining it,putting a price on it. Talking of export, untill we get a clear view of what we want as India,exporting basmati rice has lot of merit but exporting commodity rice at lower price than intervention price to farmers o that other south-east asian countries make noodles out of it, have a longer value chain is also not a good idea.Especially when we put the price of water at top.

How to extend the value chain of agri in the country? How to make sure that cheapest and cheapest of commodities, when it is in the supermarket becomes super expensive and has a brand on it. Thats why it is said, that “Rice is profitable except for those who grew it”.

Government policies that makes it more attractive to grow a resource guzzling crop super inefficiently to a saturated world market.Is this the right thing.We should look at where can we tweak policies,at least not incentivise in the wrong direction.We can produce anything here, why are we pritizing growing low value grains ?

Conserving water

Last year if we would not have started about Covid, then we would have started talking about delayed monsoon this time. We have forgotten those pains. We have forgotten about that this time the monsoon is on time, and is on average normal etc.need to put a price to water.In India there is interesting approaches to subsidizing electricity and fuel for pumping water out of ground water, where it is very depleted.In Rainfed areas, it is a question of rainwater management as well,like in Mumbai? How can we collect it and not allow them to be flown to the Arabian sea?

C. Improving productivity despite small farm holdings

India is a small holder farmer country.Small holders not only need support to improve their productivity but also to market the foods produced.Doubling farmer’s income will require addressing issues such as access to credit,Insurance,post-harvest technology,Investment in agriculture.

Role of media-:

Media also has to play an important role.It has to build the narrative of nutrition security moving away from simply food security.It needs to build narrative of doubling farmer’s Income from simply improving farmer’s productivity.Media should start calling it as Agri-business rather than Agriculture.It is a slight nuance but it changes the perspective.There has to be concentrated and coordinated efforts to promote farming for the marginal farmers,migrant workers,youth as a economically viable profession.

The above table explains how bad Indian agriculture is.China is a very large country almost 3 times India’s size, has less agriculture land than India,because rest of the land in China is a desert. In-spite of having less agriculture land than India,In-spite of having smaller holdings than India,China Scores high in productivity.In Indian Schools we have been taught that smaller farm holdings is the reason why our productivity is low . But this comparison refutes that theory. China has even smaller land holdings than India, but it has higher productivity than India because it brings technology,expertise, market dynamics into play the way India has not done.

Food habits Change-Narrative has to change from food security to Nutrition security !!!

Food and nutrition completely different aspects. Moving forward not food security but nutrient security should be the narrative. If we were to look at calorie intake basically Necessary vs over intake of calories, we see that there is a twin dilemma of malnutrition on one hand and obesity on the other hand .

We should look at the long term, how things are changing , how food habits are changing, how people are moving up the nutritional ladder ,how also pressures on farming will continue to grow? The way we grew food yesterday will not be economically and socially viable in the future.

With the Resource constraint to continue,India needs to adopt newer technologies faster.From nutritional point of view,following the WHO guidelines,Indian consumption of fruits and vegetables are far below the International standards. We should be able draw more with less

India has concentrated on rice and Wheat.As a result incremental growth in calorie is not very much and is only 1.5% compared to the 2% Earlier.

As in the above chart it is clearly visible, that as country becomes prosperous, it takes less rice, less wheat and starts consuming more vegetables, more eggs,more milk, more meat, because it wants more nutrition.

India has not learnt yet how to reduce rice consumption, wheat consumption as these are political lobbies.The wheat and rice farmers are the most politically pampered farmers.

Meeting India’s Nutrition Security-:

When we compare India with the rest of the world.What rest of the world is now looking at like being vegetarian , being vegan.In India more than 50% of population is already Veg or Vegan and for them, getting the nutritional security is going to be a challenge for us.land is limited than how can we take care of our 1.7 billion and the 10 billion of the world.One resource that is globally not looked at for supporting agriculture is sea,like aquaphonics.

Aquaphonics the future of India’s Nutrition Security?

That is going to be the future of India,in harmony with nature can we see sea and aquaphonics as new frontiers for us.This will be appealing to younger generations.It gives us excitement,gives you new thing, gives you a chance to experiment and also gives you abundant water supply to play with.Fortunately, we have a very long coastline which has not been used at all and fortunately Government has no clue at all., what to do about it.And if people take initiatives there is a strong chance to succeed.

Impact of Covid-19

Quick Response to it

With the onset of lock down in 15th march, it did not take even 7 days for the government to realize the importance of agriculture and it needs to be supported. While it looks self explanatory that Government acted fast but this was not only specific to Agriculture but to total Agri-business .It was found that there was a crunch in the supply chain which could potentially out of a health crisis , might end up causing a hunger crisis as well.It was impressive to see how we could quickly make the Agri-chain working in the country.It was also impressive how digital pilots became mainstream in serving the farmers.

Impact on Business Model

Covid-19 has brought to focus the need to reorient our food basket.Today plant based nutrition, are considered as a more sustainable source of production and consumption from the Environment and the Nutritional viewpoint.This also fits well with goal of responsible production and consumption.The eating habits of the consumer may change permanently.Going forward, we would prefer eating at home, eating more of fruits and vegetables and consuming more foods by growing them at our garden.This would require a totally product and service innovation knowledge transfer for these stakeholders, and different business models for consumers.

Covid-19 will Increasing the Role of Technology in Farming

Technology will completely disrupt the Agri-Value chains. It will drive higher productivity, create new channels for market. This pandemic has shown us immense value of digital tools and Agriculture cannot be left behind any more. For a country that involves million of small holder farmers, India needs to adopt a systemic application of digital tools for both production and timely supply. We all know about “SMS”(Sanitizer, Mask, Social distancing).The SMS here will also apply. Social distancing and safety norms are going to stay here for a long time. This could lead to reduction in labor density in farming for the first time. Consequently more automation in farming.

Indian dairy Sector

To start with, Milk is an agriculture crop and comes under Diary Sector. Diary is no doubt the backbone of Indian agriculture. But it can be made an engine to growth in agriculture. When we look at agriculture, we look at traditional crops of Rabi and Kharif, to understand what are the prospects in agriculture. This needs to change and the diary farming is kind of always looked as a supplementary activity .The numbers of diary sector is very large in terms of production.

To understand the numbers we have to start with Anand. Anand is kashi, Vatican, mecca of dairy in India.199 million Tone of milk is produced in India. Out of that, just 20% is in organized sector. The organized sector covers both private sector and co-operative sector. India ranks first Globally in milk production . Younger generation must be knowing some of the brands. Brands like West India -Amul, Mahananda ,North India-Verka and Milkfed, South India-Aavin, Nandini, Vijaya East-Medha or Sudha.

Structure of Milk Cooperatives

Particular structure has gone behind this particular brands. Every state has a particular federation, under that district unions under that-operative dairy socities.37 million liters of liquid sales is carried out by the co-operatives daily. The organized co-operatives cover around 15,000 villages, 6 lakh members, cover 15 other states through new farmer producer companies. It is not only co-operatives, but also includes producer owned companies as well. Out of the many cooperatives , Amul is the largest known food brand in the country .

How Diary and Micro-finance have done service to Indian women ?

There are two-institutions in India in the last 20-30 years which are doing things that is unheard in India’s history as well as internationally. Two sectors-: one is microfinance and another one is diary. They have harnessed the potential of woman. NDDB ran the national diary program which just concluded last year .Studies were done to look at the impact of the national diary programme.85% of the work in dairying is done by women. Diary sector has done justice to the gender issues in the country. Both microfinance and diary have become economic force multipliers. Microfinance is linked to dairying as 40% of the micro-finance customer buy cow or buffalo. They have become the largest employer of women workforce in India.

How Milk is adding Value ?

The awesome part of dairying is the value added food products. We are the largest converter of milk into value added products, which adds to the shelf life. The normal shelf life of milk is 24 hrs., max 36 hours not beyond that. If we convert it, into a value added product by adding certain things , the economic life of milk goes up to 12-18 months. For Ex-: The skimmed milk powder or butter. People can conserve these commodities , reuse this and then the milk can be re-constituted over a period of time. In a buffalo milk scenario, there are two cycles lean and flush. In winter there is more milk and in summer there is less milk. The excess milk in winter is converted into products which can then be used in summer. Automatically the market is stabilized. The prices do not go up in summer or they do not come down in winter. Producers and consumers do not suffer because of the conversion part of it. Value of output from milk and value added products from milk put together they exceed the value of paddy and wheat in the country. Milk is the largest Agri-commodity contributor in the economic terms.

Growth Outlook of Milk

There is a lot of hope in milk. The total scenario in terms of consumption gives us hope. The global average consumption of milk is 415 gms per day in India. But that is little bit skewed in terms of geography. Punjab and Haryana is much higher as compared to the national average. Other places in east like Odisha, West Bengal is lower. In Maharashtra , it is at par with the national average. If we increase the Consumption in states which are backward, there will be demand for milk , more economic activities that milk will generate .As of today 6% of Agriculture income comes from dairying , 6% of total rural employment also comes from dairying ,but that is likely to go up once states that are backward in terms of use of dairy production catch up with the national average.

Diary Supply chain is one of the cleanest In India

When we are looking at the value chain and supply chain both of milk, we find that this is one of the most transparent supply chain. If we look at the finished product in Mumbai, either a buttermilk or ice-cream, if the price is 100 rupees, then around Rs 70- 80 goes to the primary producer, who produces the milk. So in terms of the economic return to the primary producer, co-operative diary have done a wonderful service to the country. It is the 15-20% only that goes to the whole supply chain of diary. Diary has lot to do with the rural prosperity that is seen .

Increasing the Milk Output-:

As pointed out earlier, the numbers related to consumption of milk, there is potential to increase the consumption in states where the intake is lower than the national average. But we should not get restrained to domestic market alone, but also look at International market where there is lot of scope to explore. The overall idea is to how can I increase the production of milk and milk products to increase the income of farmers and improve the standing of India in the world to better than what it is today.

Need of better Cold storage, transportation and logistics facilities

1. There is tremendous scope in increasing the production and developing proper cold storage, transport and infrastructure and logistics
2. First after milk is produced , it needs to be transported. The shelf life of milk is 24 hrs. , which means that we need adequate storage capacity. This means there is a secondary opportunity that comes in terms of logistics of handling milk. We have MFI’s and banks for that . In earlier days we have IRDB program, which helped people to buy cows, buffaloes have supplementary income by rearing cattle.
3. Finally , there is another way of getting into this business is, that I may not be a farmer , but I want to convert an unorganized sector to organized sector, and I need to make sure that the logistics is much firmer. In this case I have to make surer how milk produced in one geography is transported to neighboring geography. In this way I can have a wider cross-section of people who can consume milk. This requires a strong cold storage facilities and currently it is very much underdeveloped in India. In India whatever cold storage we have is for potatoes and onions. But still it is less. Private sectors have cold storage but it is for their own products.

Need for better Marketing strategies and Imperfect Market In Diary Sector

There is a need for Marketing the diary sector in a better manner. We Need to have more value added products. There is a Fairly large market in Indian context and Organized sector is showing more interest into it. If the opportunities are utilized then there is a scope of very high margin. There are some very good examples. Especially more for college going students, if you would have gone to a diary and picked up a curd. Compare the price of that curd with that of the nestle curd that we get in kerana shop. This is applicable to similar wide ranging products like chaas, srikhand, paneer. One can clearly observe the difference in prices when he/she buys from a private sector and similar products when he buys from a normal diary. Maybe this is happening because someone is overcharging, someone getting a lower price, so lot of scope for new entrants in the private sector to aim for better marketing strategies to give consumer these products at a fair price with a fairly high return to producers.

How pricing of Milk is different to pricing of Other Agri-commodities?

1. Milk is the only commodity , if you look from the point of consumer , it is paying a higher price every year. Obviously, there are issues from the producer side as well, issues of excess supply , with Maharashtra diary farmers protesting for better price realization for them. In 1987, the price of milk was Rs 2 for every litre of milk. It has been steadily going up by 4-5% every year. It is not suddenly jumping up like petrol or diesel which are hotly debated in the parliament .
2. But the prices have gone up gradually if you look from the consumer side like CPI , PPI, there is a moderate increase, but there is an increase for sure every year. This itself can give a potential to say that as far as producer is concerned . lets leave out a situation because of the unorganized sector that is there, people are not able to harness this kind of output that we are getting. It is possible to think of a situation wherein I can have a higher output, higher income without there any problem of prices going up.
3. Today we can observe that if the prices of tomatoes goes up, prices of onions goes up, governments can get toppled because of it. The prices of milk does not jump 20-30% suddenly .The prices of milk neither jumps up suddenly but neither doers it fall back also .It keeps on increasing steadily

Need for Commercializing Milk

1. Milk is a non controversial kind of product. If anyone is looking at the market saying I want to get into this business, then he/she must observe that plain elementary thing like milk , forget about value added products, is very very imperfect . We must have experienced that in our neighborhoods three different locations having three different prices of paneer and then we kind of scout for it and select the cheapest one. There is lot of scope in unorganized market for anyone interested in doing business. Mostly, it is a case of commercializing what is already there.
2. Today if we are talking about unorganized sector. It is like I am producing certain amount of liter’s of milk. I will sell it in my neighborhood and then exit. There might be a lot of wastage in the milk Industry. The wastage in milk will also will be quite high , as it is for all other agriculture products. There is a distress sale to at least get some income rather than get nothing, as you cannot store a product.
3. For example the farmers who produces fruits and vegetables, does not have the possibility of storing it. Similarly, this happens for milk as well as individual farmer may not have the ware withal of storing the milk, considering it has such a low shelf life. There is lot of potential here as discussed, and lot private entrepreneurs coming in. It should not be seen as a low class , business for uneducated people and there is a high possibility of high returns.

Developing a Strong Export Market for Milk

India is the largest producer, but that is due to the fact that we have a larger population, larger population engaged in farming and consequently larger amount of production of milk. The next step is to commercialize it and export to international market. There are lots of countries which do not have even regular supply of milk and import all of its products from outside. It cannot be done by co-operatives and needs to be done by farmers . Dairy farming should be seen as an Industry rather than in the traditional way. This is the problem with our overall agriculture. We tend to think of only the primary produce, we do not think of how can we increase the value and get much higher return in the market. We do it for rudimentary products like wheat. Wheat becomes spread becomes biscuit. But in milk , there is not much happening. There is a lot of scope of private sector coming in .

Limitations to the Diary Sector

Concept of veganism is developing. Globally we have seen movements where people are becoming more health conscious , avoiding any animal products thus effectively banning diary products. The elite section of Indian has also got into this. Currently it is not much of a threat as people less than 1% of population are into this. And also there is some health concerns of high cholesterol in paneer, or let say concerns of high sugar content raised by diabetic patients in ice-cream. These concerns are not that severe today, but growing forward they will act as limiting factors.

Disposing animals who do not produce Milk

Finally disposing animals who no longer give milk. This has become a big concern since the NDA Government has come to power. There is one thing to say I have more cows , more buffalos, more production coming in but we have to find a way of using Earlier, there was a major meat market , major export of meat .Lot of restrictions have come up and this is affecting the market. There is a need for end to end solution on how to dispose animals as and when required.

Need for a Comprehensive Dairy Program

The numbers are large on multiple fronts in terms of physical production , value of production and farmers employed. As pointed out earlier, there is 80% unorganized sector , so there is a lot of potential to convert the unorganized sector to organized sector. There are reforms which were announced and diary sector needs to be included and should be one of the focal points on how can we increase the income of producers. It is because of such reasons , diary should be given a higher priority by the Government to sustain the increase in income by the farming community. Government has to raise to the occasion and come up with a comprehensive plan on how to increase production, income of farmers, make sure India is not only self-sufficient but also a major Global player in exports.

How Dairying acts as an Insurance against Crop failure ?

Milk production in India is by masses, it is not mass production. In America 2-3% of population is involved in Dairy , but in India much larger chunk of population is involved treating it as a business. The wastage here is much much limited compared to other sectors of Agriculture like fruits, vegetables . Poultry and Milk are the two sectors which are giving insurance against the vagaries of Nature. A Dairy farmer today, every 10 day, he gets payment for his milk. Assured income comes every 10 days. Cash comes in hand of farmers, gets credited to the bank account. This is unlike agriculture, where he gets money once in 4-5 months when the harvest season comes. This is an insurance against poverty, insurance against any shortages he might face. In case there is a crop failure dairying supports the farmers and the whole of rural economy. What you require for dairying, suppose the crop fails ,the failed crop supports the dairying industry. It becomes the fodder for cattle’s.

Why Milk-cooperatives is successful unlike other Cooperatives ?

We have to be thankful to Dr. Kurian for this structure. He ensured that the co-operatives are run in real democratic sense. There is hardly any politics compared to failed co-operatives from other states like textile Co-operatives, Cotton-co-operative Sugar co-operatives. The structure is very transparent, people right from the dairy consumer to diary producer know what is happening. The Whole supply chain and whole value chain is very transparent.

How Dairy is helping India to meet the United Nations Sustainable Goals ?

1. There is zero hunger because of milk in India , which is one of the UN’s Sustainable Development Goals.
2. There is no poverty because of the simple reason, that poverty alleviation in terms of regular income is being taken care of dairying. Even a small farmer who has 2-3 animals ,and at least 2 of them are milking, he is assured daily income. These helps them to overcome the difficulties of their day to day life and helps them in generating Income.
3. UN SDG’s talk about affordable and Clean Energy. Here we should little bit look into the future. The experiment that NDDB and AMUL is doing together in Jagariapur which is very close to Anand. We will have the country’s first solar co-operatives in the village called Jagariapur. Around 40 odd farmers have come together and have put solar panels in their farms. They are producing electricity not only for their own needs but also selling it to Gujrat Electricity board.

How Bio-Gas and Manure is trying to address the issue of Dry Animals after Government stance Against “GAUHATYA” ?

1. NDDB has taken bio-gas to the next level.368 farmer families in Jagariapur village are involved in a experimental project. Here every single family has a bio-gas plant in their own backyard, as Every family in that village is a dairy farmer. This not only takes care of fuel needs, but whatever is being left out called as slurry is being used in farms and the excess slurry is being branded as “Sudhan” and sold as Organic Manures. These operation is being run by Women’s Cooperatives. This is an additional income for farmers that is coming out of dung, which is an absolute waste of animal which is being used for producing Value added products.
2. In Maharastra , Nagpur there is a small experiment going on in a village on dry animals. By dry I mean, the animals which do not produce milk. Can they be economic still? This whole slurry, biogas and sudhan is a right direction in that. Even after the animals stop milking, the farmers can fend for themselves and feed these cattle. This is in a pilot mode, but once successful it will be implemented all over the country.

Diary has reduced the overall Inequality in Villages

The Dairy and cooperatives have removed all inequalities in villages in terms of caste, economic and gender. The cooperatives or the producer owned organization have enabled the removal of both kinds of inequalities. Once women gets empowered, she starts earning. When she starts to earn , she has a better say in the family, like children’s education , take family business decisions. In addition to that smaller farmer in a demographic set up have started earning and also a part of cooperatives where they are heard.

Dairy has improved the nutrient intake of masses in India

Milk takes care of about whole well being and good health of Masses in India. As earlier pointed out there is a whole vegan movement going on, different types of milk are being introduced like Synthetic milk, Oat Milk, Soya milk .But in a country, where we are still short of milk, what milk and darying is done is that ensuring that problem of malnutrition is eliminated. Whether it be the Mid-day meal scheme in the naxal affected districts like Chandrapur or the slums, milk is one of the best nutrient givers to the country, especially when a lot of the population is vegetarian and they cannot have non-veg proteins.

Can Milk model be extended to fruits, vegetables and the problem of Subsidy ?

Milk has empowered rural community in such a way, 80% of price goes back to the farmers. Should it be done with every agriculture produce. Vegetable owners only gets 10%, which is very frightening. Kurian was successful because he kept the Government out of dairy, but the Government found out a way to sneak back to the milk Industry by paying subsidy. Kurian created an entire Industry without subsidy. He believed that Farmer should be actually “Atmanirbhar”. By giving subsidy, you make the farmer dependent on doles, but the most dangerous thing is that you are skewing the market place by letting the inefficient survive and destroy the efficient.

The reason milk is doing well because of cooperate movement and there was no Government interference. This model should be tried for other agriculture products. It should be done, but since it is not being done by private players, or entrepreneurs , or farmers producers organization, we have to go back to the Government asking for some support. If we look at the government scheme of MSP,SMP,FRP which has completely distorted the sugarcane market and cereals market. Actually, the moment Government gives subsidies , one moves away from market dynamics and everybody survives. If we take the example of rice and wheat , most of the farmers like to produce the basic quality and do not want to go for a high variety, simply because there is a MSP program and I am assured of the price. If the farmer is from Punjab and Haryana, he knows that he can grow rice and wheats of lower quality and still get price of the highest quality. But the issue of horticulture crops is that, there are a no. of crops like potatoes, onion , different fruits which are sown at different seasons and unlike milk in not homogenous. But there are examples of NDDB in case of frozen peas and frozen corns , which can be sold throughout the year and the prices are not getting affected.

Need for govt to make FPO’s as mini NDDB

NDDB is already doing its bit with fruits and vegetables through SAFAL and also working on oilseeds . For all vegetable and fruits, the Government has introduced the concept called FPO’s. The only question is can it empower it to become a mini NDDB, a market maker , an aggregator .Aggregator is important without which we cannot succeed especially in case of food processing . The Million Dollar question is can GOI allow FPO to become as independent , as self-financing as NDDB?

Govt. needs to build structures other than APMC

First of all there is this very obsolete APMC acts. Although the recent farm bills have removed them it will take a quite a long time to build a similar kind of aggregator. We need to make a seamless kind of structure, which allows other players to come and participate. When kurien started , the business environment was definitely much better and APMC laws do not apply on milk. That made things easier.

Fortunately in case of Dairy sector, Government is playing a very constructive role along with private sector. GOI has come up with a couple of schemes recently where subsidized financing is available for creating infrastructure for Dairying.

Failure of Jipe

As pointed out earlier, that we cannot apply the milk model for vegetable and fruits because firstly, milk is homogenous unlike fruits and vegetables and secondly, the fruits and vegetables have different sowing , harvesting season. So we should take up individual fruits and vegetables and try to build co-operative models on it. But there is history of failure there as well.

There was a product called jipe. This was the first PPP in kerala where the Kerala Government and Private players got together and brought some machineries from Italy. They were producing the pineapple juice, which was supplied in Erstwhile Indian Airlines. The quality was good and was packaged attractively in tetra packs, but ultimately the product died. It could not be marketed properly.

How Private sector is also applying the same cooperative model in dairy sector ?

But what the cooperatives have ensured is that when the private players come to the scene, they also give the same remurative prices to the producers as cooperatives. One of the best examples is Hatsun in South India. If we look at the prices , in which they are procuring and how much they are passing it on to producers, they are almost near the diaries. They are good example. This is what competition does even to a private player. Hatsun is squeezing out their margins for the benefit of farmers. Since, the organized dairy sector is dominated by cooperatives, they ensure that private players also play by the same rules.

Idea and statistics taken from free Press journal of India