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Dairy Sector in India

2022 SEP 23

Mains   > Agriculture   >   Allied areas   >   Livestock rearing


  • Recently, the Prime Minister inaugurated the International Dairy Federation World Dairy Summit in Greater Noida.


  • The four-day long summit is a congregation of global and Indian dairy stakeholders including industry leaders, experts, farmers and policy planners centring around the theme of ‘Dairy for Nutrition and Livelihood’.
  • The last such Summit was held in India about half a century ago in 1974.
  • The success story of the Indian dairy industry, accounting for about 23 percent of global milk and empowering more than 8 crore dairy farmers, will be showcased at the Summit.The summit will also help Indian dairy farmers to gain exposure about the global best practices.


  • Dairy is one of the biggest agri-businesses in India and a significant contributor to the Indian economy.
  • It is the single largest agricultural commodity contributing 5% of the national economy.
  • India is ranked 1st in milk production contributing 23 % of global milk production.
  • Milk production in the country has grown at a compound annual growth rate of about 6.2 % to reach 209.96 mn tonnes in 2020-21 from 146.31 mn tonnes in 2014-15 .
  • The top 5 milk-producing states are: Uttar Pradesh, Rajasthan, Madhya Pradesh, Gujarat and Andhra Pradesh.
  • After Operation Flood, the Indian dairy and animal husbandry sector emerged as a primary source of income for a huge number of rural households.
  • Indian dairy industry is unique in the sense that it is based on a cooperative model that empowers small and marginal dairy farmers, especially women.


  • Significant contributor to farmer’s income:
    • Dairy is a significant contributor to farmer’s income as approximately 80 million farmers are directly involved in dairying.
    • Dairy is the only agri-product in which around 70-80 per cent final market value is shared with farmers and it accounts for approximately one-third of rural household income in India.
  • Nutritional security:
    • India was ranked 101 out of 116 countries under the Global Hunger Index (GHI) 2021. According to experts, one of the main reasons for this was a lack of high-quality dietary nutrients in Indian diets.
    • Increasing the consumption of milk and other dairy products can be a solution to this as milk intake can be a proxy for good overall nutrition, and dairy products provide access to nutrients.
  • Woman empowerment:
    • The sector is an important job provider, especially for women, and plays a leading role in women’s empowerment.
    • Women producers form the major workforce of the dairy sector in the country.
    • Speaking at the inauguration of the International Dairy Federation World Dairy Summit 2022, the Prime Minister said women represent 70 percent of the workforce in India's dairy sector and more than a third of dairy cooperatives' members are women.
  • Protection against natural disasters:
    • Livestock are the best insurance against the drought, famine and other natural calamities.
    • Majority of the livestock population is concentrated in the marginal and small size of holdings. Further, agricultural productions get valuable organic manure provided by the livestock.
  • Success of cooperative societies:
    • The cooperative societies in dairy sector have not only made the farmers self-sufficient but have also broken the shackles of gender, caste, religion, and community.
  • Export potential:
    • India is one of the largest producers of milk and value-added milk products in the world.
    • India exported 54,762.31 MT of dairy products worth 201.4 Mn USD in 2020-21, major destinations being, UAE, Bangladesh, USA, Bhutan and Singapore.
  • ‘Moving banks’:
    • Livestock are considered as 'moving banks' because of their potentiality to dispose off during emergencies.
    • They serve as capital and in cases of landless agricultural labourers many time it is the only capital resource they possess.


  • Low productivity:
    • Improving productivity of farm animals is one of the major challenges.
    • For instance: The average annual milk yield of Indian cattle is 1172 kg which is only about 50% of the global average.
  • Vulnerable to disease:
    • The frequent outbreaks of diseases like Food and Mouth Diseases, Black Quarter infection, Influenza etc. continue to affect livestock health and lowers the productivity.
  • Limited Artificial Insemination services
    • Limited Artificial Insemination services owing to a deficiency in quality germplasm, infrastructure and technical manpower coupled with poor conception rate following artificial insemination have been the major impediments.
  • Neglected by the financial institutions:
    • The share of livestock in the total agricultural credit has hardly ever exceeded 4% in the total (short-term, medium-term and long-term).
    • The institutional mechanisms to protect animals against risk are not strong enough.
  • Shortage of fodder:
    • Hardly 5% of the cropped area is utilized to grow fodder. India is deficit in dry fodder by 11%, green fodder by 35% and concentrates feed by 28%.
    • The common grazing lands too have been deteriorating quantitatively and qualitatively.
    • Growing trend of high breed animals is creating a huge demand for good quality feed and fodder to cater the dietary requirement of milking animals.
  • Cold chain infrastructure:
    • There is a lack of required infrastructure of chilling plants and bulk coolers to prevent contamination and spoilage at village level.
    • Many chilling plants suffer due to shortage of electricity and do not run optimally leading to poor quality and shelf life of milk.
  • Quality concerns:
    • Large share of milk (70–85%) of marketable surplus goes through informal channel where quality is a big concern. Sometimes quality is an issue in the formal channel as well
    • Quality of milk and milk products are a barrier to entry to the export market, especially the EU and the USA.
  • Low value addition and modernisation:
    • There has been less effort put into developing value-added or innovative products, nor has there been any serious effort put into supporting and modernising the informal sector. 
  • Environmental concerns:
    • Conversion of forest land:     
      • The conversion of forests into agricultural land and livestock ranches is one of the major causes of deforestation globally
    • Greenhouse gas emissions
      • Raising livestock generates 14.5 per cent of global greenhouse gas emissions. India’s huge population of ruminants contributes to greenhouse gases emission adding to global warming.
  • Other challenges:
    • Milk production is scattered over a large number of farmers producing miniscule quantities.
    • Milk distribution is limited to urban and peri-urban areas.
    • Low milk prices because of lower prices declared by cooperatives, which results in low prices of milk paid by all players.


  • National Programme for Dairy Development (NPDD)
  • Dairy Processing and Infrastructure Development Fund (DIDF) Scheme
  • Rashtriya Gokul Mission
  • National Artificial Insemination Programme
  • Kisan Credit Card (KCC) for Animal Husbandry & Dairying Farmers
  • National Livestock Mission


  • Increase the economic viability of dairy farms through input interventions and more equitable farmer prices
  • Increase the link between rural production areas and urban markets.
  • Focus on strengthening the indigenous breed to help significantly enhance productivity. Also  develop infrastructure and training for clean milk production.
  • Focus on quality issues even in the informal channel by training traders and by enforcing food quality regulations.
  • Support to dairying as an enterprise to encourage commercial dairy farming and enhance production and productivity by extension and breed development.
  • Strengthen dairy farmer cooperatives to enable farmers to get a higher price for milk.
  • Increase access to credit through dairy farmer organizations and other agencies.


Q. “The dairy sector plays a crucial role in rural economy”. Explain how the dairy sector is significant for the rural economy and examine the challenges associated with the sector.