President's Desk


Catalysing Innovation in Indian Dairy Industry: Policy Impacts and Future Trajectories

I extend a warm welcome to all attendees to the 50th Dairy Industry Conference (DIC), organized by the Indian Dairy Association, scheduled to take place in Hyderabad during March 4-5-6, 2024. It fills me with pride to note that each year, the DIC grows bigger and bolder, setting new milestones and proving to be the premier platform for showcasing the strength of the Indian Dairy Industry to the world. The history of the Dairy Industry Conference (DIC) reflects the evolution and advancements within the dairy sector. Originally initiated to provide a platform for professionals, researchers, and businesses involved in dairy to collaborate and exchange knowledge, the conference has grown significantly over the years.

This landmark 50th DIC, themed "Indian Dairying: Innovation & Entrepreneurship," aims to address contemporary issues surrounding dairy entrepreneurship, supported by innovations within the industry. The technical sessions have been carefully designed to empower and inspire young dairy entrepreneurs to enhance their businesses amidst the growing demand for milk and milk products. Concurrently, the exhibition will feature both Indian and international exhibitors, presenting their tried-and-tested machinery, equipment, ancillary materials, and services aimed at optimizing processes across the dairy value chain.

On February 14, 2024, the Union Minister of Fisheries, Animal Husbandry & Dairying, Shri Parshottam Rupala, launched the realigned AHIDF Scheme in New Delhi. Being a key stakeholder, IDA was invited for the event held at Vigyan Bhawan for the launch of scheme as well as the E-portal. The scheme has been realigned under the Infrastructure Development Fund with an enhanced outlay of Rs.29,610 crore, up from Rs.15,000 crore. In the realigned scheme, Dairy Infrastructure Development Fund (DIDF) has been subsumed. Now the Dairy Cooperatives will avail benefit of interest subvention of 3% under AHIDF instead of 2.5% which was received in DIDF. The realigned scheme will be implemented for a further period of three years, from March 31, 2023, until 2025-26. Under this scheme, beneficiaries including individuals, FPOs, Dairy Cooperatives, Private Companies, Section 8 companies, and MSMEs will receive benefits such as a 3% interest subvention payable up to 8 years, credit guarantee cover up to 25% of the term loan, no ceiling on the loan amount, and loans up to 90% of the estimated/actual project cost. Additionally, the scheme allows for dovetailing with capital subsidy schemes of other ministries or state-level schemes and offers an ease of application process through the online portal. This scheme will benefit dairy industry as a whole and the Animal Husbandry sector in particular and will spur innovation in some of the challenging issues like Feed cost in Dairy Industry.

In another significant move aimed at supporting the dairy sector, the Government of India has introduced a series of measures granting income tax exemptions and reductions for Cooperative Societies under the Income Tax Act. The key highlights include deductions under Section 80P for primary cooperative societies involved in supplying milk to federal cooperative societies, surcharge reduction from 12% to 7% for incomes exceeding Rs.1 crore and up to Rs.10 crore, lowering the rate of Alternate Minimum Tax from 18.5% to 15% for cooperative societies, amending Section 269T to eliminate penal consequences for cash repayments by Primary Agricultural Credit Societies (PACS) or Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) up to Rs.2 lakh, raising the TDS threshold on cash withdrawal to Rs.3 crore for cooperative societies, offering interest subvention on short-term crop loans up to Rs.3 lakh for farmers at an attractive rate of 7% per annum, and introducing the Kisan Credit Card (KCC) scheme for Animal Husbandry and Fisheries, providing short-term working capital loans up to Rs.2 lakh per beneficiary since 2018-19. These measures aim to provide a substantial boost to the dairy sector and promote the financial well-being of cooperative societies involved in dairy activities.

The trend in milk production growth has been declining since 2017-18, largely due to the disproportionate increase in procurement prices compared to feed costs. According to the Animal Husbandry report from the Ministry of Fisheries, Animal Husbandry and Dairying, the growth rate in milk production dropped from 6.5% in 2017-18 to 3.8% in 2023. However, with stable prices of dry and green fodder, there is anticipation for an improvement in milk production this year. While the organized and cooperative sectors are procuring 7-10% more milk, the private sector is limiting procurement due to low commodity prices. Milk prices are expected to remain stable until July-August 2024, with no increase in dairy product prices for the past 10-11 months. With stabilizing prices, there is an expected increase in demand and consumption of milk and milk products in the coming months. As the cost of milk production declines, improved margins for companies have led to offers and schemes, particularly in cheese, butter, and ghee, which would likely to boost consumption further. However, the industry needs to address feed prices, as failure to reduce cattle feed costs could impact milk production in the long term.

Internationally, commodity prices hit their lowest point in August-September 2023 but have been steadily rising since then. This gradual increase has led to the price of fat in the global market surpassing that in India, which supports the export of fat. However, prices of Skimmed Milk Powder (SMP) remain slightly lower in India. Despite this, it is anticipated that SMP prices will not decrease further in the domestic market.

In her Budget speech, Ms. Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs, emphasized the need for the Indian dairy industry to enhance the productivity of animals to remain competitive in the global market. She stressed the importance of focusing on animal productivity within the dairy sector. It is crucial to introduce the concept of feed conversion ratio, akin to the poultry industry, wherein the amount of feed consumed by animals to produce 1 litre of milk is measured. This approach should be implemented regionally, categorically by cattle, and based on breeds. By analysing this data, we can pinpoint areas for improvement.

Enhancing the productivity of our cattle will address several challenges currently faced by the dairy industry. It will not only reduce production costs and enhance competitiveness in the international market but also tackle the sustainability issue, which is garnering global attention.

In its continuous endeavors to address the challenges as mentioned above, Indian Dairy Association Punjab State Chapter in collaboration with Milkfed (Verka Dairy) Ferozepur organized "The Kisan Dairy Summit" at Genesis Institute of Dental Science & Research, Ferozepur, Punjab on January 30, 2024. The Summit was a comprehensive platform aimed at empowering dairy farmers with advanced techniques in feeding, breeding, and health management of dairy cattle. The event featured insightful sessions by expert speakers from organizations such as GADVASU, NDDB, PAU, and the Animal Husbandry Department Punjab, covering topics ranging from silage and cattle nutrition to advanced techniques in dairy farming and cattle breeding. Additionally, discussions on schemes, subsidies, and development projects available to dairy farmers were led by representatives from NDDB and Milkfed Punjab. The summit also emphasized the importance of collaboration between industry, professionals, scientists, and farmers for the overall betterment of the dairy sector, with a focus on adopting modern techniques and fostering awareness.