Dr.S.V.N.Rao, Dr.K.Natchimuthu and Dr.S.Ramkumar
The Milk producers have to pay for various direct and indirect costs to which unfortunately many stakeholders in addition to policy makers are insensitive. This paper highlights the issues which force the milk producers to remain at crossroads.Suggestions to the stakeholders of milk production to empathize with the situation and deliver their roles in a manner that helps to ease the burden on the small milk producer. People in general recognize the importance of milk in their daily routine and for many of them life without milk is difficult to imagine.
This especially applies to urban consumers whose life starts with coffee or tea blended with milk. But unfortunately they have no clue about the miseries of milk producers in the villages. The objectives of milk producers and milk consumers’ conflict as the former want to get better price for their milk and the latter want to get quality milk at a lower price.
The society is undergoing fast changes due to globalization and urbanization, concomitantly influencing the way of life. It is rightly predicted that the demand for milk and milk products is expected to rise in the years to come mainly due to enhanced purchasing power of the people, especially the mighty 250 million upper middle class (Rao et al 2004). In India, cereal consumption remained unchanged between 1990 and 2005, while consumption of meat, milk, fish, fruits, and vegetables increased (Braun, 2007).
The milk production is also increasing over the years though not at the required pace. The current milk production is estimated to be in the order of 100.9 million tons (GOI, 2008) whereas the projected demand for milk in the year 2020 is 147.3 million tones (Dastagiri, 2004). Procurement prices are also being increased though not commensurate with the increase in input prices (Natchimuthu et al 2005, Kalra and Dhaliwal, 2008)). Apparently though it appears that the situation is very much conducive to milk producers, it is not so. Non remunerative milk prices (making the dairy farming unattractive) are the most important constraint to the milk producers (Ramkumar et al 2003, Natchimuthu and Ramkumar 2002, Venkatadri et al 2008). But the mute question is who cares? This paper aims at highlighting the issues which force the milk producers to remain at crossroads.
Who is a milk producer?
- Small vs. Large (based on the quantum of milk produced or herd size),
- subsistence vs. commercial (based on whether milk production is necessary for them to sustain their livelihoods or exclusively for sale as a business),
- Urban vs. Rural (based on the region or location of the farm),
- cow vs. buffalo milk producers (based on the species they rear).
Whatever policies and changes that happen in society, may it be in terms of technologies developed or transferred and programmes developed and implemented, have invariably benefited the large and commercial milk producers, compared to their counterparts, the small milk producers, who are vulnerable to these changes.
Dairy farming is in the hands of landless agricultural labourers, marginal and
small farmers (Ahuja et al 2000; Kurup, 2001; Balaraman 2006). It is well documented that the contribution of these small milk producers to the total milk production in the country is quite substantial (about 60 per cent) (Shukla and Brahmankar 1996, De Leeuw et al, 1999). But the small producers are least benefited from various schemes formulated and implemented by different agencies intended to improve the milk production. Even the well acclaimed Operational Flood programme is not devoid of the criticism that it had marginalized the poor cattle owners, the landless labourers (Verhagen 1990).
The small farmers’ status is no better than an agricultural labourer. It is also a known fact that the negative impact of any change will have serious negative consequences on the livelihoods of resource-poor dairy farmers compared to resource-rich dairy farmers as the latter have the capacity to absorb the risks which arise from such changes. The milk producers in this paper refer to this particular segment of dairy farmers that is resource poor, maintains one or two less productive animals for their livelihood and is vulnerable to changes however small.
Who are the stakeholders of milk production?
A large number of stakeholders are involved in milk production which include, milk producers, input suppliers, milk processing and marketing agencies (cooperatives, milk vendors, dairy plants, and equipment manufacturers), pharmaceuticals, veterinarians, researchers, extension personnel, policy makers etc.
The milk producers can be traced as the weakest and last in the chain of stakeholders. Livestock rearing often is the only economic activity accessible to the poor people in developing countries as it does not require formal education or large amounts of capital and often no land ownership
Who fixes the price of milk?
The Government either directly or indirectly controls the prices of milk, considered as an essential commodity and the milk producers absolutely have no role to play. It is an irony that the Government controls the prices of milk (the output) but not the feeds and feed ingredients (inputs). Although, the cooperative unions are empowered to fix the prices of milk, in practice the government fixes the prices of milk that too in favour of a large number of influential, literate urban consumers rather than less number of weak, ignorant, and scattered rural producers. Again in the number game in a democratic country like India, the milk producers are the losers. This could be the reason why milk prices are increased at the lowest rate compared to any other commodity. Till date there is no formula to fix the milk prices on the basis of feed prices which is in vogue in many developed nations (IFCN Dairy report 2005). Whenever, the contentious issue of milk price is raised the knee jerk reply of the government is providing cows, feeds etc on subsidies. But there is no evidence that these sops have ever increased the milk production and helped in mitigating their miseries (Natchimuthu et al 2007).
Who are the beneficiaries of subsidies?
Field observations and reports on livestock research and development programmes (LID 1998 & 1999, Rangnekar 2006, Heffernan et al 2005, Owen et al 2005, Conroy 2005) showed that the benefits of programmes to the resource poor were very limited. Although the subsidies are intended to provide relief to poor/ small milk producers the actual beneficiaries of the subsidies are not the small producers. Take the case of purchase of crossbred cows and buffaloes under PM’s Relief package. The beneficiaries are the middlemen involved in cattle trade, officials, transporters, feed manufacturers, affluent milk producers etc. There is no evidence that the small producers were benefited through the distribution of animals, rather they were exploited in terms of getting poor quality and high-priced animals, added expenses to feed their animals and in addition burdened with huge loans (Sastry et al 1993). An Action Research study conducted by CALPI (Capitalization of Livestock Programme Experiences India) revealed that “The enterprise of small holder dairy farmers with low producing animals seems to be economically not viable. It is feared that better availability of credit for purchase of livestock under the poverty alleviation programme may be aiding in the creation of more such unviable enterprises ( Raghunathan, et al., 2008)
A substantial number of such animals (cows) have either died or were sold by milk producers resulting in loss of revenue to the Government without any additional increase in milk production. Wrong beneficiaries were identified as the main reason for failure of such schemes (Maheshwari 1995). It is a known fact that by distributing cattle through transfer of ownership the milk production of the country is not going to increase.
It is worthy to rethink seriously on the need of this practice of cattle induction in the The case with subsidies on cattle feed is also not different from that of the cattle loans. By subsidizing the cattle feed with a compromise on quality the small producers are the worst sufferers. The complaints of the milk producers on the quality of feed supplied especially by the Public sector agencies or cooperatives remain unheard since Milk Producers have no control:
Milk producers have no control on the output they produce. Because milk is controlled by multiple genes and it is perishable in nature, milk producers have no control on either the quantity or the quality of milk produced. In addition, unlike other consumer products they have no control on,-
- Fixing milk prices
- Framing policies for dairy development
- Guiding research on technology development.
- Storing milk leading to forced sales
- Agency to which they have to sell
The milk producer is never covered under production risk. Cattle insurance is fraught with several obstacles which force the milk producers not to get their cows insured. They have more valid reasons for not getting their cows covered under cattle insurance. The meager percentage of animals insured at any point of time is a reflection of this apathy for which the insurance companies need to introspect seriously, considering their responsibility to the poor milk producers.
The economic losses through diseases in cows need no emphasis. The impact of these losses is inversely related to the economic condition of the producer. If a producer depends upon one cow for his livelihood and it is affected with say Foot and Mouth Disease (FMD) one can imagine his condition which is more miserable than can be explained.
Through vaccination of animals, many stake holders are benefited except the small milk producers. For instance if a cow is affected with FMD even after vaccination (usually done by Government or cooperative agencies) the owner is virtually ruined as it is an asset on which the family thrives. Irrespective of the problem whether the cow is vaccinated or not, the stakeholders involved in vaccine production, sale and use are all benefited at the cost of the small producer. Neither the vaccine producer nor the service provider is accountable for this. What immunity does the milk producer have in such situations?
Although theoretically the dairy farmers have an option to sell the milk to any agency, in rural areas most of them have no option but to supply to dairy cooperatives (Holt and Ramkumar, 2003).
Theoretically, the milk cooperatives serve as an excellent intervention for milk producers to get remunerative price for their milk. But in practice many societies/ unions in some parts of the country are running under severe losses for a variety of reasons. Irrespective of the reason the milk producer has to pay for these losses. It is sad that the producers have to pay the cost of malpractices in collection of sample milk, weighing and testing, delay in payments, supply of poor quality inputs like cattle feed etc. This is the reason why the dairy cooperatives are branded as “ORGANISED MIDDLEMEN” or “COOPERATIVE MIDDLEMEN”. The Milk Coops/ Unions are not free from the Government control and it is the latter which fixes the prices of milk rather than the former. Bhasin (2004) opined that the role of Government and Registrar Cooperative Societies has not been positive and there is a tendency to control the cooperatives and interfere in their working. At some places there has developed a government / private sector nexus to the detriment of the cooperatives. In fact, while delivering the inaugural address in the34th Dairy Industry Conference held at Bangalore, Montek Singh (2005), stated “There is a perception in the country that the cooperative form of organization has got weakened and it needs to be freed from the intrusive control of the government”.
The other option could be to sell their produce to vendors or middlemen. Here also the milk producers are not free from various risks which include malpractices in measuring and payment. However, one should not undermine the contribution of these vendors who handle most of the milk than the organized sector and they will continue to serve the milk producers as well as the consumers in the years to come. In any case the milk producer has only these two options especially in rural areas and the producers are not satisfied with either of the systems.
Milk producer pays for all:
The Milk producers have to pay for various direct and indirect costs to which unfortunately many stakeholders in addition to policy makers are insensitive.
I. Breeding:It is well documented that repeat breeding especially in crossbreds is a very serious constraint faced by dairy farmers all over the country (Natchimuthu and Ramkumar, 2002). The conception rate through Artificial Insemination (AI) in the field is not more than 25 per cent which means a cow needs to be inseminated on an average four times for conception. Even if the dairy farmer is provided with free AI service he will be paying indirectly for
- feeding the cow for the extended period of conception (4 AI’s mean extra time of 3 AI’s i.e. 60 days between the first and successful AI). The cost of feeding for these 60 days alone if accounted will not be less than Rs.500/-.
- his time or transportation charges in taking the cow to AI centre, that too many times
There are several reasons for a cow not conceiving. But the milk producers pay the cost. Even though poor conception is because of factors extraneous to the milk producer which include inefficient inseminator, wrong time of insemination (mostly due to inaccessibility of AI services in the evening hours as well as holidays) and poor quality of semen, the milk producer will be blamed for his ignorance of detecting heat symptoms, not presenting the cow in right time for insemination and lastly for not feeding the cow
ii. Feeding: It is a proven fact that feeding contributes to a major chunk of cost of milk production. With increasing urbanization, industrialization, and decrease in the area under food grain crops, there is a drastic reduction in fodder production (Balaraman 2005). The inflation has helped the already high fodder prices shoot up, leaving milk farmers gasping (Srilatha, 2007). In addition, common property resources like grazing lands have almost vanished from the scene forcing the milk producers to depend upon purchased inputs (Natchimuthu et al 2007). The policy of promoting crossbreeding in cattle led to the increase in the population of crossbreds. This increase in the crossbred population induced an increased need for inputs especially the high quality feeds, medicines and vaccines ( Rao et al, 1995). The worst affected are the landless dairy farmers who used to allow the animals for grazing and have now been forced to shift to stall feeding; and need cash to purchase green as well as dry fodder thereby increasing the cost of production. The cost of milk production has gone up by 50 per cent in recent times. In contrast milk prices have increased by only Rs. 2 to 4 a litre in the past 18 months (Kaur, 2007). Based on their study, Venkatadri et al (2008) argued that Dairying was not an enterprise remunerative enough to cover all costs including input costs for family labour and farm grown inputs, even at higher productivity levels of crossbred cows and buffaloes irrespective of farmer categories. It is in the realm of anybody’s common sense that the feed and fodder prices are increasing at a faster rate than milk as the dairy farmer stands puzzled at the situation.
Likewise the milk producers often pay to inefficiencies, inaccuracies and insensitivities of several stakeholders which include input suppliers, service providers, and milk cooperatives irrespective of whether they are in public, private or cooperative sector. All these stakeholders appear to help the milk producers though in reality, they capitalize on the weakness of this disadvantaged group. Their lack of unity and formidable organization, ignorance and scattered nature all over the country makes them vulnerable for unjustifiable pressures. In effect all the stakeholders depend upon the Milk producers though the other way round explanation is often what we come across.
We fully endorse the view of Rajivlochan (2008) that no one asks the farmer and while conceiving several schemes for the development of farmers, the policy makers assume that they are well aware of the needs of the farmers without properly understanding the ground realities and the net result is that these schemes abort in the initial stages itself forcing the policy makers to evolve new schemes without learning any lessons from the previous experience. If the Government is serious about achieving the pro poor economic growth it is necessary that these resource poor milk producers are involved right from the start of any dairy development intervention by resources to identify them, target them and planning with them, appropriate interventions Whoever ( Policy makers, inputs suppliers, service providers, milk marketing agencies, technology generators, extension agents ) commits the mistake, the milk producer has to pay for it and ultimately he/she has to blame himself/herself for taking up this so called novel occupation of cattle rearing for the reasons best known to him/her.
We only appeal to the learned stakeholders of milk production to understand the realities in which the small producer who is struggling to sustain in the food chain empathize with the situation and deliver their roles in a manner that helps to ease the burden on the small milk producer.
- Milk prices must be fixed on the basis of milk : feed price ratios
- Milk collection centres should be automized and the whole process of weighing, testing and payment must be transparent.
- Efficient Delivery of Quality AH services including extension services on payment and the service providers must be made accountable.
- Input suppliers (Feed manufacturers, medicines and vaccines etc) must be made accountable for poor quality of inputs
- Assured supply of quality cattle feed ingredients rather than compounded cattle feed at reasonable prices
- Milk Unions should be freed from Government interference. (?)
- Identification of cows with electronic chips to help maintain proper records and to facilitate cattle insurance in a transparent manner.
- Private farmers should be encouraged to produce and rear heifer calves for sale to enable the supply of quality animals to the needy people. This could be facilitated through proper identification and fixation of an attractive price for heifers.
Consequences of the shortsighted policies
- The livelihoods of the small milk producers which include landless dairy farmers will be at stake. Decreased margins may force these producers out of this occupation thus adding to the number of unemployed people in the country.
- Decrease in the number of dairy animals and increase in the small dairy cattle
- Dissatisfaction to rear cows as reflected by the disinterest of younger generation or to continue family tradition to rear cows. (Farmer’s son never wants to be a farmer
- Increasing dependence on imports due to the increased gap between demand and supply of milk and milk products.
Under these circumstances when resource poor livestock keepers are facing many pressures on their livelihoods, it is important that public funds are used strategically and imaginatively, to support the development initiatives that address the realities and priorities of poor livestock keepers ( Garforth, 2001).
Ray of hope: ILRI in its report highlighted the opportunities for the poor to improve consumption are driving increased demands for livestock products which in turn are creating real opportunities to reduce poverty through livestock production and marketing. These opportunities will only be realized if the poor can respond to these new opportunities by generating marketable surpluses and by accessing the market.
Rapidly growing economies and changing patterns of food Research for poverty reduction through livestock can contribute to achieving this goal. To make it a reality the mind set of all the stake holders involved in dairy development need to be articulated for a favorable change.
Research clearly brought out that a substantial number of people especially the rural and resource poor depend upon the cash income they get from the sale of small quantities of milk they produce from their dairy animals. For this reason in some states, Dairy Sector was identified as an important growth engine for prosperity and rural development. Unfortunately the milk producers especially the small, are under severe stress and are unable to cope with the pressure from other stake holders and getting marginalized in the process. It is high time for the policy makers and stakeholders of dairy farming to empathize with the farming situation in which they are operating and do their mite to mitigate the miseries of this vulnerable section of the society.
(Thanks to Dr.S.V.N.Rao, Dr.K.Natchimuthu and Dr.S.Ramkumar for the kind permission to publish the article at this space – Editor)
The authors can be reached at: Dr.S.V.N.Rao, Dr.K.Natchimuthu and Dr.S.Ramkumar (Department of Veterinary and Animal Husbandry Extension, Rajiv Gandhi College of Veterinary and Animal Sciences, PONDICHERRY) email@example.com, firstname.lastname@example.org