Context: The second wave of pandemic has brutally impacted the dairy sector. There is a reduction in milk demand coupled with a shortage of livestock feed. The situation is very grim and requires the adoption of robust measures to support the dairy sector.
Background

• In the first wave, agriculture and allied sectors put up a spectacular performance. It showed an annual growth of 3.4 % while the economy contracted by (-)7.2 % in 2020-21. 
• However, this good performance was not replicated by the dairy sector in the second wave.
• About the dairy and livestock sector:
• In India, around 70 million farm-dependent people are engaged in the dairy and livestock sector. 
• Further, 7.7 million people are exclusively engaged in the sector. Amongst them, 69% are female which means the sector is a crucial source of women empowerment.
• The labour force of the sector mainly comprises unpaid female members.
• In the Gross Value Added (GVA) from agriculture, the livestock sector contributed 28 percent in 2019-20. Further, India witnesses a 6% growth rate in milk production every year.
• Farmers keep 2-5 milk animals for livelihood which provides great support to them, especially during drought and flood.

Challenges faced by the dairy Sector

• Price Sensitivity: Milk producers are highly susceptible to even minor shocks.  For instance, small changes in the employment and income of consumers can leave a significant impact on milk demand.
• Unorganised Nature: The majority of cattle raisers are unorganised unlike sugarcane, wheat, and rice-producing farmers. This nature further inhibits the creation of political clout to advocate for their rights.
• Data Deficiency: There is no official and periodical estimate of the cost of milk production. Even though the value of milk produced outweighs the combined value of the output of wheat and rice in India.

Poor returns: There is no MSP (Minimum Support Price) for milk unlike 24 major agricultural commodities in the country including wheat and rice. Further dairy cooperatives are not a preferred choice for landless or small farmers.

• The cooperatives adopt a fat-based pricing policy which is 20 to 30 % less than the price in the open market. 
• Further, more than 75 % of the milk bought by dairy cooperatives is at its lower price band.

Adverse impact of Pandemic on the Dairy Sector

• First, the threat of disease has restrained the door-to-door sale of liquid milk to households. This has forced the farmers to sell the entire produce to dairy cooperatives at a much lower price.
• Second, the lockdown had led to the closure of shops. This has reduced the demand for milk and milk products.  
• Third, the severe shortage of fodder and cattle feed has pushed up the input cost.
• Fourth, private veterinary services have almost stopped due to Covid-19. This has led to the death of milch animals.

Steps taken by Government for the Dairy Sector

• The government has launched a Nationwide AI (artificial insemination) program. It targets to augment annual milk productivity from 1,860 kg/per animal to 3,000 kg/per animal upon its completion.
• The dairy farmers have been included in the Kisan Credit Card (KCC) program. It provides adequate and timely credit support from the banking system to the farmers for their cultivation and other needs.
• Similarly, dairying was brought under MGNREGA to compensate farmers for the income loss due to Covid-19.

Concerns associated with the above steps

• First, there is a shortage of AI technicians in India. In August 2020, the department of animal husbandry reported a requirement of 2.02 lakh technicians while only 1.16 lakh were available.
• Second, the dairy cooperatives have not applied for a sufficient number of loans under KCC. As of October 2020, not even one-fourth of the dairy farmers’ loan applications had been forwarded to banks.
• Third, the MGNREGA scheme may not be able to provide relief as its budgetary allocation has been curtailed. The budgetary allocation for 2021-22 was curtailed by 34.5 percent in relation to the revised estimates for 2020-21.

Road Ahead

• The dairy farmers must be given a stable market and remunerative price for the milk. For the price, a greater weightage should be accorded to the quantity of milk than its fat content
• They must be ensured of an uninterrupted supply of fodder and cattle feed at a reasonable price.
• The government should also provide a regular supply of veterinary services and medicines to them.