Another white revolution, please

The yawning gap between farmgate and retail prices has been debated at length in recent times, especially with reference to the question of allowing foreign direct investment in retail. But milk is one rare agri-commodity where farmers receive a fair share of the consumer rupee. Amul, for instance, pays its farmers about Rs 28 on every litre of full-cream milk selling at Rs 36 in Ahmedabad or Rs 38 in Delhi. Even for private dairies, the corresponding ratio would range anywhere from half to two-third. This is a remarkable achievement — that too for a perishable produce — for which the credit largely goes to the procurement and pricing systems established by cooperatives under the National Dairy Development Board's (NDDB) Operation Flood programme. The model of linking farmgate milk prices to fat/total solids content, pioneered by Amul, is an established industry practice that even private dairies have perforce had to adopt. That, in turn, has been a vital ingredient in pushing up the country's milk output from some 22 million tonnes (mt) to 116.2 mt between 1970-71 and 2010-11, with per capita daily availability also rising from 114 grams to 265 grams.

But all these are past accomplishments. One has to move on, purely for the fact that Indians are voracious milk drinkers. There is no food item that sees as much increase in consumption from higher incomes as milk. That alone has been a major reason for its prices shooting up disproportionately in recent times. The sheer growth in demand would require India's milk production to go up annually by about six mt over the next 15 years, twice the average annual increase observed in the last 15 years. Achieving it is not going to be easy, given the rising opportunity cost of rural labour and pressure on fodder and feed resources. The other significant development is the emergence of the private sector, which, by NDDB's admission, has added as much capacity in the last 15 years as the cooperatives in over 30 years. In 2010-11, the cooperatives procured 9.6 mt, of which nearly half came from Gujarat's Amul and Karnataka's Nandini. The entire Hindi heartland's contribution here was barely 17 per cent, demonstrating NDDB's failure to nurture cooperatives in States that make up the so-called Cow Belt.

That being so, isn't it time to change NDDB's charter to enable it to finance dairy development in the private sector as well? If milk production has to grow at the desired pace, it would necessitate huge investments in scientific breeding, artificial insemination, animal nutrition, fodder development and farm-level mechanisation. Since the growth in procurement is coming increasingly from private dairies, what is the point in denying them funds to carry out these activities? The case to revisit NDDB's role becomes stronger if one looks at its own subsidiary, Mother Dairy, which is effectively a private company that competes with Amul or Nandini and is not obliged to even table its annual report in Parliament!

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