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DAIRY SECTOR IN INDIA: SIGNIFICANCE, CHALLENGES, WAY FORWARD

Indian Dairy Sector, a global leader in milk production, is a vital part of the rural economy, contributing 5% to the national GDP and employing over 8 crore farmers. Despite challenges like fodder inflation and animal diseases, the sector is balanced for growth through government initiatives and strategic focus on value-addition and technology.

Description

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Picture Courtesy:  INDIAN EXPRESS

Context

Indian Dairy Sector, driven by millions of small farmers, makes it the world's largest milk producer despite persistent challenges with low productivity, infrastructure, and climate change. 

Evolution of Dairy Sector in India

1950-70 saw slow growth, per capita milk fell from 124 g/day (1950-51) to 107 g by 1970. Breeding and infrastructure were limited, and India relied on milk imports.

In 1965 Dr. Verghese Kurien formed the National Dairy Development Board (NDDB), and in 1970 launched Operation Flood (the White Revolution). This World Bank–backed program built village milk cooperatives (the “Anand Pattern”) across India.

By 1997, India had overtaken the US as the world’s largest milk producer. Cooperatives like Amul (Gujarat) and Mother Dairy (Delhi) became household names.

The World Milk Day 2025 is celebrated on 1st June, under the theme “Let’s Celebrate the Power of Dairy.” The Food and Agriculture Organization (FAO) declared June 1 as World Milk Day in 2001

Current Status of the Indian Dairy Sector

Production: India is world’s top milk producer with 239.3 million tonnes (MMT) in 2023-24 (24.8% of global output). Milk availability per person is 471 g/day, above the global average.

Dairy Belts: India’s “dairy belt” lies in the fertile Indo-Gangetic Plains (UP/Punjab/Haryana) and the semi-arid west (Rajasthan/Gujarat/MP). Coastal and hilly regions have lower yields.

Breeds: India has many indigenous breeds (e.g. Gir, Sahiwal, Tharparkar) that are heat- and disease-resistant.

  • Exotic taurine breeds (Holstein Friesian, Jersey) and cross-breeds yield far more milk under good feed. E.g. average native cow yields 3.7 kg/day vs 7.6 kg cross-breeds vs 11.5 kg for Holsteins.
  • Today crossbreeds and exotics account for much of output, while pure desi breeds have declined.
  • States with higher cross-breeding (Punjab, Gujarat) show higher per-animal yields. Balancing genetic improvement with local adaptation is a key factor in yield.
  • Experts says the milk of indigenous cows have higher nutritional value and thus their declining population can have long-term health and environmental effects.

Socio-Economic Significance of the Dairy Sector in India

Income & Livelihoods: Dairy Sector contributes 5% to GDP and directly employing more than 8 crore farmers.

  • Indian dairy market was valued at ₹18,975 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 12.35% between 2025 and 2033.

Nutritional value: Milk provides protein, calcium and vitamins. Higher milk supplies cut malnutrition.

  • A1 milk, from crossbred European cows, may cause digestive issues like bloating due to the protein fragment BCM-7 released during digestion.
  • A2 milk, from indigenous Indian breeds like Gir and Sahiwal, is easier to digest.  

Economic Resilience: Unlike crop harvests, which are highly dependent on timely rainfall and temperatures, dairy production is a year-round activity, providing stability.

  • During the COVID-19 crisis, government brought dairying activities under MGNREGA in some states to provide a safety net against income losses.

Women & Social Upliftment: Women constitute over 70% of the dairy workforce, manage milch animals; dairy incomes help them buy household essentials, poverty reduction.

  • Cooperatives and training have empowered rural women, with 35% of women participating in dairy cooperatives.
  • Cooperatives follow “Anand Pattern” of farmer ownership, several million new farmers have been drawn into cooperatives (Amul alone has over 3.6 million producer-members).

Allied Impact: Dairy also fuels allied industries – fodder cultivation, veterinary care, processing, transport – creating jobs.

  • Investments in dairy processing and infrastructure have led to the creation of cold chains, milk chilling centers, and modern processing units, strengthening rural infrastructure.

Regulatory Framework in Indian Dairy Sector

Department of Animal Husbandry & Dairying (DAHD) aims to enhance quality of milk and milk products and increase share of organized milk procurement, it manages initiatives like the revamped National Programme for Dairy Development (NPDD).

National Dairy Development Board (NDDB) focus on expansion and innovation, launched "White Revolution 2.0," which targets expanding cooperative coverage to 75,000 new villages.

National Cooperative Development Corporation (NCDC) finance dairy projects. The Ministry of Cooperation was established in 2021, to coordinate cooperative policy and development.

Animal Husbandry Infrastructure Development Fund (AHIDF) incentivizes investment in dairy processing, feed plants, and other infrastructure, primarily through subsidized loans, indirectly supporting farmers' income.

State-Level Organizations: State cooperative milk marketing federations, such as the Gujarat Cooperative Milk Marketing Federation (GCMMF), and state-level dairy development boards are responsible for implementing schemes and managing local dairy ecosystems.  

Quality and Safety

  • Food Safety and Standards Authority of India (FSSAI) enforces milk quality standards and updates regulations.
  • "Food Safety on Wheels" (FSW) initiative for on-the-spot testing.
  • A July 2025, FSSAI mandate requires milk product logo on all dairy items.  

Cooperative Model

  • National Programme for Dairy Development (NPDD), approved in March 2025, aims to establish 10,000 new Dairy Cooperative Societies, key pillar of the "White Revolution 2.0" strategy.
  • National Cooperative Dairy Federation of India (NCDFI) facilitate cooperative operations, uses eMarket platform for bulk trading of dairy commodities. 

Challenges in the Indian Dairy Sector

Prevalence of the Unorganized Sector: About 37% milk consumed at the producer level, of the remaining surplus, only 32% is handled by the organized sector, while the remaining 68% is in the unorganized sector.

  • A key challenge for dairy producers is the lack of a stable, profitable market.

Low productivity: Dairy animals, particularly indigenous breeds, yield less milk than their international counterparts, low output arises from factors like poor genetics, lack of adequate veterinary care, and insufficient access to high-quality feed. 

Supply Chain Inefficiencies: India’s dairy supply chain is highly fragmented. About 80% of rural households have fewer than 5 milch animals, according to Food and Agriculture Organization (FAO). Collecting small quantities from scattered villages is hard.

Transport and cold storage are limited: Poor cold-chain infrastructure causes high spoilage and quality loss. Processing centers and refrigerated trucks are inadequate, raising losses in peak flow seasons.

High Production Costs: High dairy production costs—mainly for feed, labor, and energy—pose a major challenge.

  • According to the National Dairy Development Board (NDDB), feed makes up 60% of total expenses. Price volatility and labor shortages reduce farmers' profitability.

Adulteration and Quality: Unsafe additives (water, urea, detergent). While FSSAI monitors markets and penalizes offenders, enforcement lags in some regions.

  • Contamination not only endangers health but also erodes consumer trust, making “clean milk” a constant goal.

Price Volatility & Farmer Returns: Milk prices fluctuate. There is no Minimum Support Price for milk as for crops. Farmers are price-takers: in gluts (monsoon) prices crash, in lean season (summer) they jump.

  • Many small producers feel they have weak bargaining power. Lack of price stability and insurance against shocks remains a key concern.

Regulatory & Social Barriers: Cultural and legal factors (e.g. cow slaughter bans) influence livestock mix (more buffalo, fewer cattle).

  • Animal health issues (Lumpy Skin Disease outbreaks, Foot-and-Mouth Disease) periodically hit herds and markets.
  • Many states subsidize crops more than dairying, so policy bias remains.

Climate Changes: Changes in weather patterns impact feed availability and quality, lead to nutritional deficiencies among dairy cattle, limited grazing land due to housing/industrial expansion deepens feed shortages.

Technological and skill deficits: Many farmers lack access and knowledge of advanced breeding techniques, modern farm management, and digital payment systems, limits their productivity and market access.

Challenges from the international market: Pressure from developed nations like the EU and US to open market, these countries provide large-scale, subsidies to dairy industries.

  • The US imposes tariffs on Indian goods to push for greater market access, clashing with India's "non-veg milk" certification rules based on cultural and food safety concerns. 
  • Allowing cheap, subsidized imports from countries like the US threatens the livelihoods of small dairy farmers and could destabilize milk prices. 

Government Initiatives

Operation Flood: Funded village societies, district unions and modern plants.

Rashtriya Gokul Mission: Launched Dec 2014, RGM aims to improve indigenous cattle breeds.

  • It funds breeding centers (“Gokul Grams”), selects bulls, and now even sex-sorted semen and IVF media to propagate native genetics.
  • Upgrade low-yield cattle through cross-breeding with elite indigenous breeds like Gir, Sahiwal, Rathi, Deoni, Tharparkar, and Red Sindhi to enhance productivity while retaining climate resilience.

National Livestock Mission: An umbrella scheme to boost all livestock sectors, including dairy.

  • It focuses on fodder development, breed enhancement and entrepreneurship.
  • In 2024 NLM was expanded to include camels and encouraged fodder cultivation on common/degraded lands.
  • It reformed livestock insurance (reducing farmer premiums to 15%) to protect dairy farmers.

National Programme for Dairy Development (NPDD): Upgrade milk procurement, processing and quality.

Other Initiatives

In 2024 the government announced White Revolution 2.0 to scale up cooperatives. DIDF (Dairy Infra Fund) projects (e.g. private cold storages) have been merged into the larger AHIDF fund for better reach.

National Mission on Natural Farming (NMNF) promotes chemical-free farming and benefits dairy farmers by encouraging sustainable practices.  

National Animal Disease Control Programme (NADCP) target the eradication of Foot and Mouth Disease (FMD) and Brucellosis.  

Gobardhan Initiative converts cow dung into clean fuel and organic fertilizers, providing farmers with an additional income source and addressing environmental concerns.

Opportunities for the Indian Dairy Sector

A2 vs A1 Milk: India’s native cows produce predominantly A2 beta-casein. Many consumers believe A2 milk is easier to digest. This has created niche demand.  

Digital & Herd-Management Tech: Farmers now use apps for record-keeping (e.g. DairyKhata), financial tracking and market linkages.

  • Milk collection is computerized (RFID tags, FAT/SNF auto-meters).
  • AI models can analyze images to spot early disease.
  • These innovations promise higher yields through better health management.

Biotechnology: Veterinary advances (diagnostic labs, vaccine R&D) improve herd fertility and survival. Feed technology (enzyme-supplements, multi-nutrient blocks) to overcome fodder gaps.

International Linkages: India is exploring exports to the Middle East and Southeast Asia. Lessons from EU or NZ (animal welfare audits, carbon footprint tracking) are being studied.

Way Forward for Indian Dairy Sector

Strengthen Animal Breeding Programs: Expand the Rashtriya Gokul Mission to elevate the average milk yield per animal.

  • A national genomic database for indigenous breeds should be created to fast-track genetic improvements.

Address Feed and Fodder Deficits: Incentivize fodder cultivation through the National Livestock Mission (NLM) by promoting high-yield grass varieties and creating fodder banks.

  • Adopt technologies like hydroponics and promoting the use of agricultural by-products (sugarcane tops, etc.) to bridge this gap.

Enhance Animal Health and Welfare: Expand the Livestock Health and Disease Control Programme (LHDCP) to strengthen the network of veterinary hospitals and dispensaries at the block level and implement a robust "One Health" approach to prevent outbreaks like Lumpy Skin Disease (LSD) and ensure biosecurity.

Boost the Cold Chain: Build cold storage chain, includes funding more village-level chilling centers, bulk milk coolers, and refrigerated transport.

  • Priority should be given to solar-powered cold storage solutions to overcome erratic electricity supply in rural areas.

Infrastructure and Finance:  To improve credit access at the grassroots level, dairy farmers have been included in the Kisan Credit Card (KCC) program; working capital for animal feed, veterinary care, and other essentials.

Leverage Technology for Efficiency: Accelerate the adoption of digital tools. Platforms like the e-GOPALA app must be expanded to provide farmers with real-time information on markets, breeding, and health.

  • Incentivize the use of IoT sensors for herd management and blockchain technology to ensure farm-to-table traceability, boosting consumer confidence.

Strengthen Quality Control and Transparency: Expand FSSAI network of mobile testing vans ("Milk-o-Screen") to cover more villages.

  • Digital milk analyzers should be installed at all collection centers to ensure transparent, quality-based pricing (based on fat and SNF content).  

Expand and Professionalize Cooperatives: The "White Revolution 2.0" initiative aims to establish thousands of new dairy cooperatives in uncovered regions, the focus should be on professionalizing the management of these cooperatives so they operate as modern, efficient businesses.

Ensure Fair Farmer Returns: Establish a Milk Price Stabilization Fund, promote Farmer Producer Organizations (FPOs) outside the cooperative structure to enhance the collective bargaining power of farmers.

Empower Women in Dairying: Launch targeted programs to enhance skills in animal management, value addition, and financial literacy.

Diversify into Value-Added Products: Provide credit for setting up plants that produce high-margin products like cheese, whey proteins, yogurt, and probiotics, this creates a buffer against fluctuations in liquid milk demand.

Adopt a Strategic Trade Policy: Negotiate Free Trade Agreements (FTAs) to protect smallholder dairy farmers from competition from subsidized dairy products from large exporting nations. Policy should focus on preventing the dumping of milk powder and other commodities.

Target Niche Export Markets: India has a unique advantage in products like buffalo mozzarella, ghee, and ethnic sweets.

  • Help exporters meet international quality standards and build a strong "Brand India" for dairy in global markets across the Middle East, Southeast Asia, and Africa.

Promote Sustainable and Climate-Resilient Dairying: Encourage circular economy models by integrating dairy with agriculture.

  • Gobar-Dhan scheme need to be scaled up, to provides farmers an additional income and reduces the sector's carbon footprint.

Conclusion

The original White Revolution showed how organizing millions of small farmers into cooperatives and investing in infrastructure can transform an industry. If India continues to invest in genetics, feeds, cold chains, quality enforcement and farmer incomes, it can ensure that dairy remains a driver of rural growth and food security.   

Source:  INDIAN EXPRESS

PRACTICE QUESTION

Q. Analyze the significance of the dairy sector in rural development. 150 words

Frequently Asked Questions (FAQs)

The White Revolution, or Operation Flood, was a rural development program in the 1970s that transformed India into the world's largest milk producer.

Dr. Verghese Kurien is known as the "Father of the White Revolution" for his pivotal role in creating the cooperative dairy model.

The Amul model is a three-tier cooperative structure (village society, district union, state federation) that ensures farmers get a fair price for their milk by eliminating middlemen.

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