Form strategy to unlock growth potential in UP’s dairy industry

Formulate suitable strategy to unlock significant growth potential in UP’s dairy industry:ASSOCHAM plea to new govt.

Apex industry body ASSOCHAM today urged the BJP-led Uttar Pradesh (UP) government to formulate a suitable strategy for unlocking the significant growth potential of dairy sector in the state through productivity enhancement, strengthening and expanding village level infrastructure for milk procurement and providing producers with greater access to markets.

“With 26 million tonnes (MT) of milk production, UP is ranked on top with 17 per cent in India’s total milk production of over 155 MT as of 2015-16,” noted an analysis of National Dairy Development Board (NDDB) statistics conducted by ASSOCHAM Economic Research Bureau (AERB).

“However, despite commanding highest share in India’s total milk production, the state has registered a meagre 4.7 per cent annual growth in this regard between 2014-15 and 2015-16,” highlighted the ASSOCHAM sector-specific analysis.

Milk production across India has clocked over six per cent annual growth during this period.

While the number of registered units manufacturing dairy products in India has increased by 26 per cent between 2010-11 and 2013-14, while the number of such units in UP has declined by five per cent during this period.

Though the total output of dairy products manufactured by these units has increased by about 87 per cent and 96 per cent in India and in UP respectively.

Besides the number of people engaged in these dairy products manufacturing units have also increased considerably by about 29.5 per cent and 42 per cent in India and UP respectively.

“The dairy sector can play an important role in providing jobs for rural communities as dairy production and processing provide employment, not only to people who work on dairy farms or in dairy plants, but also to the whole sector, from upstream inputs and services providers to downstream marketing of finished products,” said Mr D.S. Rawat, national secretary general of ASSOCHAM while releasing the findings of the chamber’s analysis.

“Dairying is an important secondary source of income for many of rural families and has assumed the most important role in providing employment and income generating opportunities particularly for marginal farmers and women,” said Mr Rawat.

“There is a need to recognise the importance of small farm dairy units and opportunities for value chain development, which can lead to poverty reduction and rural development in UP,” he added.

“Dairy-sector development can be a powerful tool for reducing poverty and creating wealth in the state,” further said Mr Rawat.

The ASSOCHAM’s analysis further highlighted that Jammu and Kashmir (16.5 per cent), Madhya Pradesh (13 per cent approx) and Andhra Pradesh (12 per cent) are top states in terms of annual growth in milk production.

It also noted that after Uttar Pradesh, it is the state of Rajasthan (12 per cent), Gujarat and Madhya Pradesh (about 8 per cent each) that have maximum share in milk production across India.

With growth of the economy a shift is seen from the regular diet of cereals to a more varied and nutritious diet of fruit and vegetables, milk, fish, meat and poultry products, all these aspects further highlight the need to build up a robust production as well as supply chain network of milk products.

“Thus, the domestic dairy market must become increasingly responsive to market signals and changing consumer preferences,” the analysis noted.

For higher price realization, one needs to graduate from simple, low-value commodities to high-value added processed products. Marketing holds the key to ensuring that products are available at the right place, at the right time, at the right price. Brand building is an essential exercise for all dairy companies to exploit the full potential of the dairy value-chain. Some of the processed tradable dairy products comprise condensed milk, cheese, dry milk products and butter/ghee.

Following are certain suggestions to the UP government for formulating a long-term strategy for state’s dairy industry:

1. Promoting dairy entrepreneurship
2. Promoting application of new technologies for higher productivity
3. Strengthen economic viability of dairy farms.
4. Increase link between rural production areas and urban markets
5. Develop packaging in small quantities to meet the needs of poor.

Milk Production by States (‘000 tonnes)