India's Milk Revolution— Investing in Rural Producer Organizations

Over the last 25 years or so, the Indian dairy industry has progressed from a situation of scarcity to that of plenty. Dairy farmers today are better informed about technologies of more efficient milk production and their economics. Even the landless and marginal farmers now own highly productive cows and buffaloes in many areas. Application of modern technology and advanced management systems in milk processing and marketing have brought about a marked change in the market place. Consumers now have a wide range of choice of products and packages. The Operation Flood (OF) programme implemented by National Dairy Development Board (NDDB) played a key role in bringing about this transformation. The importance of OF programme lies in its focus on small rural producers. Lucrative alternate employment opportunities are often not available in Indian villages making dairying an attractive option for many villagers. Low capital intensity, short operating cycle and steady returns make dairying a preferred activity among the marginal and small farmers (those having less than two hectares of land) and even landless who depend for fodder on common grazing and forest lands. About 57 percent of rural households in India are marginal and small farmers in many milksheds. Nearly 70 million households hold a total of 98 million cows and buffaloes. A majority of milk producers have 1 - 2 milch animals and account for some 70 percent of the milk production. On an average, about 22.5 percent of the income of the rural households is contributed by milk.