Dairy Decline

Context: The recent decline in the prices of milk has negatively impacted the dairy farmers, requiring urgent steps to be taken to increase the demand and provide relief to the sector. 

Significance of Dairy Sector in India:

• Milk is the country’s largest food product in terms of both output and value, far ahead of rice or wheat.

• It supports the livelihood of 80 million landless, small and marginal farmers who rely critically on supplementary income from milk.

Challenges to the Dairy Sector: 

• The decline in Milk demand and prices: 

• Consumption has declined because of erosion in demand from bulk consumers like hotels, restaurants, canteens, sweetmeat shops, and social functions.
• The prices of raw milk have plunged sharply by 15-30% in different areas since March

• Unfulfilled Government Commitments: 

• For E.g. The Maharashtra government had offered to give an additional Rs 5 per litre directly to the milk producers, remains unfulfilled.

Way Forward: A Two-Pronged Strategy ????

• Increasing Domestic Demand: 

• Distribution of milk through anganwadis (child care centres) to improve the nutrition of children and hospitals to feed Covid-19 patients.
• Inclusion of milk in the Mid-Day Meal Scheme after the pandemic.
• Suspending the Goods and Services Tax, which currently range from 5-12% for various ranges of milk and its derivatives, until the pandemic subsides.

• Boosting Exports: 

• Skim Milk Powder (SMP) exports can be stepped up by offering direct or tacit subsidies that are permitted under various special clauses of the global Agreement on Trade-Related Intellectual Property Rights.
• Revisit the structure of duties: to discourage imports and incentivize exports of milk derivatives.