Background
Apart from providing livelihood security to over eight crore rural Indians and contributing to one-third of their income, dairying is also central to the rich cultural landscape of the country. India has been dominating the global dairy map for over two decades by occupying the numero uno position in the annual aggregate milk production (210 million MT), which has led to a per capita availability (428 g/day) greater than the requirements (280 g/day as per ICMR). Furthermore, going by 2030, India is poised to top the dairy chart in the world with a healthy growth rate. A comparison of the dairy situation in 2021 and 2030 shows the huge prospects for Indian dairying (Table 1).
Table 1. A comparison of key attributes of dairy production in India
| Attribute | 2021 | 2030 |
| Annual milk production (million MT) | 210 | 289 |
| Share (%) in world dairy production | 22 | 26 |
| Herd size | 1-3 | 20-25 |
| CAGR (%) of milk production | 6 | 4 |
| CAGR (%) of milk productivity | 1.6 | 2.0 |
| Milk production system | Number-driven | Productivity-driven |
CAGR: compound annual growth rate
(Source: Indian Dairy beyond 75; a Yes Bank–CII publication)
Dairy production is largely fragmented in India, with the bottom of the pyramid typically representing production by masses housing 1-3 or more animals in a typical mixed crop-livestock farming system rather than mass production. And, to completely harness the genetic potential of dairy animals, it is imperative to ensure optimum feeding of scientifically balanced diets. As an example, for every kg of feed dry matter consumed, dairy cows and buffaloes are expected to produce around 1-1.7 kg and 0.5-0.75 kg of milk, respectively. However, at the national level, NITI Ayog (2018) reports a looming shortage of all three major ration components, i.e., green forage, dry forage, and concentrates that are deficient to the extent of 45%, 11%, and 35%, respectively. As a result, hardly 44%, 52%, and 30% of dairy farmers use green forage, dry forage, and concentrates, respectively under field conditions. Consequently, the imbalanced nutrition-led sub-optimal production performance is evident at many farms.
By and large, ‘feed’ alone is the single largest entity that makes up the majority (~65%) share in the recurring farm expenses. It is well known that to make a dairy enterprise profitable, either the feed cost should be low or the feed offered should result in an augmented milk performance leading to better returns. However, given the current market scenario, keeping the feed cost low is becoming increasingly challenging.
Price volatility of feed raw materials
Today, owing to various factors including weather uncertainties (for instance, a prolonged monsoon in 2022), geo-political trade issues and economic shocks (e.g., the Russia-Ukraine war), among others, have caused large unprecedented price volatility in agricultural commodities, including the raw materials used in animal feeding. Table 2 and Fig. 1 compare the normal prices vs. price rallies observed for some of the traditional (conventional) raw materials in the last two years.
Table 2. The recent price trends for various feed raw materials in India
| Sl. no. | Ingredient | Price variation (INR/kg) | Change (%) |
| 1 | Maize | 21-25 | 19 |
| 2 | Barley | 26-34 | 31 |
| 3 | De-oiled rice bran | 13-19 | 46 |
| 4 | Huller bran | 10-14 | 40 |
| 5 | Rice polish | 28-40 | 43 |
| 5 | Sugarcane molasses | 12-18 | 50 |
| 6 | Cottonseed extraction | 32-44 | 38 |
| 7 | Whole cottonseed | 40-46 | 15 |
| 8 | Soybean meal | 40-110 | 175 |
| 9 | Saturated vegetable fats | 85-170 | 100 |
| 10 | Wheat straw | 6-14 | 133 |
(Source: Author’s own assessment)
Implications on the feed industry and farmers
The compound feed manufacturing industry suffers directly when both the nutrient-rich ingredients like cereals, oilcake, etc. as well as filler materials like de-oiled rice bran, huller bran, etc. are hit by price hikes to the tune of 15-50% in the last two years. Surprisingly, the price of dry forage wheat straw has soared by 100% this year compared to a year before. In fact, it has been noted that the wholesale price index-based feed and fodder inflation has skyrocketed to a nine-year high of 25.5% in Aug. 2022 (Indian Express, 9th Nov. 2022). By contrast, wholesale milk prices have increased at the rate of 5.8% per annum (Economic Times, 10th Jun. 2022).
From the point of view of feed manufacturers, the obvious results of the inflationary prices would be either lowering the nutrient specifications to match the price or increasing the selling price of the finished feeds. Both of these consequences are not healthy for dairy farmers, especially the latter, which results in increased input cost, whilst the additional cost incurred will not be immediately reflected in the rise in procurement price (i.e., receivable). Because there is a close intricacy between milk price and general price rise (i.e., inflation), the additional producer costs may not be readily passed on to the consumers (Deccan Herald, 3rd Feb. 2020). Thus, farm-gate milk realization will be low under the circumstances of sudden raise in the feed cost. Additionally, the usage of quality feed additives and supplements – that constitutes about 10% of feed cost – would be compromised to minimize the plunging gaps between milk returns and the input costs. Indeed, a prolonged trend of such a market slump would imperil the sustainability of dairy farming.
The possible solutions
It is recognized that milk production is responsive to the quantity of utilizable nutrients ingested rather than any specific ingredient(s), so there is a scope to utilize alternative, non-conventional and lesser-known by-product feedstuffs that are available locally. Besides delivering nutrients in an economical manner, alternative ingredients must also ensure good palatability, not to be contaminated with mycotoxins to keep feed and milk aflatoxin levels within the limit of 20 and 0.5 PPB, respectively. In addition, the government of India’s ambitious scheme to initiate the creation of 100 new fodder-specific farmer producer organizations in 2022-23 is also an encouraging and timely step to minimize the hardships faced by the country’s dairy producers.
Conclusion
Dairy production continues to struggle with the existing disequilibrium of feed resource availability vis-à-vis actual requirements on one hand and price rallies on the other. Therefore, an integrated, solution-driven and farmer-friendly policy involving all the key stakeholders of the dairy value chain may pave the way for a sustainable dairy trajectory in India.
(References are available on request)
M.S. Mahesh
Assistant Professor, Unit of Livestock Farm Complex, Faculty of Veterinary and Animal Science, Rajiv Gandhi South Campus, Banaras Hindu University, Mirzapur-231001, Uttar Pradesh, India
E-mail: drmaheshmsvet@gmail.com; Phone: 7309630890
