Milk Production in India: Analysis of Trend and Structural Change since Liberalization

 

Shaifali Kumawat

Research Scholar, Institute of Development Studies, Jaipur

 

ABSTRACT:

The paper analyses the process of structural transformation of milk production sector in India. The milk production sector grew by 4 per cent annually. The observed enhancement in productivity is attributable to change in the composition of animals from indigenous to crossbred. Productiveness of milch animals is influenced by quality of cattle feed and its relative price with respect to milk. It was found that there were three phases in the relative movement of milk price with respect to cattle feed. During the period between 1994 and 2003, the price of cattle feed ruled higher than the milk price. In the second phase from 2004 to 2012, price of milk grew faster than the price of cattle feed. The relative price of milk again started falling by 2013. Therefore, the main concerns are to examine the changes in the productiveness of milch animal population and to analyze the factors influencing the changes in milk production.

 

 

INTRODUCTION:

Agriculture sector interlinks crop production sector with livestock sector. The livestock sector is the complementary to crop production sector. The share of livestock product in the agricultural sector is estimated at 21% (CS Edhayavarman, 2012). Livestock sector grew at an annual rate of 5.3% during 1980s, 3.9% during 1990s and 3.6% during 2000s. Despite deceleration, growth in livestock sector remained about 1.5 times larger than in the crop sector which implies its critical role in cushioning agricultural growth (GOI, 2012).As far as production is concerned India ranks first in milk production, yet the per capita availability is much below the nutritional standard. With such a large stock of livestock population, it is expected to have a large contribution in country’s GDP but because of some genetic potential of our livestock population, its contribution is remained about 4-5% (Kumar, 2008).

 

The composition of the cattle population is declining. The proportion of male cattle has been declining as they are not considered worth to plough in the fields because land is becoming smaller and smaller. The proportion of crossbred is increasing while the proportion of indigenous is decreasing. The pattern of this change is different in different states. The cattle population is among the highest but the milch cattle population is quiet less in the states like Odisha and Assam. Thus, they were recorded in medium milk producing states. (Rath, 2015).The top major states on the basis of milch animals are Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal. Specifically, the exotic/crossbred milch cattle have increased to 34.78% and the indigenous milch cattle have increased to 0.17% during 2007 to 2012. The milch buffaloes have increased to 4.95% over previous census 2007.

 

The intra-regional milk yield gaps exist in north and south region of India. The expenditure on concentrates which contributes towards milk yield is very high in north than the south. The incremental number of milch animals is the source of growth in milk production mainly in Rajasthan and Uttar Pradesh. This creates pressure on land. (Shah and Dave, 2010)

 

Gaddi, Kunal and Hiremath (1997), Paul and Chandel (2010) used the log linear form of Cobb Douglas production function. They tried to establish the input-output relationship in milk production. They found the impact of qualitative as well quantitative factors on milk yield. The quantitative factors are agricultural land, educational level of the family head, labor charges, fodder expenditure and expenditure on concentrate and qualitative factors are economic status of the households and availability of green fodder in the surroundings. There is a comparative analysis between old farm technology and new farm technology. Thus there is a structural break exist due to change in technology. The marginal value product with respect to the factor cost in milk production was calculated. According to it, except fodder variable all the ratios are greater than one showing the underutilization of other resources. Thus to enhance milk production the expenditure on other factors need to be considered.

 

Data Source:

The study is based on the data compiled from various published sources. Data on milk production, dairy animals and their yields were compiled from the Basic Animal Husbandry Statistics, published by the Department of Animal Husbandry, Dairying and Fisheries of the Ministry of Agriculture, Government of India. Data on the number of operational landholdings was compiled from NSSO reports on 59^th round “Livestock ownership across operational land holdings classes in India 2002-03, 70^th round “Key Indicators of land and Livestock holdings in India, 2013”

 

The paper contains the state wise analysis of major milk production states and milch animals. The main objectives of the study are: (i) to examine the changes in the pattern of milk production and composition of milch animal composition; (ii) to identify the factors influencing the change in milk production. Thus the paper is organized as follows. Section 1 outlines the trend in milk production sector in India. Section 2 defines the changes in the composition of milch animals in India. In section 3, the factors influencing the milk production sector has been discussed and lastly section 4 contains the conclusion.

 

Trend in Milk Production Sector in India:

Increasing milk production has been a pre-eminent goal of India’s dairy development since independence. The dairy industry has undergone significant changes with milk production increasing from 17 million tonnes (Mt) in 1950-51 to 138 Mt in 2014-15, an increase of almost 88% (BAHS, 2014). However, between 1951 and 1973, the growth rate in milk production was 1 per cent per annum only. After the launch of the programme ‘operation flood’ during 1980’s, the milk production grew at 4.31% annually. During the period between 2003 to 2007, six out of 14 major milk producing states showed a growth rate in milk production above the national average while Kerala state recorded negative growth rate.Important observations from table 1 are: 1) there has been a decline in the annual compound growth rate in milk production from 5.79% to 4.61% between the last two cattle census period in India. 2) This annual decline has been observed in states also. Kerala and Karnataka show a negative decline over the years. All these major states show the decline in the compound growth rate. Bihar and Odisha also show a decline in the milk production about 3 to 4%. Among the 14 states, the growth of Bihar in milk production is fastest followed with Odisha. The growth rate of rest other states is below 10%.

 

Table 1. Growth trend in milk production across major states of India (in per cent)

States	CAGR (2003-2007)	CAGR (2007-2012)
	Milk Production
Andhra Pradesh	7.9	6.27
Bihar	19.15	15.05
Gujarat	6.76	5.37
Haryana	1.52	1.21
Karnataka	-1.67	-1.34
Kerala	-1.76	-1.41
Madhya Pradesh	5.31	4.23
Maharashtra	3.69	2.94
Odisha	14.63	11.55
Punjab	3.23	2.58
Rajasthan	9.94	7.87
Tamil Nadu	9.07	7.19
Uttar Pradesh	5.39	4.29
West Bengal	3.22	2.57
All India	5.79	4.61

Source: Computed from BAHS (various issues)

 

Although the milk production is more or less constant in annual change, there are exceptional years which are 1983-84, 1987-88 and 2003-04 (graph 1). The average annual percentage change comes out to be 4.31% over the past three decades. The linear regression line also depicts the percentage between 4-5%. Thus we can say statistically that the milk production grow by 4% annually.

 

 

 

Graph 1. Annual percentage change in Milk Production Sector

 

The concentration ratio has been calculated on the basis of data on milk production and number of milch animals in a particular year (table 2).Kerala’s share in concentration ratio is highest among the states. The states like Gujarat, Uttar Pradesh and Rajasthan are below in this list. Punjab is the second highest among the states having the concentration ratio 2 to 2.5. It is also one of the highest milk producing state. This means its productivity is quiet high with respect to density. The traditional milk supply chain in Punjab is being replaced, slowly with the commercialization of dairying (Kumar, Stall & Singh, 2011). Bihar is also adopting the milk marketing chains. The situation in west Bengal remains stagnant because of the exploitative nature of traditional milk market agents (Kumar, 2010). Tamil Nadu is much higher than Uttar Pradesh.

 

Table 2. State-wise calculated Concentration Ratio

II. Change in the Bovine Population in India:

India has the largest cattle and buffalo population in the world. Cows and buffaloes are the main milch species and together contribute about 96 per cent to the total milk production in the country. The significant changes have been noticed in some states like Bihar, Gujarat, Karnataka, Kerala and Tamil Nadu. There is a shift from buffalo to cow milk, the primary reason being increasing replacement of the indigenous cows with crossbred cows. Milk production from crossbred cows has been found growing at a higher rate than that from buffalo and non-descript cattle. The changing composition of dairying population clearly indicated the growing contribution of crossbreed cows in milk production, from 17 per cent in 2003 to 24 per cent in 2012 census. As the process of replacement of indigenous cows to crossbred cows is still progressing, the contribution of crossbred to milk production is certainly expected to increase further in the times to come.

 

 

 

 

 

 

Table 3. Share of different milch species in milk production across different states of India

States	2003			2007			2012
	Cattle		Buffalo	Cattle		Buffalo	Cattle		Buffalo
	Crossbred	Indigenous		Crossbred	Indigenous		Crossbred	Indigenous
Andhra Pradesh	5.8	5.87	9.81	5.28	4.62	11.66	7.72	4.37	13.39
Bihar	0.84	3.87	3.55	4.11	8.58	4.63	4.46	8.46	4.28
Gujarat	2.54	8.02	8.38	3.99	8.11	8.57	6.16	7.94	8.72
Haryana	3.9	2.16	8.62	1.95	1.34	8.17	2.04	1.32	8.79
Karnataka	7.99	7.14	4.07	6.7	5.32	2.42	7.77	5.12	2.57
Kerala	14.03	0.89	0.1	8.45	0.43	0.05	8.15	0.03	0.06
Madhya Pradesh	1.05	10.04	6.17	1.05	9.86	6.32	1.96	12.24	6.37
Maharashtra	12.8	5.98	6.14	11.51	4.53	5.56	10.55	4.79	5.47
Odisha	0.29	1.58	0.41	2.7	3.31	0.39	2.25	2.73	0.36
Punjab	13.24	0.61	12.98	9.29	0.76	12.07	8.59	1.11	9.72
Rajasthan	0.76	11.31	9.93	2.84	13.86	10.62	2.82	14.89	10.69
Tamil Nadu	12.67	6.44	3.15	20.7	3.41	1.4	17.23	2.62	1.04
Uttar Pradesh	9.01	14.67	21.7	6.07	14.7	22.88	5.23	15.47	23.91
West Bengal	6.48	11.27	0.64	6.23	9.84	0.42	6.55	8.6	0.34
All India	17.27	22.89	53.98	22.24	21.13	52.46	24.45	20.7	51.1

Source: BAHS (various issues)

 

The share of different milch species in milk production across different states of India has been shown in table 3. The highest share of crossbred cattle is in Maharashtra (12.80%), Punjab (13.24%) and Tamil Nadu (12.67%) while Tamil Nadu and Maharashtra have relative less share in having indigenous cattle and buffalo whereas Punjab has very less share in indigenous cattle but comparatively large in buffalo category. Andhra Pradesh share in crossbred has remain stagnant in four years from 2003 to 2007 but its share % increases in case of buffaloes i.e. it increased from 9.81% in 2003 to 13.39% in 2012.This means the major milk production in Andhra Pradesh is from buffalo. The share of crossbred cattle in Bihar has also increased from 0.84%in 2003 to 4.46% in 2012. The share in indigenous cattle has also increased from around 4% in 2003 to 8% in 2007 and 2012. Gujarat and Haryana have not shown much improvement in crossbred cattle case and in other two categories too its share remained stagnant during the decade Karnataka’s share is quite different from other states. Its share in crossbred cattle remained in between 7% to 8% during the decade. The share in other two categories has decreased over the years. Its share percent has also increased from 10% in 2003 to 12% in 2012. Indigenous cattle of Madhya Pradesh has maximum share in milk production among the three categories. The share of milch animals in milk production in Orissa is very less. The states of Rajasthan and Uttar Pradesh have sufficient number of indigenous cattle and Buffalo. Uttar Pradesh is marked as the largest state in India of having milch animals specially buffaloes. The share of buffalo in Uttar Pradesh in 2003 census was around 22% which has further increased to 24% in 2012. Tamil Nadu has the highest share of crossbred cattle in milk production. After it Kerala has shown the second largest state of having the crossbred share in milk production in 2003 but during a decade it decreases.

 

 

III. Factors influencing milk production in India

1.       Cattle feed:

The cattle feed is one of the input on which the milk prices depend (table 5). According to the data, the price of cattle feed is more than the milk price (11 out of 20 observations are showing having ratio less than 1). With cattle feed 57.09 in 1994, there was an increase of 1.05 unit in milk price. After that, the trend changes to increase in cattle feed price.

 

Productiveness of milch animals is influenced by quality of cattle feed and its relative price with respect to milk. It is found that there are three phases in the relative movement of milk price with respect to cattle.

 

Table 5. Wholesale price index of milk and cattle feed

Year	Milk Production (Mt)	Milk Price Index(MPI)	Cattle feed Price index(CFPI)	Ratio
1994	63.8	59.99	57.09	1.05
1995	66.2	62.23	64.53	0.96
1996	69.1	64.81	71.65	0.90
1997	72.1	67.43	79.68	0.85
1998	75.4	73.18	83.05	0.88
1999	78.3	79.20	91.47	0.87
2000	80.6	87.96	95.82	0.92
2001	84.4	89.93	95.17	0.94
2002	86.2	93.38	95.27	0.98
2003	88.1	95.24	100.54	0.95
2004	92.5	100.00	100.00	1.00
2005	97.1	100.71	95.49	1.05
2006	102.6	105.25	96.31	1.09
2007	107.9	113.85	98.75	1.15
2008	112.2	122.77	114.72	1.07
2009	116.4	133.94	116.89	1.15
2010	121.8	171.78	177.05	0.97
2011	127.9	188.18	183.72	1.02
2012	132.4	201.42	201.42	1.02
2013	137.7	235.70	235.70	0.92
2014	138.00	260.04	260.04	0.91

Source: Office of economic advisor, GOI

 

 

 

During the period between 1994 and 2003, the price of cattle feed ruled higher than the milk price. In the second phase from 2004 to 2012, price of milk grew faster than the price of cattle feed. The relative price of milk again started fallen by 2013.

 

2.       Operational Holdings:

The changes in the estimates of area under household ownership of land and the number of cattle owned per 100 households is seen in 1991-92(48^th round) and 2002-03 (59^th round) are presented in table 1, 2, 3 and 4 of appendix. It can be seen that the estimated area owned per 100 households and the cattle per household has declined. There is shift of cattle population from landless to large farmers. There is a decline in number of cattle in case of landless households in 2002-03 as compared to 1991-92. There is an increase of cattle population of small, marginal and large farmers. In large farmer category the cattle ownership has just doubled the previous year. This means that the subsistent farmers (landless and small) have lesser scope in milk production as their cattle population got declined. The commercialization of milk production sector started gaining the importance having increasing number of cattle. Same is the case with buffaloes.

 

CONCLUSION:

The study has revealed that India has made significant attempts to enhance the milk production and yield during the past decade. The structural changes in production of milk have been quite visible and the composition of milch animals has shifted in favor of improved crossbred cattle and better-yielding buffaloes. The role of some states in augmenting milk production in India is also apparent. The set examples among them are Bihar and Orissa (Kumar et al., 2008). Its annual growth during the decade is in double digits (table 1). Thus, the milk production sector has been growing significantly during last two decades.

 

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Received on 07.02.2018          Modified on 05.03.2018

Accepted on 23.03.2018      ©A&V Publications All right reserved