Budget Boost for Dairying

In a major development and boost for the dairy sector, Finance Minister Arun Jaitley announced for setting up of a dairy processing fund with a corpus of Rs. 8000 crore for three years.

The fund creation of Rs. 8000 crore will be used for dairy processing and infrastructure development by National Bank for Agriculture and Rural Development (NABARD).  The main objective of setting up of this Rs. 8000 crore fund is to enhance production of milk by facilitating financing of milk processing capabilities.

For the first year, Rs. 2000 crore has been allocated to the corpus. This is the first time since the white resolution that the government has brought in such a reform for the sector.

According to Mr. R.S. Sodhi, MD GCMMF, “the decision would enable India to produce 500,000 litres per day of additional milk with an estimated Rs. 50,000 crore cash flow to the farmer’s hand”.

According to Mr. Dilip Rath, Chairman, National Dairy Development Board (NDDB), thousand of dairies and cooperatives at village, district and state levels, which were formed around 30 years back, required funds to grow their businesses. This would lead to enhancement of milk processing capacities of dairy cooperatives which has stagnated for last many years.

Whereas, According to Mr. Harsh Kumar Bhanwala, Chairman, NABARD, “The allocation for dairy will allow NABARD to finance modernisation of milk processing units, encourage new bulk milk cooling units, improve milk production and productivity and promote clean milk production.

Officials from Department of Animal Husbandry said with the exception of big state cooperatives like GCMMF and Karnataka Cooperative Milk Producers, ”federation the others do not have enough financial strength to expand processing capacities out of the total annual milk  production of 160 million tonnes, around 50% is marketed. Cooperatives and private sector have a share of 50% of the marketable surplus and the rest is sold by unorganised sector players. The move for this special dairy fund will strengthen India’s numero uno position as the world’s largest milk producer.

Organised players in the country, including dairy co-operatives and private players, currently will have capacity to process an estimated 10 crore litres (1,000 lakh litres) of milk per day. Of these, the dairy co-operatives alone had a capacity of 668 lakh litres per day as on March 2016, according to NDDB sources. @source: IDA_March17