Page 44 - BANKING FINANCE JUNE 2016

ARTICLE
India is fast emerging as the world's premier dairy nation.
To meet the exponential growth in demand for milk and
milk products, dairy farming has become a profitable busi-
ness solution for many. There is ample scope for the devel-
opment of dairy farms as a successful and commercially
viable business enterprise.
Banks can play active role in the development of dairy
farming by providing finance to this sector . This paper
attempts to find the unexplored lending opportunities of
dairy sector and describes the factors which may help
the bank /bank's officials to increase the lending to Dairy
Farming sector.
India's Dairy sector - A retrospect
During the decade of nineties , India emerged as the larg-
est producer of milk in the world . Impressive work has been
done under the guidance of the National Dairy Development
Board (NDDB) under "Operation Flood" programme for
organizing dairy production , processing and marketing of
milk and milk products by the cooperative dairy sector
following the well known "Amul" model -a three tiered
cooperative structure of village level dairy cooperative
societies, a district level cooperative milk union and a state tion in the world having a total bovine population of 304
level cooperative milk marketing federation where the
profits are shared by the farmer members.
About 15.46 million farmers have been brought under the
ambit of 1,65,835 village level dairy corporative societies
up to March 2015. Gross Value Added ( GVA ) from Agri-
culture and allied sector as of 2014-15 is 17.6 %. At
present , the live stock sector contributes to 4 % of GDP
and the dairy sector comprises a king's share of it . All
Banks credit to Agriculture and allied activities as of June
2015 is Rs 7.39 trillion.
44 | 2016 | JUNE
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Milk production in the country has been growing at an
exponential rate and has crossed 146.3 million tones mark
during 2014-15. The milk production is expected to increase
to 151 million tones by 2015-16 fiscal year. The per capi-
tal availability of milk also improved to 322 grams per day
by 2014-15 against the world's average of 294 grams per
day during 2013. Yet, the milk yield in the country remains
one of the lowest in the world (Graph -1)
Graph 1 - Milk Production and Per capita milk
Consumption
The success of the dairy industry has resulted from the in-
tegrated co-operative system of milk collection, transpor-
tation, processing and distribution, conversion of the same
to milk powder and products, to minimize seasonal impact
on suppliers and buyers, retail distribution of milk and milk
products, sharing of profits with the farmer, which are
ploughed back to enhance productivity and needs to be
emulated by other farm produce/producers.
Further , India is endowed with a largest livestock popula-
million compared to the world's total bovine population of
1400 million. It accounts for 57.3% of the world's buffalo
population and 14.7% of the cattle population. Yet, cer-
tain issues continue to prevail in this sector despite of
Government/NDDB initiatives to address the issues.
The milk processing industry is small compared to the huge
amount of milk produced every year. Only 10% of all the
milk is delivered to some 400 dairy plants. A specific Indian
phenomenon is the unorganized sector of milkmen, vendors
who collect the milk from local producers and sell the milk
in both, urban and non-urban areas, which handles around
65-70% of the national milk production. In the organized
dairy industry, the cooperative milk processors have a 60%
market share.
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