In the southern Indian state of Andhra Pradesh, more than 70 percent of the population resides in rural areas. Economically, the state has performed considerably well in the past few months. Yet, the growth process has not been inclusive.

Therefore, to rejuvenate the rural economy and make it more inclusive, Chief Minister Jaganmohan Reddy has rightly chosen to strengthen the cooperative movement in the state by signing a Memorandum of Understanding with the Gujarat Cooperative Milk Marketing Federation (GCMMF) on 21 July 2020.

Amul, the flagship brand of GCMMF, is a household name – the ‘taste of India’. If all goes well, within a few years, it could transform into the potential taste of the ‘Gateway of South India.’ However, there are miles to go before we clap for the same.

Potential for dairy market

Andhra Pradesh currently produces around 16.4 billion litres of milk and maintains the third largest dairy market in India after Uttar Pradesh and Rajasthan. Andhra currently caters to almost more than 10 % of the country’s milk production and mainly comprises of cow and buffalo milk. Currently, it has the third largest dairy market in India.

A recent report by the IMARC group clearly shows that cow milk dominates the total milk production in the state, accounting for majority of the market share. The dairy market grew at a compound annual average growth rate (CAGR) of 9.2% during 2014-2019, which is quite commendable.

Therefore, inviting Amul to steer the dairy market in Andhra Pradesh may be seen as a masterstroke by the current government.

Sl No.ParameterQuantity
1Milk Production during 2017-18 (in ‘000 tonnes)13724.99
2Per capita Availability during 2017-18 (in gram/day)574
3Total number of villages as per 2011 Census27800
4Number of Milk potential villages as a percentage of total number of villages11716 (42.14%)
5Number of organized Dairy Cooperative Societies (DCS)3274
6Number of Milch Animal owning Households (MAH) in Lakhs24.34
7Number of farmer member enrolled in DCS 565553
8Average Milk procurement by DCS ( in TKgPD) (percent of Milk production)1199 (3.19%)
Status of dairy development in Andhra Pradesh / TKgPD: Thousand Kilogram Per Day / Source: Department of Animal Husbandry, Dairying & Fisheries (DADF)

As a newly-formed state, it is indeed welcoming that Andhra Pradesh is sincerely moving towards rejuvenating its local economy. The rationale of decentralising governance and creating hubs has immense potential if it can be maintained.

The COVID-19 pandemic has ruined many, but it has also opened up opportunities, especially at the local level. The importance of the dairy market and being vocal about it is one of the most prudent options for the socioeconomic sustainability in Andhra Pradesh, as 42.14 % of its villages has the potential of producing milk.

This is even more so because a large portion (96.81%) of this production is still within the unorganised sector and on an average, only 3.19% of the milk is procured by the Dairy Cooperative Societies. The room for intervention of Amul, naturally, is well established.

The immediate challenges

Primarily, at this point, to ensure the smooth flow of the dairy movement, the government must focus on certain intrinsic issues that are directly related to the production of milk in the state.

The first is related to feeding practices. In Andhra Pradesh, even till date, the availability of green fodder is a major constraint. The crisis is grave especially during the summers or dry seasons. Thus, most of the households depend on dry fodder, which for obvious reasons, is less nutritious and prone to fungus. This, in turn, hampers the quality and quantity of milk production. Dry fodder is mostly purchased from the market, while the market for green fodder in the state is still at its infancy.

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Further, maintaining hygiene, especially in the post-Coronavirus context, will be a major challenge for the dairy industry in the region. Unless the government heavily invests and engage in mass campaigns to maintain proper hygiene standards, it seems to be a long way for the dairy movement to practically take off. 

Indeed, with the introduction of Amul, the state has initiated a major structural transformation in the rejuvenation of the dairy market. In Andhra and many other regions in India, the traditional milkman procures milk from the farm or produces at the household level and delivers it directly to the consumer. On the other hand, large dairy farmers prefer to deliver to the intermediary traders.

The role and presence of the dairy cooperatives, needless to say, need a major boost and above all, recognition. All these taken together, apart from other factors, add to the price fluctuations (towards higher side) during the summers. 

Further steps to be taken

Perhaps now, with the entry of Amul along with possibly the Institute of Rural Management, Anand (IRMA) in the state, the government can also strengthen credit facilities by offering advance payments in cash or supporting them in  getting bank loans. 

In addition, shortages of skilled labor can be resolved through through veterinary support and trainin through this bonding. In fact, the state government budgeted to spend Rs 3500 crore to provide breeding-quality cows and buffalos to around 4.69 lakh underprivileged women in the state. 

Further, geographically too, the locational advantage of Andhra Pradesh, being in the proximity to Bengaluru, Chennai, Hyderabad and a large part of Odisha ,will certainly help the dairy movement in securing its key objectives and setting an example on its own. 

It is quite remarkable at at one end, we see farmers protesting in the streets against the government, while on the other, a state government with limited fiscal autonomy and decision-making power is engaged in empowering the rural economy.

Views expressed are the author’s own.

Featured image: A herder with his cattle in Andhra Pradesh | Shyamal L.,Wikimedia Commons