XXV Dairy Industry Conference
By Dr. V. Kurien
National Dairy Development Board
Anand – 388 001
March 24, 1994
The Honourable Chief Minister Shri Madan Lal Khurana, Dr. Aneja, distinguished guests, members of the Indian Dairy Association, and all who have come to participate in this, our Twenty-fifth Dairy Industry Conference I am privileged to have this opportunity to speak on this important occasion.
When Dr. Aneja asked me to deliver the Keynote Address, I could not help but recall speaking to earlier conferences of our industry. At our Fourteenth Conference in 1985, I commented that:
The world is the same. As I stand here, I have the feeling that most of the faces are the same too. Even the speakers are the same! Shall we conclude, by the end of the Conference that the problems have also not changed? I hope not.
That was in 1985. Today, in 1994, the world is not the same. And I note with regret that many of the old familiar faces are gone, though I must also note that there are many new faces who represent the next generation of our industry. Last, the problems have indeed changed. And it is on that subject that I would like to share some thoughts.
When I spoke to the Seventh Conference in 1970, our dairy industry was struggling to survive. National per capita consumption of milk had dropped to 107 grams per day less than 21 million tonnes of milk per annum were produced despite our having the largest national dairy herd in the world. In 1970 I reported with some pride that the modern dairies in our four metros had doubled their throughput to an average of 9 lakh litres. I didn’t mention that the total milk marketed in other cities and towns was only a tenth of that figure. In that year we produced 22,400 tonnes of milk powder, and imported another 19,000 tonnes. Operation Flood was barely underway – 2.8 lakh members of some 1,588 village cooperatives in five milksheds poured an average of 5 lakh kilograms of milk per day. There were still shortages of quality milk and milk products. There were still queues at the milk booths in our cities. Our towns were yet to taste fresh, clean and wholesome milk. As was true with much of our agriculture, we dealt daily with the problems of scarcity, trying to stretch limited supplies to meet rapidly expanding demand.
Today everyone in this room can take pride in what has been achieved during the last twenty five years. Our annual milk production of more than 60 million tonnes places us second in the world and we are close to a per capita availability of 200 grams per day – and, as our Health Ministry hasn’t done nearly as well with family planning as we have with milk production, we are providing milk to 350 million more people today than we were in 1970.
Our metro dairies market 3.5 million litres per day, a figure increasingly dwarfed by our non-metro sales which now exceed 5 million litres. From five milksheds, our cooperative structures now cover 170; membership has grown to 80 lakh women and men; and procurement has truly become a flood.
I feel proud of what the National Dairy Development Board and Operation Flood have contributed to this White Revolution. But I also feel proud of the efforts of a great many others of my countrymen and women. While we have not always agreed about ends and means, there can be no doubt about the contributions of our Ministry and its officers, of the state governments and their agencies, of voluntary organisations and others who have worked to build our national milk production. Most of all, we must all pay tribute to the women and men who manage our national herd. Poor – often without access to education, health services, finance and other facilities enjoyed by their counterparts around the world – our dairy farmers have transformed a national liability into a national asset. It is they who have accepted the risks, they who have laboured from dawn ‘til dusk, and they who have sacrificed. Unlettered and under-financed they have adopted new technologies. It is one thing to invest in better seeds – the return comes with the first harvest. It is quite another to invest in better livestock – the change takes years, and the progress is in steps, not the grain or oilseed farmers, they are the women and men mainly women – who have raised the productivity of our nation’s cattle and buffalo.
In 1970 we faced the problem of scarcity – with confidence. Today we face the problems of plenty. Pardon me if I say that I feel less confident now than I did then.
Why do I feel less confident?
Success breeds self satisfaction. Entrepreneurial spirit gives way to conservatism. We begin to believe that we know the answers, forgetting that in a period of change the questions may remain the same, but the answers will be different. At a time when we must challenge everything we have done, we become overconfident.
We are very close to producing more than our population can afford to consume. Please note, I did not say more milk than our population can consume – I said more than our population can afford to consumer. Our Government was once quite generous: it was willing to subsidise the cost of imported oil for our traders and to ensure at the cost of our dairy farmers – low priced milk to our urban consumers of every strata. Alas, we spent more than we earned and today we believe we can no longer afford even targeted programmes to ensure adequate nutrition to our rural and urban poor. And so, we are very close to producing more milk than our population can afford to consume.
That is not necessarily a permanent condition. Our middle class is growing, and with its increasing affluence comes increasing demand. If 20 crore of our fellow citizens decide to purchase the equivalent of 10 grams more milk and product per day, the annual increase in demand would be more than 7 lakh tonnes. And as well as we have done with artificial insemination and veterinary care, we have yet to produce cattle and buffalo that are immune to the effects of a poor monsoon. Let us not forget that we have enjoyed an almost unprecedented string of good monsoons.
I am confident, however, that we shall continue to meet increasing domestic demand even as we develop new processes and products to expand that demand. That leads us to Global Opportunities, or, as I would prefer to say, Global Challenges.
Some years ago economists at the University of California Davis predicted that by the turnoff the century, India would become a major player in the world dairy market. There were those who scoffed. I did not. Nor, I suspect, did the multinationals who are now busy with plans to build dairies in India.
However, I am equally clear that the world is not waiting for India’s milk and products. If we are to achieve our destiny, it will require commitment, sacrifice and unrelenting effort.
What is the scenario that is unfolding as we enter this new era of Indian dairying? First, there is a growing global market for milk and milk products. In 1992 the world traded $11 billion worth of milk, $ 9 billion in butter and $ 3.5 billion in cheese. Asia and Africa accounted for imports worth $5.2 billion.
Today the lion’s share of exports are dominated by Europe and Oceania. Much of the Asian and African market is shared by these two regions. However, a change is in the wind.
Whatever you may think of Mr. Arthur Dunkel, he has pressed vigorously for a rapid end to producer subsidies. Today the price received by a European dairy farmer represents more than 60 percent Producer Subsidy Equivalent. Those subsidies have kept tens of thoughts of dairy farmers in business who, without support, would be uneconomical producers. If the Dunkel draft is approved, there will be an enormous shake-out in the European, North American and Australian dairy industries. Excess supply and administered prices will give way to a shift to demand and free market prices. In some markets, such as the United States, supported prices are already too high to permit competition in the international arena which is why that government introduced export assistance programmes having driven commodity prices up with subsidies, the Government then bought them down with more subsidies!
There are only two major producing nations that don’t subsidise their dairy farmers New Zealand and India. Our prices – already competitive – will become increasingly attractive in the world market.
However, neither is the world waiting for our milk and products, nor are the advanced dairying nations going to sit idly while we gobble up their markets. There are already indications that producer subsidies that will be passed back to producers to maintain the status quo. I trust our Government is alert to this threat.
The other threat we face is attacks on our quality, on our reliability, and on our integrity. And there are those in our industry whose behaviour has given credence to such attacks. The response to these attacks is not rhetoric, the response is action.
We have argued – against increasing resistance – that strict quality controls must be applied to every gram of dairy product exported from this country. Every successful exporting nation has applied such controls. They are essential with foods which are subject to the strictest importing nation controls and where disguised tariffs are applied by setting prohibitively difficult standards. Unless we ensure our quality, a single bad shipment can and will be used to “prove” that India dairy products are unacceptable!
I believe that it is both appropriate and consistent with the NDDB’s mandate that we should undertake the responsibility of export quality control. However, we would also be willing to consider an independent and voluntary authority established and financed by all exporters provided that Government ensured that no dairy products were exported without the approval of that authority.
Quality is not simply a matter of ensuring that what leaves the country meets the highest standards. Quality goes back to the producers and their animals. The days when we can simply collect milk without regard to the health and environment of the animal that produced it are fast fading. Every link in the chain from the animal to the factory to the retail outlet or export wharf – must be part of a total quality process.
Our competitors know what their customers want – they know the milk preferred by a Malaysian, the cheese favoured in Oman, the butter Kenyans find best. They know how to package those products to attract local buyers. They know the regulations that govern products. They have worked with and through marketing channels. They know each substitute for every product and how to ensure that they remain competitive. They know how to advertise and reach the hearts and minds of buyers from Zimbabwe to Zamboanga. They have worked with and through marketing channels. They know each substitute for every product and how to ensure that they remain competitive. They know how to advertise and reach the hearts and minds of buyers from Zimbabwe to Zamboanga. They have in support of professional and experienced commercial offices financed by their own Governments. They have the financing of their own domestic industry. Right now, we only have a dream.
That dream will remain a dream unless we can work together. Those of us who want to see our nation become a major player in the international dairy market must agree to common objectives; we must work together to build upon our mutual strengths and overcome our weaknesses; we must share a strategy and a plan; we must allocate responsibility and, once we have accepted responsibility we must all meet our commitments, whatever be the costs: we must share risks as well as rewards; and we must be willing to finance the investments necessary to build international markets. There is no other way.
Let me be quite clear: the future of our industry depends on finding new markets. If we fail to do so, our industry will stagnate as supply swamps demand. Prices will drop, investment will decline, and the gains of the last two decades will erode.
To move forward we need discard much of the past. We can no longer afford managers who are administrators, or those whose sole qualification is seniority. We can no longer run businesses without the marketing expertise, the financial acumen and the professional skills of our toughest competitors. We can no longer tolerate waste, inefficiency, and worse. If we are to seize the day, we must raise ourselves to the next level and beat our competition with our talent, with our ingenuity and our commitment.
Four our cooperatives, the luxury of competing brands is simply not affordable in the international market. There is no option but a single Indian dairy cooperative brand, a brand that will mean the highest standard of quality everywhere in the world.
And for our cooperatives, we must remember our greatest strength: the individual small producers who have brought us to where we are today. Have no doubts: the multinationals will come to India. Locating production where costs are lowest is a fundamental strategy of these firms; just as is abandoning those facilities when prices rise. The economics of our business is very sensitive to transport costs. Each MNC that enters our dairy industry will seek to decrease those by encouraging large farmers mass production, not production by the masses.
Our commitment is to more than the “bottom line”. Or rather, our bottom line is our people. Value for us is not dividends paid to stockholders in Zurich, London or New York. Value is the quality of life of lakhs of farm families. It is those farm families who have created the first miracle of Indian dairying, transforming a stagnant industry into one that stands poised to take on the world. It is those same farm families who will create the second miracle – India as the world’s leading dairying nation. We must never forget them.