This blog provides an overview of some of the most recent incentives announced for the benefit of India's dairy industry. We will also discuss how farmer-producer organisations (FPOs) and dairy industry entrepreneurs can benefit from these programmes.
India has the world’s largest cattle population and has become one of the world’s largest milk exporters. India also exports a significant amount of milk and animal-based products. However, the meat industry has also suffered significant losses as a result of the pandemic.
| The National Action Plan for Dairy Development envisions achieving a milk production target of 300 million MT by 2023-24 from 155.5 million MT in 2015-16, requiring an annual growth rate of 8.56%, resulting in an increase in per capita milk availability from 337 grammes per day to 592 grammes per day in 2023-24, addressing the substantial nutritional needs of a growing population. To meet the desired milk production targets, average in-milk animal productivity would need to increase at a 4.7% annual rate from the current 4.65 kg D to 6.7 kgPD by 2023-24. |
Glossary:
- Impact of coronavirus on the dairy and meat industry
- Animal Husbandry Infrastructure Development Fund Scheme
- Dairy Entrepreneurship Development Scheme
- Pradhan Mantri Matsya Sampada Yojana
Impact of Coronavirus on the Dairy and Meat Industry
- Dairy industry – Milk collection, processing, and sales all decreased during the first days of the pandemic. However, the virus’s impact on the organised dairy industry was not as severe as it was on unorganised milk farming.
- Meat industry – The pandemic has had a significant impact on the meat and meat processing industries. During the lockdown, buffalo meat exports fell by more than half. People stopped eating meat out of caution. This has resulted in mass bird culling and low-cost sales of chicken and eggs in the poultry industry. According to one estimate, the losses exceed 22,500 crores, affecting 25 million farmers.
Animal Husbandry Infrastructure Development Fund Scheme
The Cabinet Committee on Economic Affairs has approved a fund worth ₹ 15,000 crores in the year 2020.
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Eligibility for the scheme
Farmer Producer Organisations, Section 8 companies, private companies, and individual entrepreneurs with at least 10% margin contribution. The remaining 90% would be loan components made available to them by scheduled banks.
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Aims of the scheme
The government would assist public, non-profit, and private companies by providing a 3% interest rate subsidy.
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Moratorium on loan re-payment
There will be a two-year moratorium on payment of the loan and a total repayment period of six years.
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Credit guarantee under the scheme
The government will provide a partial credit guarantee to dairy companies in order to make loans more accessible. Furthermore, this would amount to 25% of the borrower’s credit facility.
Significance of the Dairy Sector for FPOs
- Impact on farming incomes – The government in its official release notes a peculiar characteristic of the dairy industry in India. Additionally, unlike other agricultural sectors, in the dairy sector, almost 50-60% of the final value of the product flows back to the farmers.
Opportunity for development by private entities –
This means that farming profits are strongly correlated with the growth of cooperation as well as private infrastructure in many regions. Moreover, the surveys by the government note that investments through the Animal Husbandry Infrastructure Development Fund can leverage the value of seven times more than the investment made.
Benefits of the scheme
- The scheme envisages promoting private as well as cooperative organizations involved in the dairy, animal and meat sector
- Moreover, all entities engaged in value addition infrastructure, processing and setting up of infrastructure for dairy and meat processing, the establishment of animal feed plants, etc will benefit from the scheme.
- The scheme will help enhance returns for investors in the dairy sector significantly, while also promoting exports and value addition.
Dairy Entrepreneurship Development Scheme
As part of the Startup India plan, the dairy entrepreneurship development scheme is a central government subsidy program made available for those setting up dairy farms.
Eligibility of the scheme – Under the scheme, individuals, cooperatives Society, and NGOs setting up new farms are eligible. Additionally, even entities intending on upgrading their existing infrastructure, in the dairy industry are eligible for financial assitance.
Nature of Financial Benefit Available –
- A capital subsidy of 25% of the total project cost for the general category and up to 33% for SC/ST farmers. The component-wise subsidy ceiling will be subjected to cost arrived at by NABARD. Entrepreneur’s Contribution to loans beyond ₹ 1 lakh – 10% of the project cost is eligible for the subsidy.
- Moreover, the upper ceiling limit of subsidies ranges from ₹20,000 for setting up a vermicompost unit to ₹30 lacs for setting up a cold storage facility.
- Other eligible infrastructural components are – the purchase of milking machines. Moreover, rearing indigenous and crossbred cows, and establishing a dairy parlour or veterinary clinics.
Pradhan Mantri Matsya Sampada Yojana
Under this scheme formulated for fisheries development, beneficiaries would be entitled to funding from the Central Government. Launched in May 2020 for a period of five years, it aims at boosting the production and productivity of the fishery sector in India. As a result, it will also fund infrastructure and long-term fish post-harvest management.
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