dairy budget 21-22 analysis

Current dairy situation in India is mimicking the Feb 2020 scenario. The milk is short and the prices are moving up at almost all locations in the country including Maharashtra. Only difference is that the commodities stocks in the country are much higher than what they were last year. All claims of bumper milk production due to good rains, high production of fodder , increase in animal trading (in last two quarters of FY 2020-21 )and good calving (though delayed) could not stop the shortage of milk and thus increase in milk prices.

Recent spike in trading of dairy commodities has given impetus to the commodity prices. The price of fresh stock of good quality SMP has crossed Rs 300 and so is the case of Butter and Ghee. Milk prices in the North are moving further north. Maharashtra has seen 3 price corrections in the last two cycles of ten days each this month.

Milk prices moving up

Companies have started to increase the MRP of milk and dairy products in almost all parts of the country now. Hyderabad has seen a recent correction of Rs 2 per liter . The global market is stable and moving up with a persistent increase in prices of SMP , Butter and Anhydrous milk fat . It seems that the ground is all set for higher prices of milk, SMP and butter during the coming summer.

S No  SchemeRevised Estimate 19-20Budget Amount 20-21Revised Estimate 20-21Budget Amount 21-22
1 2  National Program for Dairy Development Dairy Entrepreneurship Development266.00 250.00300.00      0.02  0.02 
3Rashtriya Gokul Mission270.00310.00400.00502.00
4   5   6Supporting Dairy Cooperatives and FPOs in Dairy Activities Dairy Processing and Infrastructure Development Fund Livestock Census and Integrated Sample Survey100   34.59   126.49100   60.00   100.00100   60.00   100.00100.00
7   8Livestock Health and Disease Control National Livestock Mission346.00 405.39438.00 370.001000.001470.00
9Animal Husbandry Infrastructure Development Fund126.9687.00183.00
10.Pradhan mantri Kisan sampada Yojana819.001085.00750.00700.00
11Total White revolution1798.931805.001642.00
12Rashtriya Pashudhan Vikas Yojana   1177.00
Budget Allocation dairy sector

Key Highlights

a.     Farm Credit has been increased from Rs 15 lakh crores to 16.5 Lakh crores. If this incremental amount is dedicated to Livestock farmers then around 1 crore dairy farmers linked with cooperative societies in India will be able to get Kisan Credit card benefits of Rs 150000.00 each. Currently 6 lakh farmers are enrolled with Kisan(Pashu) credit card and 52 lakh farmers have filled in the forms which are pending with the Banks.

b.     There has been an increase of over 100% in Animal husbandry infrastructure fund. If Rs 183 crores are paid as 3% interest subvention then it would be equivalent to an indirect benefit to an investment of  Rs 6100 Crores . This  investment is sufficient to create around 200 plants of 3 lakh litres per day of milk handling capacity. In total an extra 6 crore litres per day equivalent of milk processing capacity could be built with this support.

c.      The budget on Livestock health and disease control has been increased by 48% to continue India’s crusade against FMD and Brucellosis. This would not only make the country free from these diseases but would also improve the export potential of dairy products from India to the developed world.

Backward forward linkage

d.     Implementation of Pradhan Mantri Kisan Sampada Yojana for backward and forward integration of dairy supply chain with processing of value added products may be given fast track approvals to build a robust dairy cold chain. Though the budget has been reduced but increase in focus and fast allocation could still bring the momentum back to the sector. Special provisions for supply chain in direct to home with IT enabled supply chain may also be made part of this scheme.

e.     Rashtriya Pashudhan Yojana is being presented as a new scheme while it was announced in 2015 also. This year no budget allocation has been done under the white revolution heading but it is done under a new heading of Rashtriya Pashudhan Vikas Yojana.

I think that the government may not change the nomenclature of schemes so as to simplify tracking and assessing the impact under each scheme over a period of time.

Looking at the current priorities of the government, it would be inappropriate for the industry to expect much. However the government may look at reducing the GST on butter and ghee to indirectly support the sector .

A dairy blog by Kuldeep Sharma