Dairy sector in the post Covid time is just about limping back to life after facing challenges like demand degeneration, high cost of cattle maintenance and changing demand patterns. Even though it has been a difficult time for farmers, especially the small and marginal ones, who own limited number of milch animals, the pandemic also forced action on the much required digitisation of the dairy sector.
As the initial hardships subsided, the Indian dairy sector actually faced an unprecedented boost of demand, given the importance of milk in building up stamina and immunity. Also, as supply chain was impacted due to Covid, the dairy sector actually saw a boost in the demand of the small farmers who could supply locally without any hindrances. Growing demand and long range transport issues brought forward the importance of local dairies.
Technology to make Dairy Sector ‘Smart’
For the sector to grow sustainably from the grass root level, while maintaining the quality of milk, will need more than change in pattern of consumer demand of milk and milk products. It will need interventions like micro-finance, health tracking devices for cattle, cattle monitoring drones for larger farm and free range cattle, product traceability for customers through technology and many such technology interventions. Dairy farming need to become ‘Smart’ to sustain the changes in demand and other parameters.
An economic survey estimated that in the last six to seven years, India’s milk production capacity has escalated by 35.61 per cent to 198.4 million tonnes in 2019-2020, nearly a 6 per cent increase over 2018-19. Meanwhile, dairy and animal husbandry are estimated to contribute 4.2 per cent to India’s GDP. But still when demand is increasing at a rate of 6 percent, supply is only increasing at a rate of 4 percent. The difference in supply is what is leading to additives and milk adulteration. And it has been proven that the technology interventions coupled with better supply chain management and traceability of milk freshness will help to build up the trust on the product.
The pandemic has turned the crisis into an opportunity for dairy farmers and right intervention can help the sector overcome its drawbacks like limited export market, being a part of unstructured market and production along with more human interaction with the products. However, as indicated earlier, most of the dairy farmers are marginal — hence to boost the technology introduction, the sector also need structural changes like strengthening the cooperatives beyond supply points and making them shared technology sources as well,
Dairy Co-ops should become ‘Tech Hubs’
The capacity created by private dairies in the last 20 years is more than the capacity set up by the cooperatives in over 30 years. However, given the micro nature of most of the farmers, Indian hinterland and rural farmers are still unorganised and in desperate need for technological intervention. The proliferation of dairy-tech start-ups, is transforming the face of the Indian dairy sector slowly but steadily.
The risk of technology adaptions and training to use these technologies is best to be dealt through collaborations — in this case co-operatives, which can be used like hub and spoke model to enable the technology training. Even in the supply side, as online ordering is more prevalent, registering supply through common platform is more rewarding than trying to create independent micro platforms.
Artificial Intelligence and machine learning in supply chain management will essentially take away the issues of sharing a common selling point through co-operatives. The shared cost of technology, order management and supply chain will help the rural economy immensely. It is always easier to look after the well-being of the cattle through a unified source, rather than trying to face challenges alone. The co-operatives can adopt biotechnology advancements for disease management among cattle or utilise Internet of Things for tracking livestock, breeding programmes and wellbeing of the cattle from one point of management.
Technology can be utilised seamlessly only when it can have used for a sizeable population. Not only it helps to transform the price of these technologies to a much reduced and affordable cost, but also minimises human intervention in management of the cattle, or the milk supply chain.
How will a Tech led Dairy Economy look like
The advanced high-tech setups in private farms or the modern cooperatives will essentially pave the way for an export led growth of Indian dairy market. According to the UN Food and Agriculture Organisation (FAO) forecast, world trade in dairy products in 2021 stood at 88 million tonnes in which India had a miniscule share with annual dairy products exports of just about 1.18 lakh tonnes in 2020-21. Apart from the growth of export market, according to the National Dairy Development Board (NDDB), the demand for milk and milk products in India will surge up to 266.5 million metric tonnes by 2030.
Through common platforms, technology providers will have direct access to farmers and provide customised services. The farmers will be able to focus on the quality and variations of the products. As technology drives in, it will become much easier to set standards for dairy products, thus slowly weeding away the problem of adulteration. Bureau of Indian Standards (BIS) along with National Dairy Development Board (NDDB) has already issued a unified system for quality and safety of milk and dairy products across the country. The integrated logo of Kamdhenu Cow — a seal of certified quality, is the first ever move by India to bring uniformity in milk quality and certify end-to-end milk value-chain.The move will not only benefit dairy consumers, but also milk producers who aims to achieve greater access to international markets. Quality will also bring in better price realisations in both domestic and export markets.
The pandemic has established that development is proportionate to tech-adoption for every sector, and the story isn’t going to be any different for the dairy sector. Already, there are technology interventions in the market like AI enabled collar to study the pregnancy cycle of bovines; a smart cloud based solution which digitises cattle health, milk production, milk procurement, milk testing, and cold chain management; and direct payment platforms for dairy processors and cooperatives.
Add to these, mechanisms like cattle monitoring drones, well refrigerated supply chain and methods to check out milk freshness at realtime that enables quality assurance, and India can become a powerhouse for milk production and export. The Indian dairy supply chain is a complex geography given the amount of transportation required to reach from plant to consumers. As it is a function of a lot of factors like right packaging, storage temperatures during passage, cold chain availability, weather, perishability quotient of the product, the last mile coverage — it is a daunting task to digitalise milk supply chain, especially with the challenging geography that India has. However, numerous supply chain startups have actually taken up the challenge to bridge the gap, thus opening up huge possibilities for the dairy farmers and their profitability.
Another part of dairy management is feeding the bovine proper nutrition. There are technology breakthroughs that are able to provide quality check and manage the feeding as well. There are a number of feed technologies that today produce formulated feed additives and supplements, that enables optimal milk production throughout the year. The National Dairy Development Board (NDDB) has also developed bypass protein technology to produce specially treated protein supplements that help to increase milk yield and quality.
Connecting the Farmers — How to replace Tradition
According India Brand Equity Foundation, despite technologies making its presence felt in dairy sector, only around 20 percent dairy farmers are involved in organised production of milk. Given this unorganised status of the industry, the scale of production is still lacking and most of the dairy farmers still lack financial means, accessibility and expertise to deploy the technology. As cooperatives and fintech startups ease out the financial crunch, it will take effort to help farmers adopt the available technologies and become ‘smart’. India’s mega plan to produce about 300 million tonnes of milk by 2024, will need market connectivity, financial planning and policy push to be achieved.
B2B marketplaces have started mentoring the farmers and making modern equipment and advisory services available at the doorstep to farmers through smartphones. B2C platforms on the other hand have also emerged at a rapid pace, offering services to pick up fresh produce from farms and deliver them at the doorstep of retail customers, hotels, restaurants and cafes.
Technology intervention and help to access them has had a positive enough influence on dairy farmers in India. The current start-up and technology revolution will need to transform the resolution to adapt modernisation thus pushing the nano-steps towards achieving the “Second White Revolution” in the country.