68
S
tate
of
I
ndia
’
s
L
ivelihoods
R
eport
2015
The product covers up to two animals per
farmer for a maximum of three years. Only
productive animals (largely cross-bred cows
yielding more than 1,500 litres of milk) are
eligible, thereby excludingmany indigenous
animals. The product only covers the death
of the animal, although low yield, diseases,
extended dry periods, price fluctuations and
lack of inputs are other common risks faced
by the farmers. As result of high incidences
of fraud, insurance companies are forced to
adopt measures of extreme caution at the
time of policy issuance and claim settlement.
In recent times, some insurers are dis-
playing interest inmilch animals’ insurance
and loan-linked sales (outside government-
subsidised schemes) is picking up, largely
through individual agents. Forty per cent
of TATA-AIG’s livestock portfolio and 30
per cent of United India’s cattle portfolio
of INR 1.07 billion are outside the govern-
ment schemes. Dairy farmers, overall, are
still wary of insurance more because of the
formalities to be fulfilled for death claims
and uncertain benefits even after insuring
at market rates. Apart from underwriting
and issuing policies, insurers should train
local resource persons such as the dairy
cooperative staff, the milk collection agents
or the paravets on filing of insurance claims
as this is themost vexatious process in which
customer dissatisfaction is high.
7. Milk marketing
About 50 per cent of the milk producing
households are estimated to sell milk where
as others use it for their own consumption.
19
Dairy farmers are highly dispersed and are
located far away from consumer markets;
and milk is highly perishable. Thus, they
require efficient marketing and processing
systems along their entire supply chain—
from production to consumption—to reap
optimal returns. Aggregated marketing and
processing activities assume added criticality
in India since most livestock producers are
small, resource-poor and often unable to
establish their own linkages with the mar-
kets, processors and consumers.
20
Milk cooperatives procure about 10
per cent of the total production which is
around 18 per cent of the marketable
surplus.
21
A similar quantity is reportedly
procured by the private sector. Both these
sectors together account for only about 35
per cent of the marketable surplus.
22
This
means that a large quantity of milk remains
unprocessed. The installed processing capac-
ity of the cooperative sector is 43.3 million
litres/day, while they actually process an
average 33.5 million litres/day. As per the
available data, the registered (as different
from installed) capacity of private sectormilk
processors in India is 73.3million litres/day.
23
The base line study of NDP found that in
the 14 milk producing states, more than 55
per cent of the milch-animal rearing house-
holds sold milk. A much larger per cent of
population soldmilk in Kerala (91 per cent),
Tamil Nadu (86 per cent) and Andhra
Pradesh (80 per cent). The study also found
that the share of milk sold to organised
sector was 45 per cent; out of the 14 states,
Karnataka led with 89 per cent and the least
being West Bengal where only 10 per cent
of milk sold was to the organised sector.
While cooperatives collected 32 per cent of
the milk sold, private dairies (13 per cent),
individual milkmen or
dudhias
(39 per cent)
and farmers (15 per cent) also collectedmilk
for marketing. Households preferred organ-
ised sector primarily for the price and timely
payments, at least every fortnight. Dudhias
were preferred for doorstep milk collection,
especially where there was a lack of channel
for milk collection.
For most of the private dairies, agents
procure milk from farmers. Some private
19
Making Indian Dairy Farming Competitive:
The Small Farmer Perspective, A White Paper, Yes
Bank, 2015.
20
NABARD, 2015, Annual Report 2014–15.
21
Production during the year 2013–14 was 137.69
metric tonnes.
22
Nanda Kumar T. 2015. CII: Dairy Vision 2025
Delhi: Keynote Address Speech at CII, available at:
23
Nanda Kumar T. 2015.
