High cost of fodder led milk price hike

High cost of fodder led milk price hike

Birmashri Rathore knows exactly how much water to add to milk so that it can still be accepted as milk.

As the price of this essential commodity shot up across the country over the past two years, so did the level of dilution in the family’s daily milk. Three years ago, Rathore bought two litres every day from the Mother Dairy outlet near her slum cluster in West Delhi’s Vikaspuri area; today she buys only 250 ml, which occasionally goes up to 500 ml. Half the milk is used for making tea which her family of six has twice a day (her husband died five years ago); the rest she mixes with two glasses of water and gives her five children to drink. She does not boil the milk because that reduces the quantity, she said. But her younger children won’t be fooled that easily. “It’s just water, where is the milk?” Kiran, 11, asks her mother.

“For people like us whose monthly income is not more than Rs 1,500-2,000, the budget for milk cannot go beyond Rs 600,” Rathore said; her 17-year-old son, who works in a shoe factory, is the breadwinner of the family.

Between January 2007 and March 2010 the price of milk rose seven times in Delhi. “In the past one year, prices went up from Rs 17 to Rs 22 a litre. First we stopped eating pulses because it became so expensive and now even milk is becoming difficult,” Rathore said. On a year-on-year basis, the inflation in pulses was 32.60 per cent and in milk 21.12 per cent.

“A growing child of 10-15 years of age needs at least 500-750 ml (two glasses) of milk per day while an adult body needs a minimum of 250 ml per day,” said Kumud Khanna, principal of Institute of Home Economics. The government must make milk available for mid-day meal programmes, said Veena Shatrugna, retired from the National Institute of Nutrition in Hyderabad. “If the government can build massive airports, why can’t it subsidize milk?” she asked.

Rising price drove Rathore’s neighbour Guddi and her husband to change their line of business from selling kulfi to selling vegetables. “Time was when we would get about 10 litres of milk every day at Rs 3 per litre. Now, with both sugar and milk prices soaring, there is simply no money to be made by selling kulfi,” Guddi said.

First we stopped eating pulses, and now milk too is costly
—B RATHORE, Mother of five

“There is a gap of 1.8 million tonnes (MT) between demand and the current milk supply,” Sharad Pawar, Union agriculture minister, told a conference of state ministers for animal husbandry and dairying in January. On March 17, the Centre allowed duty-free import of up to 30,000 tonnes of milk powder and 15,000 tonnes of butter oil. Milk powder imports till now attracted 60 per cent customs duty and butter oil 30 per cent. The imported milk powder and butter oil were for reconstitution as milk meant for supply in the summer months when shortage peaks because that is when livestock produce very little milk, informed N R Bhasin, president of Indian Dairy Association in Delhi. The import was allowed because Mother Dairy and other dairies in north India were facing a crisis.

More demand, less supply

“The demand for milk is rising with increase in salaries of government employees after the sixth pay commission in 2008,” said Amrita Patel, chairperson of the National Dairy Development Board (NDDB). The demand rose in rural areas too after the government wrote off farm loans in February 2008 and introduced the National Rural Employment Guarantee Scheme (NREGS), she explained. “Rising demand in rural areas means there is less milk available in urban areas,” Patel added. “We were quite comfortable with the milk available till about three years ago. A 4 per cent growth rate in milk production, double the growth rate of the world, was good enough because demand was more or less the same as supply,” Patel said.

The demand for milk is rising with the rise in government salaries, the demand has gone up in rural areas too after NREGA
— AMRITA PATEL, chairperson, National Dairy Development Board

But that is changing. “Families that did not add milk in their tea because they could not afford it, now give their children at least one or two glasses a day,” said Kailash Yadav, founder of Jaipur’s milk mart. This happy development makes Patel’s task that much more difficult, but it is not rise in incomes that is tipping the balance in milk supply.

Rising cost of production is. The main reason behind the rise in milk prices is the increasingly higher cost of fodder. “Inflation has been high in the last few years, the cost of fodder too increased. Yet milk prices remained where they were. Only in last two to three years, have the prices shot up,” said B M Vyas, managing director of Gujarat Co-operative Milk Marketing Federation.

The drought in north and northwest India in 2009 made matters worse. A low agricultural yield led to low fodder yield, and prices hit the roof. About 70 per cent of the cost of milk production goes into fodder; this includes dry wheat, millet or paddy stalks and green fodder. Then there are concentrates like de-oiled cakes and molasses, among others. The remaining 30 per cent are medical and labour costs.

“There are reports that some milk producers find it more profitable to sell their animals for meat instead of continuing with milk production,” said Amrita Patel in her address to the Dairy Industry Conference held in Bengaluru in February this year. This is because there is a 4-6 per cent incentive on the export of buffalo meat.

 

Dairy factfile

• Milk production in India went up from 20 million tonnes in 1960 to 106 million tonnes in 2007, so did consumption. According to Food and Agriculture Organisation (FAO), it increased from 57.7 kg per person per year in 1995 to 65.2 kg in 2005.
   
• Dairying engages 18 million people, 5.5 per cent of the national work force. Milk is the main source of income for the landless, holding 1.5 to 2 animals per household.
   
• India followed a mixed farming system. Crop residue went to livestock while it gave manure in return. The transition to a commodity specific system is underway because of increasing demand. According to FAO, this has led to more puchased inputs and less non-traded ones.

Why is fodder so expensive?

Tejpal Mehta, former sarpanch of village Dighariya, is well known all over Thana Gaji tehsil of Rajasthan’s Alwar district because he is among the rare few who possesses 100 milch animals, both indigenous and crossbred.

He also owns eight hectares (ha) of land. But that does not seem enough in the times of water—and therefore fodder— scarcity. “If the yield is good, I get about eight tonnes of fodder annually. The additional 12 tonnes that I need, I buy from the market,” said Mehta.

The fodder that cost Rs 50 for 100 kg about 10 years ago was hardly available even for Rs 800 a quintal about six months ago, he said. Rs 5-6 per kg is the standard rate for wheat or bajra straw anywhere in Rajasthan at the time of harvest. In Gujarat, it varies from Rs 4-5 while in Maharashtra from Rs 4.50-5.50 per kg.

Why is it so? “Try to see the big picture. The groundwater level has gone down below 150 m. The crop yield is not as good as it used to be. Where will the fodder come from?” Mehta asked. “Because of lack of water, we can’t grow green fodder even. Then there is the prohibitive cost of seeds.” A kg of Lucerne (alfalfa) seeds, a leguminous green fodder, costs Rs 300, Mehta said. “So you can imagine the sowing costs when one acre requires 30 kg of seeds,” he added. Ideally, 25 per cent of animal feed should comprise green fodder, he said. “But my animals do not get any more than 2-3 per cent green fodder,” he added.

“At the end of a typical day, I sell 1,200 litres of milk at Rs 5,400,” Mehta said. It’s a daily loss (see: Statement of loss). “We recuperate only when a calf is born as they start giving milk within two years in case of a Holstein.” Mehta would like the government to open depots where fodder is provided at subsidized rate. “Otherwise our animals will all die in five years,” he said. It is a different story in Haryana and Punjab. Technology is one reason fodder prices shot up here. More and more farmers today hire combine harvesters.

“The harvester slices off the top end of the wheat plant that has the grains, leaving the large part of the stalk standing on the field,” said Sharmila of Burheda village in Gurgaon in Haryana. “We have to ask the harvester-wallah to do a second round of cutting if we want the fodder. For this he charges Rs 100 for 100 kg. Even then a lot remains on the field which is burnt,” she added.

In Punjab too the straw left over by combine harvesters is burnt. One of the largest producers of dry fodder, the state has banned burning of crop residue, but that seems to be only on paper. Gathering the fodder does not make business sense. There is no profit to be made after paying for labour costs to cut and bundle the fodder and then to transport it to other states. Only those farms that do not use Combine harvesters keep the fodder market going.

Across the border in Hadota village in Chomu Tehsil of Jaipur is what is reputed to be the largest wholesale fodder market of Rajasthan. About 70 trucks come in every day to sell fodder at Chomu. When the Mandi opened 20 years ago there were just 20 trucks coming in.

Truck drivers complained they are routinely fined by the traffic police for overloading. “After discounting the diesel cost and fines, we hardly get about Rs 2,000,” said Joginder Singh from Kaithal in Haryana. “We would have made a loss if we were not buying vegetables from Chomu (Rajasthan’s largest wholesale vegetable market) and selling them back home,” he said. In 2005, the central government started by giving 25 per cent subsidy to entrepreneurs for fodder block (balesmaking units) to encourage movement from areas of surplus to areas of deficit.

This has now gone up to 50 per cent. “Trucks can transport only about four tonnes of fodder but if briquetted, it can go upto 10 tonnes,” said an official of the Central Animal Husbandry and Fisheries department.

Not enough fodder

As per a 2007 study by NABARD Consultancy Services, there is a 36-57 per cent gap between demand and supply of fodder in the country. The 10th Five Year Plan projected the demand for green fodder in 2010 to be 1,060 MT. “The greatest concern today is that there are no reliable statistics, be it dry or green fodder or concentrates. Whatever data is available is of the 2003 livestock census and every policy initiative is taken up from there,” NDDB’s Patel said.

Patel is worried many farmers are now moving away from cereal crops that yield fodder because there is more money elsewhere. “Farmers in Mehsana, which has the largest milk cooperative in Gujarat, are switching to potato because fast food chains want a particular variety of potatoes to make French fries. Then there is tobacco cultivation too that is replacing cereal crops,” Patel said.

From what it appears, the falling groundwater level, modern farm harvester technology and India’s new economy are elbowing out fodder production. As the stall-fed dairy owners find it difficult to feed their livestock, pastoral dairy farmers’ battle for survival is becoming increasingly bitter.

Where are the grazing grounds?

Umrao Gujjar of Shiliberi village in the buffer zone of Sariska National Park in Rajasthan’s Alwar district has to bring his 15 buffaloes outside the forest area as grazing is not allowed there any more. “In the summer months, we take our cattle to Uttar Pradesh for grazing,” he said. Life was not so hard earlier; both the forest and the hills were kind. “There would be enough grass on the hills in winter, but now even that falls inside the forest,” Gujjar said.

According to National Forestry Action Programme of the Ministry of Environment and Forests, around 60 per cent of the livestock (about 270 million heads) graze in forests; this is nine times the carrying capacity of 30 million animals. Sunandan Tiwari of Winrock International India, non-profit that is providing technical inputs for a National Integrated Grazing Management Policy, said: “There are traditional rights of communities to collect fodder and then there is grazing too. But at the state level there has been no comprehensive estimation of the carrying capacity of the forests.”

In Gujarat, the famed grasslands of Banni in Kachchh have been taken over by the weed Prosopis juliflora. Banni is a flat stretch of land with the Greater Rann of Kachchh on one side. It takes a long time for the water to drain out during monsoon. “Our king designated this land for use by cattle and not agriculture because of the fine grasses that grew here,” said Salim Bhai, sarpanch of Navi Sargu hamlet, about 37 km from Bhuj. “In Banni, no one ever imagined a day would come when we would be buying cattlefeed,” said Salim Bhai. At present, they buy cotton Binola for their animals at Rs 13 per kg.

Gando bawal (mad tree, literally), as juliflora is called in the region, has spread far. “Earlier, grass here was so tall that a man on horseback would be hidden from view. But this tree has destroyed everything,” said Nabib Bhai of Navi Sargu. Nothing grows under it and buffaloes develop ulcer and lock jaw after eating its pods, he added. “The forest department does not let us cut it because it shows a green cover from satellites,” Nabib Bhai said. Grasses have given way to barren land as 65 dams built on rivers around Banni have stopped water from reaching the area.

In Zarapara village, on the other side of Banni, in Mundra taluka, the struggle is of a different kind. The sarpanch here sold nearly 650 hectares (ha) of common grazing (gauchar) land in the village to Mundra Port and SEZ. “The sarpanch told the collector there are hardly any cattle in the village. But that is not true; there are 8,773 heads,” said Valjibhai M Tapariya, BJP leader from Mundra. The Zarapara gram panchayat has filed a case in the high court.

As per Gujarat government norms, there should be 16 ha grazing land for every 100 livestock heads and 8 ha in a forest area. In 2003 the deficit was about 75 per cent, wrote Charul Bharwada and Vinay Mahajan in a paper titled Quit Transfer of Commons in Economic and Political Weekly (January 28, 2006). “If the more than one million ha wasteland in the state is developed as grazing land, the deficit can be covered to some extent. But this land is being given to industry at throwaway rates,” said Bharwada, architect-planner who has been studying pastoral communities at Sandarbh Studies, non-profit in Ahmedabad.

Soil is regularly being mined from the gauchar in Zarapara to reclaim the sea at the Mundra port. “There are about 700 families who have no land and depend solely on the gauchar. But now, they are moving to other jobs like that of chauffeurs or labour for the company,” said Ashanand Ghadvi, schoolteacher in Zarapara village. Lack of fodder is changing their way of life.

Statement of loss

The cost and benefit of a crossbreed cow according to Hemant Kumar, dairy owner in Alwar

Cost:

• Fodder (dry+green): Rs 27,375
• Concentrates: 51,100.
• Medical cost: Rs 3,650
• Labour: Rs 10,950
• Calf maintenance: Rs 14,600
• Cost of a crossbred divided by 10-year milching period: Rs 3,500/year
• Total: Rs 1,11,175

Production:

• 20 litres of milk for 180 days after the birth of a calf: Rs 61,200
• 10 litres for the next 45 days: Rs 7,650
• 5 litres the next 45 days till next calving: Rs 3,825

Total sale: Rs 7,2675

Loss: Rs 38,500

If producer has land, he saves Rs 27, 375 on the cost of fodder

Breed and crossbreed

Cows crossbred with foreign breeds like Jersey and Friesian Holstein were introduced in India in the 1970s. “They give more milk but require more to eat,” said Hemant Sharma, a dairy shop owner in Alwar district. “In the 1970s, there was a blanket recommendation to crossbreed cows with foreign species which led to our own hardy species disappearing,” said Anil Kumar, senior scientist at Indian Grasslands and Fodder Research Institute in Jhansi.

“In Orissa, people took up crossbred cows after the cyclone but the straw available was too little for the heavy eaters,” said N R Bhasin of Indian Dairy Association. NDDB is working out a breeding policy exploring crossbreeding with hardy Indian breeds. It has started a breed improvement programme in Rajasthan and Gujarat.

Food security for livestock

“The area under dedicated fodder cultivation has remained constant since independence at 4.7 per cent of the total cultivable land; 10 per cent of this is in Punjab,” said Bhasin.

The demand for 2021 is projected to be 180 MT which would mean an increase in production of five MT per annum. Sharad Pawar, in a conference of state animal husbandry and dairying ministers, stressed on increasing the area under fodder cultivation to around 15 per cent in the next 15 years.

Diverting the area under food crops to fodder crops is not feasible, said Patel. But of the land already under fodder, about 10.8 million ha as per the 2002-03 census, not even 3-4 per cent is produced from fodder seed but from cereals like maize and pearl millet, she added. “So the yield is less than 50 per cent of a good fodder crop. We are trying to plan in a way that in the next 15 years we get at least 10 per cent of this area under good green fodder,” Patel said. NDDB at present is preparing the National Dairy Plan, which has an outlay of Rs 17,300 crore till 2021; it will focus mainly on breed improvement and augmenting cattlefeed.

Digharia’s Mehta said, people buy seeds now from private shops as most government seed shops do not have seeds. These seeds sometimes turn out to be spurious. The Indian Grasslands and Fodder Research Institute (IGFRI) in Jhansi produces breeder seeds for fodder crops like lucerne and berseem. “We produce much more than the demand generated by the states which is 50,000 kg. We provide about 70,000 kg each year,” said K A Singh, director of IGFRI.

But the state seed corporations and national seed corporation, which should be producing foundation certified seeds out of this, are not interested, he said. “They say they have to focus more on food crops,” Singh added.

All seeds are first produced in controlled lab conditions; these are called breeder seeds. They are further given to seed manufacturing companies for multiplying and what goes to the market is certified, foundation, true-to-type seeds.

“We imported about 15,000 tonnes of berseem from Egypt in 2007-08 and 2008-09 but since it is not adapted to the Indian climate, it fails to germinate sometimes,” said Singh. State animal husbandry departments are not interested in fodder. “They are staffed by vets who are mostly interested in artificial insemination and health services rather than livestock production and nutrition. This has to change; all states must have fodder production specialists,” said a fodder expert.

As of now, only Punjab and Tripura have fodder line staff who can advice livestock farmers on animal nutrients. Even a small country like Bhutan has fodder line staff down to the village level, Singh said.

NDDB’s plans to propagate ration balancing may address that to some extent. It is still in its early stages. Ration balancing involves assessing the nutrition requirement of the animal and then computing the available feed and fodder products in the area. “For example, in places where pineapple and banana leaves are in plenty, these can be added to the basket of greeen fodder,” said Patel. NDDB has developed a software to compute localized fodder mix and it is training villagers to use it. But that is all in the future.

What is happening today is India’s fodder supply is failing to keep up with the demand. Fodder so far has more or less been a byproduct of food crops. Even the government perceived it as such. But with increase in demand there is an urgent need to treat food for animals on par with agriculture.