Daily Mains Question - GS 3 - 1st September 2025

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Welcome to your Daily UPSC Mains Answer Writing Practice – GS Paper 3 (Indian Economy & Agriculture).

Today’s question focuses on India’s dairy sector, which has made the country the largest milk producer in the world by relying on smallholder farms, cooperative structures, and low-cost household labour. This achievement, pioneered by Operation Flood under the National Dairy Development Board (NDDB), not only ensured self-sufficiency in milk but also created a stable source of income and employment for more than 80 million rural households.

However, the model’s long-term sustainability and competitiveness are under question. Rising opportunity costs of rural labour, fodder scarcity, and low productivity of milch animals threaten to erode India’s global edge. Unlike New Zealand’s pasture-based system or the highly mechanised dairy farms of the United States and Europe, India’s dairying cannot rely solely on cheap labour in the future.

This makes the topic highly relevant for UPSC GS-III, covering issues of agriculture, rural development, cooperative economy, and sustainable growth.

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QUESTION

India’s dairy sector has become the world’s largest milk producer by relying on smallholder farms, cooperative models, and low-cost labour. Yet, low yields, fodder scarcity, and rising opportunity costs of rural labour pose serious challenges to its long-term competitiveness. Discuss with reference to global price comparisons, structural inefficiencies, and the way forward for sustainable dairying in India.

Answer: India is the world’s largest milk producer, contributing over 24% of global production (FAO, 2024). This success stems from the smallholder-based cooperative model launched under Operation Flood (1970) by the National Dairy Development Board (NDDB). The dairy sector today supports the livelihoods of over 80 million rural households. However, its heavy reliance on low-cost family labour faces pressure from rising opportunity costs and diminishing rural workforce availability.

Price Competitiveness and Efficiency

Farmgate Prices (July 2025):
- India – ~₹34/litre (cow milk, 3.5% fat, 8.5% SNF)
- United States – ~₹36/litre
- New Zealand – ~₹35/litre
- European Union – ~₹55/litre
Milk Yield per Cow (USDA, 2024):
- India – 1.64 tonnes/year
- New Zealand – 4.60 tonnes
- European Union – 7.33 tonnes
- United States – 10.97 tonnes

Despite low yields, India remains price competitive because of its labour-intensive system relying on unpaid family labour.

Processing & Marketing Efficiency:
Cooperatives like GCMMF (Amul) ensure farmers capture 55–75% of the consumer rupee, compared to ~35% in the US.

Structural Challenges

Labour Dependence
- Feeding, milking, cleaning, and fodder handling depend on cheap or unpaid family labour.
- Rising rural education and off-farm opportunities increase the opportunity cost of labour, reducing availability.
Fodder and Land Constraints
- Unlike New Zealand, India lacks abundant grazing pastures.
- Dependence on crop residues and limited green fodder lowers productivity.
Technological Gap
- Western farms use milking robots, automated feeding, and health sensors.
- Indian smallholders cannot afford such capital- and energy-intensive mechanisation.
Fragmented Production
- Over 50 million farmers with 110 million milch animals (vs ~24,000 dairy farms in the US) prevents scale economies and uniform efficiency.

Way Forward

Selective Mechanisation: Low-cost milking machines, bulk coolers, and fodder choppers suited for small farms.
Genetic Improvement: Cross-breeding, artificial insemination, IVF, and genomic selection to raise yields.
Fodder Security: Cultivation of high-tonnage fodder crops (hybrid napier, maize silage, protein-rich grasses).
Strengthening Cooperatives: Expanding procurement networks, digital platforms, and cold-chain logistics.
Productivity Focus: Lowering per-litre cost by improving yields and input efficiency, rather than relying on cheap labour.

India’s dairying model has ensured inclusive rural growth and global competitiveness. But its sustainability is under threat from rising labour costs, low yields, and land constraints. The future lies in a hybrid model of smallholder dairying, supported by selective mechanisation, genetic and nutritional improvements, and cooperative value-chain efficiency. This will enable India to maintain its global leadership in milk production while ensuring long-term viability and rural livelihood security.

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