Future of smallholders in the dairy sector: A macro study of Gujarat

Abstract

A study was conducted to examine the structural changes in dairy production front, inclusiveness of dairy farming in livelihood structure of farmers and to conceptualize the structural changes in organized dairy processing industry in Gujarat state. Overall milk production in Gujarat is increased by the combined effect of population (59.62 %) and yield effects (39.14 %). The income from dairy farming increased higher (1.40 times over the decade) as compared to other income activities (crop production, off-farm business, wages and salaries) and has an equalising effect on the distribution of farm income. Contribution of dairy income in farm income is higher especially in case of marginal (37.97 %) and small (31.01 %) land owning farm households. At the same time income of dairy farmers is higher compared to non dairy farmers. Ex-factory value of output per organized dairy processing factory was increased 4.20 times while the ex-factory value of output per rupee of fixed capital investment increased 18.45 times over the period (2000-01 to 2015-16). This indicates that the excess investment in dairy industry has happened over the period which has not resulted in increase in value of output from the industry. This trend shows that it is possible that without addition in capital investment organized dairy industry can sustain in near future the condition is to use full capacity, this way dairy industry and farmers remain in win-win situation. The, government should give more focus on promotion of dairy farming in the programmes designated for enhancing farmer’s income and in reducing income inequalities.