India's Dairy Industry Faces Potential Crisis Over Farmer Margins

R.S. Sodhi, the former chief of Amul, has raised alarms about potential structural issues in India’s dairy industry. He insists that dairy farmers need to receive between 70% and 80% of the final sale price of milk to ensure the industry's sustainability. Sodhi highlights that the cooperative model, which channels the majority of revenue back to producers, has been a key factor in India becoming the world’s largest milk producer.

The cooperative system contrasts with private-sector models by prioritizing farmer welfare over high corporate margins. This approach has not only supported smallholders but also contributed significantly to rural livelihoods. Sodhi noted that dairy farming is one of the few agricultural sectors providing regular daily income, but increasing production costs are squeezing margins at the farm level.

Sodhi underscored the crucial economic role that dairy plays in rural India's economy, especially for women and small-scale producers. He pointed out that cooperatives have facilitated stable income opportunities in villages, contributing to nutritional security and job creation.

To sustain this social and economic ecosystem, Sodhi called for balanced value distribution across the supply chain. He warned that excessive profiteering beyond the farmgate could undermine the success of India's dairy industry. Ensuring fair milk pricing for producers is essential as domestic demand for dairy products grows and competition increases.

Sodhi's statements highlight the need for policymakers and dairy processors to focus on fair value distribution to protect the interests of dairy farmers. This is critical for maintaining production levels and farmer participation in the sector.