The impact of Operation Flood became visible when milk production started to grow significantly faster in the last couple of decades. The organised dairy sector was put on to a new fast growth trajectory through evolution of Anand Pattern of cooperative dairying. Emphasis was put on strengthening the processing and marketing infrastructure in rural and urban areas. Various programs in the areas of veterinary services and animal nutrition were introduced as measures to increase milk production.

Operation Flood created the platform and the required infrastructure to support the growth that the dairy industry is witnessing today. The demand-supply interplay effect is clearly visible in steadily rising milk prices which has put us at a juncture where the need for a Second White Revolution is greatly felt.

There is need to change the paradigm of dairying from “subsidiary” occupation to “mainstream” activity by achieving economies of scale and continuous yield improvements. This would need conceptualization and implementation of new production models that would inculcate the following crucial requirements of high-tech dairying:

  • Mechanisation and automation of dairy farms
  • Sustainable measures to provide better quality feed and fodder
  • Provision of improved seed varieties for fodder cultivation, and also encouraging seed replacement
  • Adoption of new breeding techniques and veterinary services
  • Maximization of environmental benefits through adoption of green energy measures such as re-utilization and effective disposal of manure.

However, there are certain challenges which are impeding the above approach:

  • Low organised sector participation in dairy farming which could otherwise bring in the desired innovation and consequentially increase milk production
  • Lack of awareness of best practices implemented in dairy farming worldwide
  • Higher costs for provision of specialised input services like medicines and feed which overshoots the advantages offered by low labor costs

Approximately 80 per cent of dairy cows/buffaloes in India are with small scale farmers having herd size of up to four animals and for whom dairying is a subsidiary activity, and hence it does not get as much priority as farming. Further, the recent increase in input costs like feed, fodder and labour has created a threat to the existence of these small farms. Dairy players are also facing challenges in procuring milk from the small scale farmers due to low milk volumes, long distances, weak last mile infrastructure, lack of adequate/economical cooling infrastructure and difficulty in assuring consistent milk quality. Also in the long term the biggest threat to the non-organised milk production is coming from the shift of labour to non-farming jobs in the towns and cities. Today’s generation of farming population is disinterested in continuing with the current subsistence model of dairy farming. Furthermore, this traditional model has also reached threshold levels, as far as yields are concerned.

Adoption of dairy farming on a commercial scale aims at significant reduction of production costs, maximising environmental benefits and a dramatic improvement in milk quality and yield. Some of the key benefits of commercial dairy farming are:

  • Adoption of better farm management practices and automation in milking helps in reducing operational costs as well improving milk quality.
  • Better feed management practices help in achieving farm economics as well as increase in milk yield per animal.
  • Proper medical care and veterinary facilities help in reducing the risk of disease outbreak thus improving the animal productivity and milk quality.
  • Adoption of new breeding techniques helps in improving the genetic potential of the herd.


A number of innovative models are conceivable/are emerging in various parts of India in order to address the challenges mentioned above. Some of these models are:

Large Scale Dairy Farms

Large scale Integrated dairy farms have facility for housing over 1,000 high yielding crossbred cows, with automated milking, feeding, milk processing and integrated feed production. Ownership and responsibility for the operation and maintenance of the farm lies with an anchor/organised player. The organised player may enter into contract farming with the farmers for procurement of green fodder, a key input for enhancing milk yield of cattle. The milk is either sold to other dairies or used for processing into value added milk products at its own plant. The significant benefit of this model is efficiency in scale of operations, end to end product traceability and high level of product and process control. This model is suitable for large cooperatives and corporates.

Figure 1: Large Scale Dairy Farms

Hub and Spoke Model

The main farm (Hub), owned by an anchor organization has all the integrated facilities like automated milking, feed production and milk processing with a cattle count of over 500 cows. The connected/satellite farms (spokes), with 50 to 200 cattle each, have basic infrastructure for milking and cattle management and are owned by progressive dairy farmers/rural entrepreneurs in close proximity to the main farm (less than 100 km distance). The main farm provides technical support (veterinary care, feed management, training) to the satellite farms. This model offers the benefits of end-to-end product traceability and reasonable level of product and process control, although with significantly lesser capital expenditure by the Anchor. Critical to this model are the control systems that need to be put in place to ensure that farm management administration is of desired level and that milk output quality adheres to the set standards. Further, versus the Single Location Large Scale model, the land requirement is distributed over multiple locations. The model is also more socially inclusive and lends itself to faster scale up.

Figure 2: Hub and Spoke Model

The constraining factor impacting profitability in both of the above models is the low milk yields of up to 3,600 litres per cow per year for existing crossbred cows in the Indian scenario as compared to EU-27, US and Israel with average milk yield of 6,692 litres, 9,865 litres and 11,706 litres respectively. Framing and implementation of an enabling policy structure that facilitates import of high yielding cattle and intensified efforts on cattle breeding programmes for indigenous breeds shall be significant initiatives in overcoming the challenge of low yields.

Progressive Dairy Farming Model

With some support from an anchor processor, a number of progressive farmers are scaling up their current herd size to establish mid-sized dairy farms with 200 to 300 cattle. Farms in this case are semi-automated for milking and feeding. This is an entrepreneurship model wherein the anchor without incurring substantial capital expenditure benefits from an assured supply of milk of traceable, consistent and good quality. The anchor provides technical support (veterinary care, feed management, training) and financial support (directly or through financial institutions) to the farms. Government also provides support to small farmers for purchase of cattle and also by way of administration of breeding programmes. This model is constrained by way of limited capital investment capability of the progressive farmers and is also challenging in terms of the anchor’s ability to have a fool proof mechanism to ensure checks and controls on the farm operations. However if replicated, this can be an excellent partnership between farmers and processors and can be a win-win model for all stakeholders in the long run.

Figure 3: Progressive Dairy Farming Model

Community Dairy Farms

Collective dairy farming is based on the concept of building “hostels” for cows. It has been successfully implemented in countries such as China. Development of such models help farmers achieve economies of scale and also result in better dairy management systems. This model envisages investment in farm infrastructure by an anchor (corporate, cooperative, government) and cow stalls are leased out on nominal charges to individual farmers, who are responsible for housing of cows and managing them under guidance of the anchor. Automation level of the farms can be a function of the farm size. The milk would be purchased under buy-back arrangement by the anchor. This model enables the smallest of the dairy farmers to avail the benefits of technology, scale and systems.

Figure 4: Community Dairy Farms

Lead Farmer Model

In this model, a lead farmer establishes common farm infrastructure required for housing, breeding, feeding and milking of animals. The model works on the lines of community dairy farming, with a difference that the ownership and management of infrastructure lies with the lead farmer and not with an investor/anchor. Milking machines, equipment, bulk coolers and milk storage facilities are owned by the lead farmer. Individual farmers are responsible for housing their cows and managing them under the guidance of the lead farmer in stalls provided to them on a rental basis. Milk produced is sold to a processor who provides technical assistance to the farmers. This model is sustainable and scalable under the farmer producer organisation structure as well.

Figure 5: Lead Farmer Model




The following key enablers would pave the way for effective implementation of various dairy farming models:

Utilization of Feed & Fodder Resources

With rapidly shrinking land and natural resources, sourcing of feed and fodder is challenging the very aim of augmenting milk production in India. Application of newer tools of technology to produce large scale feed blocks, feed enzymes and other innovative feed resources need to be enhanced. This coupled with the efficient cultivation and harvesting techniques including irrigation management can greatly improve the fodder production in the country.

The following imperatives assume significant importance to optimize the feed and fodder production and management:

  • Maximize the usage of crop residues and leguminous forages. Use Research and Development (R&D) interventions to enhance the nutritional quality and adaptability of crop residues and forage crops.
  • Treatment of cereal straws, use of urea-molasses mineral blocks, maize and sorghum stovers, spent tea leaves etc. through a participatory approach involving farmers.
  • Explore the possibilities of additional sources of feed supply like intercropping with cereal crops, relay cropping, food-feed systems etc to ensure year-round feeding systems and counteract seasonal scarcities.
  • Effective utilization of an integrated watershed development approach towards evolution of fodder production systems.
  • Promote quality fodder production through effective seed production, harvesting, processing, storage and marketing systems.

Facilitation of Knowledge & Technology Transfer

Advanced and computerised milking and feeding systems, cow-cooling systems as well as milk processing equipment are some of the areas where joint ventures and strategic alliances with the international technology providers can bring in the desired level of improvements. The following steps need to be taken to facilitate technology infusion and knowledge transfer to scale up milk productivity:

  • The government should promote selective import of heifers and frozen semen from countries like Israel whose genetic sources have the potential for better adaptation and performance under our climatic conditions. This paves the way to improve the existing genetic potential of the Indian cattle.
  • Knowledge transfer to understand successful international models of dairy farming that could be adopted in India.

Concrete strategies which set the directions to increase profitability, sustainability and competitiveness for Indian dairy farmers.

Figure 6: Key Components of Dairy Farming Strategy

Government Policy Support

Government is providing support to the dairy sector through various development schemes. Along with these supporting policies, the following initiatives will also help in giving an impetus to this sector:

  • Suitable incentives by the central and state governments, including subsidy to private investors on plant and machinery, single window clearance and subsidised basic infrastructural support like power and water for such projects.
  • The Government should encourage private sector participation by providing land for the project as well as setting-up the project and managing the operations.

The stress on dairy production systems necessitates the development of innovative and scalable commercial dairy farming models. Enabling government policy along with innovative approach of the private sector will play a key role in defining the success of these initiatives. However, the drivers of success for each model need to be tested on the ground. Due to the current diversity in nature of farming systems, prevailing infrastructure, farmer capacities, socio-cultural realities, climatic patterns, multiple models/structures of organizations, there will not be a single model that shall fit all requirements in all circumstances. Rather a mix of various models is going to evolve and determine the landscape of commercial dairy farming in India.