After six decades of economic planning, India remains predominantly rural with agriculture as its basic resource for subsistence of almost two thirds of its population. The contribution of livestock sector to agriculture GDP in the last 10 years varied between 24 and 29 per cent. While the growth in agriculture over the years has not been steady, rather fluctuating significantly, livestock sector had a steady growth between 4 to 5 per cent. In the 11th Five Year Plan, the growth in agriculture has been targeted at 4 per cent out of which half of the growth would be contributed by the livestock sector. This would be possible only in case the livestock sector achieves an overall growth of 6 per cent per annum.

In livestock sector, dairy and poultry are the high growth areas. The output in dairy sector contributes 68 per cent while that of poultry is around 10 per cent. In order to meet the target of 6 per cent growth rate, milk group should show a minimum growth rate of 5 per cent, meat and eggs 10 per cent and wool 2 per cent. The performance during the first two years of the Plan has not been encouraging. Dairying has shown a growth of 3.5 per cent, and is projected to grow at 3 per cent only during 2009 on account of overall recession. The poultry sector has received a major setback due to avian influenza.

The pillars of growth in livestock sector are: improving productivity through improved nutrition, breeding, value addition, and creating viable business enterprises. The Working Group on Animal Husbandry and Dairying, set up by the Planning Commission, has estimated deficit in requirement and availability in terms of dry fodder, green fodder and concentrate at 11.20 per cent, 27.66 per cent, and 34.45 per cent, respectively, which may persist and even get aggravated during the 11th Plan period.

Oil cakes and rice bran constitute an important component of livestock feed. The major oil cakes are soybean, groundnut, rape/mustard, sunflower, cottonseed, sesame, castor, niger and linseed. There has been an unprecedented increase in their export. The export volume has increased from 2.69 million tonnes during 2004-05 to 5.42 million tonnes during 2008-09 showing an increase of 202 per cent. During this period, the export of soybean extraction increased by 180 per cent, rape seed extraction increased by 116 per cent and castor seed extraction increased by 104 per cent.

Large scale export has fuelled the prices of cakes in India. The price of groundnut expeller per tonne has increased from Rs. 8,048 during 2005 to Rs. 14,400 in 2008 showing an increase of 179 per cent. The market price of rapeseed (expeller) has increased from Rs.6,833 to Rs.10,700 during the corresponding period showing an increase of 157 per cent. The price of groundnut extraction has increased from Rs.7,059 to Rs.13,300 per tonne showing an increase of 188 per cent while the rice bran has shown an increase of 165 per cent, soya extraction 198 per cent, rape seed extraction 199 per cent and sunflower extraction 252 per cent. The trend shows that with the increasing international prices the situation is going to aggravate.

The wheat and rice straw constitute an important source of roughage for the livestock. The production of wheat is concentrated in the states of Punjab, Haryana and parts of UP where wheat straw has been a favoured commodity for livestock feeding. I happened to travel to Chandigarh last fortnight by evening train and saw large quantities of wheat straw being burned by the farmers instead of its collection and preservation for feeding the animals. Large parts of India face natural calamities every year when livestock perish for want of feed. It, therefore, appears a crime to burn the national resources. The State Governments should impose a ban on the burning of the wheat straw and instead provide support for its preservation and utilization. The wheat straw can be fortified with urea, molasses and minerals, compressed and converted into feed block which can easily be transported to deficit areas. This would not only lead to judicial use of the resources but also provide income generation opportunities to the farmers in these states.

The area under green fodder cultivation in India is constant at 4.60 per cent of the total cultivable land since last many decades and does not show any prospect of increase. It has not been possible to develop a strategy for bringing additional area under fodder cultivation. Dr. P. Bhattacharya, Member, National Commission on Agriculture, used to say: "The fodder production has fallen in between the two stools of agriculture and animal husbandry; while agriculture has technology it has abandoned it, the animal husbandry has adopted it but does not know how to raise the baby."

In the 10th Five Year Plan, National Project on Cattle and Buffalo Breeding (NPCB) was launched in various parts of the country. Unfortunately except for a few, most states have taken up this project as an extension of Intensive Cattle Development Project (ICDP). The introduction of Frozen Semen Technology alone shall not bring any improvement per se unless superior and progeny tested bulls are used. In number of NPCBs visited by me, the only information available about the genetic worth of the bull is his mother's yield. Non-availability of progeny tested bulls may lead to serious consequences, including deterioration of the crossbred produced under the project. This issue, therefore, needs serious and urgent attention.

An impressive network of milk producers cooperative societies has been set up in India. The dairy cooperative movement received a major boost under "Operation Flood". Since the early 1970s vertically integrated three-tier dairy cooperative structure in various states has played an important role in increasing the proportion of milk handled in the organised sector. With the liberalisation of economic policy in 1991 and the consequent delicensing of dairy industry, there has been a growing interest by the private sector, and presently, there are about 490 private dairy units with aggregate processing capacity of 460 lakh litres per day. Despite all these developments, the share of milk handled by the organised sector is only 17 per cent of production and the bulk of the surplus milk continues to be handled by the unorganised sector. Little appears to have been done to upgrade the technology followed by the unorganised sector in production of indigenous sweets and other dairy products. IDA has published four monographs on: Khoa, Channa, Whey and Paneer manufacture. This is an area which offers immense opportunities for development in dairy processing sector.

The dairy sector has not received its share of bank credit. The terms and conditions of availability of the credit through normal lending channels are not favourable to the dairy sector. IDA has been pleading to Government of India that the dairy sector, new and existing, both production as well as processing, should be made eligible for priority sector term loan and working capital without any restriction or ceiling of investment. All the banks are required to lend at least 18 per cent of their adjusted net bank credit for agriculture to the priority sector. It is learned that many banks do not comply with the norms and instead prefer to pay penalty by depositing the short fall equivalent with NABARD which pays them 6 per cent rate of interest.

The Indian Dairy sector appears to be at the crossroad and would not be able to meet its targets for the 11th Plan. There is, however, a silver lining that National Dairy Development Board has prepared a "National Dairy Plan" (NDP) which would address many of the issues mentioned in this note, except probably credit.