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Divergent Dairy: comparing pathways in India and South Africa

This is the first of two blog posts looking at the different pathways of development of the dairy sector in India and South Africa. It draws on research supported by the project ‘Governing the Land-Water-Environment Nexus in Southern Africa’.


“True development is not the development of land, or of cows; it is the development of men and women.”
(Dr. Verghese Kurien, founding member of Amul Dairy cooperative, India)

Milking parlour

Image: Rotary dairy parlour on a community dairy farm in the Eastern Cape Province of South Africa. Credit: Brittany Bunce

As a significant agricultural commodity in both India and South Africa, what role can dairy play in spurring development?

In rural spaces across both these countries and indeed much of the developing world, people are struggling to sustain even meagre livelihoods. Land and agrarian reforms, rural development projects and other agricultural investments are, in many cases, failing to avert this crisis. Generating opportunities for accumulation, to allow for upward social mobility for previously disadvantaged groups, remains a distant pipe dream in many contexts.

A brief look at the efforts of these two BRICS nations to create livelihoods for people through dairy farming, illustrates strikingly different pathways of dairy development. Both countries face some common pressures: global capitalism, a liberalised international market for dairy, and the deregulation of the dairy sector, which occurred in India in 1991 and in South Africa in 1997. So what explains the radically different pathways taken by each country?


Salient features of the Indian and South African dairy sectors

Number of dairy farmers

In India 75 million people (5.72% of a total population of 1.3 billion) are engaged in dairy farming. 15.46 million of these dairy farmers are under the ambit of 165, 835 village level dairy cooperative societies.

South Africa, in contrast, has experienced a rapidly increasing trend of concentration of land and dairy herds under a few dairy farmers. In 1994 there were around 9,000 dairy farmers, but many producers have now been squeezed out: as of January 2016, only 1683 (0.003% of a total population of 55 million) remain.

Herd sizes

In India, over 80% of dairy animals are kept in herds of between 2 and 8 animals, and the average herd size is between 1 and 2. In contrast, South Africa has the fourth-largest herd sizes in the world, with the average at 399 dairy animals.

Dairy markets

In India, 30% of dairy is consumed in households and never reaches the market. 80% of the remaining marketable surplus is sold in the informal market, and 20% is sold among the cooperative and private sectors.

In South Africa, markets are almost entirely formalized. 96% of milk is sold in the formal market, only 2% is sold informally, and the remaining 2% is consumed on farms.

How dairy contributes to Gross Domestic Product (GDP)

 Dairy is the most important agricultural commodity in India, accounting for 24.8% of agricultural GDP. In South Africa, it is the fourth most important agricultural commodity, accounting for 7% of agricultural GDP.

Contribution to world production of milk

India is now the world’s largest milk producer contributing 18% to world milk production, while South Africa contributes 0.5%.

Cost of production

India produces very competitively at less than US$30 per 100 kg. This is in part due to the low-input, mixed farming system, which is characterized by cheap feed for dairy animals derived from crop residues. Indian dairy also benefits from low labour costs, a result of ‘unpaid’ household labour.

South Africa’s cost of production is slightly higher, but still competitive, at around US$35 per 100 kg. South Africa benefits from its irrigated and rain-fed pasture-based systems, large herd sizes and cheap wage labour.


What explains the differences?

India’s ‘White Revolution’

India’s extensive system of cooperative dairy farming, established between 1970 and 1996 under the Operation Flood programme (also known as the ‘White Revolution’), is widely hailed not only for immense productivity gains, but notably the benefits it derived to women, the landless and other vulnerable producers. The programme built up the necessary organisational and physical infrastructure for an extensive cooperative milk procurement and marketing system.

Operation Flood replicated an existing ‘Anand model’, which was controlled by milk producers with the help of professional managers. The Indian government today continues to support and extend its cooperative dairy sector through its National Dairy Development Board and various other dairy development programmes (which also aim to grow the bourgeoning private sector).

‘Capitalist’ dairy farming in South Africa

In South Africa, capitalist relations of production have become firmly established in dairy farming. The prevailing discourse around ‘viability’ in South Africa is that to compete in the formal market, one requires at least 300 cows – but ‘the bigger the better’. This competitive and unprotected environment has made it difficult for smaller producers to survive.

Joint ventures between ‘communities’ and ‘agribusiness’ aimed at creating livelihoods for previously disadvantaged communities are also premised on this large-scale model. The ‘communities’ who own the land are often organised into cooperatives but they are not cooperatives in the Indian sense. The cooperatives are merely legal entities that represent the landowners in the farm operating companies alongside agribusiness. In South Africa these cooperatives are not mechanisms for organising production, procurement and marketing, as is the case in India; instead, these functions are mostly controlled by the agribusiness partners.

Milk producers in South Africa are left to the whims of a small number of private processors, who are unwilling (and perhaps unable) to procure milk from a large number of small, dispersed rural producers in remote areas. Although processors are often squeezing dairy producers, processors themselves are under immense pressure from supermarkets. The ‘supermarketisation’ of the South African food system is intimately linked to the nature of its dairy sector. Supermarkets are often unresponsive to changes in prices of production felt at the farm level, which may periodically arise as a result of, for example, the recent drought, economic instability and other shocks and pressures.

What could India and South Africa learn from each other?

Is there something South Africa could learn from India’s experience in its attempt to generate livelihoods through dairy farming? Could it envisage a model other than large-scale capitalist farming, which is currently the only pathway envisioned for emerging dairy farmers?

On the other hand, with the growing presence of private dairies in India and the emergence of larger farms introducing new technologies, does South Africa’s pathway of capitalist dairy farming herald a not-so-distant future for Indian producers? Perhaps there are lessons to be learnt.

However, comparative work in the social sciences needs to be aware of the perils of local specificities and contingencies. Zooming out from the dairy sector, the wider agrarian economies of South Africa and India are structured in different ways – meaning that there may be limits to how models of dairy development could be replicated. South Africa’s agricultural sector is dominated by a pathway towards what Henry Bernstein astutely characterised as “natural, simply capitalism”; India’s by a pathway where, as Barbara Harriss-White puts it, “the common man is a petty producer”.


Brittany Bunce is a PhD Candidate at the Institute for Poverty, Land and Agrarian Studies (PLAAS) at the University of the Western Cape in South Africa. Her research is funded by the National Research Foundation of South Africa and through a small grants fund from the Governing the Land-Water-Environment Nexus in Southern Africa project run by the ESRC STEPS Centre.

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