The issue of minimum support for livestock farmers in India

In Indian crop production, the government announces guaranteed prices for 22-23 crops, yet no similar system is provided for livestock products (milk, meat, and eggs). At the same time, livestock farming is of great economic importance: in 2023–24, it accounted for about 31 percent of agricultural Gross Value Added (GVA). According to the Department of Animal Husbandry and Dairying, more than 60 percent of rural households depend on livestock as a source of livelihood.

The main problem for such producers arises when transitioning from a successful production year to a period of low prices. A surplus of produce can push purchase prices below production costs, leaving smallholders without protection against price shocks. Under extreme conditions, farms are forced to sell productive or reproductive livestock to cover expenses and then take out loans to replenish the herd. Although the dairy and poultry sectors have grown through cooperatives and private competition, market growth and producer protection remain different issues.

Directly copying traditional grain procurement schemes into livestock farming faces difficulties due to the characteristics of raw milk, which requires rapid collection, cooling, as well as storage and processing capacities. As a suitable solution, it is proposed to use Price Deficiency Payments, where eligible farmers are compensated for the difference if the market value drops below a certain threshold level.

To implement this mechanism, India already has a well-developed system of dairy cooperatives. The National Dairy Development Board (NDDB) and state cooperative federations possess the necessary institutional structure capable of providing support during periods of market volatility.

Support for livestock farming addresses issues of equity, as this sector is especially important for low-income and landless farmers who cannot grow crops but are able to keep one or two dairy cows. As initial policy steps, it is proposed to test targeted income protection: introduce an equivalent of the Commission for Agricultural Costs and Prices (CACP) for livestock, conduct experiments with milk deficiency payments in surplus regions, and recognize price volatility in livestock products as a policy omission in current policy.