Improving the resilience of the agricultural sector to external shocks

Year of publication2023

AuthorFAO

PublisherFAO

AbstractThis study provides a quantitative assessment of the Indian dairy sector and aims to determine the underlying factors of the observed price movements. We analyse producer prices over time, differentiated by milk-producing ‘zones,’ and identify the underlying factors that might explain the observed discontinuities or interruptions in producer prices. The findings show no statistically significant change in wholesale milk prices immediately after the sudden lockdown was imposed in the five milk zones. However, retail prices increased in the East zone, while dairy product sales plummeted in all milk production zones. The study found disruption in milk marketing channels, logistics and transportation in the East milk zone, where the cooperative institutional structure is less widespread and active than in other zones. The East zone also has a thinly spread dairy infrastructure such as cold chains, exposing producers to market vagaries. The analysis confirms that the decision of the dairy cooperatives to continue to pay milk producers even when sales plummeted played a critical role in strengthening the resilience of India’s dairy sector during the COVID-19 pandemic. The findings show that building strong institutional infrastructure such as dairy cooperatives is necessary but insufficient for sustaining market resilience. Dairy processors need resources for assuming higher risks while relaxing certain regulations such as labour movements and enhancing access to essential inputs for maintaining production. It is crucial to provide government assistance for those who fail to use market channels for reasons beyond their control.

 

ThemeResponsible Global Value Chains or Responsible Agricultural Supply Chains

Product typeBook (stand-alone)

SeriesFAO Commodity and Trade Policy Research Working Paper

RegionAsia and the Pacific

ISBN978-92-5-138264-6

Areas of workEmerging Trends, Challenges and Opportunities

KeywordsCOVID-19; impact assessment; dairy industry ;supply chains; dairy cooperatives; veterinary services; agricultural sector; resilience; India