A `3,900 crore funding dispute between the NDDB and the Madhya Pradesh government threatens to derail a major dairy project and the future of the food supply chain.
Govt join hands with NDDB to bring dairy revolution in state

A 3,900 Crore dispute over funding puts a major milk production project in Madhya Pradesh at risk.

The agribusiness community is watching a high-stakes standoff unfold in Madhya Pradesh, where the National Dairy Development Board (NDDB) is in a dispute with the state’s Dairy Federation. The article from Free Press Journal reports that a key hurdle in their Memorandum of Understanding (MoU) is the NDDB‘s demand for a massive `3,900 crore in grants from the government. The state government is not in a position to provide this large sum, creating a deadlock that could derail a major initiative in the Indian dairy industry.

The ambitious project was initially designed to double milk collection from 12 lakh litres to 24 lakh litres. The article notes that the government had planned to invest `1,500 crore over five years to achieve this. However, after Union Home Minister Amit Shah advised the state to increase milk collection, the target was raised significantly to 50 lakh litres, forcing a recalculation of the required funding, a key piece of data journalism for the dairy economics sector.

The increased target led to a new demand from the NDDB. The article explains that the organization initially requested a revised rate of 5,400 crore**, which was later negotiated down to **4,500 crore. The NDDB is now demanding a significant portion of this amount—`3,900 crore—to be provided as grants rather than as a loan, as was originally planned. This shift from a repayable loan to a non-repayable grant is a major point of contention and is holding up the entire project.

The NDDB has issued a stark warning regarding the potential consequences of this deadlock. The article reports that the organization has stated that if the government does not provide the grant, not all Dugdh Sanghs (dairy cooperatives) will become profitable. This adds pressure to the government to find a solution, especially since the NDDB‘s refusal to disclose information about the expected profits of each cooperative is preventing the government from moving forward with the file for the increased funding.

In conclusion, this funding dispute is a powerful case study in the complexities of large-scale agribusiness projects. It highlights the challenges that arise when a national development board and a state government have conflicting financial expectations. For the international dairy industry, this serves as a crucial example of how disagreements over funding, combined with a lack of transparency, can stall even the most well-intentioned plans for growth and development within the food supply chain.

Source: Free Press Journal, “Madhya Pradesh: National Dairy Development Board demands `3,900 crore from govt in form of grants

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