Nestlé, GlaxoSmithKline and Danone support the drought-stricken farmers their supply chains rely on. But is it enough?

The children in the villages around the Indian city of Nabha in Punjab state all know what Horlicks is, although few have tasted it. The malted milk drink, manufactured by GlaxoSmithKline (GSK), is produced at the Horlicks plant in Nabha, which sources from around 1,500 dairy farmers in the surrounding area.

Punjab state, India Punjab state, India

But after several years of severe drought in a region already heavily reliant on groundwater, water reserves are in decline and fodder for cows is becoming more expensive. This is making dairy production increasingly difficult in one of the highest milk-producing states in the country – itself the world’s largest national producer of dairy.

GSK is not the only big business facing drought-related problems in Punjab. Danone buys 50,000 – 80,000 litres of milk from 5,000 farmers in 100 villages in the state, and Nestlé sources more than 300m litres of milk from 100,000 farmers in three Indian states, including Punjab.

To ensure a steady supply of milk, these companies have set up long-term sustainability projects in Punjab’s villages. But, as water shortages worsen, can they protect dairy farmers from the potentially devastating effects of continuous droughts?

India’s ‘white revolution’ under threat

In 2012, Punjab’s chief minister Parkash Singh Badal called for a “white revolution”, encouraging the state’s farmers to take up dairy since, he said, most were too reliant on wheat-paddy rotation crops with slim profit margins.

This revolution requires water. One cow consumes approximately 150 litres of drinking water a day. Water is also needed to produce fodder for cows.

Fertile lands and good infrastructure in the state such as dams and irrigation systems have helped stave off the kind of acute water shortages witnessed in other parts of India over the last few decades. But the severity of the latest El Niño weather cycle has led to unprecedented temperatures, causing rivers, lakes and dams to dry up in many parts of northern India. In Punjab, low rainfall has decreased crop yields and put a huge strain on the state’s diminishing groundwater resources.

“In the winter, cows can graze in the fields. But in the summer when there’s no rain we have to buy fodder,” says Harpreet Singh, a dairy farmer from the village of Issi who supplies milk to Horlicks. “It’s a big problem for us ... The cost of fodder keeps increasing but the price of milk stays fixed, so the entire business is in decline.”

Facebook Twitter Pinterest GSK dairy farmer in Punjab. Photograph: GSK Consumer Healthcare

Harpreet Singh makes approximately 50,000 rupees (£570) profit a month in the winter, but says his losses in the summer leave him without savings.

Horlicks’ farmers aren’t the only ones facing this crisis. On its website, Nestlé says: “Largely due to local over-exploitation by agriculture, industry and domestic use, the local water table is dropping by up to a metre a year and could affect the supply of milk in our Moga milk district [in Punjab].”

Industry support

To help farmers like Harpreet Singh cut down costs, GSK has set up education camps where farmers learn how to make their own silage from surplus grass, which can be used as cow feed in the dry season. Even though he’s feeling the pressure, Harpreet Singh says this is helping: “It’s a lot of effort, but in the summer it means we spend much less on buying fodder.”

GSK also produces a magazine offering dairy farmers advice on topics such as water reuse. The initiatives are an effort to keep the dairy business booming: “Our hope is that, through working together, we can help local farmers remain in business, assuring our supply of milk for Horlicks,” says a company spokesperson.

Facebook Twitter Pinterest GSK dairy farmers with their cows in Punjab. Photograph: GSK Consumer Healthcare

Danone, which makes Activia yoghurt, started sourcing milk from Punjab in 2012. Last year, the company set up Punjab 2020, an initiative which educates farmers in ways to improve soil quality by reducing fertiliser use so it retains more water, and maximise milk production in the context of drought. About 7,000 farmers have already gone through the company’s Academilk training programme and it has invested €570,000 (£508,000) to expand the programmes to 60 more villages.

As part of Danone’s programme, the company provides communal chilling facilities, enabling those with even one or two cows to earn an income without having to invest in expensive coolers. “It is a win-win situation as it ensures a sustainable livelihood for the farmer while securing the milk supplies for Danone,” said a company spokesperson.

The groundwater dilemma

Vibha Dhawan, senior director at the Energy Resources Institute, says that while companies are helping provide short-term solutions to prevent the dairy industry’s collapse, the urgent problem of groundwater over-extraction still needs to be addressed.

Jaskaran Singh, who supplies milk to Nestlé, says that, without rainfall, farmers in his village rely on groundwater to irrigate their fields and maintain their cows. Groundwater has to be extracted using a diesel-fuelled pump. As water levels drop and farmers have to dig deeper, fuel costs increase. “We’re already drilling 10, 20, 30 feet into the ground,” he explains. “Now the water is very low. In 30 years, we may have to go much deeper, say 100 feet. That’s expensive.”

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Cost isn’t the only problem for those relying on groundwater. “As groundwater levels go down,” explains Dhawan, “the risk of arsenic or lead poisoning in the water increases because heavy metals settle lower down. If farmers keep extracting as they have ... the quality of the water, which ultimately goes into our milk, will also reduce.”

While the companies have not yet found solutions to this, Nestlé has started funding research with the International Water Management Institute to understand the causes of groundwater depletion in the area surrounding its factory, in the Moga district. The research – which the company runs alongside wider farmer support programmes, such as cattle feeding, breeding, and veterinary support – includes a six-month pilot project investigating the company’s water footprint from milk.

Dhawan believes the Punjab government is partly to blame for the groundwater crisis as it subsidises electricity for water extraction. Big companies and the government need to start investing in water-wise technology, she says, such as sub-soil irrigation, where pipes supply the soil at root level so less water is lost through evaporation, or precision agriculture methods, where farms are monitored by computer so exact amounts of inputs can be applied.

“These are already technologies that exist, but they need to be made available to farmers,” says Dhawan.