Khejri Bujurg (Rajasthan): Buying milk is getting expensive in India and the price could soon hit an all-time high, forcing the world’s biggest producer to step up imports to boost supplies and ease cost of living pressures. And as per information available from various sources, the rise in milk prices is here to stay.
And there are various reasons for the rise in milk prices. Farmers are wrestling with a rare double whammy: a lethal condition called lumpy skin disease in their cows and a drawdown in market-ready cattle stock after the coronavirus pandemic slowed breeding.
Milk prices have already jumped more than 15% to Rs 56 a litre over the past year in many places of India. It is the fastest rise in a decade – making it difficult for the government to bring retail inflation below the central bank’s target.
The soaring prices of milk and other basic goods are expected to become a political issue as India heads towards elections the next year. “Any upside risk coming from higher milk prices is going to pose an additional challenge,” said Upasna Bhardwaj, chief economist at one of India’s premier banking institutions. “Since milk has a weightage of 6.6% in the consumer price index, any spike could have a reasonable implication on headline inflation,” she said.
A 39% jump in exports of dairy products in 2022, followed by lower milk supplies, has already cut inventories of butter and skimmed milk powder (SMP) in India, even as rising incomes lift demand for protein-rich dairy products, a key source of calcium, vitamins and protein for a large vegetarian population.
Industry officials estimate demand for dairy products to rise seven per cent this year. But milk production is likely to have risen just one per cent in the fiscal year to March 2023, well below the average annual rate of 5.6% in the past decade, said a senior official of the government-backed National Dairy Development Board (NDDB). The official declined to be named as he was not authorised to speak to the media.
Ramavatar Sharma, a 57-year-old farmer from Khejri Bujurg village in Rajasthan, a major milk-producing state, is keen to cash in on higher milk prices but is struggling to find affordable cattle. “Cattle prices have doubled as there are fewer cows in the market,” said Sharma, who has been raising cattle since childhood.
That contrasts with recent years when prices dived in the wake of the coronavirus pandemic. While cows were cheaper, coronavirus lockdowns weighed on milk consumption.
Those losses prevented farmers from increasing herds, which restricted milk stock even during the so-called flush season runs from October to February, when dairies build supply for the lean season.
Farmers and dairy managers say they now have to wait until the next flush season in October to ramp up market-ready cattle stocks and dairy products inventory. “There is no way we can raise milk production in 2023,” said Santosh Sharma, general manager a dairy farm.
Those pressures mean India will rely more on imported SMP, farmers and dairy officials said, further tightening global supplies and setting off a rally in international prices. India’s SMP imports are likely to hit an all-time high in the fiscal year that started April, surpassing record purchases in 2011-12, dairy industry officials said.
Lumpy skin disease, which causes blisters and reduces milk production in cows, has infected millions of cattle and killed more than 1,84,000 in India, including around 76,000 in Rajasthan, according to government data.
Farmers in Rajasthan who managed to protect their cattle through vaccinations now complain about lower incomes as the disease has left them with low-yielding cattle. “Even the cows that survived after spending a lot of money on medicines and vaccination are now producing less milk than earlier,” said a farmer.