India is facing rising milk prices which are not expected to ease until November.
Matthew Lloyd | Bloomberg | Getty Images
India, world dairy powerhouseFacing rising milk prices, it is not expected to ease until November.
“Over the past 15 months, [an] The growth of milk and dairy products has been phenomenal, about 14% to 15%,” said RS Sodhi, former managing director of Gujarat Cooperative Milk Marketing Foundation, India’s largest dairy company.
The spike in prices is due to factors including rising feed costs, increased demand for ice cream and infectious cattle diseases.
India, the world’s largest milk produceraccounting for 22% of global milk production, followed by the United States, China, Pakistan and Brazil.
Milk prices in India rose from Rs 46 to Rs 53 per liter (between $0.55 and $0.64) from November 2021 to early May 2021, according to data provided by food commodity price database Mintec.
This is an economic squeeze on Indians Who is the world’s largest milk consumer.
“In India, every household buys milk every day. The per capita consumption is about 440 grams per person per day. Every Indian starts [the day] Add milk,” Sodhi said.
“In the morning people drink milk, from the bottle, or tea and coffee… a lot of Indian desserts are mostly made with milk only,” he added. Other milk-based local delicacies include paneer, ghee and yogurt – all of which are staples of the Indian diet.
higher feed costs
Higher prices for cattle feed coincided with peak demand season, sending milk prices soaring.
“Rising feed prices are preventing farmers from getting enough feed for their cattle,” said Matthew Biggin, commodities analyst at BMI, the research arm of Fitch Solutions.
India is facing rising milk prices which are not expected to ease until November.
Hindustan Times | Getty Images
Cattle feed usually consists of Corn, wheat, rice and oats, among other grains, according to the National Dairy Development Council of India. Many of these components saw big spikes in the middle of last year and have remained elevated.Some Part of the price increase is due to Russia’s invasion of Ukrainewhich disrupted supply chains and drove up prices.
In addition to rising feed costs, cattle farmers have to contend with higher transportation, storage and energy prices, Bigin said.
plague and pandemic
Even before the increase in input costs, the dairy industry was already reeling from the impact of the pandemic.
“The industry, already under pressure, is still feeling the impact of the pandemic, which has hit demand, putting financial pressure on smallholder farms that make up a significant portion of India’s dairy sector and causing a slowdown in farming,” he said.
As the country enters summer, demand for products such as ice cream increases, followed by subsequent religious festivals where milk confectionery becomes a staple, [alongside] Limited domestic supply will continue to support prices throughout 2023.
Matthew Biggin
BMI Commodity Analyst
In addition, the country’s millions of dairy herds are affected by lumpy skin diseasecausing blisters and reduced milk production in the herd.
Andrew Woods, deputy editor at Mintec, said: “It is estimated that more than 300,000 cattle died or wasted last year from nodular skin disease, negatively impacting milk production.”
Will prices drop after November?
BMI’s Biggin said India’s milk production “is likely to remain under pressure” and increase the country’s import dependence, especially as the industry enters the peak demand season.
“As the country enters summer, demand for products such as ice cream rises, and then the following religious festivals, milk confectionery becomes a staple, [alongside] Limited domestic supply will continue to support prices throughout 2023,” he predicted.
Indian Sweets Mithai at Chandu Sweets, Teenbatti, Walkeshwar.
Anshuman Porekar | Hindustan Times | Getty Images
Also known as the Festival of Lights, Diwali is one of India’s largest religious celebrations and is celebrated by Hindus, Jains and Sikhs around the world in November. The centerpiece of the celebration is Indian sweet rice tai, made mostly of milk, flour, ghee and sugar.
“That said, as prices continue to rise, consumers will be incentivized to substitute for alternative products and limit their consumption, thereby helping to dampen larger increases,” Biggin said.
Likewise, Sodhi expects prices to drop after Diwali in November this year. Milk prices may drop by Rs 2-3 per liter to around Rs 50 per liter, he said.
“Prices will stabilize after Diwali – they may come down, but I don’t expect a big drop.”