Most state governments increased milk prices by 1 to 2 ₹ per liter in June-July. The price increase seemed logical given last month’s severe heatwave conditions, which would have affected milk production. However, what is concerning is the fact that the world’s largest milk producing country is witnessing a slowdown in production year on year. From a growth rate of 5.81% (222.7 million tons per year) in FY2021, the lowest growth rate on record was recorded in FY2024 at 3.78% (239.3 million tons).
Genesis
India has been experiencing intermittent milk shortages since the COVID-19 pandemic. While you may have heard that personal milk consumption increased during the pandemic, institutional milk demand fell by nearly 40%, severely impacting the entire dairy industry. “Due to the drop in demand, most dairies ended up increasing their milk production. Surplus milk was converted into products (such as skimmed milk powder), which were then sold to market. When the price of the product is 20% to 25% As a result, most private dairy farms reduced the prices they paid to farmers. At a time when farmers’ wages were falling, they were paying more for feed because the cost of grain was rising. They have started reducing the cost of feed and have also reduced investment in new animals,” explains RS Sodhi, former Amul MD and current chairman of the Dairy Products Association of India.
Most dairies reported a 7-8% shortfall in milk production in FY22-23. Shortfalls in milk production were reported during the flush season (the winter season from October to March, when milk production typically increases). Milk shortages are also thought to be caused by a fatal lump-like skin disease that affects cows. Farmers could not add new cows or buffalo to their herds. Milk prices have soared by 15-18%. Although the situation has improved in the months since, milk sourcing remains uneven. Experts claim that there will be a shortage of both cow milk and buffalo milk for Diwali in 2024.
challenge
What’s plaguing India’s dairy industry? Climate change (extreme summers and winters) may be responsible for the drop in production, but dairy industry experts say the drop is due to I believe this is due to a systemic flaw. The needs of the times are process changes. “We were growing because our main stakeholders, the farmers, were producing more because they were getting a good price for their produce. Consumers were getting great products at affordable prices. The industry needs to bring back the efficiency of the old supply chain.” When Sodhi talks about supply chain efficiency, he is referring to the variation in prices that cooperatives and private dairies pay to farmers. Farmers are paid more when milk production is low, but many dairies pay less during flush seasons when milk production is plentiful. “There was a time when farmers received 85% of the milk price paid by consumers. Today, in many states farmers are paid only 55%, while in others they are paid 78-80%. “If farmers are not paid enough, how can they grow their herds and increase productivity?” Sodhi wonders.
Farmers are typically paid between £32 and £36 per liter of milk in good times. In fact, during the pandemic, procurement rates have come down to ₹18-19 per litre. Dairy expert Aditya Jha points out that these fluctuations in procurement prices are discouraging farmers.
“Livestock feed costs are rising (almost 25% to 30%) and the constantly fluctuating milk price makes life difficult for farmers. Unfortunately, the dairy industry in India is not seller-driven.The poorer the state, the more volatile the price is,” Jha explained. Emphasizes the need to establish a “It must be mandatory that dairy manufacturers must not pay less than £35 to £36 for a liter of milk at any time of the year,” he added.
So the problem is not so much as inflation or rising feed prices. It’s a flawed system. On average, cows in India produce 10 liters of milk per day, while the global average is 40 liters per day. Milk consumption is increasing by 5-6% per year, but production is decreasing by 3.78%. Rahul Kumar, chief operating officer (COO) of Parag Milk Foods, says cow productivity is extremely low. “We are not doing anything to ensure that milk is produced in abundance. There is no feed management or breeding of cows. The milk yield per cow is quite low.If you raise the price of milk, you pay less to the farmer, and if you pay less to the farmer, you won’t be able to keep the milk properly, which will reduce productivity. It causes fertility and calving problems and reduces milk yield. Most farmers don’t want to increase the number of cows as they don’t get much income from their existing herds,” Kumar explains.
the need of the moment
“We need to increase productivity per animal through a scientific approach. Production is so distributed that no one can monitor it. Farmers don’t know what to feed.” Kumar further added. Former Amr doctor agrees. “We need to increase productivity without increasing the cost of milk production so that consumers can consume more milk. If consumption increases, we will not be left with excess milk powder stocks, and farms will be able to It also affects pricing,” Sodhi explains. When milk production declines during the summer months, some dairies end up paying farmers a premium to procure milk, but many dairies use surplus milk procured during the winter to Converts to skim milk powder, and when milk is insufficient, converts to liquid milk. . This also leads to price fluctuations.
The Ministry of Livestock has launched a dairy infrastructure fund, but dairy industry experts believe the fund is not really helping farmers solve their problems. “This is a Rs 15,000-crore fund aimed at improvising dairy infrastructure, such as setting up processing plants.However, most cooperatives do not have enough profits to cover loans of Rs 50-60 billion. Building a factory will not help milk production at the village level. No investment has been made at the village level in the past seven to eight years,” he said. Expert Jha says.
Kumar from Parag province warned that milk prices could rise again in the coming months. “If milk consumption is increasing by 5-6% but production is capped at 3.78%, there will certainly be an impact on pricing.”
