India, known as the dairy powerhouse of the world, is currently facing a significant increase in milk prices, and this upward trend is projected to continue until November. The surge in prices, reaching around 14-to-15% in the last 15 months, can be attributed to various factors such as higher feed costs, increased demand for ice cream, and the impact of a contagious cattle disease. As the leading producer of milk, India accounts for a substantial portion of global milk production. However, this price hike poses economic challenges for Indian consumers, who are the largest consumers of milk globally.
The rise in milk prices is driven by several factors, including higher costs of cattle feed during the peak demand season. Escalating feed prices have discouraged farmers from providing adequate feed to their cattle, further exacerbating the situation. Additionally, the dairy sector has been grappling with the aftermath of the pandemic, with reduced demand and financial strains on smallholder farms. The outbreak of lumpy skin disease among the dairy herd population has also adversely affected milk production.
The coming months, marked by summer and religious holidays, are anticipated to witness increased demand for milk-based products like ice cream and sweets, further supporting the elevated prices. However, it is expected that prices may stabilize and even experience a modest decline after the Diwali festival in November. Consumers may seek alternatives and limit their consumption in response to the elevated prices. While relief is expected post-Diwali, a significant decline in milk prices is not anticipated.
