Women arrive at a milk collection center outside Jaipur, India
As of March 2022, a full-cream pack of Amul milk costs ₹60/litre. A one liter pouch now costs ₹66. Since 2021, milk prices in India have fallen. Prices have been hiked across brands and the recent hike in February 2023 was Amul’s fifth hike since 2021.
In April 2023, the average price for a liter of milk in India was ₹57, which was about 12% higher than ₹51 in April 2022. The average price of milk was the highest in Lucknow and Guwahati in ₹66/litre and ₹65 /litre, respectively. Southern cities like Bengaluru and Chennai have relatively lower milk prices.
Last year, Ernakulam saw the highest increase in milk prices at 19%, followed by Mumbai, Lucknow and Jaipur which increased by over 10% ( chart 1).
Chart 1 | The chart shows the average retail price for a liter of milk in the month of April over the past six years.
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The Central Bank’s monetary policy committee, which met in the first week of April, said in a statement that high milk inflation was one of the factors driving retail inflation. While retail inflation slowed to 5.66% in March, milk inflation continued to rise. In the same month, milk inflation stood at 9.24%, close to levels last seen in February 2015 ( chart 2).
At the same time, there are concerns over the country’s stagnant milk production in FY23. On April 5, Secretary for Animal Husbandry and Dairying Rajesh Kumar Singh said that the country is facing stagnation and that the government will consider all options, including importing butter and ghee if the situation is remain unchanged.
However, days later, Union Minister for Animal Husbandry and Dairying Parshottam Rupala contradicted him and overruled the freeze in milk production and the government’s decision to consider importing butter and ghee.
In FY22, India produced 221 million tonnes of milk, about 5.3% higher than in FY21. While there was an increase in the absolute amount of milk produced, yoy growth slowed down ( chart 3). It rose to 6.6% in FY18.
According to Mr. Singh, the country’s milk production in FY23 will be stagnant or grow at 1%-2%. Many factors have resulted in the cessation of milk production in the country. Initially, dairy farmers faced a drop in demand due to COVID-19. As demand recovered, an outbreak of lumpy skin disease hit cows and buffaloes, resulting in lower milk yields. High fodder prices also increase production costs.
According to a reply in the Lok Sabha, 32.8 lakh cattle were affected by the disease and 1.86 lakh died of the disease. Rajasthan, the second largest milk producer, has seen the highest number of cases and cow deaths. Close to 50% or 15 lakh cases and 76,000 cattle deaths were reported in Rajasthan, as shown in Map 4. While fodder inflation based on the wholesale price index dropped to 17.13% in March, the figure has remained in double digits for 14 months now, as shown in Chart 5.
Map 4 | Map shows cases and deaths due to skin lump disease
Finally, when it comes to the statements of Mr. Singh about the possibility of importing dairy products, it should be noted that India is the largest producer of milk in the world and accounts for 24% of the milk produced in the world. As shown in Chart 6, India last imported large quantities of milk in FY12. Since then, milk imports have fallen. While India continues to import whey, butter, cheese and curd in relatively higher quantities, the share of milk in India’s import basket is significantly lower.
Source: National Dairy Development Board, Department of Consumer Affairs, Lok Sabha, Ministry of Statistics and Program Implementation and Commerce Ministry
Also Read: Lumpy Skin Disease, fodder cost hike: Center foresees ‘stagnation’ in milk production