Why are milk prices getting so high in India?
2 min read 23 Mar 2023, 02:50 PM ISTMilk prices in India have been on the rise since 2022 due to a combination of many factors.
PremiumThe increase in milk prices over the last few months has been 14 to 15%, much more than the inflation. However, over the last three years, the increase has been less than 7%. Ten years ago, full cream milk prices were at ₹42, indicating a 52% increase.
Milk prices have been on the rise since 2022 due to a combination of factors such as farmers reducing their herd during the early months of the pandemic, a spike in prices of cattle feed and a surge in demand for milk and dairy products following the reopening of hotels and restaurants.
Organised dairy players in Delhi-NCR, including Mother Dairy and Amul, have hiked milk prices multiple times since last year. The price hikes were induced by higher fodder costs, robust demand, and some impact due to reports of lumpy skin.
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This increase is due to a demand-supply situation, as farmers suffered during COVID due to less demand. Input prices, such as feed costs, have increased by 20 to 25% in the last one year.
The prices of skimmed milk powder rose by 30% from a year ago in the December quarter. Wholesale milk prices across India rose by 10.2% in the first half of December. Dairy companies have also raised milk prices by 8-10% in the past few quarters due to a sustained rise in milk procurement costs.
In February 2023, Amul had its fifth hike since 2021 as it raised prices up to ₹3 per litre. The dairy cooperative attributed this to an increase in the overall cost of operations and milk production. Full cream milk in Delhi-NCR cost ₹58 per litre while toned milk cost ₹48 until February 2022. However, as of February 2023, the price of full cream milk has risen to ₹66 per litre and toned milk costs ₹54 per litre.
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The dairy industry has been struggling with cost inflation, which is largely due to intrinsic challenges such as changing weather patterns and issues that impacted cattle over the last year. This has led to an adverse impact on milk production.
Manish Bandlish, MD of Mother Dairy Fruit and Vegetables, earlier said that there was no respite from high milk prices until Diwali 2023 due to a sharp spike in the feed and raw material cost.
