Several factors such as high cost of feed, inclement weather, disease outbreaks and demand-supply mismatch are prompting the world’s largest dairy producer to consider importing India.
According to the Department of Animal Husbandry and Dairying, India’s milk production increased by 6.3% to 221 million tonnes in 2021-22, but the output is estimated to remain stable in 2022-23.
Earlier this week, Animal Husbandry Secretary Rajesh Kumar Singh said India would take a decision on importing dairy products like butter and ghee after assessing the supply situation. Retail milk prices are on the upswing, having increased by about 15% in the last one year.
High prices of milk and cereals are one of the reasons why India’s retail food inflation has remained persistently high. In February, retail dairy prices were up 9.7% year-on-year, while cereal prices were up 16.7%.
In a way, higher grain prices also contributed to higher dairy prices because grains like corn and wheat are used to make animal feed.
But high milk prices are the result of both immediate and long-term factors. After the pandemic hit, dairy producers had to deal with falling demand as social gatherings were postponed and consumption demand from hotels and restaurants dropped. Farmers responded by reducing herd sizes. So when demand improved after the easing of lockdown restrictions, supply fell short.
The delicate industry suffered another blow in 2022 due to an outbreak of lumpy skin disease. Official estimates put the death toll at 189,000.
Read also: How come India, the world’s largest producer of milk, had to import it?
Almost simultaneously, Russia invaded Ukraine, causing grain and oilseed prices to skyrocket. This increased animal feed prices, which account for more than 70% of dairy production costs. The dairy industry, led by the cooperative sector, was able to pass on higher production costs to consumers because milk and milk products are essential commodities.
Result? While production is projected to remain stable in 2022-23, demand increased by 7-8%, pushing up retail prices.
Another factor, less frequently cited, is the effect of rising temperatures on animal productivity. Last year, summer temperatures broke old records and this year is expected to be no different. Dairy cattle usually give less milk in summer and more in winter. However, there is almost no discussion on how to deal with the impact of rising temperature on milk yield.
Another long-term factor is low productivity. India is the largest producer of milk in the world, but cattle milk production is 60% that of China and less than a fifth of that of the United States.
Farmers in India are also replacing cows with buffaloes as it is not allowed to kill cows due to legal restrictions and religious beliefs. This means that farmers lose out on the life value of a spent animal, which they might otherwise have interned. from 10,000 15,000 per animal. That money is usually reinvested in replenishing the herds.
Livestock trade and transportation – for both dairy and meat – is also a possible factor in why farmers are losing interest in animal husbandry.
As a result of these short-term and long-term factors, it is no surprise that Indian consumers have to depend on imports of skimmed milk powder from time to time to deal with the demand-supply imbalance. Poor families would have to give up milk in their tea and cut down on their daily consumption.
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