With the early onset of summer fuelling demand for milk and milk products, India’s dairy industry anticipates a robust growth in revenue in the coming months, also the prices of which have risen amid tight supplies.
Dr. R.S. Sodhi, president of the Indian Dairy Association, said, “We expect the volume of milk and milk products to increase by 12-15% during the summer season, while the prices can increase by 10-12%. It means, we can see a value growth of 25-27%”.
According to Sodhi, demand for dairy products has already surpassed the pre-Covid levels by 10-15%. Aiding this is the increasing use of products like buttermilk as a beverage, he said. While demand has risen, the supply of milk in the country has been decreasing, in part due to the prevalence of lumpy skin disease, an increase in cattle feed cost, and higher export of ghee and butter in the previous year.
During this period, several dairy firms have increased milk prices by Rs. 2 per litre four to five times. It is possible that both the procurement as well as consumer prices of milk may go up by Rs. 4-5 per litre, or 10%-12%, until June, as demand is strong while supplies are tight.
However, there is pressure on the bottom line, and the dairy companies may not be able to pass on the entire rise in the price of raw milk to consumers and absorb a part of it. They are now banking on an increase in demand for value-added dairy products.
Currently, Indian dairy products are more expensive than in the rest of the world. The price of almost all dairy products is more expensive by Rs 40-50 than the ruling international prices. However, the price rise could also start impacting demand. “High increase in consumer prices will not be good for the long-term demand,” said Sodhi