Following the conclusion of India’s 18th Lok Sabha elections, the country is witnessing yet another surge in milk prices. Leading milk cooperatives, Amul and Mother Dairy, have announced a Rs. 2 per litre increase, effective June 3. Consequently, the price of full-cream milk from both brands will rise from Rs. 66 to Rs. 68 per litre.
Mother Dairy, headquartered in Noida, cited rising production costs over the past year as the primary reason for the price hike. “The increase in consumer prices is mainly to compensate the producers for increased production costs, which have been on the rise for over a year,” the company stated.
Similarly, the Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets products under the Amul brand, confirmed a similar price increase of Rs. 2 per litre.
Over the past two years, both Amul and Mother Dairy have frequently raised their milk prices, attributing the hikes to increased procurement costs from farmers. Between March and December 2022 alone, Mother Dairy increased prices by Rs. 10 per litre. Amul also raised its prices three times in 2022, with the last increase of Rs. 2 occurring in October. Mother Dairy’s last price hike of Rs. 2 took place in December.
Impact of Lumpy Skin Disease and Inflation
India’s Animal Husbandry and Dairy Secretary, Rajesh Kumar Singh, pointed out that milk production remained stagnant in fiscal year 2023 due to the lumpy skin disease affecting cattle. This stagnation was a significant factor behind the multiple price hikes seen last year.
Despite a marginal easing in retail inflation to an 11-month low of 4.83% in April, compared to 4.85% in March, milk prices continue to rise. Milk constitutes about 6.61% of the Consumer Price Index (CPI). The Reserve Bank of India’s annual report highlighted that increased price in the food and beverages (F&B) category, which includes milk, were major contributors to India’s inflation in FY24, with F&B’s contribution to headline inflation rising to 60.3% from 46% the previous year.
Heat wave and milk production
The ongoing heat wave across several parts of India is expected to further impact milk production. “Despite higher milk procurement costs in recent months, consumer prices were maintained, but the unprecedented heat stress across the country is expected to further impact milk production,” warned Mother Dairy.
With temperatures exceeding 45 degrees Celsius in some regions, the heatwave poses a significant threat to dairy production. Dairy farming is a crucial sector in India, contributing 5% to the national economy and providing direct employment to over 8 crore farmers. India leads globally in milk production, accounting for 25% of the world’s total milk output.
As the country navigates these challenges, the repeated hikes in milk prices reflect the ongoing struggle to balance production costs, environmental factors, and consumer prices.