- Monday, May 13, 2024
By: Shubham Ghosh
India might be the world’s biggest milk producer but the country might face a major challenge soon.
Buying the white liquid is getting costly in India and the price could soar to an all-time high, forcing it to step up imports to boost supplies to ease pressure on consumers.
According to a Reuters report, the situation is caused because of two hardships that the farmers are facing — a lethal lumpy skin disease from which their cows are suffering and a slump in the stock of cattle-ready market post the Covid-19 pandemic which slowed their breeding.
Milk prices have already gone up by more than 15 per cent to Rs 56 rupees a litre over the past year in India — the fastest rise in a decade — which is also making it difficult for the government to bring retail inflation below the central bank’s target.
Also, with elections lined up this year and the general election next year, soaring prices of milk, a basic food item in the country, could snowball into a political issue.
“Any upside risk coming from higher milk prices is going to pose an additional challenge,” Upasna Bhardwaj, chief economist at India’s Kotak Mahindra Bank, was quoted as saying by Reuters.
“Since milk has a weightage of 6.6% in the consumer price index, any spike could have a reasonable implication on headline inflation,” she added.
A 39 per cent jump in exports of dairy products last year, followed by lower milk supplies, has already slashed inventories of butter and skimmed milk powder (SMP) in the South Asian nation, even as rising incomes boost demand for protein-rich dairy products, a key source of key nutrients such as calcium, vitamins and protein for a large vegetarian population.
According to industry officials, demand for dairy products may rise seven per cent this year, the Reuters report added.
But the production of milk is likely to have risen just one per cent in the fiscal year till March 2023, which is well below the average annual rate of 5.6 per cent in the past decade, a senior official of the government-backed National Dairy Development Board told the news outlet on the condition of anonymity.