Milk Prices Surge in India: Unpacking the Repeated Hikes
Shortly after the conclusion of the 18th Lok Sabha elections, India’s milk prices surged once again. Major dairy cooperatives, Amul and Mother Dairy, announced a price hike of Rs 2 per litre, effective June 3.
Mother Dairy, headquartered in Noida, explained the increase as a response to rising production costs. “The increase in consumer price is mainly to compensate the producers for increased production costs, which have been on the rise for over one year,” the company stated.
Similarly, the Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets products under the Amul brand, also raised prices by Rs 2 per litre.
Persistent price increases
Comparing current prices to those of 2023, Mother Dairy’s full cream and Amul’s full cream milk (Gold) now cost Rs 68 per liter, up from Rs 66 a year ago. Over the past two years, Amul and Mother Dairy have repeatedly increased prices, citing higher procurement costs from farmers. In 2022 alone, Mother Dairy raised prices by Rs 10 per liter between March and December.
Amul implemented three price hikes in 2022, with the last in October, while Mother Dairy’s final increase of the year came in December. These hikes were largely due to stagnant milk production, exacerbated by lumpy skin disease in cattle, according to Rajesh Kumar Singh, India’s Animal Husbandry and Dairy Secretary.
Inflation and Economic Impact
India’s retail inflation dipped slightly to 4.83% in April, an 11-month low, down from 4.85% in March. Despite this, vegetable inflation remained high at 27.80% year-on-year. Milk, a significant component of the Consumer Price Index (CPI), accounts for nearly 6.61% of it. The Reserve Bank of India’s annual report highlighted that increased prices in the food and beverage category were a major driver of inflation in FY2024.
Heatwave Threatens Further Disruptions
Heatwave conditions across several regions of India are 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.
Temperatures have soared past 45 degrees Celsius in parts of the east, north, and south, exacerbating the stress on dairy production.
The Importance of Dairy in India
Dairy remains the largest agricultural commodity in India, contributing 5% to the national economy and providing direct employment to over 8 crore farmers. India holds a significant position in the global dairy sector, leading in milk production and contributing 25% to the world’s total output.
