Onion prices may be eye-watering, but India's next food crisis could be about milk prices have risen 24% in the past year, according to food inflation data for the week ending January 1. For the month ending December last, milk prices rose 18%.
Even periodic hikes in retail prices — most recently on December 19 — have not been able to offset producers' losses. Another round of price hike is looming, industry sources said.
"Over the past two years, prices of all major inputs for milk production have increased. However, increase in MRP has not been adequate to cover the increases and bridge the gap," a spokesperson for Mother Dairy Fruit & Vegetable Pvt Ltd said.
Dairy products are poised to quietly milk household budgets as domestic demand in the world's largest milk producer now far outstrips supply. Dairy farming in India in fact is a milky mess: cattle feed is shrinking, producer costs are rising and productivity is almost stagnant.
Hit by falling domestic supply of fresh milk, producers are increasingly importing milk constituents, such as skimmed milk. Dairy imports rose by a whopping 476% till October last year, according to the latest import data of 15 sensitive items tracked by the government.
Milch cows need to be fed well, usually on oilmeals — the solid residue left after oily seeds are pressed of their oil.
Fodder, however, is becoming costly and scarce. The Economic Survey 2009-10 put national green fodder shortage at 34%. On the other hand, fodder exports continue on the back of lucrative deals. "Fodder exports need to be curbed," animal husbandry expert Parul Sinha said. Cattle feed costs make up 70% of milk production cost.
The bigger issue, however, is a sluggish diary growth rate of 4%. Gant milk federations that once powered India's "white revolution" are aging and inefficient, Sinha says. Second-generation entrepreneurship has failed to take over from them.