Milk prices unlikely to spike again, says NDDB chief

Milk prices unlikely to spike again, says NDDB chief

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According to Meenesh Shah, Chairman and CEO of National Dairy Development Board (NDDB).

“The end of the harvest season, when milk production increases, has been delayed by rains and cooler weather in recent months, helping dairy cooperatives build stocks for the lean summer months when production would drop,” Shah told FE.

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He ruled out any possibility of importing dairy products such as ghee at present to meet domestic demand for milk and products.

“There was a 7.5% increase in cooperative milk purchases in April 2023 compared to a month ago,” Shah said.

Milk retail price inflation was reported at 8.78% in April 2023. Milk inflation has remained elevated at over 6% since August 2022.

WPI milk inflation also remained high at 7.1% in April 2023.

Although India has been the largest producer of milk since 1998, the commodity has been the second most important factor after cereals such as rice and wheat in the rise in retail inflation over the past exercise.

Milk has the second highest weight in the consumer price index food and beverage basket at 6.61%, one notch lower than cereals and commodities which have a weight of 9.67%.

Organized players including Mother Dairy and Amul have raised milk prices several times over the past year citing rising feed costs, robust demand and some impact from reports of lumpy skin diseases.

Industry sources said the cost of animal feed, which accounts for more than 65% of the cost of milk production, has risen from Rs 8/kg a year ago to Rs 20/kg.

“We don’t expect any reduction in milk prices until November,” RS Sodhi, chairman of the Indian Dairy Association, told FE last month. Stability in milk prices is only expected by the winter months, he said earlier.

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Last month, the Ministry of Finance attributed high milk inflation to a mismatch of supply and demand and said it could be one of the factors other than volatility in international crude oil prices and that limited milk supplies would influence the country’s inflation path.

The combination of high feed and raw material costs, supply issues, lumpy skin disease (LSD) and increased dairy exports have impacted milk production and costs , which has led organized actors, including Mother Dairy and Amul, to raise milk prices several times in the past year.

“Milk production has been affected by a nodular skin disease that infected millions of cattle at the end of 2022,” the ministry said in the monthly economic review, adding that the vaccination campaign against the disease is expected to curb the spread and immunize the cattle against the skin. disease. “While this would increase milk supply, a general decline in inflation will moderate feed and transport costs, thereby reducing milk inflation,” he said.

For the first time in decades, the country’s milk production is likely to have stagnated in 2022-23 due to LSD in cattle in several states and the lagged effect of Covid-19 in the form of a delay of animal growth, a senior official with the Department of Animal Husbandry and Dairy Industry said last month. Milk production was estimated at 221 million tonnes in 2021-22.

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