India: Milk Markets Stare at a Dry Patch as Summers Begin Earlier Than Usual
Source: dairynews.today
As summer arrives sooner than expected, the Indian milk industry braces for a challenging period with potential shortages in skimmed milk powder (SMP) and rising milk prices.
Summer in India is traditionally a period of reduced liquid milk supplies, heightened reliance on skimmed milk powder (SMP) stocks, and complex market dynamics. This year's earlier-than-anticipated summer onset portends rough times ahead for the dairy sector.
Typically, the 'lean season' leads to a drop in liquid milk supply, increasing dependence on SMP stocks to stabilize prices and ensure supply. However, the past flush season's underperformance could mean that dairies face heightened risks due to insufficient SMP stockpiling.
"Roughly, 10 litres of milk is needed to produce one kilogram of SMP," industry insiders note, emphasizing the critical role SMP plays in maintaining supply during the lean months. Prices have been volatile, with procurement rates for cow milk stabilizing at Rs 33-34 per kg, whereas buffalo milk prices hover around Rs 50-52 per litre. This stability follows fluctuations when rates peaked at Rs 37-38 per kg last year. For businesses like Amul, a prominent dairy brand, continuous adjustments are necessary, evidenced by their recent Rs 1 price reduction in January 2025. Despite an estimated production of approximately 231 million tonnes of milk in 2022-23, the current stock of SMP, around 30,000-40,000 tonnes, is substantially lower than the ideal 100,000-115,000 tonnes.
With global SMP prices also climbing, India is positioned at a significant cost disadvantage. As the sector navigates these challenges, close attention will be on how milk cooperatives and the government manage the delicate balance between consumer pricing and farmer support during this pressing summer period.
Typically, the 'lean season' leads to a drop in liquid milk supply, increasing dependence on SMP stocks to stabilize prices and ensure supply. However, the past flush season's underperformance could mean that dairies face heightened risks due to insufficient SMP stockpiling.
"Roughly, 10 litres of milk is needed to produce one kilogram of SMP," industry insiders note, emphasizing the critical role SMP plays in maintaining supply during the lean months. Prices have been volatile, with procurement rates for cow milk stabilizing at Rs 33-34 per kg, whereas buffalo milk prices hover around Rs 50-52 per litre. This stability follows fluctuations when rates peaked at Rs 37-38 per kg last year. For businesses like Amul, a prominent dairy brand, continuous adjustments are necessary, evidenced by their recent Rs 1 price reduction in January 2025. Despite an estimated production of approximately 231 million tonnes of milk in 2022-23, the current stock of SMP, around 30,000-40,000 tonnes, is substantially lower than the ideal 100,000-115,000 tonnes.
With global SMP prices also climbing, India is positioned at a significant cost disadvantage. As the sector navigates these challenges, close attention will be on how milk cooperatives and the government manage the delicate balance between consumer pricing and farmer support during this pressing summer period.
