Climate change directly affecting prices of milk

Anvita Srivastava
Sunday, 19 January 2020

In recent months, Indian households were plagued with unprecedented food inflation. With the increasing price of food commodities, ‘achhe din’ remained a far-fetched dream for the citizens.

In recent months, Indian households were plagued with unprecedented food inflation. With the increasing price of food commodities, ‘achhe din’ remained a far-fetched dream for the citizens.
While the skyrocketing onion, green vegetables, mutton and fish  prices continue to dent a hole in the pockets, the rising price of milk has shaken their monthly budget.

Owing to climate change, unseasonal rainfall and floods resulted in low procurement of cow milk and increased price of Skimmed Milk Powder (SMP) in both, international and domestic market, that accelerated the demands and increased the retail price of cow milk by Rs 6 in last eight months in Maharashtra. There has also been an increase of Rs 2 in buffalo milk prices in the State.

Big brands such as Amul and Mother Dairy increased the price of cow milk a couple of times in the last eight months.  The private and cooperative diaries in the State followed suit and increased the price of cow milk. 

The retail price of cow milk which was around Rs 42 per litre was increased by Rs 2 in June 2019. The price further witnessed a hike of Rs 2 in December 2019, followed by a further hike of Rs 2 in January 2020. 

Maharashtra Milk Producers and Processors Association Secretary Prakash Kutwal said, “In the last four months, the purchase rate of milk increased by Rs 7 and therefore, the retail prices increased. One of the important reasons is the increase in demand for milk due to the high price of SMP in the domestic market which has crossed Rs 300 per kg mark. The prices of SMP which used to be Rs 130-140 per kg saw an unprecedented increase. The daily consumption of milk for the State is around 90 lakh litres while the increased cost of SMP increased the demand of milk from SMP manufacturers hitting the pouch milk producer badly by increasing the purchase rate for us.”

Calling it one of the most unusual hikes in milk prices, Kutwal, owner of Urja Milk, said, “I am in the dairy industry for more than 30 years and this kind of hike in milk prices has happened for the first time.” 

Apart from the skyrocketing price of SMP that increased the demand, it is also procurement of milk that got affected due to floods in western Maharashtra and unseasonal rainfall. 

Kutwal said, “There is a pan-India milk crisis as the procurement of cow milk has reduced due to various climatic conditions. However, the floods in Kolhapur and Sangli and the extended rainfall affected around 10 per cent of cow milk production while buffalo milk production has been affected by 15 to 20 per cent.”

“The extended rainfall in the State has affected the availability of fodder making it costlier for the farmers. This also leads them to reduce the number of animals.  If the input cost increases, it is likely that they will sell it for a higher price,” he added.
At present, all private and cooperative dairies in the State are selling cow milk at Rs 48 per litre which was around Rs 42, eight months ago. In January 2020, it was buffalo milk that witnessed a hike by Rs 2 and at present, it is sold for Rs 58 per litre.
Shripad Chitale, Partner, Chitale Dairy, said, “There is an all India shortage of milk of around 10 to 20 per cent and same is in Maharashtra. In 2018, due to drought, there was a procurement problem,  and in 2019, floods and unseasonal rainfall resulted in low procurement. The extended rainfall damaged the standing crops which eventually affected the fodder availability, increasing the fodder cost for the farmers. The increasing price of SMP has also increased the demand for milk, accelerating the purchase rate for us.”

He said that unseasonal rainfall has affected the animals which have resulted in low milk production in the flush period. Post monsoon, with the availability of green fodder and water, animals produce more milk, especially during October to January which is called the flush period. 

Dr Vivek Kshirsagar, Managing Director of Katraj Dairy, said, “Every year, the State registered an overall growth of three to four per cent in milk production which did not happen in 2019. The production of cow milk has reduced by 10 per cent due to drought, floods and unseasonal rainfall. There was hardly any flush period as the animals were in shock. Usually, in a good flush period, there is a daily production of two crore litres every day which did not happen this time. This surplus production of milk in the flush period is used for powder production. The fodder prices are also increasing at a higher rate and if the input is high and output is less, the prices will increase.”

“It will take at least a year for the animals to recover and also the milk production to be normal. With summer approaching, milk production will further dip in the lean period which starts in April when animals produce less milk. It may further increase the milk price if the situation remains same,” added Kshirsagar.

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