Milk prices are increasing across India as dairy companies pass on higher procurement costs driven by surging cattle feed expenses, deficient monsoons, and the diversion of maize for ethanol production, ultimately impacting consumers and the broader dairy industry.

Milk prices are increasing across India as dairy companies pass on higher procurement costs driven by surging cattle feed expenses, deficient monsoons, and the diversion of maize for ethanol production, ultimately impacting consumers and the broader dairy industry.

Milk prices are increasing across India as dairy companies pass on higher procurement costs driven by surging cattle feed expenses, deficient monsoons, and the diversion of maize for ethanol production, ultimately impacting consumers and the broader dairy industry.

Despite the alarm at my house ringing at six in the morning, the real wake-up call is a light knock at the door around seven. The cue pulls my father out of bed, prompting him to walk to the 500ml Cherub milk packet or to-be chai waiting patiently outside.

Strangely enough, that ₹26 milk packet orchestrates many days, from my parents in Kerala to a dairy farmer in Maharashtra. The price of that milk packet has an even larger consequence, including the sustenance of the entire dairy industry. 

In July, the Kerala government hiked Milma prices by ₹4 per litre across the state, and my parents switched to Cherub milk. However, they can’t seem to escape the major price hike by milk producers across the country. 

India’s consumer food price index (CFPI) numbers from September reflect the hike. Although overall inflation fuelled the rise in the CFPI to 7.74 per cent from 5.97 per cent, milk still holds a massive 18 per cent weightage in the basket. 

Milk price hikes across India 

The trend started with Amul in May, which implemented a nationwide ₹2 per litre increase across major variants. 

Then the Mumbai Milk Producers Welfare Association (MMPA) raised its wholesale buffalo milk rate from ₹93 to ₹102 per litre, while the Tamil Nadu government raised milk procurement prices by ₹9 per litre to ₹102 per litre. The Karnataka cabinet approved an ₹8 per litre price increase for Nandini Milk from November. 

From November 12, Mother Dairy is also implementing a ₹2 to ₹4 per litre price increase for different categories. The price of full cream milk has been increased to ₹76 from ₹72. Toned milk will cost ₹62 per litre, compared with ₹60. Double-toned milk will now be priced at ₹56 per litre, up from ₹54 per litre. 

On top of this, ghee prices and dairy product costs are also swinging up. The price of a 500-gram pack of Amul table butter now costs ₹325, up from ₹310. Nandini’s 200-gram paneer prices increased to ₹115. 

Hikes in the October to March period may be called deliberate, as milk consumption rises 35 to 40 per cent. With a bunch of festivals lined up, household and institutional demand is high. But there is a deeper reason for government-approved price increases. 

Why are milk prices increasing? 

Easily said, the procurement costs for milk have increased, prompting producers and dairy companies to pass a part of these costs on to consumers. 

Cattle feed typically accounts for 60 to 70 per cent of the total cost of milk production. The MMPA, when it increased its prices, stated that feed expenses increased by roughly 25 per cent. A weak and deficient monsoon in major agricultural states has impacted crop yields, with industry estimates projecting a 15 to 16 per cent drop in maize production. 

A portion of maize, which makes up 55 per cent to 65 per cent of cattle feed, is increasingly being diverted towards industrial ethanol production. 

This directly affects the productivity of milk animals, causing supply constraints. A decline in milk availability has also squeezed milk fat, making products like ghee, butter and paneer more expensive. 

Escalating global crude oil costs have driven up local diesel prices, affecting milk collection tanker costs. 

According to ANI, Amul has increased the procurement rate linked to milk fat to ₹1,000 per kilogram, enabling farmers to receive ₹ 60 per litre for milk.

In the case of Nandini, the extra ₹8 revenue will be divided, with ₹7 going to dairy farmers and ₹1 to the milk corporation for operational expenses like packaging, fuel and transportation.

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