Milk prices spiked in last 6 months, and will continue to increase says an Emkay report
"Milk and milk products have seen an average
The ongoing spike in milk prices has several factors, linked to rising input costs, the disruption caused due to the pandemic, and international prices.
One of the biggest factors has been the sharp rise in fodder and animal feed costs, according to the report.
Fodder prices have been rising at double-digit rates since February 2022, and in
The most significant factor has been the drop in production and yield
Prices of skim milk powder (SMP), butter and ghee also fell.
Farmers had to reduce the size of their herds to control costs, while they also began to underfeed them, especially the calves and pregnant cattle that were not giving milk at the time, the report said.
A newborn calf typically reaches puberty in 15-18 months. Adding 9-10 months of pregnancy, it will start producing milk in 24-28 months after birth, while this is higher for buffaloes (36-48 months)
"Thus, the underfed and undernourished calves from the Covid period are the milk-producing cows of today. Milk yields have dropped, and dairies have been reporting lower milk procurement throughout the year. It must also be noted that Indian cattle have generally been low-yielding, at 1/10th of the global average," the report said.
Dairy exports doubled from FY21 to FY22, largely due to soaring international prices, and are on pace to increase further in FY23.
The 'flush' season, from September onwards, is when animals generally produce more milk, with better fodder availability and lower temperatures. This peaks in winter and continues till March-April. Dairies also use the excess milk produced in this time to produce SMP and fat, which are then used during the summer months for reconstitution as demand for curd, ice-cream etc surges
"Therefore, the current scenario could continue into the summer months as there is a shortage of milk, especially fat, at a time when dairies would be building up stock. This view is echoed by leading industry figures, with the
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