India could become milk importer if output shortfall grows

Expressing concern over the rise in milk prices, the Economic Survey today warned that the rates may increase further and the country could even turn out to be a net importer if domestic production is not enhanced.

"Recent hikes in prices of milk and milk products have been a matter of concern. The gap between domestic demand for milk and production of milk has put upward pressure on milk prices," the survey pointed out.

Milk prices have increased by 20% in retail markets in the last one year and it has been a major contributor, along with vegetables, to pushing up food inflation into double digits. The Centre had recently banned exports of milk powder to boost domestic availability and control prices.

The survey pointed out that domestic demand for milk is growing at about six million tonnes per year, whereas annual incremental production over the last ten years has been about 3.5 million tonnes per year.

It indicated that milk prices can only be stabilised through "a strong supply response with focus on production and productivity".

Considering that milk demand in 2021-22 is expected to be 180 million tonnes and output is currently 112 million tonnes, the survey said that the production must increase by 5.5% annually over the next 12 years to bridge the gap.

"If the country fails to do so, India may need to resort to imports from the world market," it warned. The survey felt that if a large milk consumer like India enters the global market (for imports), global milk prices could spurt.

The report observed it was natural for demand for milk and milk products to rise on the back of high economic growth.

Though the country's milk production has grown more than six times since Independence, the average annual growth rate in output in recent years has been close to 4%.

The report noted that despite appreciable growth in milk production in the last six decades, the productivity of animals is still low.

In addition, India's marketing systems are also not modernised or developed to a satisfactory level.

The survey noted that India's per capita milk availability, at 263 grams per day, in 2009-10 fell short of the world average of 279.4 grams per day.