Demand-supply mismatch

Shortage of milk products must be addressed

The crisis in the dairy sector, which has been brewing for over a year due to stagnant milk output and a spurt in the demand for milk products, may come to a head in the coming summer months if timely action is not taken to augment supplies through imports. While the country’s milk output has increased by just around 1 per cent in 2022-23, its requirement has swelled by 8-10 per cent, causing a severe demand-supply mismatch for the first time in over a decade. Consequently, milk prices have soared by about 15 per cent and the availability of products like butter and ghee has been gravely constrained. The shortage of butter has been reported in Delhi and its adjoining markets catered for by state-owned Mother Dairy and several big milk suppliers, including the cooperative sector giant, Amul. The southern states of Kerala, Tamil Nadu, and poll-bound Karnataka, on the other hand, are experiencing the scarcity of liquid milk as well. As the summer advances and intensifies, the situation may worsen due to reduced availability of green fodder, a heat-induced fall in cattle’s milk yield, and rise in the consumption of milk products like dahi, lassi, and ice cream.

Milk output in India, the world’s largest producer, had remained flat last year due chiefly to the after-effects of the pandemic, the outbreak of lumpy skin disease among cattle, and the paucity and high prices of feed and fodder. The fall in milk procurement prices during the pandemic due to disruption in the supply chain, which forced farmers to underfeed their animals, has adversely affected the health and milk yield of bovines. Besides, the skin disease epidemic is estimated to have killed nearly 190,000 cattle and lowered the milk output of about 100,000 others that survived. Moreover, the acreage under fodder crops has failed to keep pace with growing demand, resulting in about a 25 per cent increase in the prices of feed and fodder in the past 15 months. Feeding expenses account for 65 per cent of the cost of milk production.

Fortunately, the government is not unaware of the situation, though it has had to tread cautiously in dealing with it, given the political clout of the milk-producing farmers, especially the politician-dominated cooperative milk federations. The animal husbandry department, which had last week indicated its intention to intervene in the milk market by importing products like butter and ghee, had to retract following adverse comments from former agriculture minister Sharad Pawar and some farmers’ unions. The statement issued subsequently by way of clarification said that no decision on imports had yet been taken and that the demand-supply situation would be reviewed later in the summer season to take the final call on it. However, more significant is the reworked stance that if imports are warranted, these would be carried out by the National Dairy Development Board and routed through milk cooperatives at the prevailing prices so as not to distort the market or hurt the milk producers’ interests. This seems to be the least controversial course of action under the current circumstances. But to ward off such contingencies in future, the issue of the fodder deficit must be addressed holistically. Otherwise, the country’s White Revolution would be hard to sustain.