India turns to imports to curb milk crisis as lumpy skin disease hits cattle stock

NEW DELHI-India, the world’s biggest producer of milk, has been forced to import to boost domestic supplies and check the skyrocketing price.

Reuters yesterday reported that farmers are wrestling with lumpy skin disease in their cows and a drawdown in market-ready cattle stock after the coronavirus pandemic slowed breeding.

Milk prices have already jumped more than 15% to 56 rupees ($0.68) a liter over the past year – the fastest rise in a decade – making it difficult for the government to bring retail inflation below the central bank’s target, says Reuters.

The soaring prices of milk and other basic goods is expected to become a political issue heading into state elections later this year.

“Any upside risk coming from higher milk prices is going to pose an additional challenge,” said Upasna Bhardwaj, chief economist at India’s Kotak Mahindra Bank.

A 39 percent jump in exports of dairy products in 2022, followed by lower milk supplies, has already cut inventories of butter and skimmed milk powder [SMP] in India, even as rising incomes lift demand for protein-rich dairy products, a key source of calcium, vitamins and protein for a large vegetarian population.

Industry officials estimate demand for dairy products to rise 7% this year.

But milk production is likely to have risen just 1 percent in the fiscal year to March 2023, well below the average annual rate of 5.6 percent in the past decade, said a senior official of the government-backed National Dairy Development Board [NDDB]. The official declined be named as he was not authorised to speak to the media.

Farmers and dairy managers say they now have to wait until the next flush season in October to ramp up market-ready cattle stocks and dairy products inventory.

“There is no way we can raise milk production in 2023,” said Santosh Sharma, general manager of Saras Dairy, a leading supplier in Rajasthan.

Devendra Shah, chairman of Parag Milk Foods in Maharashtra state, said the rare surge in milk prices during the flush season has created unusual market pressure, especially in the peak summer months.

“We will witness further rises in milk prices during summer,” Shah said.

Those pressures mean India will rely more on imported SMP, farmers and dairy officials said, further tightening global supplies and setting off a rally in international prices.

India’s SMP imports are likely to hit an all-time high in the fiscal year that started April, surpassing record purchases in 2011-12, dairy industry officials said.

To ease the burden, the government could allow limited duty-free imports of SMP and butter, although it would need to manage volumes to avoid crashing prices, the NDDB official said.

In January, India’s milk and cream imports jumped 1,024 percent from the last year to US$ 4.87 million, even with import taxes, as dairies increased purchases from France, Germany, and Poland.

The temporary removal of those duties would mean imports rise even further, the NDDB official said.

Lumpy skin disease, which causes blisters and reduces milk production in cows, has infected millions of cattle and killed more than 184,000 in India, including around 76, 000 in Rajasthan, according to government data.

Farmers in Rajasthan who managed to protect their cattle through vaccinations now complain about lower incomes as the disease has left them with low-yielding cattle.

“Even the cows that survived after spending a lot of money on medicines and vaccination are now producing less milk than earlier,” Sharma said, pointing to one of his cows with lacerations caused by the disease.

Cattle breeding suffered during pandemic lockdowns due to a shortage of the village-level veterinarians needed to conduct artificial insemination.

The supply problems are already squeezing Indian consumers.

“Just to ensure that our children get milk, we have stopped adding milk to our tea,” said Satyendra Yadav, a Mumbai construction worker. “But any further price rises will make milk out of our reach.”

Source: Reuters

https://thecooperator.news/milk-consumption-still-low-dairy-sector-official-says/

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