economy · 2026-06-20
Milk Prices May Rise Again on El Nino
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Major dairies like Amul and Mother Dairy raised milk prices ~2-3% in May due to heat and fodder stressIf monsoon stays deficient, a further 3-4% hike is possible by Jul-Aug as cattle numbers dropMaharashtra govt has urged farmers to boost fodder production to prevent livestock and output losses
Why does El Nino push up milk prices?
Poor rainfall from El Nino shrinks fodder and water supply. Farmers then cull or sell cattle they cannot feed, cutting milk output. Less supply against steady demand pushes prices up. Parag Milk Foods chairman Devendra Shah noted this cycle is already visible in key producing states like Maharashtra.
How does fodder scarcity cut milk output?
When fodder costs spike, small farmers cannot afford to feed all cattle. They sell animals, shrinking the milking herd. In 2023's El Nino phase, states like Rajasthan and Maharashtra saw cattle feed costs rise ~15-20%, forcing herd reductions that took months to reverse.
Which states are most vulnerable?
Maharashtra, Rajasthan, and Tamil Nadu are most exposed. Tamil Nadu's Aavin already cut supply due to heatwaves. Maharashtra produces ~10% of India's milk. Its semi-arid regions depend heavily on monsoon-fed pastures, making them first to feel fodder stress.
How long do El Nino effects last?
El Nino typically lasts 9-12 months, but its dairy impact extends longer. After the 2015-16 El Nino, milk production recovery took nearly two full seasons because rebuilding cattle herds requires breeding cycles of ~9 months. The supply squeeze outlasts the weather event itself.
How much more could your dairy bill rise?
Milk prices already rose ~2-3% in May. Parag Milk Foods estimates another 3-4% hike by Jul if rainfall stays below normal. Combined, that is ~5-7% higher than Apr levels. For a household spending ~₹3K/month on dairy, that adds ~₹150-200/month. Tamil Nadu's Aavin has already cut supplies amid heatwaves.
What does a 5-7% dairy price hike mean?
For a middle-class family spending ~₹3K/month on milk and curd, a 5-7% rise adds ~₹200/month or ~₹2.4K/year. Dairy is not easily substitutable in Indian diets. Unlike fuel, there is no direct subsidy buffer, so consumers absorb the full increase.
Will paneer and cheese cost more too?
Yes. Value-added products like paneer, cheese, and ghee amplify the raw milk price hike because they require 5-10 litres of milk per kg. Parag Milk Foods, which owns Go Cheese, would likely pass through cost increases. Expect packaged paneer to rise 4-6% with a lag.
Could govt intervene on dairy prices?
India does not have a formal milk price control mechanism. Govt can release buffer stocks of skimmed milk powder to cool prices, as it did in 2023. But procurement prices paid to farmers also need to stay attractive, creating a tension between consumer relief and farmer income.
What are dairies doing to prevent shortages?
Maharashtra's animal husbandry commissioner Kiran Patil urged farmers to plan fodder crops now. Several dairies are working directly with cattle owners on fodder planning. Amul said it is monitoring monsoon progress before acting, adding the fodder situation is not yet alarming but could worsen quickly.
How are farmers preparing for fodder gaps?
Maharashtra's commissioner asked farmers to plant fodder crops like jowar and maize now, before monsoon gaps widen. Some dairy cooperatives are distributing silage-making equipment so farmers can store green fodder during brief rain spells. Early planning can reduce herd culling by ~20-30%.
Is Amul worried about supply?
Amul said there is no immediate impact on milk availability and it will assess monsoon progress before deciding on further price action. Amul collects ~26.5Mn litres/day from Gujarat cooperatives. Its wait-and-watch stance suggests Gujarat's fodder situation is stable for now, unlike Maharashtra's.
Has Aavin's supply cut hurt consumers?
Tamil Nadu's Aavin, the state dairy cooperative, reduced daily supplies to retail outlets amid extreme heat. Consumers in Chennai reported shortages of Aavin's subsidized ₹44/litre milk packets. This pushed some buyers toward costlier private brands like Hatsun, effectively raising their dairy spend ~10-15%.
Source: economictimes.indiatimes.com