Background India
Will India also have a milk crisis after onions?
Onion prices in India went upside down several times in the past few months. Now the same threatens to happen with milk prices. The Indian government tries to put a stop to this in time, but the milk processors in the country see no point in the solution.
India, the country with the largest milk supply in the world, has a shortage of milk. Onions are also downright scarce. However, the government did not envision the onion crisis in time. As a result, it was not possible to anticipate the enormous decline in production in time, which caused prices to shoot through the roof.
The onion crisis has made the Indian government wary. To prevent dairy prices from following the skyrocketing onion prices, the government organized a meeting yesterday (January 3). The current state of affairs is being inventoried together with the larger cooperative and private milk processors. The meeting is a response to the prevailing unrest among Indian dairy manufacturers. The manufacturers indicate that the milk supply is considerably lower than in the same period in previous years.
Disappointing flush
Every year India benefits from the so-called 'flush period', the period from October to March. Normally, this period guarantees a higher milk production among Indian dairy farmers, achieved through the availability of better feed and more water.
Normally, this period results in an annual milk surplus. This is then processed into skimmed milk powder and butter by the Indian dairy manufacturers. If shortages occur in the summer, these products are converted back into milk. The flush period, however, is very disappointing this year. This is due to prolonged and unusual rainfall, which causes the fodder crops to grow poorly.
Due to the lower milk production, dairy prices are rising. Several processors recently increased the consumer milk price by 2 to 3 rupees (= 0,013 euro cents) per litre. This may not seem like much, but by Indian standards it is significant. The prices of skimmed milk powder have even doubled to 300 rupees per kilo (= €3,75).
The milk price is also on the rise, which is of course positive for dairy farmers in the country. The milk with standard values of 3,5% fat and 8,5% protein per liter increased from 19 – 21 rupees (=0,24 – 0,26 euros) to 29 – 31 rupees (=0,36 – 0,39 euros ).
Borders open to import
Due to the milk shortage, the government has decided to open the borders to imports. However, the milk processors are hesitant about this and indicate that this does not work to the advantage of the dairy farmers. They have had a hard time over the last 3 years, because of low milk prices and they are finally recovering.
The idea is that the milk price will deteriorate when the borders are opened. This ensures that the Indian dairy farmer will be hit in his wallet again. The results of the talks between the government and the milk processors are not yet known.
Jorine Cosse
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