As summer approaches, India is gearing up to face soaring temperatures and water scarcity, according to the latest forecast of India Meteorological Department (IMD). With the mercury expected to rise above normal levels across the country, this summer, concerns over water shortage loom large, particularly for livestock consumption.

Despite early signs of summer, overall milk availability remained robust in the country until March 2023-24. The year began on a positive note, witnessing peak prices for raw milk with 6.5% fat content reaching 58 to 59 rupees per litre, Skimmed Milk Powder (SMP) priced at 320 rupees per litre, and ghee at 575 rupees per litre. However, by the year end, prices for these milk and milk products had declined to the level comparable to 2022, with raw milk prices dropping to 45 to 46 rupees per litre, ghee to 460 rupees, SMP to 230 rupees, and butter to 330 rupees per litre.

Anticipating a harsh summer in 2022-23, the dairy industry started stockpiling commodities like fat and SMP for both captive consumption and trading purposes. However, contrary to expectations, the summer proved to be milder than forecasted, attributed to unexpected rainfall and changing weather patterns. This resulted in reduced reconstitution and recombination of dairy commodities such as butter and SMP, along with lower demand for these products. Consequently, the summer of 2023 concluded with higher-than-usual commodity stocks, a departure from the typical trend where stock levels are lowest during the summer season.

Following the summer season, the flush season of Calendar Year 2023 commenced with robust milk procurement across both cooperative and private sectors. With ample stock availability of dairy commodities, many private dairies involved in commodity trading reduced their milk intake. This adjustment led to an increase in milk supply to cooperative dairies during the flush season.

During the fiscal year 2023-24, the demand for milk and milk products experienced lower volume growth in the first two quarters, primarily due to high inflationary pressure. However, demand saw a revival in quarters 3 and 4 as inflation subsided, leading to increased consumer demand for these products.

In the Calendar year 2024, milk production is robust in states of South India, particularly in Tamil Nadu and Andhra Pradesh. South India anticipates a significant increase in milk production, especially with an improved flush season expected from the month of May onwards. Conversely, the northern part of India is experiencing above-average heat, leading to a decline in procurement in the organized sector. Private dairies in South India are able to procure more milk due to their focus on consumer product categories, whereas in North India, most private dairies concentrate on dairy commodities like butter, SMP and Ghee.

In summary, it is anticipated that by the end of April 2024, the organized sector will have a stock of 3 lakh metric tons of SMP and 1 lakh metric tons of White Butter. However, there is no need for industry-wide panic, as current milk product prices are slightly lower than those of the previous year. Additionally, the onset of summer has led to a surge in demand for fresh dairy products like buttermilk, curd, and value-added items such as ice cream and flavoured milk. Managing the existing commodity stock is expected to be manageable due to this increased demand during the summer season, alleviating concerns about oversupply

In light of these market dynamics, it is anticipated that the prices of milk, butter, and other dairy products will remain stable at present levels, as companies focus on driving volume growth amidst the heightened demand driven by the summer season.

In contrast to the domestic market, global milk product prices exhibited different trends. The price of SMP peaked in February 2022 at USD 4600 (equivalent to Rs. 385 per kg), subsequently declining to USD 2500 (Rs. 210 per kg) in 2023, since then, it has remained stable. Conversely, the price of butter followed an opposite trajectory, soaring to USD 7700 (approximately Rs. 580 per kg) in 2022 before dropping to USD 4500 (Rs. 375 per kg) in 2023. However, butter prices rebounded in 2024, reaching USD 6700 (Rs. 550 per kg). These fluctuations reflect the dynamic nature of the global dairy market and are influenced by various factors such as demand, supply, and economic conditions.

In 2023, dairy-rich countries like the USA, New Zealand, and Europe experienced a decline in milk production due to higher feed costs and low margins. However, the global dairy market is optimistic for 2024, driven by increased demand for milk and milk products amid low inflation and reduced feed costs. While production may be lower in the first two quarters of 2024, quarters three and four are expected to show positive growth. Interestingly, although the demand for liquid milk is stagnant in the developed countries, there is a notable increase in the consumption of dairy products like butter and cheese. This surge in demand has led to recordhigh butter prices worldwide.

Dairy fat is now being perceived as a healthy fat akin to nuts, pistachios, almonds, and avocados, leading to a shift from vegetable oil and plant-based fats to dairybased fats globally. While there is a significant increase in demand for dairy fat, the demand for SMP is not growing proportionately. Therefore, there is a growing consensus that promoting or increasing buffalo milk production could be advantageous, as it provides double the fat content compared to SMP.

While significant efforts and investments have been directed towards enhancing the productivity and production of cow milk, both in indigenous and crossbreed cattle, the dairy industry now faces a critical juncture where emphasis should shift towards Buffalo milk. It is imperative for the industry to redirect its efforts and investments towards improving buffalo genetics and enhancing buffalo milk production. This strategic pivot acknowledges the potential of buffalo milk to contribute substantially to the dairy sector and underscores the need for concerted action to harness this opportunity effectively.

The detection of the H5N1 avian influenza strain, commonly referred to as bird flu, in dairy cows has raised significant concerns among scientists and public health authorities. This strain, previously circulating among wild migratory birds for the past two years, has now been identified in 16 dairy herds across six states in the United States, as reported by the US Department of Agriculture (USDA). The USDA has confirmed the presence of avian flu in two dairy herds in each affected state, marking the first occurrence of this strain in US livestock. Suspected transmission from wild birds is under investigation, with deceased birds found on several affected farms. Despite these developments, the USDA reassures the public of the safety of the commercial milk supply, emphasizing stringent protocols in place to safeguard consumer health. Only milk from healthy cows is allowed into the food chain, with any milk from unwell animals redirected or disposed of. Moreover, pasteurization, a standard procedure for milk sold across state lines, effectively eliminates viruses and harmful bacteria, further ensuring consumer safety.