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India’s ₹14 trillion dairy sector is facing a structural demand-supply imbalance, with milk production growth slowing sharply even as demand continues to rise, according to a recent industry report. Over the past 4–5 years, annual milk production growth has dropped from 6–7% (till 2022) to just 3.5–3.8%, signalling a systemic slowdown in the world’s largest milk-producing nation.
At the same time, demand is growing at around 6%, creating a widening gap that is pushing prices upward and tightening supply across the value chain. Milk prices have already increased by ₹2–₹5 per litre nationwide, reflecting this imbalance.
The supply crunch is being driven by multiple structural pressures, including a 35–40% surge in cattle feed costs due to fodder shortages, climate change impacts such as shrinking flush seasons caused by extreme heat, and rising packaging costs linked to polymer shortages amid geopolitical disruptions.
Industry leaders highlight that India has been experiencing a severe milk supply crunch since late 2025, with farm-level milk prices reaching their highest levels in five years.
Adding to the challenge, only 30–35% of India’s milk flows through the organised sector, limiting quality consistency and export competitiveness, while the dominance of the unorganised segment continues to impact efficiency and value realisation.
The combination of slowing production, rising costs, and structural inefficiencies underscores a deeper systemic issue, raising concerns about the long-term sustainability and scalability of India’s dairy sector.
Source: Dairynews7x7 2 April, 2026 Read full article here
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