“Milk prices could remain firm due to high input costs and seasonal factors,” said Das.
The RBI’s observation comes a day after reports stated that the government was mulling import of dairy products this financial year amid muted milk production. India, which is the world’s largest milk producer, might look at importing dairy products due to the tight supply situation.
Milk production remained stagnant in FY2022-23 weighed by lumpy skin disease that killed nearly 1.89 lakh cattle last year and affected the post-pandemic rebound in milk demand. India had previously imported dairy products in 2011.
The government may intervene to import dairy products such as butter and ghee, if needed, after evaluating the stock position of milk in the southern states, where peak production season has now begun, news agency PTI had reported quoting Animal Husbandry and Dairy Secretary Rajesh Kumar Singh at a press conference on April 5.
While there was no constraint of milk supply with adequate inventory of skimmed milk powder (SMP), the stocks of dairy items were lower than the previous year, the government official said.
In FY22, India’s milk output stood at 221 million tonnes, up 6.25% from 208 million tonnes in the previous financial year, according to official data. While the country’s milk production was growing at 6% annually, it would be either stagnant or grow at 1-2% in FY23, Singh added.Milk has also become costlier over the past 15 months, with prices increasing by 12-15%. It has a weightage of 6.6% in the Consumer Price Index and the CPI-based inflation in milk has surged to 9.65% in February 2023 from 3.81% in February 2022, according to the latest available data. “CPI headline inflation rose from 5.7% in December 2022 to 6.4% in February 2023 on the back of higher inflation in cereals, milk and fruits and slower deflation in vegetables prices,” RBI said in the statement.
Meanwhile, the central bank has kept the repo rate unchanged at 6.5% but added it was ready to act if the situation warranted.
