USDA Predicts India’s Milk Production Growth Will Drop to 2% by 2027 Due to Drought Conditions

India’s milk production is projected to grow by 2 percent to 226.5 million tonnes in 2027, according to the USDA Foreign Agriculture Service. This represents a slowdown from an estimated 2.5 percent growth in 2026, primarily attributed to El Nino-induced drought conditions that are expected to hinder feed and fodder availability, ultimately affecting animal productivity. While production for butter is expected to rise to 7.6 million tonnes, and skimmed milk powder production is forecasted to increase to 810,000 tonnes, tighter domestic supply and elevated prices are anticipated to restrict dairy exports significantly.

For the common citizen, this slowdown in milk production growth may lead to higher costs for dairy products, especially given the rising domestic demand that is expected to outpace supply. With fluid milk consumption projected to climb by over 2 percent to 95 million tonnes, and consumption in processing units also set to increase, consumers could face challenges in affordability and availability of dairy products, which constitute a significant protein source in the Indian diet. The market may see increased volatility as domestic demand pressures restrict the dairy supply chain.

Looking ahead, the Indian government and the Reserve Bank of India may need to assess agricultural support mechanisms, particularly in light of the potential adverse weather conditions induced by El Nino. Fostering advancements in dairy farming practices, expanding crossbred cattle populations, and enhancing infrastructure for larger dairy cooperatives may become critical areas of focus. With the dairy sector largely concentrated in a few states, targeted interventions could be necessary to ensure sustainable growth and stability in the milk supply chain amid changing climatic conditions.

Source: The Hindu

(Expert Note: This report was independently prepared by the Wealthova Economy team.)