According to industry sources, feed cost, which has a share of more than 65% in the cost of production of milk, has increased to `20/kg from `8/kg a year ago.

The annual rate of fodder inflation based on the all-India Wholesale Price Index increased to 24% in February 2023 from 28.66% in December 2022. In January 2022, fodder inflation was recorded at 7.14% and since then, it has been rising steadily.

Milk inflation has been the second biggest factor after the high prices of cereals, such as rice and wheat, in driving up retail inflation in January and February 2023.

Experts say that the drop in milk production and cattle yield in the post-Covid period was significant. As demand from restaurants, hotels, weddings, sweet shops, etc crashed during the pandemic, prices had collapsed, which had led to dairies companies reducing procurement of milk from farmers.

According to officials, farmers during the pandemic period were paid around `22-23/litre for cow milk and `32-33/litre for buffalo milk, prices which barely covered cost.

Currently, dairies are paying farmers `37-38/litre for cow milk and `52-53/litre for buffalo milk. “Yet we are unable to procure in substantial quantity of milk,” a private dairy player said.

“With the demand rising steadily in the post-Covid phase, supply failed to match up, pushing up prices,” Sodhi said. The lumpy skin disease reported in many key milk-producing states also disrupted the supplies and transportation of animals.

“We have been witnessing a significant increase in demand for milk and milk products from both consumers and institutions, even after festivals. On the other hand, procurement of raw milk has not picked up after Diwali as was anticipated,” according to a Mother Dairy note.

Meenesh C Shah, chairman, NDDB, had earlier stated that fodder and feed costs have increased by 25% in the last one year and there was some drop in milk production in a few pockets because of the spread of lumpy skin disease among livestock population.