The sector’s supply swings over the past three years began with the post-COVID price collapse in 2022–23, when milk prices fell below production costs and discouraged cattle induction, leading to a sharp decline in output. Grassroots engagement by cooperatives and private players through sustainable fodder programs helped restore confidence and revive production. A significant rebound during the October 2024–March 2025 flush season saw milk output jump nearly 25%, creating a temporary surplus.

Dairy companies responded to that surplus with strategic moves, expanding value-added product mixes, strengthening cold-chain infrastructure and increasing marketing efforts to absorb excess supply. Large players also beefed up backend systems and last-mile distribution to manage inventory more efficiently. However, the surplus did not last.

In 2025, early and unseasonal rains disrupted typical summer production patterns, while geopolitical tensions — notably the India-Pakistan conflict — affected key northern milk belts including Punjab, Haryana and Jammu & Kashmir. Combined with strong festive demand, these factors eroded inventories, tightening the supply outlook. As a result, milk procurement costs have firmed up across regions, even as retail prices have been restrained following a recent GST cut, pressuring margins.