India Dairy Industry Forecast for 2025
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—Indian dairying in 2025- As it looks from here.
2024: A Roller Coaster Year for Indian Dairy
The Indian dairy sector experienced a roller coaster year in 2024, closely mirroring the trends of 2023. Milk availability during the last summer was better, and SMP stocks remained largely untouched during the lean season. A surge in global milk fat prices kept processors optimistic, while skimmed milk powder prices stayed low due to substantial stockpiles.
As the backbone of India’s agricultural economy, the dairy industry is set to witness dynamic changes in 2025, driven by evolving consumer demands, climate variability, and advancements in technology. Here’s a detailed forecast covering key aspects of the industry:
Cattle Population
India’s cattle population is projected to witness marginal growth in 2025, driven by a heightened focus on breed enhancement and improved veterinary care. Indigenous breeds, known for their resilience to climatic variations and lower feeding demands, are expected to experience a resurgence. The government’s initiatives in artificial insemination and genetic improvement programs are poised to further boost productivity.
According to the latest Basic Animal Husbandry Statistics (2024), the cattle population has increased, while buffalo numbers have said to have shown a notable decline. However, this decline in buffalo population requires further validation. The record-breaking exports of buffalo meat though hint at a possible reduction in buffalo numbers, adding weight to this observation.
Milk Production
Milk production in India has shown a consecutive declining growth trend for the past three years—a phenomenon seen only once before, between FY08 and FY10, since 1992. Based on historical trends, FY25 might mark a rebound, with production potentially reaching 250 million MT, reflecting a growth rate of 4.5–5%. However, considering the decline in the buffalo population and the growing adoption of climate-resilient indigenous cattle, India appears to be heading toward a growth equilibrium of around 3.5–4%. At this rate, milk production could reach approximately 500 billion liters by 2047. This projection challenges the “surplus milk theory” of 100 billion liters, suggesting it might be more rhetoric than reality.
In the near term, milk supply remains stable. Due to the slightly delayed arrival of buffalo milk and significant cow milk shortages caused by cold stress in certain regions, an extended flush season is anticipated, lasting until April 2024.
Looking ahead, the first and second quarters of 2025 are likely to be influenced by mild El Niño conditions, resulting in below-average rainfall in parts of central and western India. This could negatively impact fodder cultivation and water availability, further straining the dairy sector. Adopting water-efficient practices and drought-resistant fodder varieties will be critical for sustaining production.
Summer 2025 may witness tighter milk supplies due to heat stress on cattle and reduced fodder availability. This could result in a temporary dip in production, particularly in regions facing extreme weather. A mild shortage of milk is expected from late April to mid-August 2025. Mitigation strategies, including improved cooling infrastructure and nutritional supplements for cattle, will be essential to minimize disruptions.
Milk Prices
Milk prices are expected to remain stable during the first quarter of 2025 but may rise by 8-10%( and more in certain states like Maharashtra) during the summer months due to increased demand and potential supply constraints. Inflationary pressures on feed costs and logistical challenges could also contribute to higher prices.
Feed Prices
Feed prices are anticipated to remain elevated due to global grain shortages and high demand for oilseeds. The industry’s growing adoption of alternative feed sources, like agricultural by-products and fortified feeds, might provide some relief but not fully offset the cost pressures. The government must continue the ban on exports of oil cakes as much as possible to contain the prices of feed within reasonable limits.
SMP and Butter Stocks
Skimmed Milk Powder (SMP) and butter stocks are expected to remain healthy in early 2025, supported by strong production during the winter flush season. However, these stocks could face depletion by mid-year if summer milk production falls short. The second half of 2025 might witness a boost in SMP exports, driven by growing demand in international markets.
A key recommendation to the industry is to avoid speculative stockpiling, a mistake seen in March 2023 and March 2024 despite repeated warnings in our blogs. The industry must prioritise climatic conditions and market trends over speculative buying, which often leads to inefficiencies and financial risks.
It is crucial for old SMP stocks to reach an optimal level. From an Indian context, maintaining a stock of around 3–3.5 lakh MT at the beginning of summer and approximately 1.5 lakh MT at the onset of the flush season serves as a prudent benchmark. This approach ensures sustainability while allowing stakeholders to maximize profits. Good summer may give impetus to more demand of fermented milk products, beverages and ice creams thus leading to higher consumption of SMP as compared to last few years.
Retail prices of milk and milk products
Companies are likely to significantly increase the prices of milk and milk products starting this summer. Current raw material costs, coupled with excessive stocks of SMP and lower realizations for butter and ghee in domestic markets, are insufficient to offset mounting inflationary pressures.
The industry is grappling with rising overhead costs and a decline in demand, driven by reduced purchasing power in both rural and urban markets. This combination of factors is pushing dairy processors toward price hikes to sustain operations and maintain profitability.
Efforts to balance production costs with consumer affordability will remain a key challenge for the sector in the coming months.
Innovative Dairy Products in 2025
The Indian dairy market is likely to see a surge in innovative products such as high-protein yogurts, paneer, beverages , fermented milk products ,lactose-free milk, and functional dairy foods enriched with probiotics and vitamins. Globally, products like carbon-neutral milk, lab-grown dairy proteins, and AI-designed cheeses are setting trends, which Indian producers may soon adopt. Perfect day has already initiated a manufacturing facility with sterling Biotech at Gujarat recently. Whey based products will show a tremendous growth from the domestic players also .
Emerging Sales Channels for Dairy Products
The retail landscape for dairy products in 2025 will be shaped by digital transformation and evolving consumer habits:
E-commerce: Online platforms will continue to expand, offering fresh milk, curd, and paneer with doorstep delivery.
Quick Commerce: Rapid delivery services for daily essentials, including dairy products, will gain traction in urban areas. Milk , curd and paneer will remain amongst the top five food products on these channels.
Direct-to-Consumer (D2C): Dairy brands will increasingly engage consumers via exclusive apps and websites. White labelled brands will show a mushroom growth in this year.
Modern Trade and Supermarkets: Value-added dairy products like flavored yogurts, artisanal cheeses, and ready-to-cook options will dominate shelf space along with premium dairy based beverages.
Health Stores: A rising interest in fitness and wellness will boost demand for protein-rich dairy products in specialty health outlets.
Government policies
In 2024, there has been a significant push to expand milk cooperatives across the country. The growth in milk procurement by cooperatives is expected to leap to double digits, compared to the modest 6–7% growth in previous years, driven by the formation of new cooperatives. The target for milk procurement is set to increase from the current 66 million liters per day to 100 million liters per day by 2030.
Several states, including Madhya Pradesh, Chhattisgarh, and Assam, have signed MOUs with NDDB to promote dairy development programs. Other states, such as Himachal Pradesh, Kerala, and Punjab, are enhancing milk collection by offering higher prices to dairy farmers. Kerala, notably, increased the milk price by ₹15 per liter in a single move. However, some of these states have also introduced milk subsidies for farmers to boost production. This presents a paradox, as it becomes unclear whether the rise in milk production is attributable to NDDB’s efforts or the subsidies provided.
Policy makers must shift their focus from merely increasing milk production to enhancing market linkages that ensure good prices for farmers. High production without adequate market linkage is a guaranteed recipe for farmers receiving lower returns.
Additionally, there should be a concentrated effort to increase the monthly per capita expenditure on milk and milk products to ensure the population’s nutritional security. Tax-linked market incentives could be used to encourage consumers to switch from chips to paneer and from colas to flavored milk or lassi.
This is a critical time for policymakers to establish provisions for buffer stocks of SMP (Skimmed Milk Powder) and butter to stabilize the market in times of surplus or shortage. Equitable inclusion of the private sector in government schemes is essential for the sustainability of the dairy sector, considering the significant market share of private players in the organized dairy market.
The FSSAI must adopt stricter measures to combat the rising adulteration in the dairy sector and address the malicious practices of both unorganized and organized players. The growing trend of pushing and mainstreaming analogues into dairy categories threatens consumer trust and the integrity of the dairy industry as well as impact on demand of the milk by the market.
Ensuring stringent enforcement and penalizing violators will be essential to safeguard the interests of consumers as well as dairy farmers and maintain the authenticity of India’s dairy products.
Conclusion
India’s dairy industry in 2025 will stand at the crossroads of opportunity and challenge. While production and innovation drive growth, the sector must navigate risks like climate variability and cost inflation. With a strategic focus on sustainability, technology, and consumer-centric innovation, the industry is poised to cement its leadership in the global dairy market.
Once again Happy new year to every one . May 2025 full fill all your dreams.