Accounting for almost a quarter (24%) of all milk produced, India is the biggest milk producer in the world, and has increased its output by 51% over the past eight years according to the Food and Agriculture Organisation Corporate Statistical Database.

Despite this, Reuters are reporting this week that they could be looking to import dairy products because of a downturn in output. This could lead to a suspension of import tariffs on a temporary basis, freeing up access for international traders to one of the most protected agricultural markets in the world.

While it is believed there are adequate supplies of milk powders, stocks of dairy products are low. Prices in India have been increasing as much as elsewhere over the past two years, and the current scarcity is blamed on a cattle disease taking cows out of production, feed scarcity because of a heatwave and the after effects of COVID-19 on the sector.

India is also a closed market for agricultural produce where farmers sell to government controlled wholesale markets at a guaranteed minimum price. The government attempted to introduce a free market element to this trade in 2020 which triggered massive farmer protests that lasted for a year until the government backed down from the reforms in November 2021. The government had intended to modernise the sector which is underdeveloped, particularly when it comes to processing compared with other major dairy producing countries.

As a result, vast quantities of produce are lost due to spoilage in the processing and distribution chains, which, among other things lack the level of refrigeration necessary in a hot climate.