FAO Dairy Price Index - March 2023

The FAO Dairy Price Index averaged 130.3 points in March, down 1.1 points (0.8%) from February and standing 15.6 points (10.7%) below its level in the corresponding month a year ago. The decline in March was driven by lower price quotations for cheese and milk powders, while butter prices increased. 

The decline in the international price quotations for cheese was underpinned by slower purchases by most leading importers in Asia amid increased export availabilities, including inventories, in leading exporters. 

Milk powder prices fell for the ninth consecutive month, primarily reflecting sluggish import demand, especially for near-term deliveries, and seasonally rising milk production in Western Europe. 

By contrast, butter prices increased due to solid import demand, especially from North and Southeast Asian countries, for supplies from Oceania, where seasonally falling milk production tracked slightly below trend levels.

 

Date	Butter	Skim Milk Powder	Whole Milk Powder	Cheddar Cheese
2020	3844	2606	3041	3506
2021	4995	3181	3855	3816
2022	6608	3863	4253	4535
2023-01	5320	2921	3511	5003
2023-02	5072	2801	3436	4901
2023-03	5150	2776	3426	4826

Meanwhile, dairy prices in India are on the boil with further price increases effected by Amul in Gujarat adding fuel to the skepticism that milk availability this lean season, would be short.

While milk availability in India right now is definitely short, it is not because of lumpy skin disease (LSD) or anything else. It has more to do with (1) Higher feed prices (2) Wide-scale exports of oil-meals out of the country (3) Exports of dairy commodities, especially Butter & Ghee (Butteroil) during last year when International realisations were higher and most importantly (4) Lower prices paid to farmers during last 2 years, which has led to diversion of their interests.

Now with better price realisations and normal kharif production of agricultural commodities, there are clearly signs of improved milk production once the new season starts from July-August onwards. However, there is pain left till that time and Industry has to pay for its sins of the past.

But, those short-term mismatches in inventories and some rise in milk prices does not warrant knee-jerk reaction and call for imports of dairy commodities to cool off domestic prices, which would be counter-productive and shall repeat the same cycle of lower production, which are struggling to come out at this moment. Further, it would be body-blow to the dairy farmers who have started realising good prices after covid-induced pain of almost 2 years. 

Hope some sense prevails with the authorities and they dont take decisions which are detrimental to the industry, which is the largest and fastest growing in the World today, thanks to steady and non-interventionist policies followed till date!