New Delhi, India — India’s dairy sector is bracing for tighter milk supply in 2025, following a brief 25% production surge during the October 2024–March 2025 flush season, which had temporarily created a surplus. The supply rebound, triggered by renewed farmer engagement through fodder sustainability programs and cattle-induction incentives, helped the industry recover from the post-COVID slump of 2022–23, when milk prices had crashed below farmers’ cost of production.
The revival phase from mid-2023 saw improved farmer confidence and increased milk output, according to a sectoral expert session hosted by Systematix Institutional Equities. To manage the short-lived 2024-25 surplus, large cooperatives and private dairies scaled up cold-chain capacity, advertising, product diversification, backend investments, and last-mile distribution to absorb excess milk into value-added categories.
Surplus Turns to Supply Squeeze
However, the gains dissipated in 2025 due to:
- Unseasonal and early rains, disrupting the usual summer demand cycle
- Geopolitical tensions in northern milk belts, including the India-Pakistan conflict, affecting supply pockets in Punjab, Haryana, and Jammu & Kashmir
- Strong festive demand, further draining inventories
The combined effect has firmed up procurement costs nationwide, despite stable retail prices following a recent GST cut on dairy products.
Read More: Bengal Cabinet Approves Merger of Mother Dairy Calcutta with Banglar Dairy
Regional Price Signals Emerge
While product prices have remained largely unchanged, spot increases of ₹1–1.5 per litre were reported in select states including Bihar and Andhra Pradesh, indicating early pricing pressure.
Industry insiders anticipate procurement cost corrections around April 2026, coinciding with Ramzan/Ramadan demand season, a period historically linked with milk-consumption spikes.
Margin Pressure and Strategic Responses
The GST cut supported demand via:
- Lower prices
- Increased grammage, especially in smaller SKUs
But this has also compressed margins due to supply-chain disruptions and higher channel costs. Companies are now exploring:
- Selective price hikes
- Volume rollbacks
- Profitability-led product pivots
Value-Added Segment Takes the Spotlight
A clear structural shift is underway as dairies push deeper into value-added dairy products (VAPs), including:
- Curd
- Paneer
- Ghee
- Ice cream
Ice cream, once a strict summer category, is now witnessing year-round impulse consumption, driven by:
- Quick-commerce availability
- Consumer shift from carbonated drinks to milk-based alternatives
Changing Distribution Landscape
The dairy retail battleground is being redrawn:
| Channel | Trend |
|---|---|
| Quick-commerce / E-commerce | Rapidly gaining share |
| General trade | Declining |
| Modern trade | High visibility but low margins |
Dairy firms are expected to adopt channel-specific strategies to balance visibility, cost, and profitability.
Outlook
The sector’s supply tightening, rising procurement costs, and pivot toward VAPs underscore a margin-reset year for Indian dairy in 2025, with pricing and procurement strategy adjustments likely by April 2026.
Join Our “Dairy & Food Jobs Updates” WhatsApp group
Disclaimer
I do my best to share reliable and well-researched insights but occasional errors or omissions may slip through. Please view all content as informational.
Stay informed on all the latest news updates
All Agriculture Books Free Download
All Dairy Technology Books Free Download
All Agricultural Engineering Books Free download
All Horticulture Books Free Download
All Fisheries Science Books Free Download
For Daily Update follow us at:
Facebook Telegram Whatsapp Instagram YouTube
The contents are provided free for noncommercial purpose such as teaching, training, research, extension and self learning.
If you are facing any Problem than fill form Contact Us
If you want share any article related Agriculture with us than send at info@agrimoon.com with your contact detail.
