Feed inflation is the biggest stress for dairy farmers with prices of corn, soybean meal, cottonseed cake and fodder all increasing, and small farmers unable to absorb the shock, said Ravin Saluja, Director at Nova Dairy (Sterling Agro Products).
“Milk prices don’t rise instantly to match feed costs, so the math becomes unviable. When farmers cut back on quality feed, fat and SNF (solids-not-fats) levels drop, and they get lower payouts as a result. So they’re squeezed both ways,” he told businessline in an online interaction. Over the past year, many farmers struggle to maintain productivity, especially those with 4-6 animals. The situation calls for better fodder planning, more silage adoption, and timely government intervention during inflation peaks so that farmers don’t lose income stability, said Saluja.
Stating that feed inflation remains the biggest risk, he said even a small spike affects farmer viability. The second risk for the dairy farmer is erratic weather, which directly impacts fodder and productivity. The third is the growing issue of adulteration from unorganised players, which threatens consumer trust across the category.
Subsidising consumers
On the government subsidising milk consumers by capping prices, the Nova Dairy director said that though it looked good politically, it distorted the dairy value chain. “If MRPs (maximum retail prices) are capped, the pressure moves backwards to processors and ultimately to farmers. Milk is a highly cost-sensitive product, with feed, labour, transport, packaging and energy all influencing the final price,” he said.
Ravin Saluja, Director at Nova Dairy (Sterling Agro Products)
When the government sets retail prices too low, there’s nowhere to go when things get tough. Processors can’t pay more to buy what they need, and farmers feel the pinch. “If people need help, it makes more sense to support low-income consumers directly instead of trying to control the whole market. Price caps just weaken the supply chain, drag down quality, and scare off investment. The only thing that actually works is sustainable pricing; farmers and processors both need to earn enough to stay in business,” said Saluja.
However, he said the government could step in and help farmers out with subsidies or quick fixes when feed prices jump. “That gives some relief, but it doesn’t really tackle the real problems. Export restrictions may stabilise domestic availability, but they also block opportunities for processors when global markets are favourable,” the Nova Dairy director said.
What farmers need
What farmers need is predictability in feed availability, veterinary support, and procurement systems that reward quality consistently. “One-off subsidies don’t fix the larger problems in the supply chain. Improving fodder production, strengthening village-level infrastructure and creating price transparency would protect farmers far better than temporary measures,” he said.
On the opportunity side, value-added dairy continues to grow rapidly in paneer, curd, flavoured milk, ghee and specialised powders. There is also strong potential in exports, especially if global prices remain stable. “Technology-led improvements in procurement, testing and traceability can lift efficiency across the chain. The industry is moving towards scale and quality, and organised players with strong systems will benefit the most,” said the Nova Dairy director.
Referring to structural reforms in the dairy industry, Saluja said 3 things are essential. The first is uniform quality-based pricing at the village level, measuring fat and SNF accurately, and paying farmers fairly for quality. The second is improving procurement infrastructure, such as chilling centres, testing facilities and transport networks, to reduce losses and middlemen involvement. The third is increasing processing capacity in surplus regions so farmers would not be forced to sell at distressed prices during the flush season.
Adulteration’s economic impact
“Better data on supply and demand will also help stabilise planning. Without structural discipline, farmers remain vulnerable to seasonal swings and irregular pricing,” the Nova Dairy director said.
Dwelling on adulteration, he said it was more common than people think. “Watering down milk is still the most frequent issue, but there are also cases where starch, urea, detergents, or neutralisers get added just to pass basic tests. This comes mostly from the unorganised supply chains where there is no proper testing, no cold chain and no accountability. The economic impact is huge,” said Saluja.
As a result, genuine processors end up competing with artificially low input costs. Farmers also lose because adulterated supply pulls down procurement prices in some pockets. “Worst of all, it erodes consumer trust. When customers start doubting basic milk quality, the entire industry pays the price, not just the culprits,” he said.
Reality over surplus
Though India being “milk surplus” is largely a headline, he said the reality on the ground was uneven. “Surplus is seasonal and concentrated in a few states, while demand centres are elsewhere. Farmers don’t benefit from higher retail prices because their payout depends on local supply pressure and the capacity of plants around them,” said Saluja.
For processors, packaging, logistics, energy and compliance costs keep rising, reflected in MRPs. Though retail prices go up, procurement prices don’t follow suit. “The core issue is that the value chain is not aligned. Until India invests more in processing and value-added capacity, farmers will continue facing low returns even in surplus years,” he said.
Regional imbalance in the dairy industry is real and has consequences. States such as Punjab, Haryana, Rajasthan and parts of Madhya Pradesh produce far more than they consume. But, large urban markets such as Delhi-NCR, Mumbai, Bengaluru and Chennai depend heavily on incoming supply.
Hurting mismatch
“This naturally keeps procurement prices lower in production-heavy belts and retail prices higher in demand-heavy zones. For processors, it means planning long routes, maintaining strong chilling points, and absorbing transport costs. For farmers, it means their payouts are influenced more by local availability than national demand<” he said.
The processing capacity in surplus regions has to be boosted, and logistics between States will have to be sorted out. “Or else, this mismatch keeps hurting everyone involved,” said Saluja.
The Nova Dairy director said sustainability is not a special project anymore and has become a regular part of business. “We are using less water thanks to recycling systems and better cleaning processes. Energy use is down, too, since we’ve set up heat recovery, upgraded boilers, and brought in more automation,” he said.
On the waste side, the effluent treatment plants are regularly upgraded, and strict norms on discharge are followed. “A lot of packaging is shifting to lighter and more recyclable formats. These steps make the plants more responsible, but they also improve cost stability and reliability. In dairy, sustainable practices actually strengthen long-term productivity,” said Saluja.
Published on January 5, 2026
