No respite seems in sight from the rising milk prices as fodder inflation continues to rise. The annual rate of fodder inflation based on all-India Wholesale Price Index (WPI) numbers has further increased to 29.30 per cent in January 2023 against 28.66 per cent recorded in December 2022.

Fodder inflation was recorded at 7.14 per cent in January 2022 and since then, it has been rising steadily. The rising fodder prices are a cause of worry as they fuel milk prices, which have already seen multiple hikes during 2022.

In fact, the WPI-based milk inflation reached a nine-year high of 8.95 per cent in January 2023. The retail inflation for milk (liquid) too has spiked to an 88-month high of 8.79 per cent in January this year (see graph). The last time a higher figure of the WPI-based milk inflation (9.45 per cent) was recorded was in November 2014. The previous high of Consumer Price Index-based retail inflation (9.3 per cent) for milk was recorded in February 2015.

The WPI data released by the Ministry of Commerce and Industry shows that while fodder inflation has risen sharply, prices of ‘Manufacture of prepared animal feeds’ have softened in recent months. In the month of January 2023, the rate of inflation for ‘Manufacture of prepared animal feeds’ was recorded at 4.61 per cent, which is lower compared to the same month in 2022 (15.38 per cent). However, this decline may be because of a higher base. The rate of inflation for the ‘Manufacture of prepared animal feeds’ was higher last year and it had remained in double digits for 13 months in a row – from April 2021 to April 2022.

The category ‘Manufacture of prepared animal feeds’ comprises five items — Gola & similar Cattle Feed, Rice Bran Extract, Soya preparations excluding oil, Cotton seed oil cake, and Mustard oil cake. Among these, the rate of inflation for ‘Gola & similar Cattle Feed’ was recorded at 9.69 per cent in January 2023, while it was recorded at 24.82 per cent for rice bran extract, -9.84 for soya preparations excluding oil, -2.93 per cent for cotton seed oil cake, and -20.29 per cent for mustard oil cake.

The rise in fodder inflation is significant as it increases milk production costs which eventually affect consumers’ household budgets. In the calendar year 2022, dairy brands like Amul and Mother Dairy raised their milk prices several times. Besides, the rising fodder prices also hurt families dependent on cattle rearing.

The rise in fodder inflation contrasts with the fall in overall WPI inflation, which came down to 4.73 per cent in January 2023 from 4.95 per cent in December 2022. It stood at 13.68 per cent in January 2022.

Source : The Indian Express Feb 16th 2023 by Harikishen Sharma