Is your breakfast going to get costlier soon? Well, the answer may lie in the start and spread of monsoon in India, which so far has been late and scanty. The price of milk, a key food item and essential ingredient in India’s favourite beverages tea and coffee, is typically determined by supply, which is influenced by the availability and the health of cattle and monsoon. As the price of milk is already rising, there are concerns that milk price inflation may get acute as the beginning of monsoon remains deficient in India so far.
“While we do not model any impact on milk production, we believe any material inflation in food grains will likely result in higher prices of cattle feed and it may impact the margins for the farmers. We believe there exists a potential risk of higher milk procurement prices for dairy companies,” says Aniruddha Joshi, analyst, ICICI Securities.