India’s milk production growth to slow in 2027 due to drought

India, the world’s largest milk producer, is expected to increase milk production by 2% to 226.5 mln tons in 2027, compared with 222 mln tons in 2026. However, growth is projected to slow from the estimated 2.5% expansion in the current year. The main reason is the anticipated drought associated with the El Niño weather pattern, which could limit feed and fodder availability and negatively affect animal productivity. These forecasts are presented in the US Department of Agriculture’s (USDA) Dairy and Products Annual – India report.

Feed and fodder shortages remain among the main constraints on the development of India’s dairy industry. According to estimates from the ICAR-Indian Grassland and Fodder Research Institute (ICAR-IGFRI), the country faces shortages of 11–32% in green fodder, approximately 23% in dry fodder, and 28–40% in concentrate feed. Drought conditions in 2027 are expected to further worsen the situation and increase livestock feeding costs for dairy producers.

Meanwhile, an increase in the number of higher-yielding dairy animals is expected to partially offset the negative impact of adverse weather conditions. The USDA forecasts the number of milking cows to rise by 1.3% to 63.3 million head in 2027. Indian farmers are gradually shifting towards more productive cattle breeds and buffaloes, supported by government breeding and animal husbandry improvement programs. However, around 95% of milk producers own just one to five dairy animals, while approximately 80 million rural households are involved in the sector.

Demand for dairy products in India is expected to continue growing, supported by rising household incomes, urbanization, and the expansion of the food processing industry. Domestic fluid milk consumption is projected to reach 95 mln tons in 2027, more than 2% above the 2026 level. Milk use in industrial processing could increase to 131.5 mln tons. At the same time, rising feed costs are already affecting prices. During January–August 2026, average milk procurement prices were approximately 4% higher than the 2025 average, while butter prices increased by 10% and skimmed milk powder prices rose by 8%.

Despite the expected slowdown in milk production growth, India’s output of processed dairy products is projected to continue expanding in 2027. The USDA forecasts butter production to rise by 2.2% to 7.6 mln tons and skimmed milk powder output to increase by 2.5% to 810 thsd tons. However, strong domestic demand and tighter supplies are expected to limit exports. In particular, skimmed milk powder shipments could more than halve from 15 thsd tons to 7 thsd tons, while butter exports are projected to decline from 45 thsd tons to 40 thsd tons and fluid milk exports from 30 thsd tons to 25 thsd tons. As a result, India’s dairy industry is expected to become increasingly focused on meeting domestic market demand.

Tags: India, dairy product