The Biggest Challenge Facing Dairy Farmers Today
Mr. Ganesh Sharma
Vice President
Paras Nutritions Pvt Ltd
Feed accounts for 60–70% of the total cost of milk production in India. In 2026, this already dominant cost centre has become the single biggest pressure point for dairy farmers across the country. Sharp increases in the prices of key energy and protein ingredients have squeezed farmer margins at a time when milk prices have not increased in the same proportion. For small and marginal farmers, the situation is particularly difficult.
Why Feed Costs Have Surged
Several factors have converged to tighten the availability and affordability of key feed ingredients. The government’s E20 ethanol-blending programme has increased demand for maize, pushing up its price and creating direct competition between fuel and feed. The same market pressure has also affected broken rice. Once a relatively economical energy source, broken rice is now largely out of reach because of price parity. Wheat has similarly become commercially unviable for most feed formulations. In addition, ingredients that routinely carry high aflatoxin levels have already been excluded from the usable ingredient basket on quality and safety grounds.
A particularly striking development this year is that Rice Bran Extraction (RBE) prices have risen to levels almost equivalent to those of maize—something virtually unimaginable under normal market conditions. For the first time in the careers of many industry professionals, RBE has lost its traditional cost advantage over corn. This has forced many small feed mills to significantly reduce RBE inclusion levels in their formulations, potentially affecting the nutritional quality and consistency of the feed they produce. Monsoon variability and climate-related stress have further reduced the availability of green fodder, increasing overall dependence on purchased concentrate feed.
Impact on Farmers and the Industry
Higher feed costs directly reduce the net income generated from milk production. Many small farmers are cutting back on either the quantity or quality of feed, which can, in turn, reduce milk yield and compromise animal health over time.
Small feed mills, already operating on thin margins, are particularly affected by the RBE–maize price parity because they often lack the scale and working capital required to maintain optimal formulations. Larger feed manufacturers, however, may find a future opportunity when the price differential between maize and RBE widens again. Their greater scale and purchasing capacity could enable them to restore higher RBE inclusion levels and regain greater formulation flexibility.
Practical Ways Forward
At the farm level, the most immediate relief can come from improving feeding efficiency. Balanced rations, proper utilisation of available dry and green fodder, and minimising feed wastage can help farmers obtain more milk from every kilogram of feed. Feed companies and cooperatives can support farmers by providing practical, on-farm nutritional advisory services rather than limiting their role to product sales.
On the industry side, the careful use of quality-assured alternative ingredients and by-products, provided they are free from contaminants, can help moderate formulation costs. Longer-term raw material contracts and better inventory planning by manufacturers can also help reduce extreme price volatility. The recent government release of 2.2 lakh tonnes of rice for the livestock sector is a helpful short-term measure. If this supply reaches the feed chain efficiently, it could ease some pressure on maize and other energy ingredients over the next couple of months.
Finally, sustained policy attention will be essential to securing a stable supply of safe and affordable energy and protein ingredients. Without a broader and more reliable ingredient basket, cost pressures are likely to recur whenever demand from competing sectors increases.
Rising feed costs in 2026 reflect deeper structural pressures within India’s livestock feed ecosystem. With maize, broken rice and wheat under pressure, RBE losing its traditional cost advantage, and high-aflatoxin ingredients already ruled out, the usable ingredient basket has narrowed significantly. A combination of improved feeding efficiency, smarter sourcing and supportive policy measures will be needed to protect both productivity and farmer livelihoods in the months ahead.