India’s dairy industry is on the cusp of another growth phase, according to a report by CRISIL, which estimates that the organised dairy sector will record a healthy revenue growth of 13 to 15 per cent in FY27. However, the sector is also confronting a stark reality: climate change is increasingly impacting dairy farming, making sustainability a critical concern for the entire value chain.
Climate Impact on Milk Production
Across several parts of the country, rising temperatures, prolonged heatwaves, erratic rainfall, and declining fodder availability are affecting milk production. Heat stress directly affects cattle health, leading to reduced feed and water intake, lower milk yields, and weakened immunity. Irregular monsoons further reduce the availability and quality of green fodder, increasing feed costs while diminishing nutritional value. These factors combined make it harder for farmers to sustain milk yields and manage operating costs, according to the source.
Small Farmers at the Frontline
The impact is felt most strongly by small dairy farmers, who form the backbone of India’s milk production. Many operate with limited resources and lack access to scientific farming practices, quality veterinary care, climate-resilient infrastructure, or reliable weather information. As climate-related challenges become more frequent, these farmers struggle to maintain stable incomes and consistent production. The ripple effect extends to procurement, processing, and distribution, making it harder for dairy companies to ensure a steady supply of quality milk.
Technology and Sustainability Solutions
Technology is emerging as a key partner in building a stronger dairy ecosystem. Digital monitoring tools, weather-based advisory services, and data-driven farm management can help farmers make informed decisions. Simple measures such as providing shaded shelters, improving ventilation in cattle sheds, and ensuring proper hydration can improve animal health during extreme heat. Sterling Agro, through its Nova Dairy brand, has consistently focused on quality, innovation, and sustainable practices that support both farmers and consumers, the source reported.
Many dairy organisations are recognising that sustainability is closely linked to long-term business growth. Investments in renewable energy, responsible sourcing, resource-efficient processing, and farmer development programs not only reduce environmental impact but also strengthen resilience across the value chain.
Market Outlook and CRISIL Projections
The growth forecast of 13 to 15 per cent for the organised dairy sector in FY27 is driven by rising consumer demand, increasing consumption of value-added dairy products, and steady improvements in pricing. Consumers are becoming more conscious about where their food comes from and how it is produced, increasingly valuing brands that demonstrate transparency and responsible sourcing. Collaboration between dairy companies, researchers, policymakers, and farming communities will be essential in accelerating the adoption of sustainable solutions.
| Aspect | Detail |
|---|---|
| Revenue growth (FY27) | 13–15% (organised dairy sector) |
| Key drivers | Rising demand, value-added products, pricing improvements |
| Climate challenges | Heatwaves, fodder stress, erratic rainfall |
| Primary affected group | Small dairy farmers |
For commodity traders and procurement teams monitoring the dairy supply chain, the growing frequency of climate disruptions and the continued reliance on smallholders highlight the need for robust sustainability strategies. While CRISIL’s growth outlook is positive, the sector’s ability to withstand heat stress and fodder shortages will determine whether long-term supply remains stable.
Sources:
