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Dairies may be forced to increase milk prices as there is a dip in availability coupled with demand for higher procurement prices from milk farmers, said Dilip Rath, chairman of the National Dairy Development Board (NDDB), on Wednesday.
“In recent months, milk procurement prices have gone up by 10 to 15 per cent. But, we hear that many farmers are demanding a further increase. If they demand, we have no choice but to give them higher prices. A part of this we may have to recover from consumers,” Rath told BusinessLine here.
He hoped that consumers would not be upset as the prices had not increased for more than a year. Prices are hardening because of self-correction in the market. In the last one and half years, farmers got lower prices for milk. So, they invested less in animals and many even sold off their milch animals. This has resulted in a dip in milk availability, he said.
“Every year, in winter months, we see an increase in procurement. This winter, we have seen hardly any increase in procurement by the cooperatives. This shows there is a dip in milk availablility. In coming months we expect to see lower milk availability, leading to an upward trend in milk and powder prices,” said Rath.
According to the NDDB chairman, the price of skimmed milk powder (SMP) has gone up to nearly ₹200 a kg from ₹125 a kg earlier. This has happened in the last one or two months.
This year so far, India has exported 10,000 tonnes of SMP, 75 per cent of this in the last two months. The increase is mainly because of subsidies given by the State and central governments. “This is going to further increase, as the global market is also looking up,” he said. The total export of SMP in 2017-18, on the other hand, was around 11,000 tonnes.
He said milk cooperatives went through a tough time in the last one and half years. “Unlike private dairies, milk cooperatives had to continue procurement of milk even though they accumulated so much. They converted surplus milk into SMP. At one point in time, cooperatives were saddled with 1.5 lakh tonnes of SMP, seriously denting their liquidity situation. This was mainly in Gujarat,” Rath said.
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