Agri Business

Milk prices on the boil as fuel, feed costs increase

Our Bureau New Delhi | Updated on March 12, 2018


Amul hikes rates by 5-7%; others to follow suit

Milk prices across the country are set to rise ahead of the festival season, posing further problems to customers already reeling under surging prices of tomatoes and onions.

Market leader Gujarat Co-operative Milk Marketing Federation (GCMMF), which owns the Amul brand, has increased prices of pouched milk by 5-7 per cent. This will come into effect from Tuesday.

This is the second time that Amul has increased prices this year, after the one in April. Other players such as Mother Dairy, Hatsun, SMC Foods and Sterling Nova are expected to follow suit.

In fact, Karnataka Milk Federation, which owns the Nandini brand, had raised prices in September by Rs 2 a litre.

Defending the latest price increase, R.S. Sodhi, Managing Director, GCMMF, said: “Our price hike is lower than the general food inflation in the country.” Sodhi blamed rising production and logistics costs on account of increase in fuel prices and fodder prices.

The extended monsoon has hit the availability of both dry and green fodder raising the costs by 20 per cent, he said.

Before increasing milk prices, Amul had hiked prices of products such as butter, paneer and cheese among others by an average of 10 per cent in the past one-to-two months.

Admitting that there was pressure from milk producers to increase prices, Sodhi said unless the farmers were paid properly, they could move away from dairying.

Amul, Sodhi said, pays about 80 per cent of the product price to farmers.

Food inflation for September ruled high at 18.4 per cent on higher onion and cereal prices. In fact, milk prices have risen by some 62 per cent since October 2009.

In the same period, prices of onion have increased 1.5 times, while tomato rates have doubled. Edible oil, mainly sunflower, has kept pace with rising milk prices. “There is a cost pressure build-up,” said R. Chandramogan, Chairman and Managing Director of Hatsun Agro Products, citing logistics and processing costs.

“It is a matter of time before we increase the price, but we have not decided on the quantum so far,” he said.

“We are keeping a close watch on the procurement prices as well as raw material prices and input costs that affect the farmers. We will review our consumer prices of milk if required,” Mother Dairy said in a statement.

Sandeep Agarwal, Director of SMC Foods Ltd, which sells pouched milk under the Madhusudhan brand in Delhi and the National Capital Region, said that the hike was overdue as excess stocks of skimmed milk powder (SMP) had kept a lid on prices over the last 1-1.5 years. “The backlog had to be cleared and the latest round of hike will take care of prices till March,” Agarwal said, adding that his company was in discussion with its peers on increasing prices.

SMP exports since June last year, when the Government allowed shipments, are estimated at around 1.3 lakh tonnes.

A weak rupee in the recent past had made the Indian SMP exports attractive and the monthly shipments are estimated at 7,000-8,000 tonnes. “Shipments are almost negligible now and we are honouring the earlier commitments,” Sodhi said.

SMP exports are unlikely to have an impact on the domestic availability of milk as the flush or peak milk producing season will start soon.

India is the largest milk producer and the milk output stood at 133 million tonnes last year. SMP exports accounted for less than half per cent of the milk produced in the country.

An estimated one million tonnes of milk are required to produce about 1.5 lakh tonnes of SMP.


Published on October 14, 2013

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