Surplus powder stocks to keep milk prices stable in North

As prices of staples, such as pulses rise to alarming levels alongside those of most vegetables and fruits, consumers in Northern India are likely to be spared from paying more for milk over the year.

While Gujarat Cooperative Milk Marketing Federation (GCMMF), which owns brand ‘Amul’, hiked rates across the segment by ₹2/litre in Gujarat earlier this month, cooperative and private dairy players in the North told BusinessLine that with large stocks available, a price hike can be ruled out.

“There is no reason to raise prices in the Northern market since outlook is stable. There is a slight upward trend in prices, which is natural at this time of the year given the lean season, but our margin structures are fairly protected. That’s why this slight price increase of ₹1-1.50/kg over the last month or so will be absorbed,” said an official at Mother Dairy.

Milk expenditure Industry sources estimate that milk is being procured across Rajasthan, Punjab, Uttar Pradesh and Haryana, at around ₹550/kg of fat, up ₹20/kg, and buffalo milk at ₹36-37/litre.

The ‘upward trend’ is not likely to be passed on to consumers in these States and the Capital, which is significant since the average monthly per capita expenditure on milk is highest in the region.

Data from the 68th National Sample Survey Office’s household consumer expenditure survey shows monthly expenditure on milk in both rural/urban areas was the highest in Haryana (₹460.19/₹434.20), followed by Delhi (₹342.93/₹311.88), Punjab (₹330.94/₹357.46), and Rajasthan (₹257.77/₹302.87).

The corresponding rural and urban national average was ₹116.13 and ₹186.47.

“I don’t expect anyone to raise milk prices at all this fiscal. There are adequate dairy products available and no exports, there is surplus stock in the market,” said Sandeep Aggarwal, Director, SMC Foods Ltd, a part of the Madhusudan group.

Sluggish shipments Exports have remained sluggish with global skimmed milk powder (SMP) prices remaining depressed and stagnant demand.

Prices slid to around $2,000/tonne, compared with $4,000-4,500 a year ago, while Indian exports, currently in the range of ₹180-210/kg, are rendered uncompetitive internationally against Australian and New Zealand variants at ₹128-140/kg.

The monsoon could be a factor said some industry players, with the deficient rain forecast likely to hit fodder prices. “It depends on the monsoon, and a proper assessment can only be made a month and a half from now. If it’s poor, fodder prices will rise and that will impact milk production immediately,” said Sanjay Dhingra, Chairman and Managing Director, Kwality Ltd, owner of the ‘Dairy Best’ brand.

Aggarwal, however, was optimistic and stated that the monsoon would not be a factor. “This is the off-season and milk will start coming in by August. Whatever deficit there is on account of the monsoon will get covered,” he said.

The Consumer Affairs Ministry data say that the average retail price of milk in Delhi and Chandigarh as of late last week has remained unchanged over the previous year at ₹38/litre, while consumers in Amritsar paid ₹40/litre through the same period.

Average price has risen marginally to ₹34/litre from ₹32 in Jaipur, and from ₹41 to ₹43/litre in Karnal.

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