Dairy majors expecting a sharp drop in stock of milk products to carry forward.
New Delhi: Milk and milk products are set to cost more, as dairy cooperatives such as Amul and Mother Dairy are preparing to increase prices in the coming months and boost the payouts to farmers.
The dairy majors are expecting a sharp drop in the stock of milk prod ucts to carry forward to the next fiscal year in April. They plan to raise milk and milk product prices and pass on the gains to farmers to encourage them to increase supplies, so that they can stock up products for the summer months, a lean period for the production of fresh milk.
“By the end of March, carry forward stock of skimmed milk powder (SMP) will be 50% less of last year and hence we might have to again increase farmers’ prices, which will impact the price in the market,“ said RS Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation that owns the Amul brand. “Consumer should be ready to pay more.“
Mother Dairy managing director S Nagarajan said the price that the consumer pays for liquid milk could see an upward movement by February . The cooperative has increased its payment to farmers by `3-4 a litre over the past year, he said. The last consumer price revision was in June-July this year, when milk prices were increased by `1 a litre. Private dairies usually follow Amul and Mother Dairy in revising prices.
“If Amul increases liquid milk prices, then we will too,“ said Kuldeep Saluja, managing director of Sterling Agro Industries, which sells dairy products under the Nova brand.He predicts the price of milk products such as buttermilk, butter and ice-cream to increase 5-10% by March. Amul had not increased the price it pays to farmers in 201415 when supplies were more than demand, but the situation has now changed, said Sodhi. “Now that milk production has slowed and we have low carry-forward stock of milk powder and butter, we are further increasing (procurement) prices,“ he said.Cattle feed and fodder prices have gone up 32-35% in the past one year, so an increase in farmers’ price is necessary , he added.
Amul had increased the procurement price for cow milk by 10% to `30 a litre and buffalo milk to `41-42 a litre in the past one month and may increase it further.
Sodhi said the carry forward stock till date of SMP in the country by dairy cooperatives and private payers was 32,000-35,000 tonnes, compared with 1.25 lakh tonnes a year earlier.
In the summer months, when milk production drops, the dairy sector manufactures liquid milk and other products by diluting milk powder -10 tonnes of SMP is needed to make 1 lakh litres of milk.November to January is the flush season when milk production increases naturally as there is plenty of green fodder available.
Meanwhile, milk fat prices have moved up to `340 a kg from `290 and SMP to `195-200 a kg from `170 since September this year.Players like Mother Dairy have increased ghee prices since September by `15 to `375 per litre.