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Milk prices unlikely to increase in next two months

The retail price of milk is unlikely to increase in the next two months as dairy companies are left with huge stocks of milk powder from last year and exports are enviable due to lower prices overseas.

A liter of full cream milk costs Rs 48 in Delhi and the National Capital Region, according to a July 2015 price listing on the website of Mother Dairy Fruit & Vegetable Pvt.

About half the milk produced in India from March every year is reconstituted from skimmed milk powder with the addition of butter oil. Ten liters of milk can be produced from 1 kg of skimmed milk powder.

In north India, the flush season, when milk production increases, is from November to January, when there is plenty of green fodder. The lean season follows from April to July. In south India, the flush season begins with the advent of monsoon.

Stockpiles of skimmed milk powder in the country are estimated at between 1.4 and 1.8 lakh tonnes, according to industry officials. The powder is consumed by dairies, confectionery and sweet manufacturers and pharmaceutical companies. “Consumers are set to benefit as we have ample stocks in country and the flush season is set to begin in the southern states,” said Devendra Shah, Chairman of Parag Milk Foods Pvt, which sells ‘Gowardhan” and ‘Go’ branded dairy products.

He said India remains noncompetitive in the global market due to lower prices overseas. At the fortnightly global dairy trade auction on April 19 in New Zealand, skimmed milk powder prices rose 0.3% to $1,727 per tonne, which is equivalent to Rs 115 a kg in India, where domestic prices are at Rs 140-160 a kg.

“SMP prices in wholesale are firming up in the domestic market, largely in north India, as summers have set in. The demand is also more to make milk products from ice-cream to buttermilk,” said S Nagarajan, managing director of Mother Dairy. Still, he said, milk prices were unlikely to increase for the next 60 days.

“The trend of what will be the consumer prices for milk will be visible at the end of June. We will need to watch commodity stock levels in the country, arrival of fresh milk in May-June in north India and the price level of milk in the season,” he said.

After May 2014, liquid milk prices have not increased in the country, said RS Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation, which sells the Amul brand of dairy products. “Milk prices will not rise immediately, but we are watching the situation. The way white butter and SMP prices are going up and production unable to meet the demand, we might have to revisit prices,” Sodhi said.

In the past 15 days, the price of SMP in the domestic market has increased by Rs 15 a kg, said traders.