Milk prices set to rise by up to Rs 3/ltr

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SME Times News Bureau | 17 Dec, 2019
After onions made headlines with exorbitant cost, milk will soon become dearer as major processing firms have decided to raise prices by up to Rs 3 per litre on the back of constrained supply.

Accordingly, the rise is seen to be in line with the retail food inflation trajectory which has shown an upward trend, as perishable items' supply has been adversely impacted due to weather-related phenomenon such as flooding and extended monsoon.

Last week, Consumer Price Index which gauges retail inflation showed a year-on-year (YoY) rise of 3.46 per cent in milk and milk products during November.

Incidentally, the milk price component in wholesale price index has shown an upward trajectory for the past seven years. This has meant that consumers have been paying higher prices for milk every year.

According to Mother Dairy, the adverse climatic conditions have resulted in a significant increase in feed and fodder prices.

"This has impacted the prices paid to the milk producers. The raw milk prices, which in a normal year come down during winter months, have firmed up substantially. The prices paid to milk producers have increased by about Rs 6 per kg in the last few months, up by almost 20 per cent than the corresponding period last year," the company said in a statement.

"Mother Dairy is compelled to raise its milk prices in Delhi NCR for all its milk variants with effect from December 15, 2019." This is fourth increase in milk prices by the cooperative in last three years. The prices have been revised upwards in March and October 2017 and in May and december 2019.

Another major producer, Gujarat Co-operative Milk Marketing Federation which markets dairy products under the brand name of Amul, has decided to revise the milk prices by Rs 2 per litre being sold in Ahmedabad and Saurashtra markets of Gujarat, Delhi NCR, West Bengal, Mumbai and Maharashtra from Sunday.

"It is worthwhile to note that in the last 3 years Amul has made only two price revision for pouch milk which is only Rs 4 per litre and less than 3 per cent per annum increase in MRP. The price increase in milk is much lower than average food inflation," the company said in a statement.

"This year the price of cattle feed has increased by more than 35 per cent. Considering increase in cattle feed and other input costs, our member unions have increased milk procurement price in the range of Rs 100 to Rs 110 per kg fat which is more than 15 per cent increase than last year for the 36 lakh milk producers of Gujarat."

Lately, weather related phenomenon have pushed food prices higher, thereby lifted India's retail and wholesale inflation levels.

Recently, data by the National Statistical Office (NSO) showed that Consumer Food Price Index (CFPI) inflated to 10.01 per cent during the month under review from an expansion of 7.89 per cent in October 2019 and (-)2.61 per cent rise reported for the corresponding period of last year.

Product-wise, prices of vegetables, eggs, milk, meat and fish pushed the retail inflation higher on a YoY basis. In contrast, decline in prices of 'fuel and light' capped the overall food inflation.