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The aroma of freshly made fluffy, spongy rasgullas and gulab jamuns fills the air at Chhotu Motu Joshi, a famous confectionery store run by Rishi Mohan Joshi, a fourth-generation sweet maker, in Rajasthan’s Bikaner district. With Deepavali just days away and the demand for sweets doubling, Mr. Joshi is finding it tough to meet his shop’s milk requirement as supply has been hit following the outbreak of lumpy skin disease, which has severely affected cattle in the State.

Mr. Joshi says four families that run dairy farms have been supplying milk to his shop for years, but now he has been forced to reach out to local vendors to plug the shortfall. “We use only cow milk to prepare sweets. But over the past two months, its price has shot up from ₹35-₹40 a litre to ₹60-₹65,” he says, adding that his shop’s milk requirement jumps from 300-500 litres a day to 1,000 litres during the festive season.

“The rising cost of milk products such as ghee and khoya is prompting us to raise the price of sweets. The cost of khoya, which is used to make gulab jamun and barfi, has risen from ₹190-₹200 a kg to ₹260-₹270. The price of a 15 kg tin of ghee has increased from ₹6,000 to ₹9,000. There has been no intervention from the government. Our profit margins have dipped as stiff competition prevents us from hiking the rates of sweets at one go. We used to charge ₹170-₹180 for a kg of rasgulla. Now, we sell it for ₹210,” Mr. Joshi says.

With sweet makers like Mr. Joshi raising the rate of products following the hike in milk prices, customers will have to shell out more to buy delicacies this festive season. Milk suppliers, cooperatives and dairy farmers say a shortage in supply owing to the outbreak of lumpy skin disease and the rise in input costs are driving up milk prices.

Compromising on profits

A dairy shop owner in east Delhi, who did not wish to be named, says there was an apprehension that milk prices would increase as supply in most farms in Rajasthan had reduced by three lakh litres a day due to the spread of lumpy skin disease. “Milk is an essential commodity in most households, but people have reduced their consumption due to the price hike,” he says, adding that the prices are expected to rise further.

Over the past year, the prices of various sweets have increased in Delhi: sevpak (₹690 a kg to ₹720), Karachi halwa (₹690 to ₹720), besan ladoo (₹690 to ₹720) and sohan halwa (₹800 to ₹840).

Kunal Balani, a partner at the 121-year-old Chaina Ram Sindhi Confectioners in Chandni Chowk, says sweets in his shop now cost ₹30-₹40 more as the price of a 15 kg tin of ghee has risen from ₹5,000 to ₹9,000 and a kg of khoya has increased from ₹290 to ₹400. “Ideally, we should hike prices at least by another ₹20, but we can’t afford to lose customers just to make a profit.”

Siddharth Jain, owner of Bengali Sweet Centre in South Extension, says, “We tried out different milk brands to reduce costs and maintain quality, but it was still expensive.” He adds that they are expecting better sales this year as Deepavali is being celebrated in a full-fledged manner after two years of the COVID-19 pandemic. “Between Holi and Deepavali, the cost of making a sweet has increased by 25%,” he says.

Sumon Kar, owner of the 40-year-old Annapurna Sweets in C.R. Park, says he hasn’t changed his vendors despite the rise in prices. “We can’t take a chance with the quality of our product,” he says. Over the past two years, Mr. Kar says he has hiked the price of each sweet by ₹2 and yet his business is earning meagre profits. “We largely cater to Bengali customers. A spike in prices might lead to a dip in sales.”

Rising cost of fodder

Shubham Yadav, a milk shop owner in Uttar Pradesh’s capital Lucknow, says milk prices have increased as the cost of fodder has risen sharply. The price of chuni chokar rose from ₹1,700 per quintal to ₹2,580 and the cost of bhusa doubled from ₹700 per quintal, he says.

Mr. Yadav adds that the pandemic also played a role in depleting the stock of milk as dairy farmers were forced to sell their cattle to sustain themselves when businesses shut following the imposition of the nationwide lockdown in 2020.

“Earlier, farmers would have sufficient supply of milk as they would sell 490 litres of the 500 litres they sourced and set aside 10 litres for personal consumption,” he says. Similarly, during the second wave of COVID-19, farmers sold their cattle to keep themselves afloat. Later, they began procuring cattle from Punjab, but had to stop it owing to rising transportation costs, he says.

Mr. Yadav also fears that substandard milk and adulterated ghee, paneer and khoya will soon flood the market as shop owners will be looking for cheaper alternatives amid the rise in prices.

Fear of adulteration

Munmun Biswas, a resident of C.R. Park, says her neighbours are wary of buying milk at cheaper rates from local vendors as it could be of poor quality. “Milk procured from vendors is mostly unhygienic and contains added urea and whiteners.” Ms. Biswas says her family of three is managing not to cut down on their milk consumption by trying several alternatives. “Most companies launch new offers and provide free products like butter, ghee and buttermilk. But they too increase their prices later,” she says. The ₹2 hike in milk prices might not look significant, but it will lead to a rise in the rates of paneer, khoya and ghee, and sweets will be dearer by ₹50, she says.

‘Benefits not reaching farmers’

Dayabhai Gajera, leader of Dairy Farmers Federation of India and chairman of Upleta Milk Producers Society Limited in Rajkot, Gujarat, says the benefit of the hike in milk prices has not reached the farmers as there has been no major increase in the milk procurement price. “After the outbreak of lumpy skin disease and rise in fodder prices, bovine mastitis has now affected milk production. Supply has dipped from 4,500 litres a day to 3,500-3,700 litres,” he says.

R.S. Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation Limited, which sells milk and other dairy products under the Amul brand, agrees that there is a strain on the supply chain, particularly milk cooperatives. “There is pressure as demand for milk increases by 10% and dairy products by 15% to 20% during the festive season. The organised sector is finding it difficult to increase milk procurement and a large proportion of products is sold through the unorganised channel. We increased the price of high fat milk on account of rising input costs,” he says. Amul had increased the prices of full cream milk and buffalo milk by ₹2 per litre last week.

Tapesh Yadav, general manager of Pradeshik Cooperative Dairy Federation, says they are yet to take a call on hiking milk prices further. “We had revised our prices in August. During the festive season, production usually dips. The rise in input costs may have an impact on production.”

Private sector feeling the heat

“The Indian dairy sector is an integral part of festivities. Mother Dairy witnesses a 5%-8% surge in demand during festivals. This year, too, we are optimistic of demand rising. We are ensuring consistent supply to our consumers. The prices of raw milk have firmed up compared with last year. The last two months alone have seen prices rise by ₹3 per litre owing to rise in input costs,” says Manish Bandlish, managing director of Mother Dairy Fruit & Vegetable Pvt. Ltd.

However, with India being one of the largest producers of milk in the world, supply is expected to return to normal after the spike in demand during Deepavali. According to the Ministry of Animal Husbandry and Dairying, 209.9 million tonnes (provisional figure) of milk was produced in the country in 2020-21, while in 2019-20, the figure was 198.4 million tonnes. In 2020, during the pandemic, the average per capita availability of milk in the world was about 321 grams per day, while in India it was 427 grams per day.

Source : The Hindu Businessline 21st Oct 2022 by Samridhi Tewari and A.M. Jigeesh