Milk prices are likely to be at elevated levels till October this year due to high cost of feed and raw material, and supply challenges, a senior official of Mother Dairy, a major milk supplier in the Delhi-NCR region, said on Monday.
Organised players, including Mother Dairy and Amul, hiked milk prices multiple times in the last one year citing higher fodder cost, robust demand and some impact due to reports of lumpy skin.
“There is no respite from high milk prices till Diwali this year because of a sharp spike in the feed and raw material cost,” Manish Bandlish, MD, Mother Dairy Fruit and Vegetables, a wholly-owned subsidiary of National Dairy Development Board (NDDB), told FE.
Industry sources said that feed cost, which has a share of more than 65% in the cost of production of milk, has increased to Rs 20/kg from Rs 8/kg a year ago.
Mother Dairy had hiked milk prices in the Delhi-NCR region by Rs 2/ litre, citing a rise in input costs in December last year – the fifth round of increase by the firm last year.
“We have been witnessing a significant increase in demand for milk and milk products from both consumers and institutions, even after festivals. On the other hand, procurement of raw milk has not picked up after Diwali as was anticipated,” according to a Mother Dairy statement.
Meenesh C Shah, chairman, NDDB, had earlier stated that fodder and feed costs have increased by 25% in the last one year and there was some drop in milk production in few pockets because of the spread of lumpy skin disease (LSD) among livestock population.
Milk inflation in January was at 8.79%. Prices have been rising since a 3.81% jump on year in February last year.
The annual rate of fodder inflation based on the all-India Wholesale Price Index increased to 29.30% in January 2023 from 28.66% in December 2022.
In January 2022, fodder inflation was recorded at 7.14% and since then, it has been rising steadily.
According to industry estimates, out of around 9 million litres of milk supplied daily by organised dairy players in Delhi-NCR, Mother Dairy and Amul (Gujarat Cooperative Milk Marketing Federation) have around 40% share each.
Mother Dairy procures milk through farmer producer companies across states, including Uttar Pradesh, Rajasthan, Andhra Pradesh and Maharashtra.
Dairy cooperatives, including Amul, which have a major share in the liquid milk market, have hiked prices of packaged milk in the last one year citing rise in cost of production leading to higher procurement prices paid to farmers.
The cooperatives claim that 75-85% of each consumer rupee realised from selling milk and products goes back to the farmers.
Supported by a robust sales growth in milk and dairy products, Mother Dairy is aiming to achieve a 20% jump in sales turnover to over Rs 15,000 crore in the current fiscal against Rs 12,500 crore reported in 2021-22.
Source : Financial Express March 7th 2023