Dairies hike milk prices in Maharashtra due to milk shortage

Increased demand and a shortage in milk has seen dairies increasing their farmers’ milk procurement prices. Milk farmers in most parts of the state are now commanding prices between Rs 25-26 per litre for their milk with 8.5 per cent solid-not-fat (SNF) and 3.5 per cent fat, which dairies say is expected to continue for days to come.

On Saturday, the Pune district cooperative milk producers union– the dairy which retails dairy products under the brand name, Katraj– announced an increase in their procurement price. Vivek Hindurao Kshirsagar, managing director of the dairy, said this hike was in response to the shortage in milk procurement. “At present, we have a 10 per cent dip from our normal 2.5 lakh litres per day collection,” he said. While supply has dipped, he said demand has picked up, as life has almost returned to normal due to the government relaxing lockdown restrictions. “We expect this situation to remain for days to come,” he said.

Ironically, the dip comes when dairies normally report excess milk production in what is called the flush period. Between October and March, animals increase their milk production, thanks to easy availability of water and green fodder. Once summer sets in, animals reduce their lactation due to stress on water and fodder, which corresponds to the lean period in the sector.

Flush is yet to start

However, this year, the flush is yet to start, leading to dairies feeling the pinch. Dasrath Mane, chairman and managing director of Indapur Dairy and Milk Products Ltd — popularly known as Sonai dairy– said this was mainly due to floods and excess rains reported from various parts of the country and the state as a whole. “We feel the flush has been delayed by over a month,” he said. Sonai dairy has also started paying their farmers Rs 26 per litre as their procurement price.

The Covid-induced lockdown had severely affected the dairy industry, with farmers reporting very low procurement prices of Rs 18-20 per litre. This was mainly due to a slip in demand as sweet shops, tea shops and canteens etc remained closed. Following the easing of restrictions, things have almost returned to normal, causing demand also to normalise.

Mane however negated any dip in collection, and points that his dairy still reports a normal collection of 20 lakh litres per day collection. Commodity prices like skimmed milk powder (SMP) and white butter have firmed up, which has seen dairies trying to corner as much milk as possible, he added. Dairies convert excess milk in SMP and white butter, which are tradable commodities.

SMP and Butter Prices

At present, domestic SMP prices are between Rs 190-210 per kg, while white butter price is around Rs 285 -290 per kg. “Barring some cooperative dairies who have 2 lakh tonnes of SMP and 1.15 lakh tonnes of white butter, most dairies are running low on them. So, they have signalled farmers for more milk by increasing procurement prices,” he said. The present procurement prices, Mane said would continue for at least a month.

At the international level, SMP prices have firmed up, with Global Dairy Trade the online auction platform of New Zealand’s cooperative giant Fonterra reporting December 15 contracts closing at $2,930 per tonne.