Source : India narrative 18th Dec 2022 by Mahua Venkatesh
Retail prices of packaged milk supplied by dairy cooperatives and Mother Dairy could see another round of hike soon, owing to the rise in costs of feed and other inputs. “As we have to hike procurement prices of milk from farmers, there could be one more round of increase in prices by cooperatives,” Meenesh C Shah, chairman, National Dairy Development Board (NDDB) said.
Last month, Mother Dairy, a wholly owned subsidiary of the NDDB, had announced a hike in prices of full cream milk by Rs 1 per litre and token milk (bulk vended milk) by Rs 2 per litre in Delhi-NCR, citing increase in feed costs.
This was the fourth hike in milk prices this year by Mother Diary, one of the leading milk suppliers in the region. Full cream milk at present cost Rs 64 per litre, but the company did not revised the price for 500 ml packt at Rs 32 a litre. Token milk is current sold at s 50 a litre.
According to Shah, in the last one year fodder and feed costs have increased by 25% and there was some drop in milk production in few pockets because of the spread of lumpy skin disease (LSD) amongst livestock population. He said that fodder prices have stabilised and with the setting in of ‘flush’ season when milk production goes up, prices are unlikely to firm up further after the next round of hike. The feed costs constitute about 75%-80% of the cost of production of milk, Shah said.
Dairy cooperatives, 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. Dairy cooperatives claim that 75%-85% of each consumer rupee realised from selling milk and products goes back to the farmers.
Mother Dairy and Gujarat Cooperative Milk Market Federation (popularly referred as AMUL) supply around 3 million litres of milk per day each to Delhi and NCR region. In October, the Mother Diary and AMUL had hiked milk prices.
While stating that the dairy industry is witnessing a huge gap in demand and supply of milk, a Mother Dairy spokesperson had said that ‘raw milk availability has been impacted due to increased cost of feed and fodder, erratic monsoon.
Milk inflation in November was at 8.16%. Prices have been rising since February, when they rose by 3.81% on year.
According to analysts at ICICI Securities, pan-India wholesale milk prices have increased 10.2% y-o-y in December 2022 so far, due to inflation in animal feed prices, and increasing consumption, weak flush season and spread of LSD.
Milk prices in south India are up 12.8% y-o-y. On a month on month basis, wholesale prices increased marginally by 0.6% across India.
The prices of maize, and wheat, key components of feed, continue to be 27.4% and 31% up y-o-y in November 2022, which will likely lead to higher feed prices. “We expect farmers to pass on any further inflation in key raw materials via higher milk prices,” analysts said.