Sri Vijaya Visakha hikes milk procurement price

Sri Vijaya Visakha Milk Producers Company Limited (Visakha Dairy) hiked the milk procurement price by Rs 10 on 1 kg fat milk (every 100 litres of milk generate one kg fat) from Wednesday.

"This will impose an annual additional burden of about Rs 5 crore on the dairy," Visakha Dairy managing director D Venkata Rao told Business Standard. However, the dairy has decided not to increase the selling price of milk as of now, Rao added.

"We were paying Rs 190 per one kg fat milk. From March 1, we have enhanced it to Rs 200. So depending on the milk quality, producers will get an additional Rs 0.75 to Re 1 on every litre of milk," he said.

Visakha Dairy collects milk from about 1.75 lakh farmers in Visakhapatnam, Vizianagaram, Srikakulam and East Godavari districts. It currently procures about 4 lakh litres of milk a day. During the summer season, it will cut down procurement by 50,000-60,000 litres a day.

Taking cue from Visakha Dairy, other local milk societies, which supply milk to Visakha Dairy, have also announced a hike of about Rs 0.50 per litre depending on the quality. There are about 706 societies under Visakha Dairy. This decision is likely to hit the profits of some of the private dairies, which are procuring milk from North Coastal Andhra Pradesh.

Currently, private dairies like Dolphin Dairy, Heritage Dairy, City Dairy, Supraja Dairy and other small private dairies procure about 1.5 lakh litres of milk from Visakhapatnam and Vizianagaram districts.

"Because of the decision of Visakha Dairy, we too were forced to increase the procurement price, which would impact our margins significantly. But our milk procurement will increase because we will pay the increased procurement price uniformly in all areas," M Appa Rao, chairman of Dolphin Milk Products Pvt Ltd, told Business Standard.