Skimmed milk powder prices have increased from Rs 180 to Rs 200 a kg this summer.
A 10-12 per cent jump in skimmed milk powder (SMP) prices to record levels of around Rs 200 a kg has made demand almost negligible this summer. Producers apprehend they will have to cut price in the next two weeks, as they cannot carry stocks for long. This summer, SMP prices have increased from Rs 180 to Rs 200 per kg.
In December, prices were ruling at Rs 165 per kg. Export is banned and cooperatives (one of the main customers of SMP) have imported the product. A price cut of around Rs 10 per kg is likely soon.
"Usually, the demand for SMP is strong in summer. However, this year, demand is weak. The market is not ready to buy at the current price levels. In a fortnight, prices will come down since we cannot carry stocks for long," said Jitendra Agarwal, director, Bhole Baba Dairy Industries that sells SMP under Krishna brand name.
While the domestic demand is lacklustre, a ban on SMP export imposed in February has closed avenues these as well. Along with the SMP, ban on casein export was also imposed. In the last financial year, the country exported SMP and casein worth Rs 500 crore. After imposing an export ban, the government in March allowed the dairy industry to import 30,000 tonnes milk powder at nil duty.
In a pre-emptive move, the government banned export to control milk prices. In spite of this, milk prices have continued to increase. Since April, Amul and Mother Dairy had raised prices by Rs 2 a litre. In the past one year, the milk prices have jumped 20-25 per cent. Amul and Mother Dairy attribute the rise to rising cost of inputs, especially cattle feed.
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Agarwal said South Indian states are having a flush milk season and their demand for SMP is also low. The SMP is used by milk processors to make full-cream milk.
Rajeev Kumar, managing director, Param Dairy said the combined impact of export ban and lean domestic demand has led to lower sales of milk power. The company sells SMP under the Param Premium brand.