After nearly a five-month pause, milk prices have started rising once again. Private dairies in Mumbai are set to raise milk prices by 10 per cent effective tomorrow on rising fodder prices.
The last revision was in September, with private dairies raising milk prices by Rs 2 a litre, followed by organised sector players, including Amul and Mahananda dairies, increasing prices by Rs 1 a litre each, respectively. This time, again, private dairies have taken the lead in raising milk prices by a massive Rs 4 a litre, thereby opening a door for organised sector players to follow suit.
With this price rise, milk from private dairies will be sold at Rs 48 a litre from tomorrow, as against Rs 44 a litre now.
“We had no option but to pass on the price rise in fodder to consumers,” said Ashok Sharma, owner of Ashok Dairies in the western Mumbai-suburb.
Sharma said fodder prices have jumped 12-15 per cent in the past few months. The average price of maize, the main ingredient of cattle feed, has gone up by nearly 18 per cent to Rs 11,518 a tonne in the past year.
Meanwhile, organised sector players like Gujarat Cooperative Milk Marketing Federation (GCMMF), the owner of Amul brand, has not taken any decision to raise prices till now.
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“We are not raising milk prices as of now. But, we are not going to cut prices either as dairy products are the cheapest in India,” said GCMMF Managing Director R S Sodhi.
While comparing milk prices in India with the US, Sodhi said, “As against a dollar a litre in the US, Indian consumers are paying much less for a litre of milk.”
GCMMF is buying 14 million litres of milk daily in Gujarat currently, 19 per cent more than the procurement a year ago. It pays around Rs 30 crore a day to dairy farmers in the state.
According to GCMMF, Indian farmers get the maximum price for milk as they get 70 to 80 per cent of the ‘consumer rupee’, while in the West, farmers get only a third of the ‘consumer dollar’.
A study by the United Nation’s Food and Agriculture Organisation (FAO) estimates India’s milk production to rise four per cent to 121.7 million tonnes (mt) in 2011 on the back of rising domestic consumption, The country produced about 116 mt of milk in 2010.
Rising domestic demand for milk and dairy products is stimulating growth in the country as India is largely absent from the international markets for dairy products, the FAO report said.
The international body on the farm sector in its latest 'Food Outlook' report also estimates global milk production in 2011 to grow two percent to 728 mt.
Much of the anticipated expansion is likely to accrue in Asia, where India is expected to witness an output rise of five mt to 121.7 mt.
According to a recent study by the industry body, Associated Chambers of Commerce and Industry of India, India, the world’s largest milk producer, accounts for around 20 per cent of global milk production, with most of it consumed domestically.
The domestic dairy industry is expected to touch Rs 5 lakh crore by 2015, with milk output pegged at 190 mt at the end of the period, the study further said.