 "Skimmed milk powder prices to rise this year")
Skimmed milk powder (SMP) prices are thought likely to rise by 25 per cent this year on less output during the lean production season of April–October and higher seasonal demand. From Rs 125-130 a kg a couple of weeks earlier, the price is now Rs 140-150 a kg, still about half of the Rs 290 a kg peak of around 18 months earlier. However, prices are expected to be Rs 175-180 a kg by the end of the peak demand season of Diwali.
The price rise would raise farmers’ income proportionately, as cooperative milk processors pass on the income from the commodity without delay. “SMP prices have been under pressure for 18 months due to falling export demand. These would rebound on the sharp decline in pipeline inventory and lean season production slump in April–October period,” said Shirish Upadhyay, senior vice-president at Parag Milk Foods, producer of the Gowardhan brand milk and cheese.
During the peak arrival season of liquid milk, between November and March, the demand for SMP dips in the domestic markets.
Many dairy farmers had started focusing on animal health and supply of quality feed, to obtain more milk. That has started yielding results. A recent PhillipCapital report estimates milk production in India at a record 147 million tonnes in 2014-15, a rise of five per cent from the previous year. Consumption also rose, by six per cent, to 138 mt in FY15.
The jump increased pressure on farmers as processors didn't want more milk, a perishable commodity. So, farmers had to settle for a lower price. Over the past 18 months in Maharashtra, for instance, realisation declined to Rs 19 a litre from the peak of Rs 26-27 a litre. That had prompted the government to order state co-operatives to start processing of liquid milk into SMP. The dairy department here estimates total SMP production at 5,000 tonnes in 2015-16.The price rise would raise farmers’ income proportionately, as cooperative milk processors pass on the income from the commodity without delay. “SMP prices have been under pressure for 18 months due to falling export demand. These would rebound on the sharp decline in pipeline inventory and lean season production slump in April–October period,” said Shirish Upadhyay, senior vice-president at Parag Milk Foods, producer of the Gowardhan brand milk and cheese.
During the peak arrival season of liquid milk, between November and March, the demand for SMP dips in the domestic markets.
Many dairy farmers had started focusing on animal health and supply of quality feed, to obtain more milk. That has started yielding results. A recent PhillipCapital report estimates milk production in India at a record 147 million tonnes in 2014-15, a rise of five per cent from the previous year. Consumption also rose, by six per cent, to 138 mt in FY15.
“SMP prices have bottomed out and would see a turnaround from the current level,” said P G Ganesh, head, food & agri research, Rabo India Finance.
Rabo Bank says medium-size dairy units, with 50-300 cattle each, would be the future of this industry in India. In the coming years, milk procurement will become the critical link in the dairy supply chain as procurement from small and marginal dairy farmers will increasingly become a challenge, it said.