Dairy products may get dearer as milk prices rise

National and regional dairy players are mulling a price rise in some of the products following an increase in milk prices driven by growing demand in China and Latin America and dwindling supplies.

Gujarat Cooperative Milk Marketing Federation (GCMMF) which markets its products under the Amul and the Sagar brands, is looking to increase prices of its butter brand by Re 1 for 100gm and milk powder by 3 per cent for 1 kilo from Rs 170 within the next one week.

R S Sodhi, chief general manager of GCMMF, said, "We had to increase prices to keep pace with the sudden increase in milk prices worldwide." GCMMF also increased prices by about 3 per cent in January across all categories due to rising input costs.

Similarly, Britannia Milkman is also looking at increasing prices. Anupam Dutta, head of Business Dairy, Britannia Milkman, said, "Milk is a very volatile commodity. But if there is a further increase in milk prices, which is likely to happen, we would be forced to increase prices of some of our dairy products." Britannia Milkman increased prices of its cheese and dairy whitener brands by almost 12 per cent in the last one year.

Recently, Mother Dairy also increased prices of all its milk variants by Re 1 in Delhi and NCR regions owing to a rise in the purchase price of raw milk and milk commodities.

Regional players like Thacker Dairy, the Rs 300 crore dairy brand of eastern India, has increased prices twice in the last three months and is likely to increase it further if milk prices escalate.

Said Nishit Thacker, director of Thacker Dairy, "Milk prices are likely to go up by Rs 30 more and we would be forced to further increase prices of our products to save ourselves from suffering losses."

Thacker increased prices last week of its skimmed and full cream milk variants by Re 1 for a litre but did not revise prices for toned and double toned variants as they are the highest selling products for the company.

In March, Thacker increased prices by Re 1 for a litre for full cream, skimmed and cow milk variants, and 50 paise for a litre for toned and double toned variants. Metro Dairy, another dairy major of eastern India, had increased prices three times in the last one year by Rs 3 per litre of milk.

Skimmed milk powder, the benchmark for world trade, has risen 60 per cent in six months to a record $1.58 a pound on May 4 on the Chicago Mercantile Exchange, seven times higher than the five-year average.

Reduced subsidies eliminated milk surpluses in Europe and slowed production growth in the US, government data show. The rally started last year after Australia reduced exports because of its worst drought in a century.

This year's rally, however, is different from increases in previous years because government surpluses are no longer available in dairy-producing countries such as the US, the largest exporter of milk powder, and the EU, the largest exporter of cheese.

Mexico, a top importer of US dairy products, cut purchases of milk powder by 28 per cent last year.