‘Rise in prices needed to make milk remunerative for farmers’.
After onions, it is now the turn of milk and milk products. Skimmed milk powder prices have touched an all-time high of Rs 165/kg, following the recent increase in milk prices. Milk is a major component in the food basket and has a weight of 4.37 per cent in the wholesale price index (WPI).
“This is an all-time high price, though there is negligible export. There has been a price increase of Rs 15-20/kg since pre-Diwali,” said Kuldeep Saluja, managing director, Sterling Agro, which sells milk powder under the Nova brand. In the past, the government had banned milk powder export to control rising prices.
Gujarat Co-operative Milk Marketing Federation (GCMMF), which owns and markets the Amul brand of dairy products, has just raised milk prices by up to Rs 2 a litre, though the winter season usually sees higher procurement. It is in this season that powder stocks are built to cater to the milk demand in summer, when output is hit. Before Amul did so, the capital’s biggest milk retailer, Mother Dairy, also increased its price, by Re 1 a litre.
Producers point to an increase in input cost. “If we want milk production to increase, we will have to pay, else farmers will move away from dairy farming and, like edible oil, we will have to depend on imports to meet domestic demand,” said R S Sodhi, managing director, GCMMF. He did state, though, that no price increase would be required for at least the next six months.
Sodhi said the cost of labour, fodder and fuel had all gone up and an increase in milk price was required to make it remunerative for farmers. “India can produce much more milk, provided a remunerative price is given to farmers,” he said.
According to Amul, India’s annual milk production is around 110 million tonnes, about the same as demand. “The demand is growing by five to six per cent annually and we will have to increase the production by the same percentage to match it,” added Sodhi.
Earlier, a milk price rise used to take place only once a year. However, Amul has revised retail prices thrice in 2010, saying it was needed to encourage farmers to increase production, by paying them affordable prices.
Saluja said the government needs to review some policies. It had, he said, allowed duty-free import of 30,000 tonnes of skimmed milk powder and 50,000 tonnes of butter oil in the current year. Yet, it was providing DEPB benefit (an export incentive) to casein exporters, whose raw material was milk. Saluja says around three million litres of milk are being converted daily to produce casein, primarily for export.
