Say rising input costs leave them no choice; demand growth also consistently outpaces output.
Faced with rising cost of production, milk producers in the organised sector are planning another round of price rises, in the range of Rs 1-2 a litre, by the end of next month. in summer cost of storing wheat and transporting also goes up.
Some of the leading producers such as Gujarat Cooperative Milk Marketing Federation, producer of the Amul brand, and Mumbai-based Mahanand Dairy, raised milk prices by Rs 1 a litre early this month. They are considering raising it again next month. Unorganised sector suppliers here had raised prices of their best-quality buffalo milk by Rs 6 a litre this month in two stages.
“The dairy industry is seeing a visible and very rapid increase in demand for milk due to rising purchasing power of both rural and urban people, leading to a shift from consumption of cereals to vegetables, milk and meat. At the same time, farmers are struggling to cope with higher feed and other costs and asking for a higher price to meet the increased cost of production,” said Amrita Patel, chairman of the National Dairy Development Board.
She says milk yield in India is between 800-1,000 litres an animal a year against the global average of 7,000-8,000 litres a year. Since much of this milk comes from individuals with small herds, who lack the means to invest in improving cattle yields, Patel believes corporate entry into milk production may address the problem.
Farmers also face a fodder shortage, estimated at 15 million tonnes, forcing them to use low-quality feed. The shortfall in production raises prices consistently of fodder.
Meanwhile, prices of molasses, another animal feed, have surged to Rs 3,400-3,600 per tonne from Rs 2,700-2,800 per tonne a month before. Though this forms a small component in the entire animal feed basket, such a surge does affect the planning, said Deepak Desai, chief consultant, ethanolindia.net, a consulting firm.
“We raised milk prices by Re 1 on February 17 when the government raised procurement prices by Rs 2 a litre. The remaining Re 1 differential was passed on to consumers on April 6. So, until now the company is bearing the hike in the cost of milk production. But any further rise in cattle feed prices will be passed on to consumers,” said a senior Mahanand Dairy official. Rising transportation cost has also squeezed our margin, which was already thin, he added. Data compiled by the Solvent Extractors’ Association show that prices of castorseed meal, another animal feed, have risen to Rs 5,400 per tonne from Rs 4,900 per tonne in the past three months.
With competing claims on biomass for energy, the cost of dry fodder for feed is rising and will continue to rise. Since dry fodder constitutes the major portion of the animal’s ration, it becomes important to take steps to secure all the straw in the fields, hitherto being wasted or burnt, said NDDB’s Patel. Meanwhile, India’s domestic demand for milk has been growing at about six million tonnes per year, whereas annual incremental production over the past 10 years has been about 3.5 mt per year. As the requirement of milk in 2021-22 is expected to be 180 mt, output needs to rise at 5.5 per cent per annum now.
