Onset of summer sets milk prices on boil

Some players have hiked prices, others planning to follow

Milk prices are climbing with the onset of summer. Arrivals are slow in parts of the country, including Maharashtra, and farmgate milk prices have risen nationwide. Some players have raised retail prices and others are evaluating hikes.

The country’s largest dairy cooperative, the Gujarat Cooperative Milk Marketing Federation (GCMMF), said it would raise milk prices by ~2 per litre in March.

Input costs for farmers, which includes fodder and cattle feed, have gone up by 20-25 per cent in the past year. “Cow raw milk prices have increased by more than 25 per cent from levels seen at the same time last year. Prices have now moved upwards of ~28 per litre,” said Shiva Mudgil, senior analyst, Rabobank.

The Punjab State Cooperative Milk Producers’ Federation, which sells milk under the Verka brand, has raised procurement prices from ~600 per kg fat to ~620 per kg fat. Arrivals are stable and the federation is yet to take a call on whether to raise prices.

“Arrivals are around 2.05 million litres per day and we expect this to pick up in coming weeks,” said S R Saini, additional managing director of Punjab State Cooperative Milk Producers’ Federation.

GCMMF’s member unions are paying ~610-635 a kg fat to farmers. Arrivals were one-two per cent higher than the same period last year, said R S Sodhi, managing director, GCMMF.

A Mother Dairy spokesperson said, “We expect an upward correction in the consumer price of milk. And, we are working on the timing.”

“Procurement prices have jumped by ~4.15 per kg from the same period last year. The last milk price hike was undertaken in July,” the spokesman added.

In the south, private dairies like Hatsun Agro in Tamil Nadu raised farmgate prices by ~2 a litre a month ago and are now paying ~27 per litre to farmers. The company, however, has not raised retail milk prices.

R G Chandramogan, managing director of Hatsun Agro, said the supply of raw milk was steady. “MarchApril is the leanest season here and things start improving from May. We have not yet decided on whether to raise prices,” he said.

Chandramogan said the inventory of skimmed milk powder was lower this year. Last year’s squeeze in exports kept milk prices stable.

“There is neither a surplus or a shortage of skimmed milk powder in the market. There is an estimated inventory of 125,000 tonnes,” Sodhi said.

Arrivals have fallen by 15-20 per cent in Maharashtra, where private dairies have raised prices. Devendra Shah, chairman and managing director of Parag Milk Foods, said it had hiked prices by ~3 per litre a month ago.

Maharashtra-based Mahanand Dairy has seen procurement fall by 20 per cent in recent months. The drought in the past two years has reduced Maharashtra’s herd and affected milk production in the state.