Faced with a sharp decline in demand during the ongoing lean season, coupled with a sharp increase in supply, skimmed milk
producers (SMP) have cut their product prices by six-seven per cent across all varieties.
leader, the Gujarat Co-operative Milk
Marketing Federation Ltd (GCMMF), which sells its products under the Amul brand, has revised its product prices by up to Rs 10 per kg. With this revision, SMP
prices currently stand around Rs 220 per kg.
price cut indicates a sharp decline in demand from consumers. Normally, demand for SMP
products remains robust during the festive season. However, the demand has remained lacklustre so far this season.
"We have cut maximum retail price (MRP) of skimmed milk
powder by six-seven per cent across all varieties recently because of weak demand from consumers. SMP
prices are likely to remain subdued in coming months due to the commencement of new milk
supply season," said R S Sodhi, managing director, GCMMF.
Normally, the new season of milk
supply begins in September and gradually intensifies to reach its peak in October and November. During this period, normally, dairy companies
process their liquid milk
to manufacture SMP
for supply in the lean supply season of April and May.
price decline, however, is unlikely to impact farmers’ realisations for the supply of liquid milk
as dairy companies
are preparing to absorb a squeeze in margins from lower SMP
in Maharashtra have posted lower profit margins for June quarter due to increase in milk
procurement prices. Milk
prices, however, are unlikely to decline because of a cut in SMP
prices," said Shirish Upadhyay, senior vice-president (strategic planning), Parag Milk
Foods Ltd, the producer of Gowardhan brand milk
An Edelweiss Securities report said that the average milk
procurement price for Prabhat Dairy stood at Rs 27.1 for the April–June quarter of 2017, up by five per cent from the corresponding quarter last year and down by around five per cent from the previous sequential quarter.
Dairy producers, however, find exports difficult given that the prevailing prices in international markets are 20 per cent lower than domestic prices.