Dairies likely to revise milk price next month

Price increase is being attributed to drought and rising fodder and cattle feed costs

As milk supplies drop 15-20% with the onset of summer, dairies are likely to review their prices next month.

Supply falls around this time every year. This time, it is coupled with rising fodder and cattle feed costs, owing to drought in many parts. And, commodity prices (fat and skimmed milk powder or SMP) have started moving up, after being stable for a long while. A review of retail milk prices is likely around the first week of May.

R S Sodhi, managing director of the country's largest dairy cooperative, Gujarat Cooperative Milk Marketing Federation (GCMMF), said: "Commodity prices were down last year but have started firming up since the past 15-odd days. Already, fat and ghee prices are up by Rs 40 a kg; SMP is up by Rs 15-20 a kg. Cattlefeed prices are up 15% and so are fodder prices."

Sodhi also said procurement of milk was down by 15-20% on an average across the country, except in Gujarat. "In Gujarat, supplies are up by 10%, as we have the highest procurement prices in the country," he added. GCMMF procures about 18 million litres a day, 15-20% of this from outside Gujarat. The latter's farmers get eight to 10% more for their milk every year, higher than elsewhere.

Drought-hit Maharashtra, normally the seventh largest milk producer, has a particular problem this year. In cow milk, it is ranked fourth in India, around 8% of the total produced.

Devendra Shah, chairman of Parag Milk Foods, one of the leading private dairies in the region, said: "We have already increased the procurement costs (prices) to farmers by 10%.The input cost of fodder has witnessed a significant increase of 15-20%."

Tamil Nadu is in a better position, having got good rain during the northeast monsoon. "We are already paying more to farmers at Rs 26 a litre, compared what they are getting in states like Maharashtra, where it is as low as Rs 18 a litre. Hence, we do not have a supply crisis, as of now," said R G Chandramogan, managing director of Hatsun Agro.

He added SMP prices had started firming up in the international market, and this would push it here, too. If the monsoon was on time, he said, the fodder situation might improve.