Dairies likely to review milk prices around May

Fodder crisis, commodity prices firming up, tight supplies in summer months might push milk prices upwards

As milk supplies drop by around 15-20% with the onset of summers, dairies are likely to review milk prices around May.

Summers are the lean months for milk production, and as such supplies fall around this time every year. This year, it is coupled with rising fodder and cattlefeed costs owing to drought like situation in many parts of the country. Moreover, the commodity prices (fat and skimmed milk powder) have started firming up after remaining stable for a long time. Dairies thus are under pressure to raise the procurement prices to farmers to boost production, and as such a review of the retail milk prices is likely around 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 that were down last year, have started firming up since the last fifteen days or so. Already fat and ghee prices are up by Rs 40 per kg while skimmed milk powder (SMP) prices are up in the range of Rs 15-20 per kg. Add to this, cattlefeed prices are up 15%, so are fodder prices on account of fodder shortage in the country."

Sodhi further claimed that procurement of milk is down by 15-20% on an average across the country, except Gujarat. "In Gujarat, supplies are up by 10%. This is because we have already paid the highest procurement prices in the country," he added. GCMMF procures around 15-20% of its milk from outside Gujarat. The federation procures about 18 million litres of milk per day on the whole.

Gujarat farmers are getting around 8-10% higher milk prices every year, and this is higher than what farmers in the neighbouring states get. Average procurement prices here around around Rs 650 per kg fat.

Maharashtra is facing the biggest crisis as such when it came to milk supplies, and this is primarily because of the drought situation. Maharashtra is the seventh largest milk producing state in India. In cow milk production, Maharashtra is ranked fourth in India accounting for around 8% of cow milk produced in India.

One of the leading private dairies in the region, Parag Milk Foods said that it has already raised procurement prices to farmers. Devendra Shah, chairman and managing director of Parag Milk Foods said, "At Parag Milk Foods, we have already increased the procurement costs to farmers by 10%.The input costs of fodder has witnessed a significant increase by 15-20%." Shah agreed that milk price review is an ongoing process depending on the season.

In comparison, Tamil Nadu seems to be in a better position as it received a good rainfall during the north-east monsoons. "We are already paying more to farmers at Rs 26 per litre compared what they are getting in states like Maharashtra where it is as low as Rs 18 per litre. Hence, we do not have a supply crisis as of now," informed R G Chandramogan, managing director of Hatsun Agro. He added that SMP prices have started firming up in the international market, and this would powder prices here too would rise. However, Chandramogan is hopeful that if monsoons set in time, the fodder scarcity situation might improve.