Milk prices to go north in west

Retail margins prompt rise in Maharashtra, rising input costs in Rajasthan; other regions stable

Milk prices could rise in west India - Maharashtra and Rajasthan - after a long period of stability.

In other regions, such as Gujarat, Delhi and the south, however, prices were unlikely to go north because of surplus stock of skimmed milk powder (SMP) in the country.

The country's largest dairy, Gujarat Cooperative Milk Marketing Federation (GCMMF), which sells dairy products under the brand name Amul, is likely to review the situation in June.

After unorganised sector milk producers raised prices around Mumbai in April, two cooperative dairies in the region, Mahanand and Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd (which sells milk and milk products under the Gokul brand), have raised retail prices by Rs 1-2 per litre primarily because of pressure from the retailer lobby.

V K Agnihotri, general manager, marketing, Mahanand Dairy, confirmed the development and said the increase in prices was for raising retailer margins.

Rajasthan Cooperative Dairy Federation (RCDF), which sells milk under the Saras brand, is planning to raise procurement prices to attract farmers to dairying as well as pass on a bit of this rise to the consumers.

Jog S Balot, chairman, RCDF, said, "Our procurement has fallen from 3.6 million litres a day to 2.6 million litres during summer (lean production months). In order to be able to attract farmers into dairying, we are planning to increase procurement prices."

The prices now range between Rs 510 and Rs 570 a kilo fat across dairies in Rajasthan. Balot claimed it would be raised to at least Rs 550 a kilo fat from May 21 across Rajasthan.

This would result in a rise in retail prices, too. Milk prices could go up to Rs 34 a litre for double-toned milk from the current Rs 32 a litre.

Balot said this would not be to increase retail margins, but to offset the rising input costs.

In other regions, however, milk prices are likely to remain stable.

R G Chandramogan, managing director of Tamil Nadu-based Hatsun Agro, a leading private dairy in the region, said it had no plans to raise milk prices in the coming months.

"There is sufficient stock of SMP in the country. Everyone is flush with milk. There is no immediate scope to raise prices. What Mahanand and Gokul have done is because of technical reasons," he said.

Amul, or GCMMF, has no plans of raising even retailer margins.

R S Sodhi, managing director, GCMMF, said: "We maintain a pan-India margin, and we cannot raise margins in specific regions. We have not raised prices in the past 12-13 months now, and as on date, there is no plan to increase retail prices."

As of now, there has been a 20-25 per cent decline in GCMMF's production of about 12 million litres a day.

However, according to Chandramogan, there is still about 80,000 tonnes of SMP inventory in the country, which would be easily converted back to milk. At the same time, as demand for value-added goods like ice creams increase during summer, a portion of the SMP stock would be used to meet the demand, and this would, in turn, bring down the inventory.