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Further dairy price hikes unlikely as companies cut procurement rates

Owing to a fall in demand, the procurement price of milk has been cut by Rs 3-5 per litre in Maharashtra, Punjab, Haryana and Uttar Pradesh

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BS Web Team New Delhi

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In the last 15 days, major dairies across North India and Maharashtra have cut the procurement price of milk by 10 per cent, but it is not expected to reduce the prices for retail customers, a report by The Economic Times (ET) said on Friday. However, it will allow dairy companies some legroom to not hike the prices for a few months to come.

The report cited several experts as saying that the delayed onset of summer has kept the demand for products like ice cream and buttermilk below the peak and has allowed the companies to release the hoarded stocks to meet the shortfall. Moreover, the recent hikes, totalling up to 15 per cent in some cases, have also kept the demand lower.

Several dairy companies had approached the Centre two months ago to ease the import of milk products to meet the "acute" shortage in the country. Despite that, the prices of skimmed milk products (SMP) and butter have fallen between 5 and 10 per cent during the period.

Owing to the fall in demand, the procurement price of milk has been cut by Rs 3-5 per litre in Maharashtra, Punjab, Haryana and Uttar Pradesh. The price of SMP is down Rs 20-30 per kg to Rs 290-310 per kg, while the price of butter has fallen Rs 25-30 per kg to Rs 390-405 per kg in the past fortnight.

The report also quoted RS Sodhi, president of the Indian Dairy Association, as saying that the consumers have reduced milk consumption owing to price hikes.

"The demand for summer products like ice cream, curd, buttermilk, lassi and other milk-based beverages has yet not hit the peak summer demand in many markets of the country," he said.

He added that the fall in procurement prices is a "win-win" situation for farmers and dairies. While the rate cuts may be some time away, any price rise is unlikely for consumers.

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First Published: May 26 2023 | 10:13 AM IST

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