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Milk prices are on the boil this summer even as temperatures are rising across the country.
Amul, the market leader in pouched milk sales in Delhi National Capital Region, is increasing its prices by Rs 2 a litre across all categories from Wednesday. Delhi NCR is the country’s largest and fastest growing pouched milk market, valued at around Rs 7,000 crore annually.
“The 5-7 per cent increase in prices is both in Delhi NCR and Uttar Pradesh,” said R.S. Sodhi, Managing Director, Gujarat Milk Marketing Co-operative Federation. He attributed the price increase to general inflation and the rise in costs, especially of transportation, on account of costlier diesel. Amul had recently hiked milk prices in Mumbai by a similar quantum along with products like curd in Delhi.
The increase in prices of milk by Amul comes after a year and may prompt other players, such as Mother Dairy, Delhi Milk Scheme and Sterling Nova, among others to follow suit. The previous hike by Amul in Delhi market was in April 2012.
higher costs
When asked, a Mother Dairy spokesperson said, “The procurement cost and other overhead costs have gone up in the last few months. Mother Dairy at this point is still reviewing the situation and a decision on price increase is yet to be taken.”
But sources said Mother Dairy may not go for an immediate price increase, especially due to fear of attracting the attention of the Competition Commission of India.
Traditionally, either Amul or Mother Dairy would take the lead in increasing the milk prices, and others would follow suit within days.
Amul commands 42 per cent share in the Delhi NCR pouched milk market, estimated at 5.5 million litres a day. It sells about 2.3 million litres of pouched milk in Delhi, while Mother Dairy, including its bulk sales, vends about 3 million litres a day.
Surplus stock
“We will wait for Mother Dairy, before deciding on the price hike,” said Kuldeep Saluja, Managing Director of Sterling Agro, which recently launched the Nova brand of pouched milk in Delhi.
The milk price hike comes at a time when food inflation has softened to around 8 per cent, while the overall inflation has come down to around 6 per cent. Also, it comes at a time when daily milk procurement by co-operatives and private players is declining in the Northern States due to the seasonal fall in production during summer months. But the dairy players say there is surplus skimmed milk powder (SMP) stock, estimated at over 60,000 tonnes to meet the domestic milk requirement.
In the South, the flush or peak milk production season is set to start in a couple of months. “We are not contemplating any hike in prices immediately. However, we may increase the price by about 5 per cent in the next two to three months to offset the rising costs,” said R.G. Chandramogan, Chairman, Hatsun Agro Product Ltd, a large player in the region.
India is the largest milk producer and the output in 2012-13 is estimated to have crossed 133 million tonnes. Since June last year, the total SMP exports from the country are estimated at over 60,000 tonnes in fiscal ending March 2013.
vishwanath.kulkarni@thehindu.co.in
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