Milk prices, which had inched up by over 20 per cent since the beginning of this year, might soon start trickling down, thanks to the drop in prices of skimmed milk powder. Milk price could dip by Rs 1-2 a litre after February 2012, said Mr Sumit Deb, Managing Director, Metro Dairy Ltd.

Price of skimmed milk powder (SMP), which was ruling at around Rs 200 a kg in August this year dropped to Rs 180 a kg in November. SMP prices might drop further and stabilise at Rs 155-160 a kg, Mr Deb said. Dairy companies add a certain percentage of SMP to the SNF (solids-not-fat) portion of raw milk. In West Bengal, for instance, approximately 20-40 gm of SMP is added to a litre of milk.

“Mother Dairy, Kolkata, had invited tenders from SMP manufacturers across the country in November this year for its winter procurement period (December-January-February). The price which has been quoted is around Rs 153-155 a kg and they plan to procure about 5,000 tonnes of SMP. So this is almost like a benchmark,” Mr Deb said.

The fall in price of SMP would have its impact on milk prices with a lagged effect, so prices would start coming down after February next year, he indicated. “Dairy companies usually carry SMP stock of around 2-3 months so the current drop in prices will be reflected only after February,” Mr Deb explained.

Procurement price of raw milk is expected to drop with the anticipated rise in milk production. “The buffalo calving season falls typically between September-March, so the peak season for milk production is October-March. The increased supply of milk therefore brings down prices to some extent,” Mr Deb said. Buffalo milk containing 6.5 per cent fat and 8.5 per cent solids-not-fat, which was landing in northern dairies at around Rs 30 a litre, has already dropped to about Rs 28.5 as litre, Mr Deb said and added that the procurement cost is likely to come down further.

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