After onion brings tears to eyes, Amul, Mother Dairy raise prices; why milk rates may not fall soon

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Updated: December 16, 2019 6:24:29 PM

Even as the government takes steps to check rising onion prices, major dairy companies have increased rates of various pouch milk variants.

In over five years of the government, the total increase has been merely Rs 8 per litre.

Even as the government takes steps to check rising onion prices, major dairy companies have increased rates of various pouch milk variants. The prices have been increased by Rs 2-3 per litre by the Gujarat Cooperative Milk Marketing Federation (GCMMF) better known as Amul, and the National Dairy Development Board-owned Mother Dairy. It’s the second hike in milk prices in the current year by these companies. The experts are of the view that the hike in prices of milk indicates the return of food inflation. In addition, it may take a longer time for the situation of milk supply to improve, unlike onion rates that may decline after March.

In over five years of the government, the total increase has been merely Rs 8 per litre. However, half of the price increase came in the last seven months. Rising food prices pushed the retail inflation in November to an over a three-year high of 5.54 per cent, while the industrial sector output shrank for the third month in a row by 3.8 per cent in October, indicating a deepening slowdown in the economy.

Also read: EXPLAINED: Onion prices may not fall anytime soon; here’s why prices are on rise

Writing in The Indian Express, Harish Damodaran said that the average procurement price paid to milk producers by GCMMF unions, for example, increased from Rs 298 per kg of fat in FY09 to Rs 535 in FY14. In the case of full-cream milk containing 6 per cent fat and 9 per cent solids-not-fat, the increase is from Rs 18.42 to Rs 33.06 per litre or 79.5 per cent.

Watch: What is inflation?

The average producer price has increased by a mere Rs 155 to Rs 690 per kg fat or Rs 42.64 per litre in FY19 since FY14. It amounts to a hike of 29 per cent in more than five years. Meanwhile, Amul on Saturday raised milk prices by Rs 2 per litre in Gujarat, Delhi-NCR, West Bengal and Maharashtra. Similarly, Mother Dairy also announced an increase in milk prices by up to Rs 3 per litre in Delhi-NCR due to lower supply and rise in procurement cost.

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