Milk prices not going up soon; this will keep cost in check in coming months

By: |
February 13, 2020 4:15 PM

While dairy players in India have hiked milk prices twice in the last year, the same is not likely to repeat in the coming months due to reasons including abundant water supplies and increased crop production.

The dairy players including Amul raised milk prices twice last year 2019, making the daily essential commodity costlier by Rs 4 per litre.

While dairy players in India have hiked milk prices twice in the last year, the same is not likely to repeat in the coming months due to reasons including abundant water supplies and increased crop production. “In fiscal 2021, milk production is expected to pick up, given abundant water in reservoirs and expectations of a normal monsoon. That should arrest any further rise in milk procurement and retail prices,” a CRISIL research report said on Thursday. RS Sodhi, managing director, Amul, had also earlier said that the company does not expect milk prices to rise any soon.

The dairy industry raised milk prices twice last year 2019, making the daily essential commodity costlier by Rs 4 per litre. However, these were the only two hikes in milk prices in the last three years. “This is less than 3% which is below both food inflation and retail inflation,” RS Sodhi had earlier told Financial Express Online in January. There were several factors behind these hikes. The procurement prices of milk skyrocketed between April and December 2019 due to shortfall in production across India, the CRISIL report said.

Further, floods had hit various parts of the country and this led to poor animal health. “Also, water logging in green pastures kept animals from grazing and damage to crops such as maize and sugarcane, which are used for fodder, crimped fodder availability,” the report added. The overall result was milk shortage and then price hike.

What changed in FY21?

Other than increase in water supply due to enhanced reservoir levels, rabi sowing area has increased by 10% as of January 31, 2020. What this essentially means is that the cattle will have better availability of fodder. “Higher arrivals of key crops such as wheat, bajra, jowar and maize from March would mean copious fodder availability, which should raise milk production next fiscal,” CRISIL said. The same will stabilise milk procurement prices, which then reflects into end consumer price.

Even then, there is a risk factor of monsoons. If monsoons aren’t satisfactory in 2020, it can again impact milk production and availability.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Gold price today: Yellow metal trades higher, follows international trends; may touch Rs 48,500 soon
2Madhya Pradesh revokes ban on soyabean seed sale outside state
3Petrol and diesel price today 7 May 2021: Price hiked for 4th day running; check rates in Mumbai, Delhi here