Milk set to get costlier; Rs 1-2 per litre hike on anvil as production slows down

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Updated: March 28, 2019 11:30:28 AM

The price change may affect various milk-based products such as ice creams, butter, cheese, yoghurt, ghee and flavoured milk among others.

A litre of milk will become costlier by Rs 1-2, says report.

Your daily milk, tea, coffee, ice creams and other dairy products are set to cost more. A litre of milk will become costlier by Rs 1-2 owing to a decline in skimmed milk powder inventories and decreased supply of milk, a report said. However, the price change will be seen within the next few quarters, CRISIL said in the report. The price change may affect various milk-based products such as butter, cheese, yoghurt, ghee and flavoured milk among others.

“The overall dairy sector is witnessing a rising trend in farm gate prices of raw material owing to the ongoing lean season followed by the predictions of deficit monsoon, which can burden the operating profitability and could further result in firming up of consumer milk prices. However, we don’t anticipate any immediate impact on consumer milk prices.” a Mother Dairy spokesperson said to Financial Express Online. Meanwhile, queries have been sent to Amul and Nestle regarding the same.

Amul, Mother Dairy along with Kwality, Britannia, Nestle rely heavily upon milk production as they have many products and brands in the milk range. Amul’s Lassi and cottage cheese, Kwality’s ice creams, Nestle’s dairy whiteners and its MilkMaid condensed milk are some other milk-based products, which are a day to day consumption items.

While domestic milk production is expected to slow down by 3-4% in the upcoming financial year 2019-20, the consumption will see an upward trend of 6-7% which will also lead to the price increase. “Consumption, however, will continue to grow… enabling dairies to raise milk prices,” CRISIL report said.

The last price change in the milk industry was seen in 2017 when the prices per litre had hiked by Rs 1. Globally, skimmed milk prices have seen a 20% increase which may compel dairies to liquidate their stock, CRISIL said. About 25% decrease in the inventory of skimmed milk is expected from the 3 lakh tonne which was available at the end of March 2018.

The reduction in milk production is largely due to a decline in cattle investment because of higher maintenance cost. Also, there has been no correction in farm gate prices lately which has made the business less profitable, the report said.

  • First published on www.financialexpress.com on 27 March 2019. 

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