January 5, 2012
India's milk production rises but prices remain the same
Amid good monsoon, a surge in milk output has enabled some Indian dairy firms to lower the amount they pay for milk procurement by INR2/litre (US$0.04), but there are no plans yet for price reduction.
Dairy major Gujarat Cooperative Milk Marketing Federation (GCMMF), which is the largest player in the country with its Amul brand, as well as Mother Dairy and Paras Dairy are procuring 10-30% more milk now than they did in the corresponding period last year.
The surge in production has prompted Mother Dairy and Paras Dairy to reduce the procurement price they pay to their suppliers, but GCMMF has abstained from a similar move till now.
However, while the two dairies have reduced the procurement price paid to farmers, there is no immediate sign of a price cut for consumers.
Mother Dairy managing director Shiva Nagarajan said the company's procurement has gone up by about 25-30% due to the increase in milk production on account of a good monsoon.
He said the procurement price has been reduced by INR1.50 (US$0.03) a litre to INR25.50 (US$0.48) per litre from INR27/litre (US$0.51) earlier due to the rise in production.
Nagarajan, however, said there was no plan to slash the price of milk for consumers in the near future.
"We are utilising the flush season to build up a stock of milk for the future to balance the supply in times of shortage, particularly in the summers," he said.
Paras Dairy Director (Operations) Narendra Nagar said procurement by his firm has shot up by around 8-9% vis-Ã -vis the previous year. Paras is procuring about 24 lakh litres of milk a day nowadays, he added.
Nagar said due to the increase in procurement, the firm has slashed the purchase price by INR2 (US$0.04) a litre.
With the country producing surplus milk vis-Ã -vis demand, Nagar favoured lifting the export ban on milk. India had banned milk powder and casein exports in February, 2011, to calm price pressures.
Procurement by GCMMF has also gone up by 19% to 14 million litres. GCMMF-affiliated district cooperatives have, however, kept their procurement price unchanged at an average of INR31 (US$0.59) a litre, he said.
"Owing to a good procurement price and marketing, we have seen an all-time rise in milk procurement this flush season," said GCMMF managing director R.S Sodhi.
The flush season - during which the yield goes up due to the availability of good quality fodder - started in October and is expected to continue till March.
