May 30, 2012

 

Bangladesh's milk prices hike

 

 

Key liquid milk processors based in Bangladesh, have raise prices by 5.4% per litre due to increased processing, transportation and packaging costs.

 

However, their purchasing prices at the dairy farmer's end remain unchanged.

 

Consumers now pay up to BDT58 (US$0.71) for a litre of liquid or pasteurised milk processed by three major processors, including state-sponsored Bangladesh Milk Producers' Cooperative Union Ltd (BMPCUL), which sells milk under the brand Milk Vita.

 

The prices of half-litre packs were raised by 6.66% to the value of BDT32 (US$0.39). Other smaller packs also witnessed a price hike.

 

"We have hiked the prices due to increased costs of processing and transportation resulting from a spike in the prices of fuel, electricity and gas," said Altaf Hossain, general manager of BMPCUL that sells up to two lakh litres of liquid milk daily.

 

He, however, said the BMPCUL is yet to take any decision on whether the prices at the farmers end would be increased following the spiral at the consumers' end.

 

The milk producers' cooperative platform increased the prices on May 26, two weeks after its nearest rival BRAC Dairy hiked the prices citing reasons of higher processing and other costs.

 

The second biggest processor, BRAC Dairy, which sells milk under the brand name of Aarong, increased the prices to the present level early this month.

 

Following Milk Vita and BRAC, another major processor Pran yesterday said it would increase the prices to the level of its competitors.

 

The rise in the prices to BDT58 (US$0.71) each litre will be effective from today, said Kamruzzaman Kamal, director (marketing) of PRAN-RFL Group, yesterday.

 

"Now we have to pass the costs on to the consumers," he said but added that the prices at the producers' level would remain the same.

 

The price hike by processors coincides with the time when consumption and production of milk goes up, with households preferring the freshness of liquid to the powdered milk.

 

Hossain of the BMPCUL said the price hike would not affect sales and demand.

 

Md Mosleh Uddin, general manager of BRAC Dairy and Food Project, said the company has increased the prices to 'sustain' their business and encourage farmers to boost milk production.

 

"We had no alternative to increasing the prices. It would become tough for us to carry on if we continued selling milk at the previous prices," said Mosleh Uddin of BRAC Dairy.

 

He blamed the increased fuel and electricity prices for the rising costs of processing.

 

"We have raised the prices to support the farmers."

 

The BRAC Dairy official said they had not increased the prices of liquid milk since July last year, although they had to buy milk from the farmers at higher prices to keep them encouraged.

 

Mosleh Uddin also said sales of Aarong milk slumped after the price hike on May 10 as other processors stayed on the sidelines.

 

BRAC collects 140,000 litres of milk daily from the farmers.

 

Over the years, domestic production of milk has increased, buoyed by entry of new investors and a shortfall in supply against the backdrop of rising demand.

 

Currently, nine local companies are engaged in processing locally produced milk.

 

In 2011, the companies processed nearly 150 million litres of liquid milk. Four years ago, the total volume of processed liquid milk was 85 million litres, according to Kamal of PRAN.