July 6, 2010

New Delhi sees hike in milk prices

Already hit by a hike in fuel prices, people in Delhi and the National Capital Region (NCR) will now have to fork out more for their milk as well, with the biggest supplier Mother Dairy hiking milk prices by up to INR2 (US$0.04) a litre.

The increase comes on the heels of another supplier Amul raising the price by the same amount on Friday (July 2).

Following the hike, one litre of full-cream milk of both the brands will now cost INR32 (US$0.68) a litre in the national capital instead of INR30 (US$0.64) earlier. One litre of toned milk in poly packs will cost INR24 (US$0.51) instead of INR23 (US$0.49), while a litre of toned vended milk will cost INR23 (US$0.49) instead of INR22 (US$0.47).

Prices of double-toned and skimmed milk remain unchanged.

Mother Dairy attributed the reason for increasing the prices to higher procurement costs. "Due to deficit monsoon last year, there has been a sharp rise in the prices of fodder which constitutes a major part of cost of milk production. This has led to a significant increase in the prices paid for procurement of fresh milk," a Mother Dairy spokesperson said.

Over the last two years, Mother Dairy has increased the procurement price of fresh milk by about INR5 (US$0.12) per litre. Other input costs towards packaging material, transportation and salary revision have also increased.

The price hike was necessary mainly because of higher procurement costs, which have gone up by 30% from last year. Farmers have increased the price of fat by around INR100 (US$2.14) per kg, Amul acting managing director R S Sodhi said.

The recent hike announced by the government on petroleum products has also contributed to the cost push, he added.

Dairy production in India, the world's largest producer and consumer of milk, is projected to go up to 166 million tonnes by 2020 and would be between 180 million tonnes and 200 million tonnes by 2021-22. The milk production was 108.5 million tonnes last year.

The government is planning to launch a national dairy plan of INR17,371 crore (US$3.7 billion) to increase output to 180 million tonnes by 2021-22 as demand is expected to reach 172 million tonnes by then.