May 25, 2007

 

India's milk prices to increase on higher cost, lower supply

 

 

Milk prices in India are seen to increase by 1-2 rupees per litre, the second rise in the year due to higher procurement cost and a supply shortage, industry officials said.

 

Prices already rose in February and is likely to see another increase in June, this being a "lean season" for milk production, they said.

 

R.S. Sodhi, chief general manager of Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), which owns India's best known dairy brand, Amul, said they are paying 20 percent more to farmers than last year. Procurement cost has risen 13.92 percent to 18 rupees a litre since March this year and is expected to rise further, he said.

 

Sodhi added that global milk prices have increased by fifty percent due to increasing demand.

 

The severe drought in Australia which caused global demand shortage has pulled up milk prices, officials said.

 

Warana Sahakari Dudh Utpadak Prakriya Sangh Ltd., one of the largest milk and milk products suppliers in Maharashtra, will raise prices of skimmed milk powder by 5.4 percent to 136 rupees per kilogramme by Friday, said Sales Manager R.V. Desai.

 

The cooperative plans to raise milk prices by 1-2 rupees a litre in June, he said.

 

The trend of price increase in dairies comes after Amul and another leading Indian dairy Mother Dairy jack up its products. Mother Dairy is a brand owned by a subsidiary of the National Dairy Development Board.

 

India, the world's largest producer of milk, has banned export of skimmed milk in February to ease local prices.

 

Skimmed milk powder exports jumped almost 95 percent in the last ten years and its ban came at a wrong time as it has affected the dairy market, said Animesh Banerjee, president of Indian Dairy Association.

 

India produced 97.1 million tonnes milk in the year to March 2006 and is estimated to surpass 100 million tonnes this year, according to data from the animal husbandry ministry.

 

GCMMF's Sodhi said India's milk production is growing at a rate of 3 to 4 percent yearly as farmers are putting more cattle in the farms.

  

US$1 - 40.44 Indian rupee