The past one year has witnessed continuous increase in prices of milk and milk products. Surprisingly, this trend continued in flush season when milk supply remains at its peak. As milk supply will decrease in coming summer season, there will be pressure on the dairy industry for further price increase. In less than a year, liquid milk price has gone up by around Rs 8 to 10 per litre. Due to shortage of fat, dairy companies increased ghee prices by more than 20 per cent recently.
Sources told Rural Voice that to assess the situation of supply and price, the secretary, ministry of animal husbandry and dairy held a meeting today with representatives of cooperative dairy sector and private dairy companies.
As per Rural Voice sources, it came up in the meeting that milk procurement in October-December quarter went down by three percent and demand went up by 10 percent. It shows that gap between supply and demand was quite significant compare to the same period last year.
As double-digit inflation for food grain is creating trouble for the government on price front, any further price increase in milk and milk products will not be good.
This year, procurement of milk for dairy cooperative federations and dairy companies has gone down, and in some states, procurement is down by up to 20 per cent. It has gone down despite higher prices of up to Rs 55 per litre paid to dairy farmers.
Sources said that lower investment by farmers in milch animals to due milk price crash in the Covid period and millions of cows suffering from lumpy skin disease affected milk supply badly.
At the same time, due to good prices in the international market, domestic companies have exported large quantity of fat from the country.
Low procurement and higher export created a shortage like situation for dairy fat. Even after more than 20 per cent increase in the ghee prices, some popular brands of ghee are not available at big retail chain stores. It shows that coming days are not good for milk consumers.
As demand for milk products like ice cream and curd goes up during summer, more milk is required. To meet this extra demand, dairy companies create stocks of Skimmed Milk Powder (SMP) and butter in the flush season when supply remains higher.
But, sources in the industry told Rural Voice that this is not a normal year because in the flush season, supply of the fresh milk was low. As a result, many companies, particularly from the private sector, do not have SMP and butter stocks for summer season, to use it for creating liquid milk.
Although SMP and butter oil prices are low in the international market compared to the domestic market, import will not be economically viable due to higher import duty on it.
Against this backdrop, todays’s meeting was becomes highly significant.
Sources said that the department of animal husbandry and dairy used to regularly meet the industry representatives at regular intervals, but today’s meeting did not take place in a normal situation.