Milk prices go up for farmers but consumers remain unaffected

The lean season (a period when production is scarce) for milk is about to start in the next few days but even before this, there has been a significant increase in the milk prices that farmers get. The increase ranges from two to four rupees per litre and farmers from almost across the country are getting benefited from it. But there will be no increase in milk prices for the consumers in the near term. The cooperative sector and other buyers have increased the milk prices that farmers get by two to four rupees per litre. Since the prices of milk products are going up even in the global market, these prices may go up further in the days to come in the event that milk supply reduces.

RS Sodhi, the Managing Director of Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF), Amul, said to RuralVoice that there will be no increase in milk prices for the consumers in spite of this increase in the prices the farmers get, because the sale of other milk products is returning to normal. He says that apart from milk, the demand for most of the milk products is going up and getting back to almost normal. These products include butter, ice-cream and beverages. The demand for these products had almost stopped around the same time last year due to the Covid-19 epidemic. But now their demand is almost back on track.

In fact, the milk cooperative societies and companies have an opportunity to earn better through these value-added milk products. Last year, the demand for these products had almost stopped due to the massive reduction in consumption at the levels of hotels, restaurants and individuals in the wake of the Coronavirus-induced lockdown and other restrictions. Also, large volumes of milk had to be converted to skimmed milk powder (SMP) as the cooperative societies continued buying milk.

Sodhi says that Amul has increased the price at which it purchases milk from farmers by two to three rupees per litre. At present Amul is paying Rs 710 per kg fat to the farmers. Farmers are getting a price of Rs 41-42 per litre at six per cent fat. They are getting Rs 30-31 per litre for cow milk. Besides, farmers get an additional price of 8-10 per cent from the year-end bonus. The farmers get a significant lumpsum amount towards the end of the year by means of this, says Sodhi.

Milk prices had registered a significant decline last year due to Covid-19. In last lean season, the dairy cooperative committees of Uttar Pradesh had reduced the price of milk containing 6.5 per cent fat to Rs 31 per litre. But the Mathura Milk Producers’ Cooperative Federation Ltd has raised the price of milk to Rs 44 per litre from February 20 onwards. In Maharashtra, the price of cow milk containing 3.5 per cent fat has now increased to Rs 26 per litre while the dairy companies and cooperative committees there were paying only Rs 18-21 for this milk last year.      

However, milk production has reduced this year. On being asked about this, Sodhi replied, “Amul is getting 7-8 per cent more milk in comparison to last year. A major reason for this is that milk from the unorganised sector has now come into the organised sector. Farmers are supplying more to the organised sector.” As far as the rise in prices is concerned, says he, it is good for the farmers. At the same time, he denies that there will be any sort of increase in retail prices. Currently, Amul’s toned milk is available in Delhi at Rs 46 a litre while full-cream milk sells at Rs 56.

Usually, when cows and buffaloes start producing less milk during the summers, the milk prices start going up. However, this was not the case last year; rather, the farmers had to suffer a massive fall in prices. But the milk cooperative societies and companies have been forced to raise the prices this year even before the advent of summer. This is due to the decrease in milk production before the usual season. In a way, the flush season (a period when production is abundant) never arrived in its true sense and, therefore, milk prices have begun to rise even before the lean season.

In fact, the farmers’ investment on milch cattle has gone down for want of better milk prices. A number of farmers had even reduced the number of their milch cattle. Which has had an adverse impact on milk production. On the other hand, the demand for milk and its products is getting back to normal with the general restoration of normalcy. Both these factors together have led to an increase in the milk prices farmers get. For the past few months, dairies across the country have been raising the prices they pay to the farmers. The Pradeshik Cooperative Dairy Federation of Uttar Pradesh has increased the price of buffalo milk containing 6.5 per cent fat and 9 per cent SNF (Solids Not Fat) from Rs 40 per litre to Rs 44 per litre.

A major reason for this price increase has been the increase in the prices of milk products, especially that of SMP, in the international market. The SMP price reached $3,200 per tonne in the international market last week. Which is the highest level since August 2014.