Several dairies from Maharashtra and northern India have reportedly slashed milk procurement prices by 10 per cent. While these milk prices have been brought down in the last fortnight, consumers are reportedly not expected to get any benefit of this as retail rates remain unchanged.

According to a report in the Economic Times, the only relief that consumers will get after a cut in milk procurement prices is that there will not be any increase in prices for the next few months. 

It adds that some time back, a section of the Indian dairy sector had approached the central government asking for easing the import of milk products. These include skimmed milk powder (SMP) and white butter and were primarily done to deal with the acute shortage of milk in the country. However, the report mentions that prices of SMP and white butter have fallen 5-10 per cent in last two weeks.

While officially the reasons of a fall in these prices were not told, the report adds that it was attributed to the weather aberrations and release of hoarded stock in the market. As all these factors mount, it must also be noted that since the summer season was reportedly somewhat delayed, the demand for ice cream, curd, buttermilk etc., has not yet reached its peak.

Private dairies in states like Maharashtra and parts of Punjab, Haryana and Uttar Pradesh, which surround Delhi, have taken a hit because of the fall in prices of SMP and butter. As a result, the procurement price of milk has been cut by ₹3-5 per litre in these states. The price of SMP is down ₹20-30 per kg to ₹290-310 per kg, while the price of butter has fallen ₹25-30 per kg to ₹390-405 per kg in the past fortnight.

“The winter season was extended, while there was a delay in summer due to the unseasonal rainfall. Consumers had reduced consumption as prices increased substantially. Thirdly, the demand for summer products like ice cream, curd, buttermilk, lassi and other milk-based beverages has yet not hit the peak summer demand in many markets of the country,” ET quoted RS Sodhi, president, Indian Dairy Association, as saying. 

Source : Oulook and Economic Times May 26th 2023