The rise in milk procurement prices in the flush season. though a good news for the dairy farmers , is pressurizing processing companies to pass on the hike to consumers This is unusual because milk prices tend to soften during the flush season, which runs from November to March when supplies are 8-10 percent more than the normal.

However trade and market sources said this year , milk supplies in the flush season were 20-25 % lower than last year, which has affected procurement rates as well.

As a result , several state milk cooperatives , along with private companies , have either raised retail milk rates or are looking to do so in coming weeks.

Market sources said average cow milk purchase prices across India since Nov had been quoting at Rs 29-30 per litre while they were Rs 26-27 per litre during the same period last year in 2020. This is an increase of around 10%. The buffalo milk was selling on an average  at Rs 41-42 per later, while last year they were at Rs Rs 39 per litre which is 5-8 % lower than current rates.

SMP prices have improved from Rs 230-240 per kgs last year to Rs 250-260 per kgs currently.

Milk supplies this year in flush are down due to multiple reasons, including farmers investing less in cattle, higher Soya and corn prices leading to higher feed costs,  lockdown during April-June and poor feeding. Another reason for shortage of milk is due to fewer animals were inseminated from March-May 2021. Milk production will rise at a slower rate of less than 3% in FY 22 as against CAGR of 5.5% in last few years.

Source : Business standard Jan 5th 2021, written by Sanjeeb Mukherjee