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Dairy Co-ops Increase Milk Procurement Prices by Rs 5-6 per Litre

01 July 2019

INDIA - Dairy cooperatives and companies have increased milk procurement prices by Rs 5-6 a litre over the last three months to prop up dairy farmers and ensure steady supply of milk at a time when the sector is facing water shortage and higher fodder prices.

During the period, the consumer price of milk has risen by only Rs 2/litre, and is likely to remain unchanged if monsoon rains pick up pace and water availability improves, executives of several dairy companies told ET.

Water problem and increase in fodder prices have often been seen to lead to a decrease in milk production and increase in its price.

In addition to the increase in procurement price, these companies are likely to pay dairy farmers Rs 2-3/litre more because cattle feed prices have risen and monsoon rains are delayed.

"There is still opportunity to increase farmers’ price by Rs 2-3 a litre, without impacting consumer price," RS Sodhi, managing director of Amul brand owner Gujarat Cooperative Milk Marketing Federation (GCMMF), told ET.

According to Mr Sodhi, milk procurement prices have been increased by Rs 5-6/litre from March while consumer prices has been increased by only by Rs 2/litre.

"Farmers will be encouraged to produce more with this increase. Now, with commodity prices firming, farmers’ price too will increase. In the past one year, de-oiled rice bran prices increased by 86 percent to Rs 16,700 a tonne, while corn gluten feed increased by 86 percent to Rs 21,400 per tonne, and maize by 54 percent Rs 21,600 per tonne," said Mr Sodhi.

The move, however, has reduced the margins for dairy, ice cream and cheese companies, the executives said.

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Source: The Economic Times

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