New Delhi: Following the completion of India’s 18th Lok Sabha elections, milk prices have once again surged. India’s leading milk cooperatives, Amul and Mother Dairy, have increased their milk prices by Rs 2, effective June 3.
Mother Dairy, headquartered in Noida, attributed the price hike to rising production costs over the past year. "The increase in consumer price is mainly to compensate the producers for increased production costs, which have been on the rise for over one year," the company stated.
Similarly, the Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets milk and milk products under the Amul brand, announced an approximate Rs 2 per litre price hike.
Frequent Hikes in Milk Prices
Comparing prices from 2023 to the current rates, both Mother Dairy’s full cream and Amul’s full cream milk (Gold) now cost Rs 68 per litre. A year ago, these variants were priced at Rs 66 per litre.
Over the past two years, major milk suppliers like Amul and Mother Dairy have raised milk prices multiple times, citing increasing procurement costs from farmers. For instance, Mother Dairy increased milk prices by Rs 10 per litre between March and December 2022. In 2022, Amul raised prices three times, while Mother Dairy revised prices several times. Amul's last hike was in October 2022, increasing prices by Rs 2, while Mother Dairy's last hike was in December by the same amount.
The primary reason for the multiple price hikes in 2022 was attributed to stagnant milk production in fiscal 2023 due to lumpy skin disease in cattle, said India’s Animal Husbandry and Dairy Secretary Rajesh Kumar Singh.
Impact on Inflation and the Economy
India’s retail inflation eased marginally last month to an 11-month low of 4.83% on an annual basis in April, down from 4.85% in March. Vegetable inflation was recorded at 27.80% year-on-year, compared to 28.30% in March. Milk constitutes nearly 6.61% of the Consumer Price Index (CPI). According to the Reserve Bank of India’s annual report, increased prices in the Food and Beverages (F&B) category were a major driver of India’s inflation in FY24. F&B’s contribution to headline inflation was 60.3% in FY24, up from 46% the previous year. The RBI expects CPI inflation to ease to 4.5% in 2024-25.
Impact of Heatwave Conditions
Heatwave conditions in several parts of the country are expected to further impact milk production. Mother Dairy stated, “Despite higher milk procurement costs in recent months, consumer prices were maintained, but the unprecedented heat stress across the country is expected to further impact milk production.”
Heatwave conditions have been observed in various states across the east, north, and southern regions, with temperatures exceeding 45 degrees Celsius in some areas.
Significance of Dairy Sector in India
Dairy is the single largest agricultural commodity in India, contributing 5% to the national economy and directly employing more than 8 crore farmers. India holds a significant position in the global dairy sector, ranking first in milk production and contributing 25% to the world's total milk output.
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