According to industry executives, leading dairies in northern India and Maharashtra have slashed the procurement price of milk by 10% over the past two weeks. However, consumers will not experience any immediate advantages from this reduction. The executives explained that the only relief for consumers is the assurance that milk prices will not be raised in the next few months.
Just under two months ago, a segment of the Indian dairy industry had appealed to the central government for relaxed import regulations on milk products like skimmed milk powder (SMP) and white butter. This request was made to address the “acute” shortage of milk in the country. However, in the past two weeks, prices of SMP and butter have experienced a decline of 5-10%.
Experts have attributed the decline in prices to weather anomalies and the release of stockpiled inventory in the market. Industry veterans explained that the delayed arrival of the summer season has hindered the demand for ice cream, curd, buttermilk, and other beverages, which are typically in high demand during peak summer. Consequently, hoarded stocks are being made available in the market. Furthermore, the demand for milk and milk products has been affected by a 14-15% price increase over the past 15 months, leading to reduced consumer demand.
In the past two weeks, the prices of white butter and skimmed milk powder have experienced a decline of 5-10%.
RS Sodhi, President, Indian Dairy Association., said, “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.”
The decrease in prices of skimmed milk powder (SMP) and butter has adversely affected private dairies in regions such as Maharashtra, Punjab, Haryana, and Uttar Pradesh, which are located around Delhi. Consequently, the procurement price of milk in these states has been reduced by INR 3-5 per litre. Over the past two weeks, the price of SMP has declined by INR 20-30 per kg, now ranging between INR 290-310 per kg. Similarly, the price of butter has fallen by INR 25-30 per kg to INR 390-405 per kg.
“Consumers will not have to face any further increase in milk prices. The correction in milk procurement prices from the very high levels is a win-win situation for the farmers, consumers as well as the dairies,” said Sodhi.