Dairies Cut Procurement Milk Prices

Indian dairy companies have taken a hit on their margins due to the fall in international prices of skimmed milk powder (SMP) and doubling of domestic tax on ghee. Dairies have cut milk procurement prices 10-22 per cent in the past few months.

Prakash Kutwal, secretary, Doodh Utpadak Va Prakriya Vyavasayik Kalyankari Sangh (milk producers and processors’ welfare federation) said “SMP price has declined from Rs 260 per kg to Rs 120 per kg in the international market in the last 3-4 months. Maharashtra produces about 30 million litres of milk every day, of which only about eight million is used as liquid pouched milk. The bulk of milk procured is used for making various dairy products such as butter, SMP, ghee, cheese, curd, etc. Maharashtra’s milk farmers are more vulnerable to international price fluctuations since state is the leader in export of milk products. Sale of ghee has fallen substantially as the price has increased from Rs 30 per kg of smaller brands to Rs 55 per kg in case of national brands. Maharashtra government increased the procurement price of cow’s milk to Rs 27 per litre for 3.5 per cent fat and 8.5 per cent SNF (solid not fat), up about 12 per cent”.

The tax on ghee increased to 12 per cent under GST from 6 per cent before the implementation of the GST regime.