Milk gets costlier as Amul hikes prices by ₹3 per litre

Gujarat Co-operative Milk Marketing Federation, the marketer of Amul, on Friday raised the prices of milk by ₹3 per litre.

Post the price hike, a litre of Amul Taaza milk pouch will cost ₹54. Amul Gold, the dairy brand's full cream milk, will cost ₹66 per litre. After the price revision, Amul cow milk is being sold for ₹56 per litre and its A2 Buffalo milk is being retailed for ₹70.

"We would like to inform you that the price of Amul pouch milk (all variants) has been revised upwards effective from February 3," the marketing federation says in a statement.

Amul had last hiked the prices of its Gold, Taaza and Shakti milk brands by ₹2 per litre in October.

The price hike by Amul comes weeks after rival Mother Dairy raised milk prices by ₹2 per litre in December 2022. The hike was applicable on full-cream, toned, and double-toned milk variants and the prices of cow milk and token milk were not changed. It was the fifth round of hike in milk prices in 2022 by Mother Dairy, one of the leading milk suppliers in Delhi-NCR with volumes of more than 30 lakh litres per day.

The hike in milk prices comes at a time when rising cattle feed prices and labour costs have further pushed up milk procurement prices.

ICRA expects dairy companies to continue retail price hikes to combat margin pressures. "Increasing milk procurement prices and higher operating costs continued to exert cost pressures on industry," the rating agency said in a report in November 2022.

Operating profit margins of Indian dairy companies are expected to contract by 120-160 basis points on a year-on-year basis as the retail price hikes are expected to provide only a partial support to the input cost pressures, it said.

Milk production yields in the first half of the ongoing financial year were hampered by the prevalence of the Lumpy Skin Disease (LSD) among cows in the northern states. Although a successful immunisation programme helped contain the disease, ICRA expects a slight moderation in milk production growth to 4-5% in FY23.

Rising cattle feed prices and transportation costs had earlier forced dairy companies to increase milk procurement prices in FY22 to support farmers. "Raw milk prices have continued to rise in the current fiscal too, owing to rising cattle feed and fodder prices for dairy farmers. While erratic monsoons in various parts of the country impacted fodder availability, rising prices of grains like maize, wheat and soyabean led to soaring cattle feed concentrate prices. Apart from that, the prevalence of LSD briefly limited milk availability," said Sheetal Sharad, sector head and vice president, ICRA.

"Given the healthy demand expectations over the festive and wedding seasons, ICRA anticipates raw milk prices to stay firm in H2 FY2023 as opposed to a typical correction in the flush season. Retail prices for dairy products have thus gone up in the current fiscal to make up for higher costs," Sharad added.

"Increased input costs for dairy companies continue to be a worry. Thus, more retail price hikes could follow in the backdrop of the current inflationary scenario," the ratings agency cautioned.