This follows price increases announced by major milk producers, including the Gujarat Cooperative Milk Marketing Federation (GCMMF) and Mother Dairy.
GCMMF had increased the price of Amul fresh pouch milk by ₹2 per litre pan-India effective 3 June, while Mother Dairy hiked prices by ₹2 a litre as intense heat impacted milk production.
An increase in overall cost of operation and production of milk prompted Amul to raise prices after a gap of over a year, the country’s largest dairy cooperative said.
Though Amul has raised the cost of its fresh milk, it has not yet planned any hike in the prices of its milk products.
What companies are saying
Companies making dairy products such as curd, ice creams, and cold beverages are wary of price hikes given the high summer demand for these items.
“The recent surge in milk prices is likely to have an impact on consumers and small sweet-shop owners, leading to higher prices for milk-related products,” said Manish Aggarwal, director, Bikano, Bikanervala Foods Pvt. Ltd.
“However, it’s important to note that the demand for ‘mithai’ and other milk-based products may not be significantly affected by these rising costs. We are absorbing the increased cost of milk and have no immediate plans to pass it on to our consumers. We are carefully balancing consumer price sensitivity with price elasticity and competitive dynamics,” Aggarwal added.
The company may though consider adjusting the prices of products in the future if the scenario persists, he said.
A Nestlé India spokesperson said, “We are closely monitoring the milk market conditions.”
The company that sells packaged milk, chocolates, and Maggi noodles had in April said it is seeing “unprecedented headwinds” with rising commodity prices, especially in coffee and cocoa. Milk prices are expected to rise on account of the expected harsh summer, the company had said.
Milk prices typically rise in summer due to decrease in production. Mint had reported in April that heatwaves and water shortages have been affecting milk yields, leading to lower production and higher prices.
“Our member unions have also increased farmer’s prices approximately by 6-8% over the last one year. Amul as a policy passes on almost 80 paise of every rupee paid by consumers for milk and milk products to the milk producers,” GCMMF said in a statement Sunday while announcing price increases.
“The price revision shall help in sustaining remunerative milk prices to our milk producers and to encourage them for higher milk production,” it added.
An increase of ₹2 per litre translates to a 3-4% increase in the maximum retail price which is lower than average food inflation, it said.
Mother Dairy had last revised its liquid milk prices in February 2023.
The latest increase aims to compensate producers for rising production costs, exacerbated by unprecedented heat stress impacting milk production. The surge in farm prices is only being partially passed on to the consumers, it added.
Biscuit maker Parle Products said the price increase will impact food companies. “Milk and milk-based products will be impacted and so will products with such input materials. I hope that the milk price increase will be restored with the onset of monsoons,” said Krishnarao Buddha, senior category head at Parle Products. The company also plans to hold the current prices for the time being.
Ice cream and cold beverage makers that are witnessing a blockbuster summer are refraining from passing on higher prices to consumers while balancing the need to manage costs and maintain consumer demand.
“We are not planning to take any price hikes currently since the season is still ongoing. This summer has been much better than the previous year. However, we may review pricing in some months.” said a spokesperson at ice cream maker Vadilal Industries.
To be sure, companies are seeing benign inflation after a period of high input costs that prompted companies to take price hikes over the last two years. However, the trend has now reversed.
In the March quarter, for instance, pricing growth remained flat-to-negative across most companies given price reductions in several categories and a high base, analysts at Jefferies said in a note on 3 June.
However, any further rise in prices will be seen as a negative for food companies, said a consumer goods analyst requiting anonymity.
