The farmers as well as players in the dairy industry are already struggling with the rising price of fodder and in turn a high-cost of milk procurement. And as the monsoon season on which these companies highly bet on is feared to be below average, there is a high chance that milk prices can be hiked for the second time in two months.
In May, raw milk prices were hiked by dairy majors including Amul and Mother Dairy viewing the interest of the farmers. Now it is to be seen whether other players in the industry will also hike milk prices or not, or if Amul and Mother Dairy will increase milk prices yet again in 2 months time.
"Due to the delay in the monsoon, the raw milk prices paid to farmers have been going up. However, we are optimistic that in the next couple of weeks, rains will cover wide-spread geography and will result in an increase in milk production and flow. We are monitoring the situation very closely and will act basis the circumstances," a company spokesperson for Mother Dairy Fruit & Vegetable Pvt Ltd told a leading business daily.
Parag Milk Foods also detailed the issue and told the daily that "With prolonged summers and delayed monsoons, feed was in short supply since last month and that created a shortage of milk leading to further increase in raw milk prices". Nonetheless, the company is hoping a good monsoon season and with rains covering most parts of the country and easing of the feed supply situation, prices of milk will be normalized over the coming one or two months, said Devendra Shah, Chairman, Parag Milk Food Ltd.
There was no major hike in raw milk prices for 2 consecutive years but dairy players such as Mother Dairy and Amul have hiked prices by Rs. 2 per litre this year in May owing to an increase in the cost involved in feeding cattle and labour which thus increases the cost of milk production.