Dairy companies hike milk prices by 15% in 15 months due to high demand and production costs

Dairy companies across India have increased milk and milk product prices by 15 percent in the last 15 months. This rise is attributed to high demand for high-fat products, an increase in production costs, and adverse weather conditions.

According to RS Sodhi, the President of Indian Dairy Association, the prices of milk are as high as anticipated. Sodhi stated that these high prices are necessary to keep farmers interested in milk production.

While there may be better procurement in March and April, Sodhi believes that milk prices will not decrease even if there is an increase in production after Diwali and Dussehra. This is because the input costs have continued to rise.

Sodhi noted that while international milk inflation has ranged from 20 to 40 percent, the inflation rate for milk in India has been around 8 to 9 percent, indicating that it is significantly lower than the global average.

Amul's brand Amul Taaza has seen a price rise of six times in the last four years. Sodhi emphasised the importance of ensuring that inflation benefits farmers.

In the previous year, there was lower demand and production of milk internationally, resulting in a decline in milk production in Australia by 4.50 percent, in New Zealand by 1.5 percent, and even in Europe. As a result, many Asian countries are looking towards India for imports, while India is also considering imports to bring prices down.

While there is a lot of conversation about milk prices, they are not expected to decrease until after Diwali, and consolidation rather than a decline in prices may be expected.