Urban consumer is not ready for price increase, says Gujarat Co-op Milk Marketing

The rabi season has been starting on a strong note and many believe that it is good news for rural India.

RS Sodhi, MD of Gujarat Cooperative Milk Marketing Federation (GCMMF), and RG Agarwal, chairman of Dhanuka Agritech, are upbeat. “After 3 years this is an opportunity for farmers to be happy. Urban consumers are calling it food inflation and we are calling it increase in farmers’ income and that’s a dilemma,” Sodhi said, adding that the urban consumer is not ready for a price increase.

“The animal feed cost has increased around 30-35 percent compared to last year but compared to last year’s milk price of Rs 18-21 per litre, farmers all over India are getting around Rs 30-34 per litre and this increase has come after 3 years. Therefore, the average increase is 4-5 percent and that’s not much whereas consumer’s price increased by Rs 4 only which is less than 3 percent inflation,” he pointed out.

GCMMF has not seen any slowdown in its product categories and this year too, it is growing at 19-20 percent rate.

“In the last 5-10 years, the share of organised sector is growing at the rate of 10-12 percent. Milk production is growing at a rate of 5-6 percent but organised sector milk procurement, processing and marketing is growing at the rate of 10-12 percent. So farmers are definitely getting better realisation for their produce and so money is going into rural areas. As more organised sectors come into milk processing and marketing, farmers are going to be happy. Only 1/3rd is organized sector and there is scope for more players to come into milk processing and marketing segment, he opined.

RG Agarwal of Dhanuka Agritech said his company will meet revenue growth guidance of 10-12 percent in FY20.