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BENGALURU: Nandini milk will cost Rs4 more, with Chief Minister Siddaramaiah on

Friday approving a hike sought by the Karnataka Milk Federation.


Regular milk, now priced at Rs29 a litre (blue pouch), will soon be sold at Rs33. The
prices of Nandini skimmed milk and curd will also go up simultaneously.
KMF produces a range of dairy products and sweets under the popular Nandini brand.
The new prices are likely to come into force from January 5.
According to Animal Husbandry Minister A Manju, KMF had mooted an increase in the
retail price of milk by Rs5 a litre. Considering the impact on consumers, Siddaramaiah
scaled it down to Rs4.
Justifying the hike, Manju said milk was already priced higher in neighbouring states.
Farmers usually suffer losses because of the vagaries of nature, and a higher milk
procurement price will encourage more farmers to take up dairying and supplement
their additional income, he said.
The government is also working on a programme to make insurance compulsory for
cows being maintained by farmers supplying milk to KMF.

At a time when food inflation is stretching house-hold budgets, the common man may have
some reason to cheer as milk prices are unlikely to go up further for the coming couple of
quarters. A combination of factors is responsible to keep the price of the commodity under
check; weak international prices of skimmed milk powder(SMP), coupled with higher milk
procurement, plus an expectation of a further correction in international prices in the future
thanks to flush of milk from Europe.
Dairies across regions unanimously claimed that milk prices are likely to remain stable and
milk inflation this year would be under control. In words of R S Sodhi, managing director of
Indias leading dairy cooperative, Gujarat Co-operative Milk Marketing Federation (GCMMF)
which owns the Amul brand, Milk and milk product prices would be very stable. Already
prices of SMP in the international market are around Rs 220 a kg which is lower than the
domestic prices of Rs 250-260 a kg now. Exports would not be much this season, as the
Indian market offers better prices.
He further forecast that SMP prices are likely to go down further in the domestic market,
and by September, it would be hovering around Rs 230 a kg. In comparison, prices had
touched Rs 300 a kg last year, and Indian dairies had exported around 100,000 to 120,000
tonnes of SMP in FY14. Jitendra Agarwal, director of North-based Bhole Baba Dairy
Products that sells the Krishna brand of products, said, There is a huge price gap between
Europe, Oceania and India, with Indian products costlier by almost Rs 40-50 per kg, and
this mars prospects for Indian exporters.
Add to this, an increased availability of milk even during the lean summer months. From
Rajasthan Co-operative Dairy Federation (which markets milk and milk products under the
Saras brand) to the Karnataka Milk Federation (which owns the Nandini brand), dairies
across the country said that milk availability is up in the range of 10-14 per cent. Pritam
Singh, managing director of Rajasthan Cooperative Dairy Federation (RCDF) informed that
procurement was up by about 20 per cent this year, even during the lean summer months it
has been up by 10 per cent compared to last year. RCDF is processing 18.5 lakh litres per
day (llpd) even during the lean season, while Karnataka Milk Federation (KMF) is
processing 62.5 llpd at the moment.
Moreover, with the onset of monsoons, the flush season will begin soon. The flush season
for milk procurement starts beginning July and the same lasts till February. During the
period. procurement prices during the flush season are not increased due to higher
production of the milk. So, we can say that milk prices may not rise till the flush season
ends, said another top official of RCDF.

However, if the monsoons are delayed, there might be some impact on fodder prices.
Dairies, nonetheless, feel that higher availability would offset the rise in fodder prices.
Devendra Shah, chairman and managing director of Parag Milk Foods, said, Even if
monsoons are delayed and there is a crisis on the fodder front, the higher availability would
not let the prices to go up. Procurement is up thanks to the higher procurement prices paid
to farmers in the last one year. Farmers are getting around 18 per cent higher price
compared to last year, and in the last two to three months, dairies have raised procurement
prices to ensure better availability.
On the other hand, come 2015 onwards, the milk quota (or dairy produce quota) in the
European Union (EU) would be abolished, thereby paving way for more production and a
further fall in international prices. According to the milk quota system that was introduced in
1984, each EU member state has a national quota which it distributes to its farmers, and
whenever a state exceeds its quota, it has to pay a penalty to the EU. Sodhi explained,
Once this quota system is abolished in 2015, there would be a flush of milk from the EU,
around 25-30 per cent more production, and this would further bring down prices in the
international market.
Industry insiders feel that low international prices would force dairies to focus on the
domestic market, and hence the prices here would be stable thanks to enhanced
availability.

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