Dairy firms may raise prices again 

NEW DELHI:  Adding to the worries of inflation-hit consumers, dairy companies may raise prices again in the coming quarters to pass on higher milk procurement prices, according to analysts at ICICI Securities. The companies have already raised selling prices by 5-8% in the past five months.

Heatwave, higher global skimmed milk powder (SMP) prices, as well as inflation in cattle feed prices, are the key reasons for higher milk prices, the brokerage said in a note on Friday.

Wholesale prices have increased 5.8% on a pan-India basis and in south India prices are up 3.4% year-on-year (YoY)  so far in June 2022, it added. “We believe the rise in wholesale prices is attributable to the end of the flush season, and increasing consumption amid intense summer.”3

It also notes that the global SMP prices have steadily increased over the past 12 months. They are up 26.3% YoY and 3% MoM in June 2022. “We believe the consequent attractive export opportunity may disturb the demand- supply equation in the Indian milk industry,” the note read. Further, it says that the rise in prices of key raw materials has resulted in a higher cost of food for bovines.