Mother Dairy hikes milk prices again

New Delhi, June 2
Mother Dairy Fruit & Vegetable Private Ltd (MDFVPL) has yetagain raised prices of milk sold in the National Capital Region byRe 1 per litre.
This marks the sixth such increase undertaken by it since the startof 2006 — the previous hikes happening in October 2007,August 2007, January 2007, September 2006 and February 2006.
In the latest round, the National Dairy Development Board-ownedsubsidiary increased the retail price of only full-cream milk,containing six per cent fat and nine per cent solids-not-fat (SNF),from Rs 24 to Rs 25 a litre.
Toned milk (three per cent fat and 8.5 per cent SNF) rates havebeen left unchanged at Rs 20 a litre.
Since February 2006, prices of full-cream milk have gone up from Rs19 to Rs 25 a litre, while moving from Rs 15 to Rs 20 in the caseof toned milk.
Indications are that Mother Dairy’s rival, GujaratCooperative Milk Marketing Federation (GCMMF), will follow suit byannouncing a similar hike for its full-cream ‘AmulGold’ variant in the next few days.
The two together account for a bulk of the National Capital’sestimated 40 LLPD (lakh litres per day) packed milk market worthover Rs 3,000 crore. Tops share
Mother Dairy alone sells 22-23 LLPD (of which about seven LLPD isconstituted by full-cream milk) with GCMMF a distant second at8-8.5 LLPD, followed by the state-owned Delhi Milk Scheme (threeLLPD) and private brands such as ‘Paras’ and‘Gopaljee’ (two LLPD each).
Mother Dairy’s latest increase is unlikely to be welcomed bymany, more so because it is said to have made a killing during therecent flush months from December to March, when the cost of rawmilk to its dock was about Rs 17 a litre.
This milk was, moreover, of higher 6.5 per cent fat and nine percent SNF content, as against the three per cent fat and 8.5 percent SNF for toned milk being retailed at Rs 20 a litre. Revenue
“For every 100 litres of toned milk sold, they would havebeen able to dispose of at least 3.5 kg of surplus fat and 0.5 kgof SNF, which at prevailing rates of Rs 135 a kg for ghee and Rs125 a kg for skimmed milk powder would have yielded an extra Rs 500or so.
The total revenue from selling 100 litres of toned milk would,then, have been Rs 2,500, compared to the corresponding raw milkcost of Rs 1,700”, industry sources pointed out.
Even if one deducted costs of processing (pasteurisation, plasticfilm, labour and other overheads), local transport, tradecommission and other marketing expenses that add up to Rs 350-400,Mother Dairy would have made a neat Rs 400-450 on every 100 litresof toned milk sold.
“Currently, such a wide margin would not be there, since thecost of raw milk delivered to the dairy dock has gone up to Rs20.50 a litre.
But this is a temporary phase during summer, which will be reversedafter about August when milk availability would shoot up and pricesfall with the flush season.
Further, by increasing full-cream milk prices, they will be able tomaintain even the earlier margins”, the sources added.
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