EXPLAINED: Why is your milk more expensive all of a sudden?

• Dairy companies like Amul, Parag, Verka have raised their milk prices by ₹2 citing the rise in input costs.
• The major reason behind the rise in price of milk is due to the steep increase in costs of energy, packaging, logistics and cattle feed.
• According to a report by ICICI securities, the prices of global skimmed milk have increased by 34% year-on-year (YoY) and 8% month-on-month.

The price of almost all consumer goods ranging from biscuits, beverages and detergents have increased over the last two years as companies like Nestle, Hindustan Unilever, Marico and Britannia were struggling to keep up with the rising input costs. Now, milk is the latest commodity to witness an increase in their prices.

India’s prominent dairy companies like Amul, Parag, and Verka have raised their milk prices by ₹2 citing the rise in input costs. "This price hike is being done due to rise in the cost of energy, packaging, logistics, cattle feeding costs…,” Jayen Mehta, chief operating officer of Gujarat Cooperative Milk Marketing Federation (GCMMF) — a marketer of Amul milk and milk products — has said.

Notably, Amul has kept its milk prices untouched in 2020 when the COVID-19 pandemic hit the country. It has announced its first price hike in 2021 by ₹2 per litre. The company has now specified that the ₹2 per litre hike would lead to nearly 4% increase in maximum retail price (MRP) of the products, which is substantially lower than the average food inflation.

Meanwhile, Parag Milk Foods has not made any changes to its prices in the last three years. The company has now cut all trade discounts and other costs as well.

According to the data by Statista, India consumes approximately 83 million tonnes of milk every year — which makes it one of the most consumed items in the country.

Source: Media reports, Company statements

“The increase in milk price was long due, but due to Covid the companies were skeptical to act. The major reason behind the rise in prices of milk is due to the steep increase in costs of energy, packaging, logistics and cattle feed that has led to an increase in the overall cost of operation and milk production. The higher cost of transportation has also [been] attributed to the increase in other expenses,” Dr. Ravi Singh, vice president and head of research at Share India, told Business Insider.

On the other hand, other milk selling companies like Mother Dairy didn’t raise their milk prices for the consumers on Monday. However, it did increase it last year by ₹2 per litre.

According to a report by ICICI securities, the prices of global skimmed milk have increased by 34% year-on-year (YoY) and 8% month-on-month. “Milk procurement prices have started inching upwards on the back of culmination of the flush season and a steady increase in animal feed prices," the report mentioned.

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