The Hindu Business Line : Milk, ghee prices crash on monsoon revival

THE drought is passé, at least as far as milk and milk products are concerned. An indication of this is the crash in prices of skimmed milk powder (SMP) and ghee that has taken place over the past few weeks, coinciding with a revival of monsoon activity.

Major SMP brands were today quoting at Rs 71-72 per kg at the wholesale market here, as against a price range of Rs 94-95 per kg exactly a month ago. In fact, prices were ruling in the region of Rs 92-93 per kg even as late as August 2.

"The good spell of rains all over the country has transformed the sentiment completely, as market players who had stocked up in the expectation of supplies tightening in the months ahead are now resorting to panic selling," industry sources said.

A similar trend is being seen in ghee. A 15 kg tin of `Milkfood' ghee, which was selling for Rs 2,190 (Rs 146 per kg) on July 26, was today fetching Rs 1,960 or Rs 130.66 per kg.

According to the sources, the rains this month have ensured abundant fodder availability. "The dry spell in July has affected production of pulses and coarse grains, but the monsoon's revival in August gives farmers sufficient time to raise bajra or jowar crop till the fodder stage. So, even if farmers may not have adequate grains to sell this time, they will have enough fodder to feed their animals and convert this into milk", the sources noted.

As a result, milk procurement by dairies are likely to be much higher in the ensuing `flush' season, compared to that last year, when the average prices of SMP and ghee touched Rs 112 per kg and Rs 160 per kg in September. That was the time when the national capital in particular faced huge milk shortages and the National Dairy Development Board (NDDB) resorted to import of 10,000 tonnes of milk powder for building up a buffer.

The NDDB-owned Mother Dairy was even forced to raise its National Milk Grid (NMG) rate — the price at which it procures from State cooperative dairy federations — to Rs 16 per litre in October 2003 for milk with 6.5 per cent fat and 9 per cent solids-not-fat (SNF) content.

The situation is now quite the reverse. With effect from August 24, Mother Dairy has reduced the NMG rate to Rs 14.50 per litre, even though it has left the price of full-cream milk at the consumer end unchanged at Rs 19 per litre. Further, the company had only recently floated a tender for selling about 5,000 tonnes of white butter (80 per fat) from its stocks. The tender could not sail through, as the price bids on offer did not exceed Rs 85 per kg.

The same NDDB that used imported milk powder to build a buffer last year may now ironically come under pressure to procure excess powder and fat from domestic dairies to avert a further crash in prices, the sources pointed out.

More Stories on : Dairy & Dairy Products | Climate & Weather

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Castorseed futures prices may recover on speculative buying

Lending a helping hand to the farmer

Going bananas?

Third party to evaluate quality of work on AP irrigation projects

Tough nut to crack

Truckers' strike keeps rubber prices steady

Tea stocks in demand on firm price trends

Gold prices may consolidate

'India has potential to influence gold prices'

Milk, ghee prices crash on monsoon revival

Raw silk imports by EOUs/SEZs from China — CBEC to discontinue testing of grades

Need for serious rethink on clearance of edible oil imports

Spices exports top 50 pc of fiscal target during April-July

Milma arm to resume marketing

Here is a tractor for Rs 99,000!