Mother Dairy on Monday said it has decided to hike milk prices by ₹2 per litre in the Delhi-NCR market from December 27.
The price hike is applicable on full-cream, toned, and double-toned milk variants. The dairy company has not revised prices of cow milk and token milk variants.
Mother Dairy has increased the price of full-cream milk by ₹2 to ₹66 per litre, while the rate of toned milk has been revised to ₹53 per litre from ₹51 per litre. Double-toned milk will now cost ₹47 per litre, up ₹2 from ₹45 per litre.
This is the fifth round of hike in milk prices this year by Mother Dairy, one of the major milk suppliers in Delhi-NCR, with volumes of more than 30 lakh litre per day.
The hike comes at a time when rising cattle feed prices and labour costs have further pushed up milk procurement prices.
ICRA expects dairy companies to continue retail price hikes to combat margin pressures. "Increasing milk procurement prices and higher operating costs continued to exert cost pressures on industry," the ratings agency said in a report last month.
Operating profit margins of Indian dairy companies are expected to contract by 120-160 basis points on a year-on-year basis as the retail price hikes are expected to provide only a partial support to the input cost pressures, it said.
Milk production yields in the first half of the ongoing financial year were hampered by the prevalence of the Lumpy Skin Disease (LSD) among cows in the northern states. Although a successful immunisation programme helped contain the disease, ICRA expects a slight moderation in milk production growth to 4-5% in FY2023.
Rising cattle feed prices and transportation costs had earlier forced dairy companies to increase milk procurement prices in FY22 to support farmers.
"Raw milk prices have continued to rise in the current fiscal too, owing to rising cattle feed and fodder prices for dairy farmers. While erratic monsoons in various parts of the country impacted fodder availability, rising prices of grains like maize, wheat and soyabean led to soaring cattle feed concentrate prices. Apart from that, the prevalence of LSD briefly limited milk availability," said Sheetal Sharad, sector head and vice president, ICRA.
"Given the healthy demand expectations over the festive and wedding seasons, ICRA anticipates raw milk prices to stay firm in H2 FY2023 as opposed to a typical correction in the flush season. Retail prices for dairy products have thus gone up in the current fiscal to make up for higher costs," Sharad added.
Increased input costs for dairy companies continue to be a worry. "More retail price hikes could follow in the backdrop of the current inflationary scenario," the ratings agency cautioned.
