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Amul and Mother Dairy have increased the prices of milk from November 12. Toned milk has become costlier by two rupees and full cream milk by four rupees per liter.
Mother Dairy's packaged toned milk will now be available at Rs 62 per liter instead of Rs 60. The price of full cream milk has increased from Rs 72 to Rs 76 per liter.
Amul has also increased the price of its toned milk 'Amul Taza' by Rs 2 per litre. At the same time, full cream milk 'Amul Gold' has become costlier by Rs 4 per liter.
According to the company, the price of Amul Taza has increased by 3.3 percent and that of Amul Gold by 5.5 percent. The new prices will be applicable across the country from today.
Both the companies are citing the increasing cost of purchasing milk from farmers and delivering it to customers as the reason for this. But the question is why did this expenditure suddenly increase so much?
Where does milk become expensive?
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The customer gets the packet of milk from the dairy or shop, but the increase in its price starts from the cattle rearer. Mother Dairy has said in its statement that in many parts of the country, less and more rainfall has affected the availability of fodder.
According to the company, the prices of green and dry fodder have increased by 20 percent in the last one year. The price of animal feed has also increased by about 10 percent. Apart from this, the cost of packing, transportation and other work of milk has also increased by 25 percent.
Gujarat Cooperative Milk Marketing Federation or GCMMF, which markets Amul, has also cited low and irregular rainfall as a reason for increasing the price.
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Amul says that the prices of cake, maize and molasses used in animal feed along with green and dry fodder have increased. The materials and fuel used in packing have also become expensive.
According to the company, its member milk unions have increased the price of purchasing milk from farmers by four to five percent in the last one year.
That is, the companies argue that milk is not becoming expensive only because of its processing, packing or transportation in the dairy. The increasing expenditure starts at the stage of rearing animals and taking milk from them.
How is animal feed related to milk price?
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Dr. RS Sodhi, former Managing Director of GCMMF, says that the biggest part of the total expense of milk production is the feed of the animals.
According to him, about 70 percent of the production cost of milk is spent on fodder and animal feed. This expenditure has increased rapidly in the last one and a half years.
Dr. Sodhi explains it in simple words. Just as people's food items become expensive, similarly the cost of feeding animals also increases. After this, the cost of keeping the milk cool, its processing, packing and transportation is added.
Harveer Singh, editor of Rural Voice and expert on agricultural matters, also considers fodder inflation and its shortage as an important reason for the current increase. Due to El Nino, drought like situation has also occurred in some areas of India, due to which there is shortage of fodder.
He says that in areas where there is shortage of fodder, cattle herders face double problems.
On one hand, feeding animals becomes expensive. On the other hand, if they do not get complete nutrition, the amount of milk they get may also be affected.
Therefore, milk becoming expensive for the customer does not mean that the farmer's income has also increased accordingly. The farmer also has to pay fodder, animal feed and other expenses from the money received from selling milk.
Why did full cream milk increase by four rupees?
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To understand the differential increase in the prices of full cream and toned milk, we need to understand the fat present in the milk. According to Amul's statement, its toned milk contains three percent fat and its full cream milk contains six percent fat.
That means the amount of fat in full cream milk is double that of toned milk.
Harveer Singh says that milk fat is becoming expensive for dairies. Full cream milk has more fat, hence there is more pressure on its price.
He explains that buffalo milk generally contains more fat than cow milk. Therefore, for a dairy it does not matter only how many liters of milk it is getting.
It is equally important how much fat is there in that milk and at what price it is available. The rising price of milk fat is also indicated by the price of butter.
According to a report by agricultural and economic affairs journalist Harish Damodaran published in The Indian Express on November 8, between October 2023 and October 2026, the average price of butter at the dairy level increased from Rs 348 to Rs 537 per kg.
This is an increase of approximately 54 percent. Butter contains about 82 percent fat. These are dairy level prices, not the prices of butter packets sold at shops.
This explains why the cost of producing milk and dairy products with higher fat content is under greater pressure.
Is the decline in milk production in India a reason?
Harveer Singh assesses that at present there is pressure on the supply of milk and the production is not increasing as per the requirement.
But this does not mean that the total milk production of the country has decreased.
According to government data, milk production in India was about 23.06 crore tonnes in 2022-23. It increased to 23.93 crore tonnes in 2023-24.
However, the pace of production growth has gradually slowed down.
Milk production had increased by 3.83 percent in the year 2022-23. This increase in 2023-24 was 3.78 percent.
Therefore it is important to distinguish between two things.
The total milk production of the country has not decreased, but the pace of its growth has slowed down.
Apart from this, government figures show the picture of the entire country and the entire year. It is not directly known from them how much milk a particular area or dairy is getting in November 2026.
To understand the current situation, we also have to see from which areas the companies are purchasing milk, what is its availability there and how much fat is there in that milk.
Why is it unusual for prices to rise at the beginning of winter?
According to Harveer Singh, generally between August and February, animals give more milk and the supply in the market increases. Many times, due to excess milk arrival during this period, companies reduce the purchase price from farmers.
But this time, at the beginning of winter, fodder is expensive, there is said to be pressure on the availability of milk and the prices have been increased for the customers. Harveer Singh, in his long journalism experience, considers the simultaneous increase of four rupees per liter in the price of full cream milk as unusual.
Dr. Sodhi sees this with rising expenses over a long period of time. He believes that compared to the inflation of other commodities, the price of milk has increased less.
That means both experts agree that the cost of producing milk has increased. However, they have a different perspective on the current increase.
How much has the cost of milk increased in the last few years?
Before the hike in March 2022, Mother Dairy's full cream milk in Delhi-NCR was priced at Rs 57 and toned milk at Rs 47 per litre. These prices were given in the official statement of Mother Dairy at that time.
Now the price of full cream milk is Rs 76 and the price of toned milk is Rs 62 per liter.
If we compare these two dates, Mother Dairy's full cream milk has become costlier by about 33 percent and toned milk by about 32 percent.
However, the price journey of every brand and every packet size was not the same.
Amul had also reduced the price of its one liter milk packets by one rupee in January 2025. Therefore, while calculating the total increase in a brand, the cuts in between and the size of the packet will also have to be kept in mind.
Why did Amul and Mother Dairy increase prices almost simultaneously?
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Dr. Sodhi says that the prices of cooperative institutions and big brands play an important role in the milk market.
When a big brand changes the price of milk, other brands and small traders also take it into consideration.
This time Amul and Mother Dairy have given almost similar reasons. These include the increased price of purchasing milk from farmers, expensive fodder, animal feed, packing and transportation expenses.
But merely increasing the prices in the surrounding period does not prove that both the companies have jointly fixed the prices.
The structure of both is also different. Amul is the brand of the federation of cooperative milk unions. Mother Dairy is a wholly owned company of the National Dairy Development Board.
How much will the farmer get from the increased price?
Amul says that about 80 percent of the revenue it receives from customers returns to milk producers through its cooperative structure.
According to Mother Dairy, about 75 to 80 percent of the money received from the sale of milk is spent on purchasing milk.
Dr. Sodhi says that a share of the increased price received from customers should reach the farmers. Their argument is that if the selling price does not increase, it will be difficult to pay cattle farmers more in line with their increasing expenses.
But it is important to understand a difference here.
A farmer getting a higher price for milk and increasing his actual income are not the same thing. If the expenditure on fodder and animal feed is also increasing rapidly along with the money received from selling milk, then the savings of the farmer will increase, it is not so.
This is the whole story of the current increase.
Now the customer will have to pay more for every packet of milk. Companies are passing some part of the increased expenses on to customers. At the same time, cattle farmers are struggling with expensive fodder and animal feed.
The high amount of fat present in milk and the increasing price of milk fat are considered to be the main reasons behind the increase in the price of full cream milk.
That means this time the price of milk did not increase only because of packing or transportation. Behind this is the pressure of the entire cost, from feeding the animal to the fat found in the milk and delivering it to the customer.
Published by Collective Newsroom for the BBC.
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