Dairies in Maharashtra are set to start a price war in order to drive players like Amul and Nandini out of business from the state. Private and cooperative dairies have decided to reduce the selling price of milk by Rs 2-4 per litre to increase their market share and capture the retail market. Prakash Kutwal, Chairman of Pune-based Kutwal Foods Private Limited said, “Twenty two private dairies,16 of which sell milk in pouches, held a meeting in Baramati on Monday. During the meeting, it was decided to reduce the retail price of pouch milk by Rs 4 per litre from the third week of June,” he said.
Dairies in Maharashtra are presently selling milk at the rate of Rs 41-44 per liter. To the farmers, dairies are paying between Rs 17-25 per liter for milk with 3.5 per cent fat and 8.5 per cent solid not fat (SNF). Gokul – the Kolhapur District Cooperative Milk Producers Union (KDCMPU) has also decided to reduce the retail price for cow milk by Rs 2 per litre from June 21. Kutwal said as procurement price from the farmers has reduced, it is but logically to ensure they reduce the purchase price for the consumer.
“Milk business has been in dire distress due to a crash in the Skimmed Milk Powder (SMP) prices globally. We had asked for intervention from the government. However, nothing was forthcoming,” he said.
Now, to increase the sale of pouch milk and to corner out-of-state players, private dairies have decided to reduce their prices, he said. Dairy sources say of the 1.2 crore liters of milk collected daily in Maharashtra around 90 lakh liters is sold in pouches. “Around 30 lakh liters of the pouch milk sold is by Amul (the brand of the Gujarat State Cooperative Milk Marketing Federation (GCMF) and Nandini (the brand of Karnataka Milk Federation), per day. The only reason we have decided to slash our prices is to reclaim this market,” he said.
Vishwas Patil, Chairman of KDCMPU, said they have decided to reduce their prices to increase their market share. The Union brands its milk and milk products under the brand name of Gokul and reports collection of over 10 lakh liters per day. Karnataka government’s decision to provide Rs 5 per liter subsidy to dairy farmers, players in Maharashtra said, allows them to sell milk at lower retail prices of Rs 35-38 per liter. Amul procures 21 lakh liters of milk in Maharashtra while its liquid sales are around 15 lakh liters. Nandini has managed to increase its sales to 3 lakh liters per day in Mumbai in just a year or so.