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People are forced to switch to a cheaper alternative due to rising milk and milk product prices

Milk, butter, ghee, and buttermilk are among the most consumed food items. According to the United States Department of Agriculture (USDA) Dairy and Products Annual 2021 report, India is not only the largest producer but also the largest consumer of milk and milk products.

Leading milk suppliers Amul and Mother Dairy hiked milk prices by Rs 2 per litre on account of rising input costs. This was the second hike by them in nearly six months.  And, according to a LocalCircles survey, rising milk and milk product prices have forced many people to either reduce their purchase quantity or switch to a cheaper alternative.

As people struggle with high food inflation, the rise in milk prices is sure to put an additional burden on household expenses. According to the Gujarat Cooperative Milk Marketing Federation (GCMMF), the major reason behind the rise in prices of milk, which sells its products under the Amul brand, is 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.

This price hike is being done due to an increase in the overall cost of operation and production of milk. The cost of cattle feeding alone has risen by approximately 20% since last year. Considering the rise in input costs, our member unions have also increased farmers’ prices in the range of 8–9 percent over the previous year, GCMF said in a statement while announcing price hikes in August.

LocalCircle’s survey received over 21,000 responses from households located in 311 districts of the country. Here are some of the key takeaways from the survey:

The survey found that while 68% of milk consumers were consuming the same brand as earlier but at a higher cost, 6% of them had switched to cheaper brands or local supply sources. Though no respondent admitted to discontinuing buying milk, 20% of respondents admitted to reducing the quantity that they purchase. Overall, 68% of household consumers continued to buy their current type of milk, but 32% cut back or switched to cheaper alternatives, whether the same brand, a different brand, or local sources.

Of the 10,522 respondents, 72% of them were buying milk packaged in plastic pouches of 500 ml or 1 litre. 12% were buying bottled milk from local farms or bottling units, while 14% of consumers were buying unpackaged milk from local vendors. Only 2% were buying tetra pak milk with a longer shelf life, possibly because they are more expensive compared to milk packaged in pouches.

Given the dependence of most vegetarian households on milk and milk products for protein intake, the reduction in quantities of milk purchased is a cause of concern, especially where children might be getting deprived. Also, as farmers have a sustainable income from their dairy activity, it is a tight rope walk for policy makers and the need of the hour may be to drive efficiencies and reduce waste so further price increases do not occur in the near future and the producers earn the same or more by becoming more efficient in selling milk and reducing waste.

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