Why Has Amul Dairy Hiked Prices for its Products?
The dairy giant Amul has recently announced a 4% price hike in its milk and dairy products, effective from August 17, 2022. While Amul claims that the price rise is lower than the prevailing rate of inflation, this change has sparked widespread interest and questions from consumers. Let’s delve into the reasons behind the price hike and the impact on consumers and farmers.
Factors Contributing to the Price Hike
1. Increasing Operational Costs: According to Amul, the rise in the price of milk and dairy products is due to an overall increase in the cost of operations and production. Cattle feeding costs, a crucial factor in milk production, have surged by approximately 20% compared to the previous year. This significant increase in feeding costs is the primary reason for the price hike.
2. Frequent Price Adjustments: This is not the first time Amul has hiked its prices. Since July 2021, the company has increased prices on three separate occasions. The latest hike of Rs 2 per liter took place on August 17, 2022. This trend highlights the ongoing and persistent nature of the cost increases that Amul is facing.
3. Input Costs: The prices of inputs that farmers need to produce milk, such as green fodder, have increased due to heavy rains affecting yields. Other contributing factors include transport logistics, manpower, and energy costs. These rising input costs significantly impact the overall production costs, necessitating a price increase to ensure sustainable operations.
4. Healthcare of Cattle: The rise in feeding costs is closely tied to the health of the cattle. Many animals are falling ill due to adverse weather conditions, leading to increased healthcare costs. This further adds to the operational expenses, justifying the price adjustment.
Impact on Consumers and Farmers
Impact on Consumers: For consumers, the price hike of Rs 2 per liter for fresh milk translates to higher retail prices such as Amul Taaza, which now costs Rs 44-46 per liter, up from Rs 42-44. Similarly, Amul Gold, a full-cream milk variant, is now priced at Rs 62 per liter, up from Rs 60.
Impact on Farmers: For farmers, the actual price of milk should ideally be at least Rs 70 per liter. However, Amul’s Rs 2 per liter increase is a minor relief. Farmers are expressing concerns that the price increase is insufficient to meet the rising operational costs and thereby maintaining their livelihoods.
Amul's Official Response: In a press release, Amul stated that the price increase is 4% lower than the prevailing inflation rate. The release also mentions that the member unions have increased farmers’ prices by 8-9% over the previous year, which aligns with the cost increases they are facing. This adjustment aims to ensure fair compensation to the farmers and maintain the quality of Amul’s products.
Conclusion
The price hike by Amul Dairy is a reflection of the broader challenges faced by the dairy industry. While it aims to address rising operational costs, it also highlights the ongoing struggles of farmers in getting fair compensation for their produce. Through understanding the reasons behind the price hike and its impact, consumers can make informed decisions and support sustainable and fair practices in the dairy industry.