Dairies in Maharashtra are set to start a price war in order to challenge players like Amul and Nandini in the state.
Private and co-operative dairies have decided to reduce the selling price of milk by Rs 2-4 per litre to increase their market share and capture retail markets.
Prakash Kutwal, chairman of Pune-based Kutwal Foods Private Limited on Thursday said, twenty two private dairies, 16 of them which sell milk in pouches, held a meeting in Baramati recently.
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 currently selling milk at the rate of Rs 41-44 per litre. To the farmer, dairies are paying between Rs 17 and Rs 25 per litre 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 logical 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 12 crore litres of milk collected daily in Maharashtra, around 90 lakh litres are sold in pouches.
Around 30 lakh litres 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. Kutwal expressed confidence that the move will be followed by other players in the sector.
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 litres per day.
The Karnataka government's decision, to provide Rs 5 per litre subsidy to dairy farmers, allows the latter to sell milk at lower retail prices of Rs 35-38 per litre, said players in Maharashtra.
Amul procures 21 lakh litres of milk in Maharashtra while its liquid sales are around 15 lakh litres. Nandini has managed to increase its sales to 3 lakh litres per day in Mumbai, in just a year or so.
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