Milk prices are set to go up in Punjab as the state owned Punjab State Cooperative Milk Producers Federation Ltd (Milkfed) have decided to raise milk prices by Re 1 a litre from July 21 over declining profitability.
"We are raising our milk by Re 1 a litre and the new rates will be applicable from July 21," Milkfed Managing Director VK Singh told PTI on Thursday.
Currently, standardised milk costs Rs 26 per litre, single toned milk Rs 23 per litre and full cream (Verka Gold) is for Rs 29 a litre.
However, there will not be any increase in double toned milk.
With Milkfed paying higher prices to its dairy farmers, its profit for the first quarter of current fiscal came down by Rs 5 crore, necessitating raise in milk rates.
"We have seen drop in our profitability by Rs 5 crore in the first quarter and if we do not take any action now then Milkfed will turn into losses by fiscal end. That is why to maintain at least our breakeven, we decided to make marginal increase in milk rates," he said.
Milkfed earned net profit of Rs 15 crore in 2009-10 with total turnover of Rs 1,350 crore.
"We do not want that our farmers reduce their milk supply to us because of lesser prices that is why we are paying maximum rates to them," he said. Milkfed pays Rs 340 per kg per fat and Rs 380 per kg per fat to its dairy farmers.
However, milk procurement by Milkfed grew by 20 per cent this summer.
"Our milk procurement jumped by 20 per cent at 8 lakh litres per day in this summer against last year's procurement," he said. Last year, milk lifting was hit severely due to heat stress in cattle.