The State has increased milk procurement prices by Rs2 per litre for cow milk and Rs2.5 per litre for buffalo milk. This hike will also have a direct impact on the prices of milk products—curd, paneer and shrikhand

After the spiralling onion prices that made the 'aam aadmi' weep, now it's the turn of milk prices to make them cry.

The Maharashtra government has increased milk procurement prices by Rs2 per litre for cow milk and Rs2.5 per litre for buffalo milk. This hike will also have a direct impact on the prices of milk products-mostly curd (yoghurt), paneer (cottage cheese) and shrikhand.

B Bhandari, general manager (marketing), Warana Dairy, told Moneylife that there would be a rise in the prices of milk products like paneer and shrikhand as the production cost of these products will go up.

Another official from a leading Mumbai-based milk dairy said (preferring anonymity), "Because of the rise in milk prices, there could be an increase in the prices of milk products. We will be thinking on that line (hiking prices)."

The decision to increase milk-procurement prices has been taken as the cost of milk production has increased, due to rise in fodder and labour charges.

Vinayak Patil, chairman of Mahananda Dairy, explained why milk prices are going up. "The milk procurement price has increased, as the cost of milk production has gone up. This is mainly because of the rise in the cost of fodder and labour. The production of milk has also come down due to the inclement weather. As milk procurement prices have increased, we have had to hike milk prices."

Following the government's decision, major milk dairies in Maharashtra have hiked the prices in the range of Rs1-Rs3 per litre, depending on the type of milk. Dairies like Warana and Gokul have hiked their prices by Rs2 per litre (for cow milk) and Rs3 per litre (for buffalo milk). Mahananda Dairy, one of the state's leading milk cooperatives, has decided to increase prices by Rs1 per litre on both types of milk.

Interestingly, market leader Amul-owned by Gujarat Cooperative Milk Marketing Federation (GCMMF)-which had earlier refused hike prices, has also decided to join the trend. Amul has increased prices by Rs1 per litre for its milk brand Amul 'Taaza' and Amul 'Lite Slim' and 'Trim Milk'.

According to R S Sodhi, chief general manager, Amul, "Earlier we did not agree to the decision of increasing milk prices by Rs2- Rs3. Now, we have increased the prices by Rs1 per litre for Amul Taaza and Amul Slim and Trim." However, Mr Sodhi ruled out any possibility of rise in other milk products by Amul.

Meanwhile, the Karnataka government permitted the Karnataka Milk Federation to increase the price of milk. Accordingly the milk prices in the state have gone up by Rs2 per litre.