Milk prices likely to rise by Rs5 per litre

Farmers cite high cost of production as reason.

KARACHI: Dairy farmers and milk dealers are considering increasing milk prices beyond Rs65 per litre, days ahead of a review of prices fixed by the city government, citing a high cost of production.

Milk, classified as an essential food item, has its price fixed by the local government. Prices are revised on a quarterly basis, after consultations with milk dealers and dairy farmers.

The current price stands at Rs59 to Rs60 per litre and local authorities have already assured dealers that rates will be increased in the upcoming announcement, however, dealers appear to be unconvinced.

“Our current cost of production is Rs60 per litre and it is rising continuously,” said Karachi Dairy Farmers Association President Sikandar Nagori. He asserted that the government should not be allowed to limit retail prices of dairy products because the prices of inputs used by the sector are not controlled or subsidised by the government.

Arguing in favour of an invisible hand, dairy dealers are pressurising the government to toss its price fixing mechanism and let the demand and supply mechanism ascertain retail rates.

Prices of milk and dairy products are scheduled to be reviewed on March 13, but dealers have threatened the government that they will unilaterally increase prices if the official rates are not revised upwards this week.

Published in The Express Tribune, March 1^st, 2011.