Food giant Nestle Pakistan’s decision to increase the price of packaged milk has once again led to the shortage of one-litre containers in the open market, leaving consumers to struggle and pay more in some parts of the city.
Nestle has increased the prices of one-litre packaged milk by Rs10 this month, making the official price Rs110. The prices of half- and quarter-litre packs have not been changed.
Other milk processing companies have kept the price at the same level (Rs100). However, retailers maintain that Nestle’s Milkpak is demanded more than Olpers (Engro Food) and Haleeb (Haleeb Foods). They said that shortage of one-litre packs has put increased pressure on smaller packs to fulfil the ever-increasing demand of milk in Pakistan.
The retailers said that prices from the other two competitors could rise as well, with the shortage likely to continue till October.
It is a dilemma for Pakistan that despite being the fifth largest milk producing country – with annual production of around 36 billion litres –consumers are facing acute shortage of milk especially in summers. Due to increasing urbanisation and unavailability, the consumption of loose milk in large cities is on a continuous decline with people shifting to packaged and pasteurised milk to meet daily consumptions.
The processed milk industry’s share is around 5% in total milk production of the country. This industry considers summers as lean months for milk production as per capita animal milk production reduces naturally this time of the year. Fodder availability becomes another issue coupled with stress on the supply chain which leads to an overall shortage.
Lack of scrutiny by the government in the price-increase mechanism of the processors is due to market forces. Packaged milk is essential for every retailer to run their business, and every one of them blames the sole distributors for artificial shortages.
“Only the distributors know when the company will increase the price,” said Shahid Butt, a salesman of a retail shop in Lahore. “What they do is hold the existing stock. That means a hike of Rs10 will result in a lot of undeserved profit.
“The availability of one-litre packs on the outskirts of the city is worse and consumers have to pay extra, on which there is no check by anyone”
Meanwhile, Nestle Pakistan acknowledged supply is not meeting current demand. “We realise that the demand for Milkpak is currently higher than its supply, which has led to sporadic product shortages,” Nestle Pakistan said in a statement.
Published in The Express Tribune, August 5th, 2014.
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