Whalesbook
Rising Costs Force Amul Milk Price Hike
Amul, India's leading dairy cooperative, has increased milk prices by ₹2 per litre nationwide, effective May 14, 2026. This adjustment follows similar moves by competitor Mother Dairy, which cited rising farmer procurement prices of about 6% over the past year. The adjustment highlights wider inflation impacting the farm sector. The decision comes as Amul, a major player in the Fast-Moving Consumer Goods (FMCG) market, reached a milestone with its brand turnover exceeding ₹1 lakh crore for the financial year 2025-26, an 11% increase from the previous year. GCMMF's sales turnover for the period was ₹73,450 crore.
Why Prices Are Going Up
The Gujarat Cooperative Milk Marketing Federation (GCMMF) attributes the price revision to rising operating costs, including higher expenses for cattle feed, packaging materials, and fuel. This mirrors broader industry challenges where input costs remain a significant concern for dairy and food companies. The government's ban on exporting De-oiled Rice Bran (DoRB), a key cattle feed ingredient, shows how intense these cost pressures are. While Amul maintains its cooperative policy of passing about 80 paise of every rupee earned back to milk producers, the need for price adjustments indicates limited capacity to absorb rising costs internally. This marks Amul's first price hike since May 2025, with previous adjustments in June 2024, signaling a repeated need to adjust prices due to ongoing cost hikes.
Inflation's Impact on Consumers
Despite Amul's strong financial performance, indicated by its ₹1 lakh crore brand turnover, the recurring nature of price increases poses a risk. Past price adjustments, such as the near doubling of milk prices in Delhi since 2006, suggest potential consumer sensitivity to higher prices. The dairy sector faces tight supply and pressure on profit margins, with companies like Amul and Mother Dairy likely to face continued pressure to adjust prices. While Amul argues its price increase translates to 2.5-3.5%, which is below average food inflation, the cumulative effect of these increases on household budgets, particularly for middle-class consumers, remains a significant concern. The competitive landscape, with Mother Dairy holding a substantial market share in regions like Delhi-NCR, requires careful pricing strategies to maintain market position.
Future Focus: Value-Added Products and Farmers
Looking ahead, the Indian dairy sector sees a trend toward value-added dairy products (VADPs) like cheese, ghee, and flavored yogurts, which are growing faster than liquid milk and offer better profit margins. This trend could provide Amul with ways to grow revenue and boost profits. The cooperative's commitment to paying farmers well is key to its operations, encouraging consistent milk production. However, balancing farmer support with consumer affordability during inflation will be key for Amul's market position in the coming quarters.