Surging demand causes liquid milk prices to go up
Saturday, 25 October 2008
Jasim Uddin Haroon
Surging demand has unleashed a crisis for liquid milk in the local market as consumers are increasingly turning off melamine-tainted powdered milk, thus allowing retailers to push up the prices.
At retail level, prices of packed liquid milk in the capital and its adjoining areas shot up by 23 per cent.
As of Friday, a packet of liquid milk weighing 250 ml was charged at Tk 16 against Tk 13 and Tk 27 for a half litre against Tk 22.
"We've to pay Tk 2 more for half a litre. So we are forced to sell at a higher price," Masud, a trader at Gopibagh area, told the FE Friday, blaming producers' syndicates for the hike.
But suppliers denied the allegations, saying that they could not cope with soaring demand that is outstripping supply.
"It's not the issue of syndicates. Only unusually high demand triggered a supply crunch in many parts of the country. Even we're concerned about how to address the evolving situation," an official of Pran Dairy Products told the FE.
Md Eleash Mridha, executive director of Pran Dairy, said that demand for liquid milk almost doubled over the past two days and they cannot cope with the increasing demand.
He said there is no likelihood of raising supply within a short time, claming his company supplies around 35000 litres in the city a day.
"We can not to raise supply overnight. But we are looking into the possibility of enhancing our capacity in the context of huge demand for fresh milk in the country," Mridha, whose company supplies both UHT and pasteurised milk.
Liquid milk suppliers said that a section of 'unscrupulous traders' are liable for the abrupt spike of the milk who are seeking to gain windfall.
Altaf Hossain, general manager at Milk Vita, told the FE that his company did not increase prices.
"I think retailers are the main culprits who are making windfall profits in the changing situations," Mr Altaf said.
He added that his company, a state-owned company, cannot supply more than 160,000 litres a day, urging the law enforcement agencies to step up their market vigilance to check price manipulation.
"Just a couple of days ago, a trader was picked for charging higher prices giving a undertaking that he will not demand higher prices," he said.
But the importers of powdered milk said demand of liquid milk will surge further as they stopped supply of milk from their warehouses after a High Court rule, asking traders to stop the sale of melamine-contaminated dairy products.
The HC Thursday ordered the government to stop the sale and display of eight brands of milk powder found tainted with melamine until receipt of laboratory test reports from both home and abroad.
The brands in question are Diploma, Red Cow, Dano, Yashili-1 and Yashili-2, Sweet Baby -2, Nido and Anlene. The department of Chemistry of Dhaka University carried out tests and found that the eight contain the melamine.
Ahmed Kabir, country director of Arla Foods told the FE the government should take immediate steps on the issue otherwise the country will face a fresh crisis of liquid and powdered milk.
"So the government should approach the FAO to carry out tests quickly, otherwise the situation will deteriorate further," Mr Kabir added, whose company supplies Danish Dano products.
"I have advised all my dealers to pull down milk powder displayed after the HC order," he said.
Mohsin Chowdhury, director sales of Nestle Bangladesh told the FE that guardians have been buying liquid milk at the higher prices as they have no other option to feed their kids.
Powdered milk account for around 70 per cent of total milk consumption and there will have definite impact following suspension of the powdered milk, he added.
Currently, around four local companies supply approximately 350,000 litres liquid milk in major cities and around half of the quantity are consumed in the capital.
Surging demand has unleashed a crisis for liquid milk in the local market as consumers are increasingly turning off melamine-tainted powdered milk, thus allowing retailers to push up the prices.
At retail level, prices of packed liquid milk in the capital and its adjoining areas shot up by 23 per cent.
As of Friday, a packet of liquid milk weighing 250 ml was charged at Tk 16 against Tk 13 and Tk 27 for a half litre against Tk 22.
"We've to pay Tk 2 more for half a litre. So we are forced to sell at a higher price," Masud, a trader at Gopibagh area, told the FE Friday, blaming producers' syndicates for the hike.
But suppliers denied the allegations, saying that they could not cope with soaring demand that is outstripping supply.
"It's not the issue of syndicates. Only unusually high demand triggered a supply crunch in many parts of the country. Even we're concerned about how to address the evolving situation," an official of Pran Dairy Products told the FE.
Md Eleash Mridha, executive director of Pran Dairy, said that demand for liquid milk almost doubled over the past two days and they cannot cope with the increasing demand.
He said there is no likelihood of raising supply within a short time, claming his company supplies around 35000 litres in the city a day.
"We can not to raise supply overnight. But we are looking into the possibility of enhancing our capacity in the context of huge demand for fresh milk in the country," Mridha, whose company supplies both UHT and pasteurised milk.
Liquid milk suppliers said that a section of 'unscrupulous traders' are liable for the abrupt spike of the milk who are seeking to gain windfall.
Altaf Hossain, general manager at Milk Vita, told the FE that his company did not increase prices.
"I think retailers are the main culprits who are making windfall profits in the changing situations," Mr Altaf said.
He added that his company, a state-owned company, cannot supply more than 160,000 litres a day, urging the law enforcement agencies to step up their market vigilance to check price manipulation.
"Just a couple of days ago, a trader was picked for charging higher prices giving a undertaking that he will not demand higher prices," he said.
But the importers of powdered milk said demand of liquid milk will surge further as they stopped supply of milk from their warehouses after a High Court rule, asking traders to stop the sale of melamine-contaminated dairy products.
The HC Thursday ordered the government to stop the sale and display of eight brands of milk powder found tainted with melamine until receipt of laboratory test reports from both home and abroad.
The brands in question are Diploma, Red Cow, Dano, Yashili-1 and Yashili-2, Sweet Baby -2, Nido and Anlene. The department of Chemistry of Dhaka University carried out tests and found that the eight contain the melamine.
Ahmed Kabir, country director of Arla Foods told the FE the government should take immediate steps on the issue otherwise the country will face a fresh crisis of liquid and powdered milk.
"So the government should approach the FAO to carry out tests quickly, otherwise the situation will deteriorate further," Mr Kabir added, whose company supplies Danish Dano products.
"I have advised all my dealers to pull down milk powder displayed after the HC order," he said.
Mohsin Chowdhury, director sales of Nestle Bangladesh told the FE that guardians have been buying liquid milk at the higher prices as they have no other option to feed their kids.
Powdered milk account for around 70 per cent of total milk consumption and there will have definite impact following suspension of the powdered milk, he added.
Currently, around four local companies supply approximately 350,000 litres liquid milk in major cities and around half of the quantity are consumed in the capital.