Many people must have noticed by now that there has been a steady increment in the pricing system of Amul milk for the past year. In the latest price hike, Amul has proceeded to increase the prices of its milk products by 2 Rupees to 3 Rupees per litre all over India, except Gujarat, its home state. Because of this, all other milk producers in this market have done the same because every single milk-producing company takes Amul as a benchmark standard.
Over 1 year, Amul has, in an estimation, done an increment of about 8 rupees, Which is approximately 12%-15% across all product categories. Certain guesses are that the possible reason behind these price hikes could be to cover the transportation costs and other input costs of all products. There are particular reasons why Amul has been steadily increasing its product prices; they are:
Applying basic economics, we’ll find two types of purchasable goods or commodities. They are luxury goods and essential goods. Commodities like milk generally come under essential goods. This means that if there is a price change in a commodity such as milk, the demand for that product will not change unless the prices change on an extreme level. So basically, if milk costs were to drop considerably, the consumers would use the saved money to purchase other commodities. Whereas, if the price of milk rises drastically, people will save money just to purchase milk. People will compromise in other aspects rather than reduce their daily milk consumption.
Since demand mostly remains rigid in such situations, so the prices of essential goods are bound to change only when the supply of said commodities becomes scarce or excess. Looking at stats for the financial years from 2018 to 2021, the demand for milk has not decreased considerably, while the supply certainly has seen a massive increase from 198 million tonnes to 210 million tonnes. And looking at the stats for the ongoing financial year of 2022, there hasn’t been any fall in milk production.
