Milk powder prices have increased dramatically, threatening to a snowball effect on to various foods and food products in which it is a key ingredient.
With summer round the corner, the cost of foods like ice- cream, yoghurt and all yoghurt products, biscuits, bakery products and baby food among others are set to rise.
Milk powder now costs $4200 per tonne, up from $3000 a tonne.
Biscuit prices are also bound to go up as the product users among other ingredients, milk powder.
Traders in Dubai said the price of milk powder had risen substantially due to an increase in demand from China, stoppage of milk powder exports by India (the world’s largest producer) and bad weather in Australia and New Zealand, two major producers.
Speaking to Emirates 24|7, Raju P Joy, Regional Manager, Pure Ice Creams, producers of Kwality brand in the Middle East said, “We are shocked by a 30 per cent increase in milk powder prices and a similar increase in vegetable oil prices that is bound to cause a price hike from April. The ice-cream industry, bakeries and other food manufactures are under pressure because there is no sign that the prices will come down.”
The company uses between 20,000 to 25,000 kilograms of milk powder per month at its manufacturing facility in Sharjah.
“After sugar prices went up and came back to normal, it is now the turn of milk powder manufacturers to increase prices,” Raju said.
Ahmed Al Hamamsy, Marketing Coordinator, Gulf Food Industries said: “The cost of many food products will go up because milk powder and vegetable oils are basic ingredients for many food products and canned food. It is worrying us because there will be a general food price increase.”
Mathai Joseph, Area Sales Manager, Al Ain Diary said milk powder prices do go up occasionally, but his company manufactures fresh milk, so the milk powder increase will not have any direct impact on local prices. “And we don’t see an immediate increase in our fresh milk prices in 2011,” he told Emirates 24|7.
Food traders who do not have sufficient forward booking will have a tough time ahead.
Indian milk prices have risen by about 20 per cent in the retail market and by 12 per cent at the wholesale level in the last one year, adding to food inflation there which is well into double digits.
"The export of milk powders (including skimmed milk powder, whole milk powder, dairy whitener and infant milk foods), casein and casein products has been prohibited and hence, not allowed to be exported till further orders," said the Directorate General of Foreign Trade (DGFT) in India in February.
Andre Wikens, Shipping Manager, Export, Eximo, a German Milk producer said the price of milk powder has been shooting up due to perceived shortage in the market.
Data from the USDA showed that China’s import of whole milk powder over the past two years has increased sevenfold to 320,000 tonnes, and this year imports will increase to 400,000 tonnes.
In 2010 Indian milk powder export was around 8,000 tonnes and the current year forecast is that the country would export around 15,000 tonnes of milk powder. That will not happen now.