Pricing System In Milk

PRICING SYSTEMS IN DAIRY SECTOR

Various pricing systems functioning in the country for milk procurement are given below:

1. Pricing on fat content A very large section of dairy industry is buying the milk on fat basis, disregarding the SNF content of milk. This is practiced by most private dairies. The advantage involves discouraging adulteration with water or separated milk or, mixing of cow milk with buffalo milk. A disadvantage of this system is that it discourages production of cow milk. The price paid per kg of fat was Rs. 425/- in 2011. 2. Pricing on volume or weight

This method is also known as flat rate. It saves time and is simple to calculate but encourages adulteration i.e. watering or skimming. It is popular in the unorganized

It should take into account the seasonal variation in production and demand. 6.Pricing according to the use of milk This practice is followed mainly for milk products. Milk procurement for a specialized dairy product such as cheese requires selection of raw milk by avoiding mastitis, colostrum, late lactation, and antibiotic-free milks. The milk should be free from detergents, sanitizers, pesticides, insecticides, aflatoxins, mycotoxins, heavy metals and even off-flavors. 7.Two-axis pricing of milk Liquid milk plants have a differential pricing system for flush and lean months based on the fat and SNF content of milk, with provision for the payment of a premium for a higher fat and SNF content than the specified standard. According to this pricing policy, the price of milk is calculated by fixing a predetermined rate for fat and SNF. This system discourages adulteration and provides a common pricing approach to both cow and buffalo milk. The requirement by Food Safety and Standards Rules (FSSR) - 2011 (erstwhile PFA) for cow milk is 3.0% - 4.0% fat and 8.5%-9.0% SNF while those for buffalo milk 5.0%-6.0% fat and minimum 9.0% SNF throughout country. This is done with a view to encourage the milk production through high-yielding indigenous and cross breeds and to give adequate incentive for production of cow milk. In this context, National Dairy Development

Two Axes Formula India has been producing large quantities of buffalo milk when compared with any other country. This milk being rich in fat content always attracted good price in comparison to cow milk. The fat portion being visible (giving thickness), separable (yielding cream) and measurable (in %age) made it easier to decide milk