Market Watch: Low supply leads to rise in milk prices
What you need to know:
The current rise in milk prices on the market can be traced back to the effects of dry season on pasture and thus on the capacity of the cattle to produce milk.
Though milk prices are expected to come down during the rainy season, they are likely to remain the same or even increase since it is still pasture-planting season.
There is still a low supply as result of the long dry season, and many dealers have subsequently increased the prices.
Price rise
Last month, many milk traders were selling a litre of unprocessed milk at between Shs700 and Shs880 at wholesale. The same amount of milk costs Shs1,400 in many of the retail milk outlets and Shs1,200 from some smallholder farmers.
At the end of last year, 2012, a litre of unprocessed milk cost between Shs660 to Shs780 at wholesale price and Shs1,200 at retail price.
Milk supply
A 50-litre can which cost Shs30,000 is currently at Shs45,000. The price of a can is expected to rise to Shs50,000 while a litre will go for Shs1,500, according to Richard Mugisha of Akampa Dairy Suppliers in Kalerwe. Until recently, a litre of processed milk that was sold at Shs2,000 is currently sold at Shs2,200 in various supermarkets.
Teddy Nabaale, a salesperson at Sibyangu Dairy Supplies, attributes the increments to the low rainfall and high temperatures in some areas where the milk comes from. Milk is mostly got from Mbarara, Rushese, Kiruhura, Gomba and Mityana Districts.
Low production
“The farmers who produce the milk say that although the water sources have filled with rain water, the pastures have not yet matured, yet the animals can’t feed on water alone,” she says, adding, “The dry season affected the growth of the pastures and many of the mature ones dried up. This has hiked the prices right from the farmers’ bases to the suppliers and the burden has been shifted to the customer.”
It is usually a reduction in water and pastures that leads to low milk production and supply hence resulting to increased prices of the product.
The dry season (especially a long one) sometimes leads to death of the cattle due to lack of food. However, the pastures will be destroyed and animals die due to heavy storms. “In situations of low supply, most famers take advantage and dilute the milk because of the high demand. They end up supplying a low quality product, which reduces the customer base,” Nabaale says.
She, however, says that, it is not only during the dry seasons that milk prices go high but also during the heavy rains that make the roads from the supply areas impassable.
Advice
Where there is a low supply of the product, farmers tend to sell the product at abnormal prices.
In a statement on March-May 2013 Seasonal Rainfall Forecast from the Ministry of Water and Environment, signed by the Minister, Prof. Ephraim Kamuntu, livestock farmers are advised to plant more pasture, guard against animals from tick-borne diseases, worms and tsetse fly, and de-silt ponds and clear water ways to harvest water for animals.
