Consumers already grappling with mounting inflationary pressure are facing another financial hit, as private dairy companies have followed state-owned Milk Vita in raising prices by Tk 10 per litre.
As a result, a family buying 10 litres of milk a month will have to spend an additional Tk100.
Milk Vita increased its milk price by Tk10 per litre in early August. Around one and a half months later, private companies including Farm Fresh, Pran and Aarong Dairy also raised prices of different milk products by the same amount.
Industry observers said a similar pattern has been seen in the past, with private companies following Milk Vita’s price adjustments.
Currently, the price of one litre of packaged liquid milk ranges between Tk110 and Tk115, while a half-litre packet costs Tk60.
Professor Akhteruzzaman of the Department of Agricultural Economics at Bangladesh Agricultural University told TIMES that the tendency of companies to adjust prices after one market player increases rates can be explained through an oligopolistic market structure.
“After one company adjusts its prices, other companies also tend to make similar adjustments,” he said.
According to him, Milk Vita’s long presence as a major pasteurised liquid milk supplier means its price decisions often serve as a reference point for other companies.
Shahriar Reza, brand manager of Akij Dairy, said the price of Farm Fresh’s special-pack UHT milk has increased to Tk135 from Tk125, while pasteurised milk now costs Tk110, up from Tk100. Prices of its 500ml variants remain at Tk55 and Tk60.
The price of one litre of Pran Dairy’s full cream liquid milk has increased to Tk140 from Tk130, while 500ml UHT milk now costs Tk65, up from Tk60. The company has also raised the price of one litre of pasteurised milk to Tk110 from Tk100.
Aarong, the dairy brand of BRAC Dairy, has increased the price of one litre of pasteurised premium milk to Tk110 from Tk100-105. The price of 500ml full cream milk has risen to Tk60 from Tk50-55. One litre of UHT milk now costs Tk115, up from Tk105-110.
Dairy companies have attributed the price increase to rising production costs at the farm level.
Shahriar said higher cattle feed prices, increased transportation costs and rising electricity expenses have pushed up production costs for farmers.
Farm Fresh has around 1,500 registered farmers, he said, adding that the price paid to farmers had been increased to support them.
According to Shahriar, around 80 per cent of the price of each litre of milk goes to farmers, while the remaining amount covers transportation, processing and other costs.
Milk Vita also increased its farm-level collection price in August. The purchase price of milk with at least 4 per cent fat content was raised to Tk53 per litre from Tk50. At the same time, the consumer price of one litre of pasteurised milk was increased by Tk10.
However, the retail price of packaged milk includes several additional costs beyond the farm-level price. These include milk collection and transportation, refrigeration, factory processing, packaging, electricity, fuel, machinery maintenance and marketing expenses.
Dairy companies said these costs have increased in recent times.
They said that while the price paid to farmers is often highlighted when analysing retail milk prices, raw milk is not the only component of the total cost of packaged milk.
After collection, milk goes through several processes. Pasteurised milk requires heat treatment and refrigeration, while UHT milk requires different processing methods and long-life packaging. Factory electricity, fuel, equipment maintenance and transportation costs are also added.
Therefore, a Tk10 increase in the retail price of one litre of milk does not mean the entire additional amount goes directly to farmers, companies said.
