Dear milk, oh-so-dear!

The milky sheer-khorma you casually devoured last week will soon be even more valuable than you ordinarily perceive. And no! Sugar is not the only culprit; it is the creamy, white ingredient of the dessert that is also bound to get pricier in the days to come.
The imposition of RGST on milk is very likely to lead to a disturbing contagion effect that would jerk up overall prices considerably. On the face of it, this may sound absurd; since only 3-4 percent of the countrys annual milk production of over 30 million tons comprises the processed milk industry that comes under the tax net - the rest not being accountable under the RGST regime.
Thus, on the surface, it would seem that the imposition of RGST on packaged milk would drive up the products price - by around Rs10-15 per litre initially, according to Sarfaraz Rehman, CEO of Engro Foods.
But the story becomes more convoluted than it appears. As the prices of processed milk will rise, loose milk retailers will also increase prices of unpackaged milk, closely matching the percentage of increase to maintain the existing discount between packaged and loose milk prices.
These gains will be shared with rural dairy farmers from whom both processed and loose milk sellers source their milk, enticing the dairy farmers to increase their prices significantly. So milk prices at source will increase even further.
When the milk processing companies purchase the dearer milk from the dairy farmers at even higher prices, the net price for the consumers will be driven up much higher than it would have after a simplistic imposition of RGST. "It may go up as high as Rs100 per litre," said Rehman.
When a representative of milk retailers was questioned on the said unjustified increase in prices, he remarked that because of the RGST-induced increase in feed prices, such as that of oil cake, the overall cost of production of unrefined milk would also soar for the dairy farmers.
"Animal fodder prices are believed to rise by as much as 80 percent," said a representative of milk retailers on the condition of anonymity.
With a 6 percent weightage in the CPI basket, the highest in the food and beverages category, rising milk prices could have a ballooning impact on inflation. In addition, the impact on health and nutrition will be quite detrimental.
Already there is an average shortfall of around 16 percent in the minimum dietary requirement of an individual, according to the Human Development Report 2010. With food prices rocketing up in the near future, prospects for any improvement in nutrition parameters appear quite grim.
So savour every spoonful of that sheer-khorma leftover from last week. Who knows, it may become a rare delicacy since peoples hospitality might die down by the vicious cycle of milk and food prices.