Ready to be milked? Dairy companies eye rate hike

JEDDAH: Several dairy companies have indicated that the production of milk is likely to be more costly with the new energy tariffs coming into force, which appear to hint that a price hike for consumers is on the horizon, according to reports.
Almarai said in a statement that the increase in fuel, electricity and water tariffs would cause its costs to rise by SR200 million in 2016, plus a further SR100 million in indirect costs this year as its local suppliers raise their prices because of the utility price hikes.
Other dairy companies have also voiced the same concern. This is being seen as an indication of the price of milk being raised at some stage, according to a report in an online newspaper.
However, Mohammad Al-Dael, a member of the national agriculture committee and head of the agriculture and fisheries committee at the Eastern Province Chamber of Commerce and Industry, said these statements from Almarai did not mean a cost increase was coming.
Mohammad Jaan, former president of the committee, said the prices should be determined after a study of the market. “A liter of milk cost SR5 about 30 years ago, but now production costs are much greater. Perhaps this was the reason for some firms not expanding and improving their products,” he said.