A two-liter bottle of milk now costs SR8, as opposed to SR7. Other dairy companies are expected to follow suit in the near future, Al-Eqtisadiah business daily reported, quoting industry sources.

The chairman of the Council of Saudi Chambers of Commerce and Industry’s national dairy committee said his organization cannot influence price rises.

“We knew about the hike in prices of milk. However, the committee has nothing to do with it. Our role is restricted only to technical matters and coordination,” Muhammad Anwar Khan said.

Sources at a local dairy market have justified the price hikes, saying that they are inevitable due to a reduction in government subsidies as well as the increase in the prices of some grains used as ingredients for fodder.

They also drew attention to the recent steep hike in the prices of essential consumer goods at the market, adding this has affected dairy products because production costs have increased.

According to the sources, other factors, such as a surge in the prices of oil and demand in biofuels, shrinking global reserves of dairy products due to climate change and shortage of production have also contributed to hikes in production costs.

There has been a 50 percent hike in the price of corn in recent months, they said, an overall increase of 70 percent compared to last year.

The sources blamed a decision to reduce subsidies for fodder. They said they sought an urgent intervention from the authorities to resolve the issue, but to no avail.

They added that prices of cottonseed had gone up by 25 percent, soyabeans by 64 percent and preserved oil by 40 percent.

There has been an increase in the price of sugar by 33 percent, plastic by 63 percent, and milk powder by 40 percent, they added.

The sources said the subsidy for corn was reduced from SR1,000 per ton in 2008 to SR225 in 2011.

It was a similar case with the subsidy for a ton of soya that was reduced from SR1,485 to SR379, cotton seed from SR1,326 to SR325 and soyabean husks from SR918 to SR201.

The only option was to hike the prices of dairy products, the sources said.