Indian Dairying: Journey Under Lockdown
Rahul Kumar
Managing Director, Lactalis India, Chennai.
India has shown a remarkable performance while implementing the world’s largest lockdown with very high population density. After over 30 days of lockdown, we have seen massive disruption in various walks of life. The most severely affected have been the migrant workers, small business units and various service providers which has thrown millions of people out of work. This would take long time to recover and we have to wait and see how things are unfold in the coming months.
Coming to Indian dairying, we must feel proud of entire Indian dairy sector which has handled the entire supply chain quite well and efficiently. We have not come across any news regarding milk producers facing procurement of milk all across India and incidents of farmers throwing milk, baring few initial sporadic incidents. This has demonstrated our rugged and efficient procurement network. Most dairies are handling more milk than pre-lockdown period and even more than last year! Though there is massive erosion of demand due to complete shutdown of hotels, restaurants and cafeterias (HoReCA segment) as well as milk used by informal system, Indian dairies have been preserving milk solids by converting into SMP and butter.
As per estimates, Indian dairy companies are producing approx 1500 tonnes of SMP and 500 tonnes of butter daily! This shows manufacturing plants are also showing incredible performance like our procurement teams. We cannot undermine the money being blocked while ensuring uninterrupted procurement and producing and holding huge volumes of commodities. This is close to stocks worth Rs 3,000 crore or US $450 million considering two months of production of just these two commodities!
Supply chain is intact though we have seen worsening situation after lockdown 1.0 started on March 24th. There have been some inconveniences regarding distribution of milk in lockdown areas especially red zones and containment areas which must be improved by better coordination between local authorities and dairy companies. The flip side of the journey we have travelled so far is huge piling up of commodities which need good working capital as well as ability to pay farmers in time.
As India was facing shortage of commodities during pre covid-19 period, now we have stocks which must be maintained for future requirements of these commodities. To ease this situation, the Government of India/NDDB should buy these commodities at fixed rates so that there is no panic selling to trade which would result in reduction of procurement prices to our dairy farmers. A steep drop in milk pieces due to liquidity problems of dairy plants would create major long term productivity issues as farmers would cut required feed to cattle, which must be avoided. Dairies have to take care cattle feed availability and Artificial Insemination (AI) services which are crucial for continuous production of milk in coming season.
We have bumpy road ahead but the Indian dairy industry has shown good track record and we must appreciate and salute our frontline dairy warriors working in procurement and chilling centres, logistics, plants and distribution in tough market conditions. Kudos to all!
In the post covid-19 period, Indian dairying will not be the same and massive disruptions can be seen on plate. I will share my thoughts on this very soon.
Stay safe and take care of our dairy warriors!!!
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Source: Blog, April 26, 2020.