Covid-19 corollaries on the dairy sector: CRISIL

New Delhi, May 26 (IANS) Supply chain disruptions in the early weeks of the nationwide lockdown, and bread-and-butter issues for hotels, restaurants and cafes, have materially reduced demand for dairy products.

This is despite supply of most dairy products continuing during the lockdown, since they are categorised as essentials.

The shuttering of hotels and dine-ins has also dried up off-take of skimmed milk powder and khoya.

According to report by CRISIL Research on the state of dairy industry and supply chains, products that can’t be made at home easily – such as cheese, flavoured milk and also khoya – haven’t found their way back to the dining table in the same quantities as before the lockdown.

Demand for ice creams, which usually peaks in summer (accounting for 40 per cent of annual sales) has just melted away. Rural areas, which are feeling the income pinch more, seem to be staying off butter and ghee, the report by global analytics firm has said.

To be sure, since the third week of April, supply chains have turned smoother, so demand for staples such as milk, curd, paneer and yogurt are expected to see a quick rebound, leading to on-year expansion in sales, CRISIL said.

The pandemic, however, may sour the business for unorganised dairies because of pervasive contamination fears.

Conversely, as consumers shift, revenues of organised dairies and packaged products should fatten.

Overall, demand for milk and dairy products would be lukewarm in the near term, so prices are unlikely to boil over, according to the report.

Large brands such as Amul and Mother Dairy had already hiked retail milk prices by 4-5 per cent last fiscal. They may not serve an encore.

–IANS

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