ICRA expects organised dairy industry to see growth of up to 5% FY21
ICRA expects organised dairy industry to see growth of up to 5% FY21

Driven by lower milk procurement prices, continued impact of the pandemic, and festival season consumption, the organised dairy industry is expected to see growth of up to 5% this financial year, rating agency ICRA said in a release. Milk procurement prices dropped to 23.8 rupees a ltr during Apr-Jun from 33.4 rupees during the previous quarter. The fall was primarily because of COVID-19-led demand disruptions amid higher availability. Though the procurement price of milk declined, consumers didn't reap the benefits, the agency said.

"...post lockdown due to lower consumption demand, fewer dairy processing companies operating during Apr-Jun; and the perishable nature of milk. The milk procurement prices corrected slightly in Jul-Sep to 24 rupees per litre and is expected to remain in the range of 22-25 rupees (in 2020-21), due to ample availability of liquid milk owing to muted demand and the onset of the flush season from October 2020," the release said.

The rating agency expects retail milk prices to fall in Oct-Mar compared to Apr-Sep.

"Liquid milk sales is expected to grow at 4%-5% in 2020-21, while value added products sales though relatively muted will also sustain owing to higher home consumption during the lockdown period. Though institutional sales for dairy products, especially cheese has been impacted, the same is likely to recover during Oct-Mar; as several state governments have permitted takeaways of restaurant food," it said adding that sales of ice creams would suffer severely this year as the p[eriod of peak summer sales coincided with the initial lockdown. For 2021-22 (Apr-Mar) and 2022-23 (Apr-Mar), the rating agency has projected growth for the sector at 8-10%, and 12-14%, respectively. India is the largest producer of milk and value added products, and accounts for 22% of the total global output.

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