dairy future bullish

It’s summer time. The weather is pushing  mercury to move up. Milk supplies in most parts of the country are matching with that of last year’s scenario. The only difference is that the SMP and butter stocks are comparatively higher than last year. Recent Institutional purchase of SMP has changed the moods of the market.

Everyone is just talking about the possible Milk powder prices at the peak of the lean season. The market is bullish. The stockists and middle men are building stocks. The industry is still preparing themselves to pass this summer without much raise in the prices of milk for the farmers. 

The dairy farmers on the other hand have begun to increase their milk prices by charging different kinds of cess on the lines diesel and petrol. Interestingly everyone is silent even after petrol has crossed Rs 100 per liter. The price of petrol in Delhi in 2016 was around Rs 65 and that of full cream milk by Mother dairy , Rs 49 per liter.

Milk versus Petrol in last 5 years

In 2021 , petrol prices are Rs 91 and milk price is Rs 55. There has been an increase of 12.22% in milk price while Petrol has increased by over 40%. Still if any dairy increases the price for the benefit of the farmers, there is a big hue and cry by the public.

The media on the contrary only believes in creating a bad image of milk and milk products. The same stories of WHO advisory and some ill informed spokesperson keep on getting aired by National channels even after the same have been refuted by both WHO and FSSAI. The media has yet to believe that India can actually produce milk and maintain her top position in the world. Even if we consider NSSO numbers, still the total demand for milk in India might not be more than 40% of the milk being produced in the country in both urban and rural areas. 

I think that our dairy farmers have all the rights to get a decent price for their produce. We have to make our farming an engaging vocation for the rural youth . The steps are to be taken up at this stage only, else soon we shall be purchasing milk from farmers at Rs 100 per liter. We see that NDDB has done a remarkable job by creating state of the art infrastructure from milk collection to processing.

What next ?

The private sector has also done a wonderful job by giving an equal shoulder to the industry in terms of milk collection and processing. Budget 2021 has made a lot of provisions for creation of milk processing infrastructure . This infrastructure is to expand the milk processing footprint of the country for value added products by the organized sector. 
There is going to be huge demand for milk and milk products in the organised sector.

There will be an incremental demand of close to 15 million litres per day of milk in this year alone considering 10% conversion from unorganised to organised sector. This shift in demand will create opportunity for both farmers and the processors. The policy makers need to check and balance this benefit and ensure equitable distribution of the incremental wealth amongst all the stakeholders.

I think that the current levels of the market in terms of prices of dairy commodities and milk prices in certain states might go for some corrections within this month. The biggest impediment to the current phase of White revolution is speculations of dairy prices. India needs more platforms like NCDFI and even regional platforms at micro levels with full transparency  could act as a catalyst for India becoming milk pail of the world.

I remember a quote which really suits current dairy scenario in India as follows :
“It’s amazing how a little tomorrow can make up for a whole lot of yesterday.”
― John Guare,

A blog by Kuldeep Sharma Chief editor Dairynews7x7