May 29, 2020
Milk products with high inventory like skimmed milk powder and ghee, a matter of concern
The prolonged lockdown has brought about many crisis with it and all industries are feeling the pinch of it. Dairy industry too has been affected as the demand of milk and milk products has nosedived amid the lockdown. Private dairy owners in Punjab, especially in Medium & Small Manufacturing Enterprises (MSME) are in great crisis and operating with less than 30% of their capacity. Many of the units have stopped and discontinued their production, while others have converted the excess milk into skimmed milk powder (SMP) and ghee now that has led them to the blockage of good amount of working capital.
Punjab has around 30 milk plants in the private sector, 10 in co-operative sector owned by Milkfed, around 24 are MSMEs, with a fixed capacity to process around 35 lakh litres of milk per day.
“Currently, the capacity utilization of private milk plants is less than 30%,” said Inderjit Singh, Director, Punjab Dairy Development Board.
The major demand for milk and milk products collapsed due to the HoReCa segment saw a total shut down. All big and small hotels, restaurants, eateries, street chaiwalas, schools, colleges, offices and other establishments were closed bring the demand to standstill. Besides, cancellation of events, weddings and other functions and festivals also led to decline in the demand.
What remained in demand was in-house requirement of milk and dairy products. Generally, the sale of curds, cottage cheese, buttermilk, flavoured milk and other dairy products to commercial institutions shoots up during February to May, this summer only households were buying these products.
“Our sales have crashed by 50%, putting strain on our finances. The price of SMP has also come down from Rs. 320 per kg to Rs. 270 per kg. Moreover, there are no buyers in the market. We don’t see immediate revival in demand,” said Ajit Singh, managing director, Metro Milk products (P) Ltd., Jalandhar.
With some inside reports so said, some dairy units accepted milk from farmers on the condition of postponed payment, while others have started practicing a milk one-day holiday where these units refrain from collecting milk on aloted day.
“Since supply to neighbouring states was also disrupted, it hit our sales by over 50%. Moreover, since most of the commercial establishments were closed, the supply of milk to our plants increased. We converted the excess milk into SMP and ghee. As compared to last year, we have 20% excess stock this year,” said Vinod Kumar Dutta, managing director, Chanakya Dairy Products (P) Ltd, Mandi Gobindgarh.
The average daily milk produced in the Punjab state is above 340 lakh litres and out of this, 170 lakh litres is vendible surplus. Of this surplus, around 50% is handled by the organized sector encompassing dairy co-operatives like Milkfed and private companies. The rest surplus is taken by daily vendors, restaurants, hotels and sweets and mithai outlets.