The scarcity of raw materials in the dairy sector has exacerbated the long-standing problem of labour shortages in industries as a result of the Covid-19 outbreak.
According to Radhey Shyam Dixit, CMD of Ananda Dairy, the dairy industry is confronting a labour scarcity as well as input cost challenges.
Inflation has added another source of concern for industry: suppliers are modifying long-term contracts to the ones lasting only 2-3 months since they are unsure how long raw material prices will endure.
This has an influence on industries ranging from dairy cooperatives to steel and cement.
“Previously, one-year contracts were the standard, but today suppliers want to commit to only two or three months at a time,” says Chaayos founder Nitin Saluja.
Suppliers are either leaving the deal or charging exorbitant fees. Similarly, non-payment of advance is another issue complicating matters.
Raw material costs have historically risen in recent months as a result of sanctions from key manufacturers and the Russia-Ukraine war. Recently, the recovery has been gradual since, while firms have been able to preserve profit margins by raising raw material costs, variables such as labour and freight are impeding the process.