Good Rains Help Dairy Farms of Maharashtra and Andhra but North Indian Dairy producers grapple with stocks from FY10 Northern dairies are saddled with excess powder and ghee inventories even ahead of the 'flush' production period, which begins from mid-August and peaks towards November-December before ending in March. The region's big private dairies – VRS Foods, Bhole Baba Dairy Industries, Sterling Agro and SMC Foods – are all apparently holding 30 per cent of stocks from the last flush, which they say can last till October. "We don't really need to operate our plants till then. Fresh production would be required only during Diwali (scheduled for November 5)," said Mr Kuldeep Saluja, Managing Director, Sterling Agro Industries Ltd. Surplus stocks have led to wholesale prices of skimmed milk prices (SMP) falling from Rs 150-155 a kg in May-June to Rs 120-130 in northern markets. Ghee, which ruled at Rs 255 a kg in May and Rs 240 in June, is now trading at Rs 210. "There are no buyers even at these rates. Therefore, we have had to slash factory-delivered buffalo milk prices from Rs 26 to Rs 20 a litre since mid-June," Mr Saluja added. A different story in Guj, Maha, AP After last year's drought and consequent supply pressures, dairies across the country are reporting strong rebound in milk procurement volumes this time round. The Gujarat Cooperative Milk Marketing Federation's member unions are currently buying 10 lakh litres per day (LLPD) more compared to last year. "Our procurement is up 15 per cent over last July and 10 per cent on a cumulative April-July basis," Mr R.S. Sodhi, Managing Director of India's largest dairy concern, told Business Line. But it is not only Gujarat that is seeing a jump. Dairies in Maharashtra, which has had excellent monsoon, have also been flooded with lot more milk this time. Dynamix Dairy Industries, Parag Milk Foods, Warana Dairy, Swaraj India Industries and Siddharth Milk Foods alone have registered a combined procurement increase of 14 LLPD. "The five of us are now converting about 24 LLPD of milk into powder and white butter/ghee. Last year, at this time, we were doing just half," said Mr Ranjeetsingh Naik Nimbalkar, Chairman and Managing Director, of Swaraj India Industries Ltd. Andhra Pradesh's four leading private dairies – Heritage, Tirumala, Creamline and Dodla – are also said to be together procuring around 22 LLPD, 3 LLPD more than last year. Additional milk In Tamil Nadu, procurement by the state-owned Aavin cooperative is up from 20 LLPD to 23 LLPD, while that of Hatsun Agro Product has similarly risen from 14 LLPD to 17 LLPD. The Karnataka Milk Federation, too, is learnt to be collecting 4-5 LLPD of additional milk compared with last year. "My hunch is that dairies across India are currently procuring some 50 LLPD more milk than they were this time last. And once the flush season starts in the North, the incremental increase would probably be 65 LLPD or more," said Mr R.G. Chandramogan, Chairman and Managing Director, Hatsun Agro Product Ltd. In Maharashtra, private dairies do not have the option of reducing prices, given the large presence of co-operatives. "But we have decided to reduce procurement by 20 per cent," Mr Nimbalkar said. More Imports On The Way The industry claims that the National Dairy Development Board's (NDDB) move to import 30,000 tonnes of SMP and 15,000 tonnes of butter oil at nil duty has worsened matters. Of the total imports, an estimated 12,000 tonnes of SMP and 6,500 tonnes of butter oil have so far arrived. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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