India Ratings and Research (Ind-Ra) expects small private dairies, who are mostly dependent on milk-based sweet making shops and local supplies in towns, to be impacted following the disruptions in economic activities caused due to the COVID-19 pandemic.
Notwithstanding the disruption in economic activity due to COVID-19 pandemic and closure of non-essential commercial establishments like hotels, restaurants, bakery and sweet shops, theatres and malls, Ind-Ra expects the consumption demand for liquid and pouch milk, ultra-high temperature milk and dairy products like butter, clarified butter and cheese to draw sustained support from the household demand.
Milk procurement from small farmers who are outside the coverage of organised cooperative and corporate sector dairy networks could be impacted due to the lockdown, it added.
However, the cooperatives as well as the established private dairies continue to procure milk from their network farmers, with the surplus being converted into skimmed milk powder, ghee and other processed products, to be sold during the lean season, it said.
Ind-Ra expects households to drive the consumption of milk and milk products in FY21.
Milk procurement by dairy cooperatives increased to 56 million litres per day (MLPD) during the first phase of the lockdown from 51 MLPD in March 2019, according to data by the Ministry of Fisheries, Animal Husbandry and Dairying.
The agency estimates manufactured dairy products output to grow annually by 10 per cent to Rs 2,83,336 crore in FY21 from an estimated Rs 2,56,589 crore in FY20, underpinned by domestic demand.
The household consumption demand for milk and milk products occupies the highest share in the private final consumption expenditure on food after 'breads, cereals and pulses, it said adding that the share of milk and milk products averaged 21 per cent in household expenditure on food during FY12-FY18.
The value added dairy products (VAP) segment holds promise over the medium-term, Ind-Ra estimated, as urbanisation, increase in disposable income and accompanying changes in lifestyle and dietary habits increase demand for milk and milk products.
To meet the needs of a growing and rapidly urbanising Indian population, a commensurate increase in milk production is required to keep pace with demand, the report said.
Ind-Ra has projected milk production to increase to 208 million tonnes in FY21 from 198 million tonne in FY20.
Thegovernment has a milk production target of 300 million tonnes by FY24, so as to meet the growing demand for dairy products and make dairying a sustainable source of livelihood for small and marginal farmers and landless labourers that constitute the bulk of milk producers in India.
The increase in productivity depends on the availability of feed and fodder, disease control and breed development programmes.
Productivity improvement initiatives would have to be aggressively pursued to achieve the high production target, Ind-Ra added.
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