Looking at the dairy industry from here- the only way is to go Up

“As I am touched by the first ray of light, I ask myself can something so wrong feel so right.”….Work of Art

I saw the sunrise today and it was no less beautiful than it was yesterday. As per Pluto, Beauty lies in the eyes of the beholder . We can see a day coming in between two nights or a night coming in between two days. It’s all about perception. Each and every one in the industry is really concerned about the possibilities of a third wave. The media has again won the race. It has again proved that the brains could be washed and the thought process could be enslaved. I may suggest a new year’s resolution to all of you….

It is doing more harm than the good. In microbiology we use media to propagate different kinds of microbes on different types of media. However the media related to ICT and news channels propagate only the pathogens. They will never let good microflora of peace and progress to grow in the ecosystem. We have been conditioned to a level that we do not understand the difference between news channel and views channel. We are consuming views of anchors or channels in the guise of news of the nation.

Count your blessings

Let me share my vision for the dairy industry in 2022. It looks balanced. I feel this year to be a balancer. It’s been too long since we saw a year which was a win-win for all the stakeholders. Let us look at the blessings which we inherit on the first of January 2022.

1. The milk supplies in most of the states in the country is slightly lesser than the demands. This creates a good opportunity for farmers to get a better price for their milk even at the peak of the flush season.
2. GDT price index is at its all time high of UsD 1354 on Dec 7th 2021 in the last 8 years. On 18th March 2014 it was at USD 1332.
3. SMP prices have not seen a decline since the last 7 years. It was at USD 2660 on 3rd Jan 2017 and has reached to USD 3745 on Dec 21 , 2021.
4. Butter prices currently at USD 5851/MT are almost matching with that of its prices on 3rd oct 2017 when it was at 5837 USD/MT
5. AMF prices at USD 6724 are at all time highs in the last  4-5 years with the last high of USD 6836 on Dec 5 2017.
6. The SMP stocks in the country are at moderate levels in the range of 150000-190000 MT.
7. Huge orders of SMP and butter are lined up which will help the processors to focus on making new stocks.
8. The butter stocks in the country have been well consumed and Butter is enjoying the highest possible market price during flush season.
9. The decline in HORECA sales are not getting impacted too much like the last two years due to emerging supply chain networking for direct to home delivery in almost all parts of the country.

What could go wrong ?

Whatever has to go wrong will go wrong-so there is no reason to worry about the same. Still there may be three possible impediments which could disturb the market sentiment during the mid of this year.

1. The third wave calls for longer lock downs due to surge in cases and casualties.There is a bleak possibility for this as Omicron has not yet proven to be anywhere near to its Delta version in terms of vulnerability anywhere in the world.
2. The chances of milk supplies increasing exorbitantly at the time of these lockdowns ( which are likely to be during 15th Jan to 15th Feb) due to delayed calving theory. It may impact milk prices but will give an opportunity to the processor to make and stock SMP and butter at a reasonable rate. The same may be exported or be utilized during summer when the milk availability is likely to be too short this time.
3. Opening up of imports from the developed world as an outcome of various FTA which are currently undergoing in a discreet manner. This may be a bigger challenge as it would not only ruin the hopes of millions of farmer’s families but also reignite the farmer’s agitation in various parts of the country.

So how does 2022 looks like from here ?

The best scenario :

1. Higher milk prices for farmers throughout the year.
2. Higher exports with subsidy support and otherwise so balancing of dairy stocks
3. Poor availability of milk during the summer thus higher Commodities prices
4. Milk production rising again during festival times and the industry starting afresh to build up new stocks in the bumper flush of 2022.

The worst scenario :

1. Milk prices touching rock bottom
2. Dairy commodities stocks touching all time high
3. Q4 results of dairy companies showing dismal performance
4. Next flush beginning with huge stocks pile up
5. Poor performance of HORECA due to inadvertent circumstances

The chances for the worst to happen are never more than 0.1%. So 99.9% it is not going to happen.

So what will happen ? Even at the worst the middle path will appear which means…

1. Farmers continuously receive reasonable prices for them to sustain in dairy business.
2. Dairy processors getting reasonably good prices for their dairy stocks in domestic or export markets
3. HORECA just be able to perform well with home delivery networks even during lockdowns so as to avoid closures with enough of black in the bottomline.
4. The next flush is in winter 2022 , starting with reasonably manageable dairy stocks and positive sentiment of the market after winning over the Corona’s third wave successfully.

I will pray for the millions of farmers and our dairy sector. As I could see , the only way is moving up. So pull your socks up and give maximum throttle to your dairy engine to make it the best year of all the times.

Source : A dairy blog by Kuldeep Sharma, Chief editor Dairynews7x7