Recession in ‘recession-proof’ dairy industry

Recession in ‘recession-proof’ dairy industry

Dairy is considered as a recession-free industry, a cash business with a good rate of return and always in demand. But what has happened this year is that the demand for milk and milk products has gone down to a never-expected extent. It is really disturbing to see dairy farmers draining out their produce for no demand. Is it because of Covid 19 that this business is showing such a slump or are there some other reasons? Being associated with this industry, I have made an analysis based on my own observations.
The first and foremost reason for this issue seems to be the sharp rise in both domestic-level as well as commercial-level dairy farms in the last year all across the valley. We should know that the youth have been attracted towards dairy farming owing to subsidy schemes put in place by the Department of Animal Husbandry in order to make the UT self-sufficient in milk production. Envisaging it as a daily-need, profitable business, people established a considerable number of dairy farms mostly at commercial scale, with 5 to 20 cows, not knowing the fact that without proper market analysis or a back-up, it was going to put them in troubled waters soon. The milk production, as it seems, is surplus this year and that too in the very lean season of milk production. This has, unfortunately, happened for the first time in the history of Kashmir. The whole of the dairy cycle has got disturbed, right from the producer to the consumer, because on one hand the production has tremendously increased by incorporating high yielding cows in dairy sector, while on the other hand the consumption has reduced to a certain level. The agitation of dairy farmers is, therefore, understandable because their produce is hardly in demand. Having limited or no options available to sell produce, a dairy farmer feels dejection at each level.
With the rise of Covid 19, milk by-products like dahi, paneer, cheese, ghee, sweets, etc, are in least demand, which has really contributed to the dwindling dairy market. The demand has gone down to an all-time low this season and the most probable reason is Covid 19. This fall in dairy demand is due to shutdown of tea-stalls, hotels, restaurants and confectioneries. A survey conducted by milk processing plants has shown that milk revenue plummeted by 30%-35% between January 2020 and January 2022. It reveals that every stakeholder is hit by the situation, be it a milk producer, a milk agent, a milk vendor, a milk plant holder, a milk distributor or a milk retailer.
The production costs of milk have gone high at all levels and it is hard to pass on the higher costs to consumers due to challenging economic conditions. This is also one of the reasons that smaller businesses have wound-up their operations while large ones are struggling. In fact, everyone associated with milk industry is in stress at present.
The other reason of the dairy business slump is increased consumption of UHT milk that comes in 100 ML, 200 ML, 500 ML & 1000 ML packaging. A large chunk of population consumes this type of milk owing to its extended shelf life and availability in every nook and corner of the valley. I think the consumption of tetrapack milk has increased to a greater extent over the last couple of years, in particular.
Undoubtedly, the present times are tough but they are not permanent. I must tell this to all readers based on my experience and expertise in this field. The situation will change. Covid will not last too long. People will again switch to dairy products and resume the consumption which they have reduced. But efforts must be made to keep the dairy cycle moving always. If the government has put in its efforts for making Kashmir self-sufficient in milk, they must also take proper measures to balance supply and demand as well. One solution is to establish a public sector Milk Powder Plant and a UHT Milk Plant. The sooner the government takes initiatives in this regard, the better it is going to be for dairy farmers across the valley.

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