The demand surge that erupted as covid instances faded, combined with supply difficulties in domestic manufacturing and imports as a result of the Russia-Ukraine conflict, has raised inflation concerns. Consumers could expect a significant increase in the price of animal protein, such as poultry, dairy products, and seafood. Amul, the largest dairy company in India, has increased retail milk prices by 4% in all markets beginning March 1.
The war has had a direct impact on sunflower oil prices, while the war has had an indirect impact on wheat, coriander, jeera, maize, and soya meal prices due to the drying up of supplies of these commodities from Russia and Ukraine.
“At this moment, we anticipate the repercussions for India will be limited to a spike in commodity prices,” said Rohit Ahuja, head of research at rating agency ICRA. However, the extension of the conflict to other parts of Europe poses a risk, as does a further rise in commodities prices.”
“Due to growing energy, packaging, logistics, and cattle feeding expenses, this price increase is necessary. As a result, the overall cost of operation and milk production has increased “Amul stated in a press release.
Milk and milk products prices have been trending upwards in India over the previous 4 to 5 months. There is a global shortage of milk protein as cattle have been killed as a result of covid-induced demand destruction, but the production cycle in India has been extended because cow culling is not permitted.
“There is significant international demand for milk powder, and the returns have practically doubled,” said Dashrath Mane, chairman of Sonai Dairy, the contract maker for the country’s top retail brands and the second-largest exporter of milk powder after Amul.
“Revenue of India’s organized dairy industry will rebound a solid 12 percent on-year this fiscal to Rs 1.6 lakh crore, compared to a decadal low growth of 1% last fiscal, riding on strong demand recovery in most value-added dairy products, steady liquid milk sales, and retail price hikes during the fiscal,” Crisil said in a recent research note on the sector.
Consumers have been paying historically high costs for nearly two years due to the Russia-Ukraine conflict, which has clouded any chances of relief from high cooking oil prices.
Chicken prices have risen by 25% since January, and industry insiders predict a further increase of 10% to 50% in March in various parts of the country due to a severe feed scarcity.
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