Ice cream makers suffer losses as demand and sales fall
For the second year in a row, India’s ice cream industry suffered huge losses as sales fell to record highs due to a significant drop in demand and brakes imposed to curb Covid infections -19. The industry is now basing its hopes on government intervention in the form of a concessional loan program to help it weather the crisis.
Priced at Rs 15,000-20,000 crore, the industry records around 70 percent of its sales during the summer months – March through September.
Insiders said while March and April were still bullish, May was a complete washout for the industry.
Rajesh Gandhi, former president of the Indian Association of Ice Cream Makers (IICMA), said the industry had not even seen half of its normal sales volumes during the period. With the state on lockdown from April with the second push, sales fell further.
RS Sodhi, general manager of the Gujarat Milk Marketing Cooperative Federation, which sells dairy products under the Amul brand, said the cooperative giant reported a decline of around 70% in its ice cream sales.
Gandhi said that a consecutive year of losses has shaken the foundations of the industry. “We have asked the government for relief measures like lowering GST rates and extending a concessional loan to allow the industry to survive,” he said.
Dairy farmers are also suffering financial losses due to the decline in milk consumption and production. Farmers who were paid between 27 and 30 rupees / liter for milk containing 3.5 percent fat and 8.5 percent SNF (solid and non-fat) at the beginning of March, are now paid between 23 and 25 rupees / liter.
In addition, the prices of skimmed milk powder (SML), the product that dairies market in both domestic and international markets, have been corrected downward.
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Formerly traded at Rs 250 / kg, SMP is now trading at Rs 190-210 / kg even as the international market continues to be bullish. For example, SMP prices on Globaldairytrade, the online auction platform run by New Zealand dairy giant Fonterra, has auctions reaching a 5-year high of $ 3,447 / tonne on May 18.
India, at present, has around 1.70 lakh tonnes of skimmed milk powder, mostly with cooperatives.
Dasarath Mane, president and CEO of Indapur-based Sonai Dairy, expressed hope that milk purchase prices would firm up again once restrictions were lifted from June. “The supply of milk is limited, so once consumption increases, we will again see farmers getting good prices,” he said.