Milkflation views –18th Apr23 –BQ Prime –Hatsun Agro Products Mr. Chandra Mogan interview :
–There was a shortage but this year ( Calendar Year 2023) it will not be the same in future. Last year we had a diff. issues i.e after 2 yrs of demand destruction due to covid, Demand picked up internationally and domestic. The international fat prices went up dramtically to 583 INR in Indian Value & 7100 USD. So India started exporting before stablising last year so India exported over & above the normal Qty of Ghee branded, they exported 20k Tonns extra. Normally this Qty is built for the lean period in a flush period to protect.
–So after this there was a shortage and inflation started creeping in. I dont expect further inflation
–Demand/Supply mismatch ? –2 things have happened. (1) 20k tonns of extra export of Butter which is the real problem so this was in Jan/feb. Going forward Delhi had comparatively so the flush of delhi extended by a month which is a good news.
–Our normal flush season in south starts from May & it has started now in Apr first week and gaining momentum & by the time delhi is shutting off now the south and Maharastra has started coming up so the problem was acute it was in Jan/Feb & not today and by June noone will be talking about Milk shortage etc and Inflation will also moderate to 3 to 4 % down by June/July.
–We dont think there is no need for importing now and the flush coming in now in south & MH and its too late and it will be damaging the local mkt.
–Peak prices ? do we stablise here ? —Dont expect any price increase here-after , cos had a tough time last year as inflation made them pay a higher price to farmers and the consumer prices they could adjust immediately so a year of this tough times is over and we are on track of recovery. It can only moderate after June but old prices will never come back as from these prices 3 to 4% it might come back only
–How does these price increases impact cos like yours ? – One major issue is skimmed milk powder is taxed at 5% , Milk is separated into 2 parts ( skimmed milk powder & Milk Fat & during the summer we reblend it to make milk to compensate the missing volume say 8/10% so this particular our GST rates are 12% for fat and 5% for Skimmed milk so this is getting added up on reconstitution and which is adding inflation pressures. eg. Fat at 12% + 5% SMP is adding cost by almost 8% to the full cream milk & we have requested govt to consider reducing tax on 12% to 5% for fat & with this move govt. can moderate the inflation by 2/2.5% straight-away
–Price increases like this , how it impacts biz prosects for a co. like yours ? – In the long run its good for co. and country. After 2 yrs of covid farmers were in a shock to whether to focus on this or not & this inflation has given him a leg up and he will be in biz and will continue to supply . I expect that we are on the moderation of coming down by June end.
–Margins–Till march we couldn’t maintain but here after it will be a normal year subject to no other volatility.
PS : Pardon the spelling mistakes
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