High inventory of skimmed milk powder, ghee worrisome.

As the demand of milk and milk products has nosedived amid the lockdown, private dairy units in Punjab, especially in the MSME sector, are in crisis and operating at less than 30% of their capacity. While some of the units discontinued their operations during the lockdown, others have converted the excess milk into skimmed milk powder (SMP) and ghee, which led to blockage of precious working capital.

There are 30 milk plants in the state in the private sector and 10 in the cooperative sector owned by Milkfed. Out of this, around two dozen are MSMEs, with an installed capacity to process around 35 lakh litres per day.

“Currently, the capacity utilisation of private milk plants is less than 30%,” said Inderjit Singh, Director, Punjab Dairy Development Board.

As hotels, restaurants and other commercial establishments were closed during the lockdown, the demand for milk and milk products collapsed. Besides, cancellation of weddings and other functions also led to decline in the demand.

According to the industry, the sale of curd, flavoured milk and other products to these institutional segments shoots up during February to May, but this year only households were buying these products.

“Our sales have crashed by 50%, putting strain on our finances. The price of SMP has also come down from Rs 320 per kg to Rs 270 per kg. Moreover, there are no buyers in the market. We don’t see immediate revival in demand,” said Ajit Singh, managing director, Metro Milk products (P) Ltd., Jalandhar.

According to trade insiders, while some dairy units accepted milk from farmers on the condition of deferred payment, others have started practising a weekly milk holiday and they don’t collect milk on that particular day.

“Since supply to neighbouring states was also disrupted, it hit our sales by over 50%. Moreover, since most of the commercial establishments were closed, the supply of milk to our plants increased. We converted the excess milk into SMP and ghee. As compared to last year, we have 20% excess stock this year,” said Vinod Kumar Dutta, managing director, Chanakya Dairy Products (P) Ltd, Mandi Gobindgarh.

The average daily milk production in the state is around 340 lakh litres. Out of this, 170 lakh litres is marketable surplus. Of this, around 50% is handled by the organised sector, comprising dairy cooperatives such as Milkfed and private companies and the rest by vendors, restaurants, hotels and sweet shops.

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