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Dairy Crisis: Conflict Squeezes Indian Margins
4 Apr
Summary
- Polymer packaging costs soared by 47% due to the West Asia conflict.
- Institutional demand from hotels and restaurants has sharply contracted.
- Dairy companies anticipate price hikes within weeks due to rising costs.
India's private dairy companies are experiencing substantial margin pressure due to the West Asia conflict's impact on supply chains and demand.
Polymer-based packaging costs have surged by approximately 47%, with other essential materials like lubricants and metals also seeing significant price increases. This rise in input costs is severely affecting profitability, especially as demand from the hotel, restaurant, and catering sectors has diminished substantially.
Logistics and labour shortages further compound these challenges, forcing companies to adapt operations and offer incentives for workers. While currently absorbing the increased expenses, dairy businesses are preparing to implement price adjustments for products such as paneer, curd, buttermilk, and lassi within the next three to four weeks.
The situation creates a double impact for farmers, facing higher input costs with stagnant procurement prices, potentially leading to price falls in some districts.
