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Indian government announces Agri-Infrastructure Fund

Amul welcomes support measures, expects dairy revenue to rise despite Covid-19

The Indian government will set up a INR1 trillion (USD13.3 billion) fund for agriculture infrastructure, the country’s finance minister Nirmala Sitharaman said on Friday (May 15).

The fund will directly focus on agriculture, dairy, animal husbandry and other related activities. Financing will be provided for funding Agriculture Infrastructure Projects at farm-gate and aggregation points which will include primary agricultural co-operative societies, farmer producer organisations, agricultural entrepreneurs and start-ups. The fund will be created immediately, the minister said.

She added that the lack of adequate cold chain and post-harvest management in the vicinity of farm-gate is causing gaps in value chains. Prior to this, the government’s focus has been on short-term crop loans while investment in long-term agriculture infrastructure has often not been enough, the minister indicated.

Of the total, the animal husbandry industry was allocated INR150 bln (USD2.0 bln), which was welcomed by R S Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation (GCMMF), also known as Amul.

He told Business Standard, that India currently has a dairy capacity of 100-110 million litres of milk and milk-based products, Amul holds 38 million litres. This will go up by another 50 million litres as a result of the announced funds.

“Utilisation of the fund will lead to employment generation for over three million people in the rural economy and will boost production and exports of several value added products,” Sodhi added.

Amul eyes turnover growth despite Covid-19 sales plunge

Amul expects its turnover to grow 15% in the current fiscal year from INR385.5 bln (USD5.1 bln) in 2019/20 despite economic slowdown caused by the nationwide lockdown to control the coronavirus outbreak.

Household consumption of milk and other dairy products is expected to rise and will compensate any temporary loss of sales caused by closure of hotels and restaurants during the ongoing lockdown period.

Sodhi said: “COVID-19 will not have any impact on demand of the food products. Our sales in value terms during this month are at par with the same month last year. The demand of some products has come down but at the same time sales of many products have risen.”

In total, fresh milk demand has declined 8% due to closure of foodservice, which contributes to 12-15% of the total demand. Sodhi noted that sales of butter, ghee, paneer, cheese and milk powder have gone up in the range of 20-35% as people are consuming more.

However, the demand for ice-cream has fallen sharply by 85%, while sales of cream and mozzarella cheese are down by 70% and 50% respectively.

Amul boss said surplus milk is being processed to manufacture SMP, the price of which has crashed to INR250 per kg from INR320 before lockdown.

 

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