Procurement of milk from farmers up 15% in April: RS Sodhi

During the initial lockdown, you asked your consumers to not worry. Amul, you said, would make sure sure that India does not run out dairy supplies. You now have demonstrated that you are capable of keeping up your promise. But given that India virus cases are not peaking out in some key states and the ongoing lockdown may not be lifted in a hurry, what is your preparedness?
When you talk about packaged food in the organised sector, there are three stakeholders.

One is the farmer, who is producing the food. The second is the consumer, mainly the urban one, who is consuming it. The third is the whole supply chain. While I am hearing pessimism in many industries, food industry is lucky, as 1.35 billion people are consuming whether at home or not.


In fact, at home, the consumption has increased. The consumption has not gone down, so is the production.

The little impact that we faced was in the supply chain. If you talk about Amul, we have three types of supply chains. One is for fresh products, where we distribute milk, butter milk or dahi. It was more or less in line and we have maintained such supplies from the Day 1 of the lockdown. Initially, the demand for such products increased, but soon tapered. The growth is 10-12 per cent in the fresh products segment because of horeca (food service and hospitality sector) closing down.

The other segment is of dairy products that includes butter, cheese, ghee, milk powder. Within two-three days, it just two-three days, the product categories demand increased from 10-50 per cent.

Today we are selling double the quantity of paneer, 50 per cent more quantity tetra-pack milk, 20 per cent more of milk powder, dairy whitener, butter and ghee.

Earlier, there used to be working breakfasts and lunches. Now everybody is having proper breakfast, lunch and proper dinner and dairy products are consumed in all the three meals.

Meanwhile, the third category which surely is impacted is the ice-cream segment. As most ice-cream parlours are closed, initially sales fell 95 per cent. But now sales are picking up. It is not that everyday consumption is increasing. Consumption was already there, but the pipeline got emptied.

Distributors, retail and gradually everybody is falling in place. The window involved is very small and we are filling the pipeline. How fast a company can fill up the pipeline is to be seen. Let me assure you that the demand has not gone down, only the pipeline is emptied. If not today, you are getting the demand back. There has been a lot of innovation in the supply chain.

Which segments could see demand coming back soon when things go normal. Amul deals not only with milk, it deals with value-added products, which in a sense capture the entire per capita curve in India. The 45-day lockdown has been a learning curve for all of us. But it must have been consumer experience, which you are analysing at Amul. What has changed for Amul temporary? What has changed for Amul permanently? What has not changed for Amul at all?
The first thing that has not changed at all is the procurement of milk from 36 lakh farmers.

In fact, our procurement has increased by 15 per cent in the April because small players are not buying milk from the farmers. Our plants are running 15 per cent more than what used to be in last April. So that has not changed.

Product categories which are used in the home for recipe purpose like ghee, butter, cheese, paneer has seen increased demand, as said earlier. People are making more recipes at home from cooking pasta to cooking cheese toast, cheese and paneer kababs. The consumption has in that way has increased. We are producing more, supplying more. What has reduced drastically is the ice cream segment. It was down 95 per cent, but is now picking up. Also, demand for Amul cream, which is basically used in the horeca segment, went down by 70 per cent. Beverages including flavored milk, shakes and coffee saw 80 per cent fall in initial demand. Again, it has now recovered up to the 50 per cent. Everybody is buying on priority. Companies are also supplying on priority.

The supply chain has seen a lot of changes happened. We had three types of distributors – for a fresh product, for dairy products and for frozen products like ice-creams.

Now as the ice-cream infrastructure is lying ideal, we have told ice-cream guys to handle milk and dairy product distributions as well. The window involved is only two-to-six hours.

What a company like Amul can do to increase the hiring?
There are two issues on the labour front. One is the shortage of labour. Second is the maintaining of social distancing inside the plant. What we have found is that the shortage of labour is mainly in the bigger metro cities such as Mumbai, Delhi or Kolkata. In these cities, we have faced such problems. Fortunately, our most of the dairy plants are in smaller places where labour is regional.

The ice-cream labour has been shifted to the other value-added product side. The bigger problem is maintaining social distancing inside the plant. As far as the main processing is concerned, that is automated.

But in the packaging line or in the loading side, a lot of labour is involved. It is extremely difficult to manage the social distancing. We have to ensure increase in number of lines, so that only a few people are standing on one line. You have to work at lesser speed. You work all the three shifts and you work at more packaging lines. With the lesser speed, you can maintain the production and demand.

Gradually, the labour is coming back. The problem will be sorted out.

Problem of labour shortage may be more in the construction industry. There is organised labour called Mathadi workers in Mumbai. Neither they themselves come nor do they allow other labour to come.