Milk Prices To Rise Despite Export Ban: Report.

Rating agency CRISIL believes that milk prices will continue to rise over the medium term on sustained demand-supply mismatch and increasing input costs.

With milk products exports forming around 5% of India's total milk production, and domestic demand for dairy products remaining strong, the demand-supply gap is expected to continue to widen over the medium term.

This, along with increasing input (fodder and transportation) costs, will push milk prices up over the next three to five years, the report said.

Gurpreet Chhatwal, director, CRISIL Ratings says, “With exports forming less than 5% of the total milk production, and imports comprising a small portion of overall demand, government’s measures will, at best, plug the demand-supply gap over the next 12 months.”

The impact of the ban on export of milk powder and casein is expected to be minimal on the credit risk profiles of 55 CRISIL-rated dairy players (including co-operative milk federations).

The demand for milk and value-added dairy products in the domestic market has been growing at over 6% to 8% per annum because of increasing income, rising aspirations, and consequent growth in per capita milk consumption.

However, CRISIL believes that growth in milk production will continue to lag at around 4% to 5% per annum over the next five years, despite GoI’s plan to double India’s milk production by 2020.

"Milk prices are expected to continue their upward trend over the next three to five years as domestic demand for milk and dairy products is expected to outpace supply," says Manish Kumar Gupta, Head of CRISIL Ratings.


Source : moneycontrol.com