Amul entry into organic foods to aid farmers & consumers; help govt save on fertiliser subsidies: RS Sodhi
What is happening in the dairy market? We have seen massive inflation, we have seen a big spike in collection costs, has everything been neutralised now?
If you are talking about inflation in food or dairy, there is a difference. In the whole food basket, the dairy segment has seen the minimum price increase in inflation. In any other food; pulses, fruits, vegetables, edible oil, meat and poultry, inflation is around 10 to 30-40-50%. In India, dairy is in the hands of the cooperatives and they are very responsive to consumers’ reactions.
Minimum inflation in dairy in the last one and a half years is 14-15%. We feel demand for dairy, especially packed food products, is still growing much faster than others and I do not think there is any chance of a reduction in any of the dairy product prices because we have not gone up to that level.
Input costs definitely were increasing in the last two, three years but now for the last one month, the cost of feed ingredients have more or less stabilised or may have gone down a little because of other commodity prices going down. I see stability in the dairy prices and the market. There may be a small increase but the situation is tight in dairy supply because demand is much more than what the organised sector is able to meet. The pre Covid level was much higher than the pre Covid level. It is good for the long term of the dairy industry and for farmers as well as consumers like you.
Consumers like me were a little worried 10 days ago when there was a shortage of butter!
We had a short supply of butter and fat around Diwali maximum because demand increased tremendously due to festivals and marriages. Out of home and home consumption showed that increase in milk supply is slightly less than the previous year and naturally fat shortage was there. We could not meet the market demand and that is why people missed Amul butter.
The farmers did not ask for an increase in prices despite demand being high. We have not increased the price of fat or butter by a single paisa.
While the rest of the soft commodities have seen a fall in prices, dairy prices are continuing to be on an uptick?
No, no, no. I do not think so. It is less than general inflation in retail and prices will definitely have to go up only because farmers also expect their income to increase and that will increase only if their produce price increases. But I can assure you that price increase in dairy will be lower than food inflation.
I also understand that you are now looking at entering into organic wholewheat atta as well. That is a very interesting diversification!
Yes, we have already launched about eight to nine organic products including wholewheat atta and the reason is simple. I was reading in the newspaper that last year, the Government of India had to give Rs 1,50,000 crore subsidies on chemical fertilisers. So basically to feed us chemical food, we are giving subsidies. The Government of India, especially the honourable home minister, has taken on the task that we have to increase the organic products production and linking it to consumers because while consumers want pesticide free natural food, farmers also want to produce it because they will get 10-20% more realisation.
What is missing is the linkage and the trust among the consumers for the available organic products. Amul, being a very trustworthy and widely available brand is also owned by the farmers. We have taken this initiative to help small farmers, FPOs, cooperatives and small artisan cooperatives so that their organic produce can be linked with consumers and marketed all over India.
The initiative has began because see organic products is not a simple you have to do certification of land, the produce, and lot of other formalities involved so we are putting lot of testing laboratories across India as well so serving the market contracting already FPOs and cooperatives were in the organic produce market and working on and gradually it will expand and I hope consumer and farmers will get the benefit.
Going back to butter shortage. We have heard from the B2B customers and they are on record these are large restaurant and hotel chains have switched to non-Amul brands like Nandini Ghee etc. Is this temporary? How are you going to win back these business customers?
There is nothing wrong if consumers have shifted to other cooperatives or other brands of butter because right now Amul is not able to meet the demand. We are supplying butter or other products more than the average. It is a consumer choice and there is enough room for everybody – Amul, Nandini, Aavin, Verka, Mother Dairy. There is enough room because only one-third market is an organised market and all have come out of Amul only. I do not consider any of these brands as our competition. We are complementing each other’s efforts and that effort is providing a very stable remunerative price to the dairy producer and providing consumer good products at a very affordable price for market growth so it is better, it is good.
Can I ask you because I love the way you said you do not consider them to be competition. Who says you are Amul’s competitors?
The competition for Amul is not the dairy companies because they are in the pure category. Competition for dairy is from fake chemical products, competition for dairy is the very very wrong propaganda by vested interest to harm on one hand the interest of the farmers and on the other side, providing consumers with fake factory manufactured food products.