The dairy sector is likely witness positive growth next fiscal, increase in market size and milk production and strong rise in exports, according to India Ratings & Research (Ind-Ra).
Ind-Ra assigned a positive outlook to the dairy sector for FY'15.
There is likely to be reasonable growth in the sector's market size and milk production and strong growth in dairy products exports, Ind-Ra said in a report here.
India's milk sector is regarded as one of the world's fastest growing market and the agency expects it to expand by 16.3 per cent in FY'15.
The positive outlook also stems from increasing the government's initiatives on improving rural income.
The agency also assigned a stable outlook to the dairy cooperatives (DCs) for FY'15 due to their stable financial performance although with some liquidity issues.
On the back of likely favourable monsoons and strengthening farmer base of the cooperative model, National Dairy Development Board (NDDB) expects 5.47 per cent year-on- year growth in milk production in FY'15.
Export opportunities, it said, have opened up as milk production is higher than domestic demand.
"Milk surplus and low production cost coupled with rupee depreciation augur well for exports. Additionally, a demand upsurge in Nepal, an embargo on milk imports from China and untimely drought in New Zealand will favour the dairy sector in FY15," it pointed out.
Ind-Ra also expects revenue to be robust for large milk federations' (MFs) and their associated unions in FY15.
However, reduced milk and milk products demand in the domestic and global markets could derail milk production plans and weaken the pricing of dairy products, it added.
