Demand Disruption Hits India's Dairy Sector Amid Middle East Conflict

Sterling Agro Industries Ltd., known for its 'Nova' brand, has faced a complete standstill in the sales of bulk dairy products such as ghee and milk powder in the last 20 days. This is attributed to a significant disruption in demand within India's dairy sector, exacerbated by the ongoing conflict in the Middle East and a shortage of LPG.

Ravin Saluja, a director at Sterling Agro, confirmed that the company had not sold any bulk packs, which are critical to their business, accounting for roughly 50% of their sales. These bulk packs are primarily sold to institutional buyers like caterers, hotels, and sweet shops.

Sterling Agro, which handles 2.6 million liters of milk daily across its three factories, generates around ₹2,190 crore in annual revenue, with about ₹60 crore fr om international markets. However, the current situation has led to a dual challenge of reduced domestic and export demand.

The conflict has disrupted shipping routes, particularly affecting exports to key markets in Saudi Arabia and the Gulf region. Shipping lines have imposed war risk surcharges, and vessel availability has become limited, further complicating export logistics.

Instances have been reported wh ere consignments were stranded mid-route, forcing companies to offload cargo at transit ports, thereby increasing operational costs. Packaging costs have also surged by approximately 30% due to shortages in raw materials and industrial gas.