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Harish Damodaran

Could reduce incentive for farmers to produce more

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New Delhi Jan. 26 Private dairies have criticised the Centre's proposed move to ban export of skimmed milk powder (SMP) in response to high prices and reports of nationwide milk shortages.

"To blame shortages on exports has little basis. The 47,300-odd tonnes of SMP exports during 2005-06 is equivalent to less than 5.6 lakh tonnes (lt) of milk, taking a solids-not-fat (SNF) content of 8.5 per cent. This is a fraction of the country's annual milk output of 91 million tonnes (mt) or its total produce of 2.25 days," the CMD of a leading Chennai-based dairy company told Business Line.

The 91 mt figure has been mentioned even in the recently released 2005-06 Annual Report of the National Dairy Development Board (NDDB). "The NDDB should not talk about India being the world's biggest milk producer and its output touching 91 mt and in the same breath refer to the so-called damage caused by the export of 2.25 days' product," he pointed out.

Expand procurement

The NDDB's Annual Report stated that large-scale SMP exports had "contributed substantially" to the increase in domestic prices. "If the NDDB and its subsidiary, Mother Dairy, is short of powder, the solution lies in expanding their milk procurement network and paying a good price to farmers. Stopping exports will only reduce the incentive for farmers to produce more milk and supply to the dairies," said Mr Kuldeep Saluja, Managing Director, Sterling Agro Industries Ltd.

Exports

Of the 47,334 tonnes SMP exports worth Rs 420 crore during 2005-06, the major shippers included the Delhi-based Sterling Agro (10,000 tonnes) and VRS Foods (4,000 tonnes), Gujarat Cooperative Milk Marketing Federation (7,000-8,000 tonnes) and Hatsun Agro Product Ltd, Chennai (6,000-7,000 tonnes). Besides SMP, the industry also exported 10,903 tonnes of casein (Rs 282 crore), in which the No. 1 player was VRS Foods (5,000 tonnes) in addition to Dynamix Dairy Industries (Baramati) and Mahaan Proteins (Delhi).

"We are planning to jointly represent to the Centre against the proposed ban being done at the instance of the NDDB. Why should the farmer and the industry suffer just because Mother Dairy has no powder stocks, for reasons of its own doing? Everybody knows that the NDDB has stopped investing in its own cooperatives and the results are there to see," said a private dairy representative.

SMP production

The country's annual bulk SMP production is estimated at 1.5-1.6 lt, of which the major chunk of around 40,000 tonnes is contributed by GCMMF. Apart from bulk SMP sold in 15 kg tins, there is also 85,000 tonnes of powder in consumer packs, with GCMMF (60,000 tonnes) and Nestle India (20,000 tonnes) being the key players.

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