The Hindu Business Line : Decision on milk powder export ban likely on Sept 24

Ban code
The ban, in place since February 9, is currently effective till September 30.
It covers all milk powders, including skimmed, whole and infant/baby powder.
Hectic lobbying on both from those for and against the ban.

Harish Damodaran

New Delhi, Sept. 20 In what could be the precursor to the lifting of the ban on export of skimmed milk powder (SMP), the Union Agriculture Ministry is convening a meeting of dairy industry representatives on September 24 to review the present milk situation and the likely scenario in the coming months.

Seeking views

The meeting, to be chaired by the Secretary, Department of Animal Husbandry, Dairying & Fisheries, Ms Charusheela Sohoni, will take a final view on lifting or continuing the ban on SMP exports. The ban, in place since February 9, is currently effective till September 30 and covers all milk powders, including skimmed, whole and infant/baby powder.

“The Ministry has sought the views of both cooperatives as well as private dairies on the matter. Those attending the meeting include representatives from the Gujarat Cooperative Milk Marketing Federation (GCMMF) and various other State federations, the National Dairy Development Board (NDDB) and Mother Dairy India Ltd, Nestle India, VRS Foods, Hatsun Agro Product, Sterling Agro Industries, Dynamix Dairy Industries, Bhole Baba Dairy Industries and Metro Dairy,” sources told Business Line.

Industry divide

According to them, there is a sharp divide within the industry between those favouring a lifting and those seeking extension of the current export ban on milk powder. Those wanting the ban to go include GCMMF and the State federations of Rajasthan, Punjab, Karnataka and Tamil Nadu, besides private dairies such as Sterling, Hatsun, VRS Foods and Bhole Baba, who have been major exporters in the past. Those pushing for a continuation of the ban include NDDB and its subsidiary, Mother Dairy, and also the Kolkata-based Metro Dairy and Nestle India.

“The ones seeking an extension of the ban are mainly large domestic SMP consumers, who would have to pay more in case exports are re-opened. This is especially so for Mother Dairy and Metro Dairy, who have limited independent milk procurement networks and rely heavily on purchase of powder,” the sources added.

Price factors

According to them, there is hectic lobbying from both sides, with those wanting the export ban to go warning of a sugar-like situation getting replicated in milk. Since July, domestic SMP prices have fallen from Rs 145 per kg to around Rs 115, forcing dairies to bring down milk prices by Rs 3-4 a litre.

This is even as cost of concentrated cattle feed has gone up from about Rs six to Rs 7.50 a kg, while that of groundnut cake has risen from Rs 17 to 20 a kg. Dairy farmers have, thus, been squeezed by rising feed costs, on the one hand, and falling milk prices, on the other.

CII paper

The proponents of the export ban have, in turn, argued their case through a recent ‘paper’ circulated by the Confederation of Indian Industry (CII). The ‘paper’ had sought an extension of the ban till March 31, 2008, claiming that SMP exports would push up liquid milk prices, “making it out of reach for the economically-weaker sections of the society”.

SMP of New Zealand origin is currently quoting at about $4,500 a tonne. In the event of exports being allowed, Indian SMP would fetch in the region of $4,000 a tonne, which translates into a net realisation of Rs 150 a kg or so.