After allowing the export of casein, a high-value milk protein, the government is now reportedly considering allowing the export of about 10,000 tonnes of skimmed milk powder.
However, officials said the fact that the supply of milk usually declined in the summer was making the government think hard before taking a formal decision on the issue.
Nevertheless, industry players said the export of skimmed milk powder would help absorb the excess stock of 70,000-90,000 tonnes of the commodity spread across various dairies in the country and support domestic prices, which had dropped about 26 per cent since November.
“The situation has become so bad that if the government does not allow some export of skimmed milk powder immediately, we would be forced to cut our annual purchases of milk from farmers from June,” said Kuldeep Saluja, managing director of Sterling Agro Industries, which manufactures the Nova brand of dairy products like ghee, butter oil and skimmed milk powder.
He added because of the sudden ban on the export of skimmed milk powder and the subsequent rise in production of the commodity, Indian dairies were now saddled with massive quantities of milk powder with no outlet to sell.
“We are ready to export SMP (skimmed milk powder) at a loss of about 10-20 per cent, but first the government should allow its export,” he said. The domestic demand for skimmed milk powder was about 100,000 tonnes a year. However, current stocks stood at almost 180,000 tonnes, he said.
India, the world’s largest milk producer, currently has an annual milk production of about 121.8 million tonnes. Its production in 2011-2012 rose 12-13 per cent, while the growth in demand during the same period stood at eight-nine per cent.
The government had prohibited the export of milk powders (including skimmed milk powder, whole milk powder, dairy whitener and infant milk foods), casein and casein products in February 2011 to augment domestic supplies. It had also allowed the National Dairy Development Board to import 50,000 tonnes of skimmed milk powder and whole milk powder and 15,000 tonnes of butter, butter oil and anhydrous milk fat at no concessional duty under the tariff rate quota for 2011-12.
These imports, along with the rise in domestic production, had led to a situation of excess supply, traders said.
There is strong demand for India’s skimmed milk powder in Bangladesh, Pakistan and other east Asian countries.
If approved, the commodity would be the fifth major farm produce, exports of which have been eased in the last few days. The government had earlier freed the export of sugar, abolished the export floor price for onions and removed the restriction on the export of cotton and high-value milk casein.