Dairy industry seeks export ban removal

Hit by increasing surplus and crashing prices, the dairy industry is demanding removal of the year-long export ban on milk products. Companies, including Amul, have written to the agriculture ministry for removal of the ban.

The improved supply, driven by higher production, has caused a crash in domestic prices of dairy products like skimmed milk powder (SMP) and butter oil (ghee). “We have written to agriculture minister Sharad Pawar requesting immediate removal of the ban. The ban, followed by a surplus, has affected domestic sentiments,” said R S Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation, which sells milk and milk products under the Amul brand.

Compared to milk production of 123 million tonnes (mt) last year, the dairy industry is expecting production of 130-132 million tonnes. Improved supply on an extended winter season has exerted pressure on prices of SMP and butter oil. There has been a 20-25 per cent drop in prices of both SMP and butter oil since Diwali.

In February 2011, the government had banned export of milk powder (including skimmed milk powder, whole milk powder, dairy whitener and infant milk foods), casein and casein products to cool food inflation that had crossed 11 per cent. Food inflation for February this year stood at 6.07 per cent.

“The country has surplus milk availability. The export ban on milk powders and casein should be removed, else the industry and the farmers will be affected. Farmers have been paid high prices and that is why we are seeing this surplus. A crash in prices will affect production,” said Kuldeep Saluja, managing director of Sterling Agro, one of the country’s biggest milk powder exporters.

Saluja agreed international prices, too, are under pressure but said export will provide an additional outlet for products. The price in New Zealand, the biggest dairy exporter, is ruling down by 20 per cent compared to last year’s prices. R G Chandramogan, chairman and managing director of Chennai-based Hatsun Agro, said the export ban had left the industry with around 100,000 tonnes of milk solid-not-fats and dairy cooperatives had imported around 50,000 tonnes of SMP, adding to the improved domestic availability. “We need to sell our excess stock outside the country to keep prices stable. If farmers don’t get good prices, cattle slaughter will increase and next year we will be back to shortage,” he said.