Dairy sector hopes for revival of powder exports

The domestic dairy industry is expecting a revival in milk powder exports as the international prices have posted two consecutive monthly gains after a gap of five months. Forward contract prices of whole milk powder (WMP) in New Zealand have seen a correction of over 19 per cent since March. This is the first significant rise since November last year.

Indian producers have started getting export queries after a gap of at least six months. “This would help us export the domestic surplus of 30,000-40,000 tonnes that is exerting pressure on the prices,” said R C Chandramogan, chairman and managing director of the Chennai-based Hatsun Agro Products.

However, Chandramogan added that the domestic price is still not competitive from a viewpoint of exports. “Domestic milk powder price is higher by Rs 5 a kg comp-ared to the international price. But the revival in global prices is a positive signal and exports are expected to pick up,” he said. Domestic price is ruling in the range of Rs 115-120 a kg and could move up further during the peak of summer season.

World prices of various dairy products have fallen from record highs seen 14 months ago as the slowing global economy capped demand for commodities and the US and European produce flooded the world market. Consequently, Indian exports also took a hit.

“In order to correct the demand-supply imbalance, major producing countries like the US and New Zealand started slaughtering cattle six months ago. The impact is being felt now,” Chandramogan said.

However, other dairy players expect a shortage in the domestic market, which would not allow large-scale exports. “Milk supplies shrink during the summer season while demand remains high. It might be difficult to meet domestic demand and prices could also see a significant rise,” said Kuldeep Saluja, managing director, Sterling Agro Industries.

In April 2008, the government had withdrawn benefits of schemes like duty entitlement passbook (DEPB), Vishesh Krishi and Gram Udyog Yojana (VKGUY) and Focus Market schemes on export of SMP, casein and any other milk product. This was done to improve domestic supplies and control prices.