Milk surplus likely this yr

Reasons: Better monsoon and remunerative prices to farmers.

With better monsoon and remunerative prices to farmers, the country could be heading towards a milk surplus this year, industry experts said. India is the world’s biggest milk producer with an output of over 108 million tonnes.

“Milk production is likely to be more this year as farmers across the country are getting good prices. Surplus has started building up in Maharashtra. In next two-three months, northern states will also face a surplus situation,” said R C Chandramogan, managing director of Chennai-based Hatsun Agro, which handles over 1.8 million litres milk every day.

The India Meteorological Department (IMD) had said in late April that the monsoon rainfall was likely to be 98 per cent of the long-term average. Last year, the country faced a rain deficit of 22 per cent and milk availability was inadequate.

According to an industry source, Maharashtra is unable to find enough buyers. This is in conrtrast to the situation earlier when a shortage prompted dairy processing units to raise prices at regular intervals.

In most states, prices paid to farmers have risen 15-20 per cent in the past two years. In northern states, for instance, processors are paying Rs 25-26 for every kg of buffalo milk to farmers.

“The supply during winter was good and the stock position is sufficient. Consequently, prices of skimmed milk powder have remained stable,” said Jitendra Agarwal, director, Bhole Baba Dairy Industries, which sells products under the Krishna brand.

Chandramogan said that even if milk output rose marginally, the impact would be huge. “If the surplus milk is processed, the supply of processsed products like skimmed milk powder and butter oil will be abundant. This will affect margins of processing units and drive them to pay less for milk,” he said.

Milk powder prices have not risen in spite of the summer demand. “Prices used to move up during summers due to high demand for milk powder for ice-cream and milk-based beverages. This time prices have remained stable at Rs 135-140 a kg,” said Chandramogan.

Other industry officials reiterated Chandramogan’s view and said the country might have to export milk products after three-four months. “We plan to make a representation to our apex body, the Indian Dairy Association, to seek export incentives. We cannot compete globally as our input cost is high due to high milk prices,” said a dairy processor.