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Private and co-operative dairies are at loggerheads with each other over a sharp rise in the prices of skimmed milk powder (SMP).
This has been triggered by a shortage that erupted by sudden increase in the wedding season demand and decline in production due to unfavourable climatic conditions last year.
Private players support bulk consumers, including ice cream manufacturers and confectioners (biscuit and chocolate makers), in their bid to seek 50,000 tonnes SMP import at “zero” duty. But co-operative dairies are protesting such a proposal over its negative impact on farmers.In fact, the Confederation of Indian Industry (CII) has proposed to the government to allow import of SMP.
Trading currently between ~310 and ~320 a kg, SMP prices have jumped 15 per cent in the last one month and doubled from its level a year ago.
“The SMP price is at its peak. Hence, there is no room for a further price rise. Any price rise from the current level would prompt consumers to shift to liquid milk and other substitutes within or outside the dairy sector. Thus, the current price rise is a temporary phenomenon. SMP prices would start declining from the current level and stabilise in the next one month,” said B C Sateesh, managing director, Karnataka Co-operative Milk Products’ Federation (KMF), India’s second largest co-operative dairy.
Sources said the ministry of commerce had convened a meeting of industry players earlier this month to explore the reasons behind the SMP price rise and chalk out a strategy for policy intervention. “We are opposing CII’s anti-farmer move to reduce milk producers’ income by recommending ‘zero’ duty (for cheap import of SMP, primarily from New Zealand and Australia). The fear expressed by private players and ice cream manufacturers is purely for their own benefits as they want cheap raw material.
They are not in the interest of farmers and consumers,” said R S Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation (GCMMF), India’s largest cooperative dairy, which produces the Amul brand milk and its derivatives.
Experts, however, believe that the sudden spurt in SMP prices is because of dairy players raising milk prices by ~2/litre in December. Apart from that, fodder has become extremely costly in the western and southern Indian states due to unfavourable climatic conditions led by heavy downpour and floods in Maharashtra and Karnataka last year. Moreover, milk supply was hit because thousands of animals were washed away in last year’s flood.
“Any move to allow import of SMP would lower agri income and take a toll on the Prime Minister’s vision to double farmers’ income by 2022. Also, it would repeat the mistake India committed in edible oils,” said Sateesh.
Over three decades ago, India was self-reliant in edible oils. Today, around 65 per cent of India’s edible oil consumption is met through imports, thanks to policy intervention.
“While co-operative are working only for farmers, private players are also concerned with consumers. Hence, import would certainly benefit consumers,” said a senior official with a private dairy on condition of anonymity.
Meanwhile, Sodhi said there may be some downfall in procurement by major co-operatives this year due to exceptional weather conditions, high input costs and low procurement prices. He added, that the dairy industry is growing at over 6 per cent.
