Milk powder firms source from price-hit South

Skimmed milk powder (SMP) traders from North India are sourcing the commodity from the South to benefit from the slump in prices there.

SMP prices in the South have fallen from Rs 140 to Rs 130 a kg as a result of the rains.

"SMP producers are able to push the commodity in the northern markets. We had procured SMP from the South at the rates between Rs 126-128 a kg and sold it for Rs 140-145 a kg in the North. But with the onset of monsoon in the North, demand will decline," said Kuldeep Saluja, managing director of Sterling Agro Industries.

Southern manufacturers said with the arrival of the rains, availability would improve in the North and would not be able to sell there.

"Today, we are able to sell the surplus milk powder from the South and pay farmers. Once the glut in the North begins, there will be no market for us," said R G Chandramogan, chairman and managing director of Hatsun Agro Product.

At the moment, we are undergoing a flush in the South and three months down the line there will be a flush in the North.

An excess milk production is expected by the August-September period and this excess needs to be removed.

Once exports resume, a share from the best prices of the international market will go to the farmer, he added.

SMP prices had moved up from Rs 90 to Rs 125 a kg by February and this prompted the government to impose a ban on the export of SMP.

The ban, which is in place till September, was announced in February to prevent a shortage situation in summer, a traditionally a lean season in milk production.

But SMP prices continued to rise even after the export ban and are currently selling at Rs 140 a kilo.