The Hindu Business Line : Nestle asking farmers to shift to cow milk

New Delhi April 11 Nestle India is consciously encouraging milk farmers to shift from buffalo to cow milk, even though the country concentrates on buffalo milk, which is costlier.

Currently, the company procures both milks in equal quantity and is expanding its Nestle Agricultural Services programme at its `milk district' in Moga, Punjab.

"Milk farming is still a hobby in India and hasn't really been looked at as a viable business option. However, we decided to move from buffalo milk to cow's since the latter's yield is much better," Mr Martial Rolland, CEO and Managing Director, Nestle India. The company currently procures nearly a million litres of milk a day from about one lakh farmers.

Nestle India says the firming up of skimmed milk powder (SMP) prices has impacted its business.

"Though we use minuscule quantities of SMPs even in the lean season, fluctuation in the commodities prices affect the company's dairy business," said Mr Rolland.

"The problem is, when SMP prices increase globally, traders find export a more lucrative option," he added.

During 2006, milk products generated gross revenues of Rs 1,285 crore to the company, out of its total revenues of Rs 2,944 crore.

The rise in SMP prices to around Rs 125 per kg, from Rs 90 levels a year ago, had prompted the Centre to ban exports of all milk powders from February. In 2006, Nestle procured 9,806 tonnes of SMP valued at Rs 95 crore, which translates into a unit price of around Rs 97 per kg.

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