The Hindu Business Line : South turns surplus in skimmed milk powder

New Delhi, Aug 4 The setting up of significant manufacturing capacities for skimmed milk powder (SMP) in the South over the last five years or so has changed equations within the domestic dairy industry. Southern dairies, which were till recently major buyers of SMP, have turned surplus, so much so that a few have started supplying to northern bulk consumers such as Mother Dairy.

The companies that have established SMP capacities in recent times include the Chennai-based Hatsun Agro Product Ltd (60 tonnes per day); the Hyderabad-headquartered Creamline Dairy Products (15 tonnes) and Heritage Foods India Ltd (10 tonnes); Tirumala Milk Products of Guntur (15 tonnes); and Kwality Milk Foods Ltd, Chennai (five tonnes).

In addition, there are the older plants belonging to cooperative unions/federations in Tamil Nadu (65-70 tonnes), Karnataka (40 tonnes) and Andhra Pradesh (30 tonnes).

“Prior to the new SMP plants being commissioned, the Southern dairies were buying around 1,000 tonnes every month or 12,000 tonnes annually, mostly from the North. But now we have the new private plants with capacity of over 105 tonnes per day. Even operating at full capacity for three months and at half capacity for another three months, they can produce about 13,500 tonnes,” industry sources say.

Export potential

But that’s not all. The captive SMP plants have also given the dairies the flexibility to procure more liquid milk in both the flush and lean seasons. In the process, their own SMP balancing requirement for the lean season has come down from 12,000 tonnes to roughly 5,500 tonnes.

“So, effectively, they have a surplus of 8,000 tonnes, which they can supply to other regions or even export,” the sources pointed out.

In fact, prior to the ban imposed on SMP exports in February, Hatsun Agro alone was shipping out 6,000-7,000 tonnes, making it the country’s third-largest exporter after the Delhi-based Sterling Agro Industries (10,000 tonnes) and Gujarat Cooperative Milk Marketing Federation or GCMMF (7,000-8,000 tonnes).

Traditionally, it is the North — more specifically Delhi — that has been the hub of the SMP trade.

Among the region’s big suppliers are Sterling, VRS Foods and Bhole Baba Milk Food Industries (120 tonnes each), followed by SMC Foods (90 tonnes), Milkfood Ltd (60 tonnes) and Modern Dairies Ltd (40 tonnes).

Shrinking SMP market

“With the South no longer deficit and dairies stepping up liquid milk procurement, the domestic SMP market is likely to shrink in the years to come.

“Right now, it is mainly the Mother Dairy in Delhi (which consumes an estimated 20,000 tonnes every year) and the eastern region that is keeping the market going,” the sources added.

“In the past, Mother Dairy sourced its powder mostly from GCMMF. But with relations between the two cooperatives under strain, it is now largely buying from private dairies, including those in the South.

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