The Hindu Business Line : Skimmed milk powder exports may top 50,000 t

Set to flow out
Chinese demand soaring by 25% every year, while the decline in dollar holds promise.
Export of skimmed milk powder will barely make 1.1% of country’s milk output.

Harish Damodaran

New Delhi, Oct. 3 The country can comfortably export 1,00,000 tonnes or more of skimmed milk powder (SMP) annually and without this unduly impacting domestic milk supplies or prices, according to Mr R.G. Chandramogan of Hatsun Agro Product Ltd.

“The world trade in SMP is in the range of 10-12 lakh tonnes (lt). We should and we certainly can capture at least 10 per cent of this market,” the Managing Director of the Rs 585-crore Chennai-based company told Business Line. The Food and Agricultural Organisation (FAO) has projected global SMP exports for 2007 at 11.44 lt, of which New Zealand would account for 3.4 lt, the US for 2.97 lt, Australia for 1.65 lt and the 25-member European Union (EU) for 70,000 tonnes.

Major developments

There have been five major developments that have influenced the international dairy trade in recent times. The first is the dismantling of the EU export subsidy regime, leading to a fall in its shipments from 2.81 lt in 2004 to an estimated 70,000 tonnes this year. The second is the prolonged drought conditions in Australia. The third is milk demand in China soaring by some 25 per cent each year. The fourth is the diversion of maize for production of bio-fuel, triggering an increase in feed costs. And finally, there has been the decline in the value of the dollar. All these together have led to a spiralling of world SMP prices from around $2,000 a tonne in early 2005 to $5,000 plus levels by June this year.

Ban lifted

“We had a golden chance to fill the vacuum and entrench ourselves in the world market. Unfortunately, the Centre imposed a ban on SMP exports in February,” Mr Chandramogan said.

The ban, effective till September 30, has since been lifted.

“The ban was untimely. But now that it has lapsed, the Centre should make sure it does not get re-imposed again. It is in the interest of our dairy farmers that opportunities created are not missed,” he added. During 2005-06, the country’s SMP exports peaked at 40,463 tonnes, with whole milk powder (WMP) adding to another 10,038 tonnes.

“To produce one kg of SMP, you require about 11 kg of milk. Export of 1,00,000 tonnes would require 11 lakh tonnes, which is barely 1.1 per cent of the country’s milk output of 100 mt. This will hardly affect domestic availability or hurt consumers here,” Mr Chandramogan said.

Prospects

On the current fiscal’s prospects, he felt that “we can do over 50,000 tonnes by March, despite the export ban being lifted only now”. Currently, SMP of New Zealand origin is quoting at $4,700 a tonne, while US powder is correspondingly ruling at $3,900-4,100. “There has been some easing from the $5,200 levels. Once India enters the market, prices will stabilise in the $3,400-3,500 per tonne range, though I expect good quality powder from companies such as mine and Gujarat Cooperative Milk Marketing Federation (GCMMF) to fetch $ 4,000 plus,” he said.

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