The Hindu Business Line : Ban on milk powder exports likely

The trigger
Concerns have been raised from top quarters on the recent price increases resorted to by major liquid milk marketers.
Milk and dairy products have a combined weight of 5.05 per cent in the overall wholesale price index.

Harish Damodaran

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New Delhi, June 2

Even as global skimmed milk powder (SMP) prices have slid from their peak $5,000 a tonne-plus levels of July-August 2007 to around $3,200 a tonne, there is talk of the Centre considering a fresh ban on exports of the commodity.

“Concerns have been raised from top quarters on the recent price increases resorted to by major liquid milk marketers. The Agriculture Ministry has been asked to assess the situation and suggest appropriate measures”, sources told Business Line.

The Centre had, on April 17, withdrawn the 9 per cent Duty Entitlement Pass Book (DEPB) benefit on casein exports, along with the 5 per cent concession given on the free-on-board price for export of SMP and other milk products under the Vishesh Krishi Upaj Yojana scheme.

Further, on April 29, it announced a reduction in the basic customs duty on SMP from 15 to 5 per cent (on imports of up to 10,000 tonnes under the tariff rate quota regime) and on butter oil from 40 to 30 per cent.

Inflation check

“They want to go beyond these measures and that could even include a fresh ban on powder export, after the one imposed during February-September last year. After wheat, rice, edible oils and pulses, milk has somehow emerged now on the Centre’s radar. This is even more so since milk and dairy products have a combined weight of 5.05 per cent in the overall wholesale price index (WPI),” the sources added.

‘Concern misplaced’

The dairy industry, however, feels the concern is misplaced, given that domestic SMP prices, at around Rs 130-135 a kg now, are ruling below the Rs 140-145 levels of this time last year. The year-on-year rise in the WPI of milk for the week ended May 10 amounted to 7.52 per cent. But this was way lower than the corresponding increases in inputs costs, especially extractions used in the manufacture of cattle-feed.

The WPI for oilcakes has gone up by 41.68 per cent (44.73 per cent for mustard & rape cake, 35.39 per cent for groundnut cake and 54.83 per cent for de-oiled cake) and, in turn, led to an annual increase of 15.23 per cent in the index for cattle-feed.

The industry holds that if the Centre wants to keep milk prices under check, it should discourage export of ingredients and extractions, so that dairy farmers get cattle-feed at affordable rates. During 2007-08 (April-March), the country exported $2,183.44 million worth of oil-meals, an 80 per cent jump over the preceding fiscal’s $1,215.19 million.

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