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Harish Damodaran

As international price touches $5,000 mark

New Delhi May 13 Even as international skimmed milk powder (SMP) prices have scaled the $5,000-per-tonne mark, domestic dairymen are a livid lot.

The reason — the ban on powder exports since February, which denies them the opportunity to cash in on the global uptrend.

Oceania origin

Currently, SMP of Oceania origin is selling at $4,000-4,300 a tonne free-on-board, while Western Europe powder is quoting as high as $4,700-5,080.

Continuing widespread drought conditions in Australia and warmer than usual temperatures in Europe — coupled with the European Union's phased reduction of export subsidies — have pushed up world prices to four times their levels five years ago.

But that is no consolation to the industry.

"Export of software has made millionaires of a few hundreds in Bangalore, Hyderabad and Chennai.

"Why are crores of our farmers being deprived of making money, just to keep consumers in metros happy?

"We are losing a golden chance to entrench ourselves in the world market", said Mr R.S. Sodhi, Chief General Manager, Gujarat Cooperative Milk Marketing Federation (GCMMF).

Domestic SMP prices are now ruling at Rs 134-135 a kg, against the Rs 160 plus that could potentially be realised from exports.

Although the 50,500 tonnes of powder exports in 2005-06 translated into only 0.56 million tonnes (mt) of milk — a fraction of the country's total output of 95 mt — its indirect impact on milk prices may not be that small.

With every Rs 10 rise in SMP realisations, dairies can pass on an extra 60-70 paise per kg to farmers.

The industry reckons that the loss of export business has cost milk producers a minimum Re 1 per kg.

For the 50 mt of surplus milk that farmers sell, even a Re 1 increase means some Rs 5,000 crore.

"Milk, unlike sugarcane or paddy, provides liquid cash on an almost daily basis.

"Also, while the farmer does not realise more than a fifth of the consumer price in fruits or vegetables, he gets at least 60 per cent for milk.

"There is no better antidote to poverty than dairying", claimed Mr R.G. Chandramogan, Managing Director of Chennai-based Hatsun Agro.

Spiralling input costs

The Centre's concern that exports may lead to higher local milk prices comes even as farmers have seen their own input costs spiral.

Since last year, prices of compounded cattle-feed (18 per cent protein) have gone up about Rs 5-6.50 per kg, while for groundnut cake (40 per cent protein) Rs 13-16 and for maize Rs 5--8.

"While dairy product exports are banned, shipments of oilcake continue to be allowed.

By doing this, the Government is promoting value-subtraction and not addition", Mr Sodhi added.

More Stories on : Dairy & Dairy Products | Exports & Imports

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