The Hindu Business Line : ‘Remove ban on milk powder exports’

Chennai, Sept. 13 With the Centre expected to review the ban on export of skimmed milk powder after September 30, the dairy industry is anxious that the ban be lifted. The industry believes that it would be possible to put in place a more pragmatic system that would protect the domestic supply of liquid milk while allowing the dairy industry to export the surplus in the form of milk powder.

According to Mr R.S. Sodhi, Chief General Manager, Gujarat Cooperative Milk Marketing Federation, it would be possible for the Government to put in place a system that would ensure sufficient availability of liquid milk in the domestic market while allowing export of surplus as milk powder. With the flush season around the corner, milk arrivals would peak and the surplus would have to be exported. Unless the surplus is exported, the dairy units would be affected which in turn would affect milk procurement and the dairy farmers.

Export tax

Mr R.G. Chandramogan, Chairman and Managing Director, Hatsun Agro Product Ltd, felt that a viable option would be the levy of an export tax and ensuring that the exports are in proportion to the volume sold in retail sales in the local market. A modvat-style benefit of the export tax could also be extended to those selling in retail in the domestic market. If the export ban were not lifted dairy units’ revenues would suffer which could result in the milk price paid to farmers being cut. Referring to the increase in milk production, he said, Tamil Nadu and Andhra Pradesh alone produce over 26 lakh litres milk a day, a 30 per cent increase over last year. The national production, according to industry statistics, is in excess of 100 million tonnes a year. Of this only about 17 per cent is procured and marketed by the organised sector.

Ban no solution

Dairy farmers have benefited through the support in the form of additional revenue and financial assistance to farmers. Over two-thirds of the market price of milk goes to the farmer as the purchase price. The ban on milk powder exports affects the performance of the dairy units and the support to the farmers. The ban is no solution because the quantity of milk retained in the domestic market is insignificant. For instance, the 40,000 tonnes of milk powder exported in 2005-06 is the equivalent of about 13 lakh litres of milk, he said.

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