The Hindu Business Line : Dairy industry seeks 20% export tax on oilmeals

“If the Government is really keen to keep milk prices under check, it should discourage export of ingredients and extractions used in the manufacture of cattlefeed. We are not asking for an outright ban, but only a 20 per cent export tax so that our dairy farmers get cattlefeed at affordable rates,” said Mr B.M. Vyas, Managing Director, Gujarat Cooperative Milk Marketing Federation (GCMMF).

For the latest week ended April 19, the wholesale price index (WPI) for oilcakes registered a year-on-year rise of 32.57 per cent, with these amounting to 45.43 per cent for rape and mustard cake, 30.30 per cent for groundnut cake and 41.67 per cent for de-oiled cake. These, in turn, have resulted in an annual increase of 14.46 per cent in the Wholesale Price Index for cattle-feed.

“We were supplying compounded cattlefeed to our farmers last year at about Rs 5,500 a tonne. But with ingredient costs going up considerably, the price of cattlefeed today is over Rs 7,000 a tonne,” Mr Vyas added. On the other hand, the WPI for milk has gone up by 9.32 per cent, which is much below the increase recorded for cattle-feed and oil-meals.

The Managing Director of the Delhi-based Sterling Agro Industries Ltd, Mr Kuldeep Saluja, claimed that prices of skimmed milk powder (SMP), currently at 130-135 a kg, are ruling 10-15 a kg below this time last year. Moreover, international prices of SMP have eased considerably to $3,200-3,800 a tonne, from their peak July-August 2007 levels of $5,300-5,500 a tonne. “There is no justification for all this panic over milk now,” he said.

The Centre, on April 17, withdrew the nine per cent Duty Entitlement Pass Book (DEPB) benefit on casein exports, along with the five per cent concession given on the free-on-board price for export of SMP and other milk products under the Vishesh Krishi Upaj Yojana (VKUY) scheme. Simultaneously, on April 29, it also announced a reduction in the basic customs duty on SMP from 15 per cent to five per cent (on imports of up to 10,000 tonnes under the tariff rate quota regime) and on butter oil from 40 per cent to 30 per cent.

‘Over-reaction’

The dairy industry is of the opinion that the latest moves were an over-reaction on the part of the Centre. Unlike rice or edible oils, there is hardly any domestic shortage in milk, it claims, citing the fact that GCMMF’s average milk procurement had increased from 67 lakh kg per day (LKPD) in 2006-07 to over 75 LKPD in the fiscal just ended. Similarly, companies such as the Chennai-based Hatsun Agro Product Ltd have seen their procurement go up by 3.5 LKPD.

“Whatever price increase we have had recently is more in the nature of a price correction. For example, in Tamil Nadu, milk prices were raised by Rs 2 a litre in March after a full year, whereas during this period prices were raised in two instalments of Re 1 each in Delhi. It is this one shot raise of Rs 2 in Tamil Nadu, Karnataka and Madhya Pradesh that has contributed to a perception of an unusual spurt in milk prices,” felt Mr R.G. Chandramogan, Managing Director, Hatsun.

But the higher prices have also spurred farmers to produce more milk. “We have seen in wheat that as farmers have got a good price, they have ended up delivering a record crop, which will help stabilise prices. The Government should ensure that milk farmers receive similar incentive to produce more,” he added.

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