Dairy cooperatives, companies spar over allowing imported milk powder

India's cooperative dairies are challenging private companies support for imported skimmed milk powder(SMP) as domestic supply thins because of weddings and fall in production.

Private companies support bulk consumers, like ice cream manufacturers and confectioners, in allowing 50,000 tonnes SMP to be imported at “zero” duty, but cooperatives protest such a proposal by saying it will hurt farmers.

The Confederation of Indian Industry (CII) has proposed that the government import SMP, which is trading between Rs 310 and Rs 320 a kg. Prices jumped by 15 per cent in the last one month and have doubled in a year.

“The SMP price is hovering at the peak. Hence, there is no room for its price rise further. Any price rise from the current level would prompt consumers to shift to liquid milk and other substitutes within or off dairy sector,” said B C Sateesh, managing director of Karnataka Co-operative Milk Products’ Federation (KMF).

"The current price rise is a temporary phenomenon. SMP prices would start declining from the current level to stabilise in the next one month,” said Sateesh, whose organisation is India’s second largest dairy cooperative handling around 8.6 million litres of liquid milk daily.

The Commerce Ministry held a meeting of industry players early in January to make a strategy for policy intervention.

“We are opposing CII’s anti-farmer move to reduce milk producers’ income by recommending ‘zero’ duty cheap import (of SMP primarily from New Zealand and Australia). The fear expressed by private players and ice cream manufacturers of shortage of milk in the country is purely motivated for their own benefits as they want cheap raw material and is not in the interest of farmers and consumers,” said R S Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation (GCMMF), India’s largest cooperative dairy.

Experts give three reasons for high SMP prices: dairy players raising milk prices by Rs 2 per litre in December; fodder scarcity after heavy rains in Maharashtra and Karnataka last year, and milk supply taking a hit when thousands of animals were washed away in floods in the same states.

“Any move to allow import of SMP would lower farmers’ income and compromise the Prime Minister’s vision to double farmers’ income by 2022. Also, it would repeat the mistake India committed in edible oils,” said Sateesh.

Over three decades ago, India was self-reliant in edible oils. Today, around 65 per cent of India’s edible oil consumption is met through imports, thanks to policy intervention.

“While cooperatives are working only for farmers, private players are also concerned with consumers. Hence import would certainly benefit consumers,” said a senior official with a private dairy on condition of anonymity.

Sodhi argued that there may be some downfall seen in procurement by major co-operatives in this year due to exceptional weather condition, high input costs and low procurement prices, but, it has to be seen in totality. The dairy industry is growing at over 6 per cent, he added.