Friday, November 23, 2012


Way back in 1950s, 1960s and 1970s, milk was a shortage commodity priced heavily as it was being imported. Skim Milk Powder (SMP) being donated by charity organizations abroad invariably found its way to the market at some what lower prices. In fact many hotels used to depend on such illegal powder supply to stay in business as the then production was grossly insufficient to meet the demand. Under the Operation Flood program, pioneered by late Dr V Kurien was supposed to have overcome the milk shortage and it is another story that India went on to become the top milk producing country in the world. With many dairying units coming up in the cooperative and private sectors, milk availability, 24/7 became a reality. Under such a condition it is not understandable why there should be shortage of milk powder in the country in recent years? The frantic efforts being made by the down stream users of milk powder in stocking this precious commodity, as being reported in the media, provide a sad reading about the working of Indian dairy sector. Here is a take on this issue.  

'Food, beverage, milk and ice cream companies, from NestleBSE -0.60 % to Vadilal, have started purchasing skimmed milk powder (SMP) six months in advance to beat the shortage that usually hits the market in summer. Current prices are 10% to 15% cheaper than the previous year at Rs 140 a kg owing to a huge stock in the country. However, with international prices firming, the domestic players expect to see prices being bullish in the coming days.  "Compared to the previous year the prices are cheaper by 10%. We have started making small purchases," says Rajesh Gandhi, MD, Vadilal IndustriesBSE -4.12 %. The icecream manufacturer whose peak capacity reaches 3.75 lakh litre in summer is set to procure 1,700 tonne SMP in the coming months. The SMP prices have fallen to Rs 140 a kg from Rs 160 a kg in the month of February this year.  As per the industry estimate there is close to 80,000 tonne of SMP lying with both milk co-operatives likeMother Dairy, Gujarat Co-Operative Milk Marketing Federation (GCMMF) and Karnataka Co-operative Milk Producers' Federation and private players like Sterling Agro, VRS Foods, Bhole Baba, HatsunBSE 1.58 %and so on. Apart from milk co-operatives, major SMP purchasers include companies such as GlaxoSmithKline India, Nestle, Cadbury, ITCBSE -0.09 % and Parle. "With prices moderate compared to the previous year, the purchases have begun in advance, though we anticipate a hike in the coming days," says Mayank Shah, group product manager Parle Products. Parle-G is the glucose biscuit brand from the country's largest biscuit manufacturer Parle Product. On Thursday, the Animal Husbandry & Dairy Department while reviewing the stock position in the country, felt that there were ample stock in the country. "Unlike the previous year we don't need to import SMP this year," says Rajni Sekhri Sibal, Joint Secretary in Union Agriculture Ministry's Department of Animal Husbandry and Dairying. Rajni added that with SMP prices gaining by 3.9% on Wednesday at the Fonterra's Global Dairy Trade online auction at $3,449 a tonne, the domestic prices might firm. The Rs 11,668-crore Gujarat Co-Operative Milk Marketing Federation (GCMMF) that markets dairy products under Amul brand is getting orders of over 2,000-3,000 tonne of SMP per month from Pakistan, Afghanistan, Bangladesh and other middle-eastern countries, unlike 2011 when exports were banned said GCMFF, MD, RS Sodhi".

Considering that value added products from milk are limited in range and volume, why there should be panic in the market is not understandable. After all there is no restriction on the price or import of milk powder and those needing it can always get it from any where in the world. It is unfortunate that the powder sold in the market to bulk buyers at Rs 140-150 per kg is offered in the market to retail consumers at double this price. To further fleece the consumer many companies are selling skim milk powder blended with powdered sugar at prices even higher, ostensibly as coffee whiteners. As for the consumer milk powder can be a valuable raw material for making fluid milk as well as other traditional products if available at affordable prices. After all one should not forget that milk powder is made from surplus milk when supply is more than the requirement and most dairy units in the country reconstitute it into fluid milk for sale during summer season when there is supposed to be a production dip. There is no two opinion that skim milk powder must be made more affordable and offered to the consumer at reasonable prices either through the milk distribution net work or in retail shops. It should not be forgotten that for a predominantly vegetarian population milk is the major source of good quality protein and a host of other vital nutrients like calcium. 


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