Co-operative dairies seek restraint on oil-meal exports

Dairy co-operatives have reiterated their demand for imposing a duty on de-oiled cake exports along with excise duty waiver on molasses used for manufacture of cattle-feed.

According to the Managing Director of the Gujarat Co-operative Milk Marketing Federation (GCMMF), BM Vyas, prices of cattle-feed ingredients normally fall from the time the kharif crop is sown in July to its harvesting in November.

Last year, prices of major feed raw materials fell between 8.5% for rapeseed extractions to 29% in the case of rice polish during the July-November period. But this year - mainly courtesy, drought - the trend decline has not happened.

As a result, average prices of de-oiled rice bran this month are 24% higher compared with November 2008, with the corresponding year-on-year increase being 23% for rapeseed extractions, 32% for rice polish, 18% for jowar and 43% for molasses.

"Our member unions were last year charging around Rs 7,800 a tonne for the cattle-feed bought by farmers. We have now been forced to raise it to Rs 9,500 a tonne, despite our dairies trying to the extent possible not to charge the full manufacturing cost," Vyas told Business Line.

To compensate farmers for their higher milk production costs, dairies have had to raise procurement prices. GCMMF unions are currently paying farmers an average price of Rs 318 for every kg of fat, which is 16% more than last year's Rs 275 at this point of time. "Our final price (after bonus) to farmers this year would be around Rs 350 per kg of fat, against Rs 305 for 2008-09," Vyas said.

At Rs 350, the corresponding rate for full-cream milk containing six per cent fat would be Rs 21 a kg or Rs 21.63 a litre (one litre of milk equals 1.03 kg). This represents three-fourths of the Rs 28 a litre price that consumers in Delhi pay for 'Amul' or 'Mother Dairy' full-cream milk.

Increasing availability

"If the Government wants milk to be affordable to consumers, it must do something about increasing availability of cattle-feed ingredients in the domestic market. An export duty on de-oiled cakes is what is required now. We would also like a special quota for supply of molasses from sugar mills to cattle-feed plants," Vyas added.

The Union Agriculture Minister, Sharad Pawar, had earlier written to the Finance Minister, Pranab Mukherjee, asking for waiver of the Rs 750 a tonne excise duty (plus 3 per cent education cess) on molasses used in cattle-feed manufacture. He also sought a reduction in the value-added tax on molasses to 4%, by moving it from the existing 12.5% slab.

During 2008-09, the GCMMF unions recorded an average milk procurement of 87.19 lakh kg per day (LKPD), a 15% jump over the previous year's 75.90 LKPD. "This year, the growth has slowed down to 6-7% mainly because of higher fodder and feed costs, which has offset higher procurement prices. This could eventually impact milk supplies," Vyas added.

Taken from Business Line