Dairy exports turn viable as global prices recover

Likewise with powder, where, only three months back, the National Dairy Development Board was planning to import 10,000 tonnes of SMP. At that time, SMP of East European origin was available at USD 1,800-1,900 a tonne, translating into under Rs 100 a kg after adding the 5% import duty. Prices have since hardened by some USD 1,000 a tonne, pushing it above the ruling domestic SMP price of Rs 125-130 a kg.

Export options open up

In fact, the situation has now changed to make dairy exports feasible at the margin, more so for casein (milk protein).

The last three months have seen nearly 3,000 tonnes of casein being shipped out, with prices going up from USD 5,200 to USD 7,000 a tonne (free-on-board, Mumbai) and exporters additionally availing themselves of a 9 per cent duty entitlement pass book (DEPB) benefit.

To produce one kg of casein, a dairy consumes an estimated 35 litres of milk. The 3,000 tonnes exported largely from North India during August-October would have, thus, consumed 105 million litres or over 11 lakh litres per day (LLPD). That would amount to over 40% of the 26-27 LLPD milk that Mother Dairy is currently marketing in Delhi.

"The Government may have to reconsider some of the export incentives, enabling casein producers to pay higher prices for milk than Mother Dairy and other liquid milk suppliers. The latter have, then, had to increase their procurement prices and pass it on to the consumer", an industry source said.

The other side to this, however, is that milk prices for the farmer this time have not fallen as they usually do during the 'flush' winter season.

 

Taken from Business Line