At a time when international prices of Skimmed Milk Powder (SMP) are ruling low and dairy cooperatives are facing reduced realisation from exports, the Gujarat Government has incentivised SMP exports with a financial assistance of ₹50 per kg for six months.
Announcing the decision, Deputy Chief Minister Nitin Patel informed that cooperative dairy unions had their funds blocked in the SMP piled-up with the dairies as exports are unviable.
Funds locked up
“Approximately 1.10 lakh tonnes of SMP worth over ₹2,500 crore are piled up at these dairies, thereby blocking their funds. International prices are lower than our SMP prices. Hence, the international market sale at this rate may cause huge loss to these dairies,” Patel said addressing media in Gandhinagar. The SMP prices have already slipped by about ₹100 a kg from their peak last year at ₹240. Currently, SMP prices hover at around ₹135/kg in the domestic market and about $2000/tonne in the international market (about ₹140/kg).
“The State government has, therefore, decided to provide ₹50/kg financial assistance for all SMP exports to be done by Amul for the next six months, beginning from July 1, 2018. This will be allowed till the ceiling of ₹300 crore is met,” he added.
Overall benefit
It is envisaged that the decision would push 60,000 tonnes of SMP exports during the given period. Against the annual production of 600,000 tonnes, India’s annual SMP consumption is estimated at 500,000 tonnes, while the remaining is the exportable surplus. But for the past two years, exports couldn’t take place due to weak international prices, which caused the pile up of stocks.
Milk cooperative unions led by Gujarat Cooperative Milk Marketing Federation (GCMMF) Chairman, Ramsinh Parmar and other dairy leaders had represented to the Gujarat Chief Minister Vijay Rupani seeking support.
Multiplier effect
Welcoming the move, GCMMF Managing Director RS Sodhi stated that the decision will not only help Gujarat farmers, but will also help milk producers across India. “With this decision, the price paid to the farmers will go up by about ₹5. The ₹300-crore support from the Gujarat government will get converted into the overall benefit of ₹12,000-15,000 crore to farmers across India. Because this will lift the overall sentiment in Indian market and farmers across the country will be benefited,” he added.