Saddled with surplus stocks, dairies want the Government to open up exports of skimmed milk powder (SMP). The cry is getting louder, especially after the Government on Tuesday permitted casein exports, under license.
Dairymen said the permission to export casein will benefit only four of 120-odd milk powder producers, while arguing that SMP stocks close to one lakh tonne have to be liquidated for a free flow of milk in the next season. Dairies, especially in the North that have seen a surge in milk procurement in the ‘flush' season on the back of better-than-normal monsoon, are under pressure to liquidate the stocks.
“The Government should open up exports of SMP immediately or else the milk powder plants will stop procurement,” said Mr Kuldeep Saluja, Managing Director, Sterling Agro Industries, makers of the Nova brand of dairy products.
Casein is basically a protein extracted from skimmed milk. It is used as a dietary supplement and in making cheese. It is also used for industrial applications in paints, glue, plastic and fibre. Unlike SMP, production of casein is milk-intensive. About 12 litres of milk is required to produce one kg of SMP, while a kg of casein needs 30-35 litres. Major exporters of casein include the Baramati-based Dynamix Dairies Ltd, VRS Foods, Bhole Baba Dairy Industries and Modern Dairies and Industrial Progress India Ltd.
Less demand
“The opening up of casein exports was long overdue. However, it is not going to improve the situation. The demand is less and dairies are suffering from SMP overstocks. If there has to be a free flow of milk in the next season, then SMP need to be exported,” said Mr R. Chandramogan, CMD, Hatsun Agro Products Ltd.
Mr Chandramogan estimates the SMP stocks at 80,000 to 1 lakh tonne, over and above the country's requirement till next season. The fat stocks range between 30,000 and 45,000 tonnes in excess of the requirement, he said.
Making a case for SMP exports, Mr R.S. Sodhi, Managing Director of Gujarat Co-operative Milk Marketing Federation, which owns Amul brand, said: “It will help improve the sentiment and benefit the farmers.”
However, dairy expert, Mr R.S. Khanna said allowing SMP exports may not benefit the dairies much because of the global surplus. The global prices of SMP have crashed to $2,700 a tonne from $3,100 three weeks ago. At the current exchange rate, this translates into a price of around Rs 140 a kg for SMP. Prices of good quality SMP ranges from Rs 150-170 in the domestic market, while poor quality is about Rs 130.