Maharashtra-based private dairy player Parag Milk Foods is in race with Gujarat-based dairy cooperative Gujarat Cooperative Milk Marketing Federation (GCMMF) to start exports to Russia. According to Parag, while the Russian authorities have inspected a few Indian dairy players, they have approved around two players in the last five months.
"The regulations in Russia are very stringent and in order to get clean chit from Russian government, we need to be certified by FSVPS (Federal Service for Veterinary and Phytosanitary Surveillance). And the day, we get a go ahead, we will start exporting to Russia," said Devendra Shah, chairman of Parag.
Earlier in January, GCMMF which sells milk and dairy products under the Amul brand, had said that it is awaiting for formalities between the Export Inspection Council of India, and its Russian counterparts to complete, so that it could begin exporting to the country. While a senior official of GCMMF did not wish to mention the exact time as to when the exports could start, it could, however, take a few months.
Amul was in talks with Russia's Galactika Group for exports after the country lifted its ban on import of dairy products from India. The Russian market has a vast potential for dairy business, the country imports nearly 500,000 tonnes of milk products every year. Parag especially is interested in exporting cheese to Russia. As Shah said,"They used to import approximately, 235,000 tonnes of cheese per year."
Parag currently exports to more than 30 countries including Philippines, UAE, Singapore, Oman, Kuwait, New Zealand, Sri Lanka. While Shah did not wish to share the export figures for FY15, he said that it has grown by 100 per cent over FY14. Parag had clocked a turnover of around Rs 1400 crore in FY14, of which about 20 per cent came from exports.
The opening of the Russian market is critical for dairy players who are facing a pressure on margins owing to lower exports thanks to low prices. China, one of the major importers of dairy products, does not allow entry of Indian products, and a handful of other countries like South Africa too have banned import of dairy products. According to Parag, while the US allows imports, the customs duties are very high, making it unviable for exports. Asian countries like Korea, Japan, Taiwan, apart from West Asia and North Africa import from India. However, EU, US and New Zealand already have foreign trade agreements with most of these countries, lowering import duties, and thus the Indian products become non-competitive.
