Skimmed milk powder price rises to Rs 120 a kg

After witnessing a fall from Rs 125 a kg to Rs 105 a kg, owing to export ban, prices of skimmed milk powder (SMP) have shot up again and are bordering at Rs 120 a kg.

Prices of SMP have shot up by about 47 per cent over the past one year, from Rs 85 a kg to Rs 125. In February, the Union government banned exports of SMP to contain the inflation. The ban will be in place till September this year.

The price of SMP has not come down inspite of the ban.

"With the temperatures rising, the supply of milk will slow down leading to further rise in SMP prices. Already, companies are paying higher prices for milk. SMP prices are likely to cross Rs 130 a kg mark in coming months," said Brijesh Gupta, vice- president of Param Dairy, one of the exporters of SMP.

The notification of ban on SMP export has also prevented companies from exporting those quantities for which the Letters of Credit (LCs) were issued before the announcement of ban on February 1.

"The transitional arrangements under para 1.5 of the Foreign Trade Policy, 2004-2009 shall not be applicable for export of SMP," said the notification.

According to industry sources, LCs for about 6,000 tonnes SMP export had been issued before the ban announcement and are pending.

Reportedly, one of the SMP exporters from Maharashtra, Parag Dairy, has contested the government's decision to not allow exports (for LCs issued before the ban) in the Bombay High Court.

The country had exported 28,200 tonnes SMP in 2004-05, 50,510 tonnes in 05-06 and was likely to export 65,000 tonnes in the current year (April-March).

"Prices will remain on the higher side. The ban has spoiled our reputation with international customers who counted on us for supplies," said Kuldeep Saluja, managing director of Sterling Agro Industries that exported 10,000 tonnes SMP last year.

Export realisations on SMP are about Rs 5-6 a kg higher than domestic sales.