Milk powder firms rush to cash in on lifting of ban

Anticipating the lifting of exports ban from October, the domestic skimmed milk powder (SMP) manufacturers have already contracted export of about 3,000 tonnes, according to industry sources. Sterling Agro Industries, the country's largest SMP exporter, shipped a consignment of 51 tonnes today.

We have export queries from countries such as Bangladesh, Pakistan and Dubai. Exporters and buyers are ready to offer a price in the $3,400-3,500 a tonne range, said an industry source.

At an average rate of $3,500 a tonne, an exporter will realise about Rs 5 a kg higher than the domestic price. Domestic SMP prices have also moved up from Rs 105 to 135 a kg over the last two weeks, and farmer's realisation of milk has also gone up from Rs 16 to Rs 19.50 a litre.

"The opening of export, apart from earning foreign exchange for the country, will result in better earnings for milk farmers and will boost milk output", said Kuldeep Saluja, managing director of Sterling Agro.

Domestic producers, who were operating at an average 40 per cent capacity a week ago due to low demand, are now operating at 70-80 per cent capacity. "We have shipped 4-5 containers (16 tonne each) today to our Dubai office from where it will be sold to buyers", said R S Sodhi, chief general manager, Gujarat Cooperative Milk Marketing Federation.

The ban was imposed in February to prevent a shortage of milk in summer, a traditionally lean season in milk production. The ban lapsed on September 30. Inflation, which was the main concern behind the government¿s decision to ban SMP export till September, has dipped to a five-year low at 3.23 per cent for the week ended September 15.

The dairy industry exported 28,200 tonnes SMP in 2004-05, 50,510 tonnes in 2005-06 and was likely to export 65,000 tonnes in 2006-07.