Milk crisis: NDDB favours incentivising exports

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Suggests creation of strategic reserves for SMP and butter to avoid crash in prices

New Delhi, July 27, 2018:The National Dairy Development Board (NDDB) has suggested that the Centre incentivise exports of Skimmed Milk Powder (SMP) and create a strategic reserve of the powder and also butter to overcome the prevailing low milk price that has arisen due to a supply glut.

Speaking to BusinessLine, NDDB Chairman Dilip Rath said that certain policy measures were recommended to address the current situation and provide a sustainable livelihood to milk farmers.

In its recommendations, the apex dairy body has also suggested that the Centre provide financial assistance for creation of the SMP strategic reserves.

MEIS and export sops

“Recommendations are being made to increase incentives under the Merchandise Exports from India (MEIS) Scheme for SMP and other milk products exports from the current 10 per cent to 20 per cent. Also, there is a need to provide grants to cooperatives to create decentralised strategic reserves of 50,000 tonnes of SMP and 15,000 tonnes of butter. This will stabilise the market,” Rath said, adding that the government should also look at donating dairy commodities to friendly nations as a diplomatic goodwill gesture.

This will help reduce the stocks within the country according to thehindubusinessline.com

Earlier, on July 13, the Directorate General of Foreign Trade (DGFT) had notified 10 per cent export incentive for milk powder and other dairy products under MEIS.

No to buffer stock

Rath, however, discarded the idea of creating buffer stocking for SMP.

“It is ill-advised. Creating a buffer of 50,000 tonnes of SMP will result into a financial burden on the Union government and will only postpone the problem rather resolving it,” he said adding that creation of strategic reserves will play an alternative to buffer stock. It is also recommended that a grant up to 8 per cent of the cost of production is to be provided to the producer-owned dairy institutions, who will maintain these strategic reserves.

There is also a recommendation to provide working capital loans with an interest subvention of 4 per cent to these producer-owned institutions for holding the stocks.

Milk in govt schemes

Commenting on the surplus milk scenario in the backdrop of the prevalent malnourishment in the country, Rath further stated that apart from mid-day meal scheme, the government should also run nation-wide school milk programme by distributing fortified milk to children.

Following a slump in SMP prices, private dairies cut milk procurement prompting farmers to turn to co-operatives looking for better procurement prices (price paid to milk producer).

According to the NDDB data, co-operatives’ procurement went up by 17 per cent in May 2018 to 510 lakh kg per day as against 437 lakh in the same month last year. The co-operative dairies have been able to maintain prices, unlike private dairies who are cutting their procurement and putting pressure on the prices.

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