Banning of export of milk powder will be a retrogade step, says Punjab MP Gujral

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New Delhi, June 4 : Reported moves by the Government of India to ban the export of milk powder in order to contain milk prices in the country has been criticised by Naresh Gujral, the Member of Parliament representing the Shiromani Akali Dal party and Punjab in the Rajya Sabha.

In a letter to Agriculture Minister Sharad Pawar, Naresh Gujral, the son of former Prime Minister Inder Kumar Gujral, said: "This retrograde step would hit the interest of the small farmers, as factories exporting milk powder will refuse to pick up milk from the farmers."

He also said that the ban on the export of milk powder would also hurt the dairy cooperative movement, and eventually lead to milk shortages in the country as the farmer would be discouraged to produce more milk.

"It is regrettable that the government policies are only focusing on urban consumers and ignoring the interest of the rural sector, which is already reeling under debt. The main reason why milk prices have gone up domestically is because the cattle feed prices have increased exponentially," Gujral maintained.

He further went on to say that: "the government needs to put restrictions on export of cattle feed so that their prices fall, and not milk products, which hurt the interest of the poor farmer."

"It is ironical that on the one hand the government is writing off the debts of the farmer and on the other hand taking steps, which will further impoverish the small farmer," Gujral said in his letter, adding "Since you are known as a champion for protection of the farmers' interests, I am certain that you will not allow a ban on the exports of milk products and will also push for the restoration of export incentives on milk products, which were suddenly withdrawn last month."

Even as global skimmed milk powder (SMP) prices have slid from their peak 5,000 dollars a tonne-plus levels of July-August 2007 to around 3,200 dollars a tonne, there has been talk of the Centre considering a fresh ban on exports of the commodity.

"Concerns have been raised from top quarters on the recent price increases resorted to by major liquid milk marketers. The Agriculture Ministry has been asked to assess the situation and suggest appropriate measures," sources said.

The Centre had, on April 17 this year, withdrawn the nine per cent Duty Entitlement Pass Book (DEPB) benefit on casein exports, along with the five per cent concession given on the free-on-board price for export of SMP and other milk products under the Vishesh Krishi Upaj Yojana Scheme.

Further, on April 29, it had announced a reduction in the basic customs duty on SMP from 15 to 5 per cent (on imports of up to 10,000 tonnes under the tariff rate quota regime) and on butter oil from 40 to 30 per cent.

The dairy industry, however, feels the concern is misplaced, given that domestic SMP prices, at around Rs.130-135 a kg now, are ruling below the Rs.140-145 levels of this time last year.

The industry holds that if the Centre wants to keep milk prices under check, it should discourage export of ingredients and extractions, so that dairy farmers get cattle-feed at affordable rates. During 2007-08 (April-March), the country exported 2,183.44 million dollars worth of oil-meals, an 80 per cent jump over the preceding fiscal's 1,215.19 million dollars.

It maybe recalled that in January last year, private dairies had criticised the Centre's proposed move to ban export of skimmed milk powder (SMP) in response to high prices and reports of nationwide milk shortages.

At that time, an official of a leading dairy company in Chennai had said: "To blame shortages on exports has little basis. The 47,300-odd tonnes of SMP exports during 2005-06 is equivalent to less than 5.6 lakh tonnes of milk, taking a solids-not-fat (SNF) content of 8.5 per cent. This is a fraction of the country's annual milk output of 91 million tonnes or its total produce of 2.25 days.

He further went on to say that the National Dairy Development Board (NDDB) should not talk about India being the world's biggest milk producer and its output touching 91 million tonnes and in the same breath refer to the so-called damage caused by the export of 2.25 days' product.

"If the NDDB and its subsidiary, Mother Dairy, is short of powder, the solution lies in expanding their milk procurement network and paying a good price to farmers. Stopping exports will only reduce the incentive for farmers to produce more milk and supply to the dairies," said Kuldeep Saluja, Managing Director, Sterling Agro Industries Ltd.

Of the 47,334 tonnes SMP exports worth Rs.420 crore during 2005-06, the major shippers included the Delhi-based Sterling Agro (10,000 tonnes) and VRS Foods (4,000 tonnes), Gujarat Cooperative Milk Marketing Federation (7,000-8,000 tonnes) and Hatsun Agro Product Ltd, Chennai (6,000-7,000 tonnes). esides SMP, the industry also exported 10,903 tonnes of casein (Rs.282 crore), in which the No. 1 player was VRS Foods (5,000 tonnes) in addition to Dynamix Dairy Industries (Baramati) and Mahaan Proteins (Delhi).

"Why should the farmer and the industry suffer just because Mother Dairy has no powder stocks, for reasons of its own doing? Everybody knows that the NDDB has stopped investing in its own cooperatives and the results are there to see," a daily quoted a private dairy representative, as saying then.

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