In an introductory blog Rahul Kumar, CEO Lactalis India has done an interesting analysis of the Indian Dairy in 2020 and its SMP dilemma.
Rahul says in his blog:
“In India, entire dairy fraternity saw unusual flush season this year when milk production remained low & first time in history, milk prices kept rising during the flush season. On 18th December 2019, I shared my thoughts on the situation of milk in INDIA & raised RED ALERT. Nothing changed much thereafter except milk availability remained low & commodity prices eg SMP & butter kept moving up. Can we believe INDIA has a shortage of milk? Many don’t believe or don’t want to believe! NDDB’s proactive actions have been missing, which has the mandate to assess milk situation across the nation & take corrective actions to ensure the nation has enough milk to feed 1.25 billion Indians at a reasonable price. We can see another round of consumer price increase of milk in major parts of the country within a week! Is it not the responsibility of NDDB to inform the government about the real picture of milk situation so that appropriate actions can be taken in time. If our milk production is down by 5% & market growth is 5%, we have a deficit of 10% of milk demand. INDIA produces 500 million litres of milk per day so shortage is about 50 million litres per day which have to be filled without a doubt. This can be done only by the import of SMP & Butter so that deficit can be minimised. Procurement prices are up which is good for farmers but high procurement prices won’t yield more production of milk & it must be understood. Government of India has to act in time & import min 100,000 T of SMP & provide to all dairies, be it co-operatives or private for strictly using for liquid milk sale to consumers. We are at the verge of disaster as incoming summer SMP rates would touch INR 400 per kg ( USD 5600 per MT ), 70% higher than current global SMP prices! Even at this price, there won’t be the availability of SMP. The same situation shall be of fat prices. Last time the dairy industry in INDIA imported SMP about 8 years back & now the same situation is haunting us. Government and NDDB must act fast as delay in import shall in fact harm farmers as SMP must not be imported when next flush season knocks the door. INDIA needs it now & before March to JUST take care of the coming lean season. I have no doubt Indian dairy farmers shall be again motivated to produce enough milk for INDIA. However, as of now, It’s again Red Alert.