January 23, 2018

Amid oversupply, milk prices slump down in India

India is flush with milk and procurement prices to farmers have gone done by 20%.

Even as stocks of skimmed milk powder (SMP) are expected to touch 200,000 tonnes by March, cooperatives are already awash with 20% more milk this season, Business Standard reports.

According to the report, capacities to convert excess milk into SMP were stretched. The result is that procurement prices to farmers have already dropped by 20% on an average, the report added.

Milk cooperatives want the government to buy SMP to serve as buffer stock or to give export subsidy in the face of low international commodity prices. The SMP stock in India at present is worth an estimated Rs16-20 billion (US$250.7-313.4 million).

"We have asked for either export subsidy or the government to do buffer stocking of at least 20,000-30,000 tonnes of SMP to ease out the situation. This stock can be released during summer months (which is the lean season for procurement)", said R S Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation.

SMP prices have reportedly fallen to about Rs150 ($2.35) per kilogramme in the domestic market, down 30%.

On the other hand, the international price of Rs115 ($1.80)/kg has made it unviable for export.