May 2, 2013
From June 4, the Gujarat Cooperative Milk Marketing Federation, which produces India's Amul dairy label, will sell through auction site GlobalDairyTrade, where prices stand at record highs.
The move will put India, once a dairy importer, to the ranks of exporters, a reflection of the improvements in output thanks to improved herd genetics and the increasing scale of milk producers and processors.
The co-operative joins global dairy producers including Europe's Arla, US-based Dairy America and Australia's Murray Goulburn and New Zealand's Fonterra, which owns GlobalDairyTrade.
A milk-producing nation with 2013 output forecast at 57.8 million tonnes (USDA estimate), an increase of 30% over the last five years, India's growth in the dairy sector is largely spurred by strong growth in domestic consumption.
However, the country's growing surplus is expected to widen further through a national dairy plan expected to double output in 15 years, and increase to 65%, from 30%, the proportion of the milk surplus handled by large dairy groups.
Increasing surplus has prompted dairy giants such as the Gujarat Cooperative Milk Marketing Federation to lobby for access to international market, which is especially lucrative after the recovery in milk prices.
GlobalDairyTrade values have doubled over the past year to the highest on record going back to the 1990s, spurred by strong demand from China and weak growth in world production, held back by high feed prices and poor weather in major exporters such as Europe, New Zealand and the US.
However, prices at GlobalDairyTrade auction fell for the first time in 2013 on May 1. Values have been depressed by rains which have relieved drought in New Zealand, the top exporting country, where milk production fell on-year in February for the first time since 2010. Arla and Dairy America's skim milk powder was going at US$1,000 a tonne lower than in April; while prices for Fonterra's skim milk powder fell by up to 14.6%.
Recognising the growth potential of the Indian dairy market, Fonterra and French-based yoghurt giant Danone paid US$355 million for Wockhardt Nutrition, India's top-ranked baby food group in 2012.
India's government in November lifted a ban on the export of dairy products, including whole milk powder, which the Gujarat federation will sell through GlobalDairyTrade, with skim milk powder.
However, India's export policy "changes frequently to adapt to market conditions and local political scenarios", according to the USDA bureau, thus casting doubts over India's commitment to exports.