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Skimming over milk

Source : BUSINESS_STANDARD
Last Updated: Fri, Dec 07, 2012 07:42 hrs

pPolicy makers should not overreact to the milk glut in India since this has largely been caused by poorly advised government policy in the first place The accumulation of surplus stocks of skimmed milk powder SMP is the consequence of the government&rsquos two ill-timed decisions two years ago as a panicked reaction to the protein-driven high food inflation &mdash banning the export of milk products and simultaneously ordering import of SMP These coincided with a rebound in domestic milk output after a post-2009 drought dip To confound matters the lifting of the export ban was delayed for inexplicable reasons till global prices had nosedived &mdash making exports unviable The dairy industry too erred it mistimed increases in the consumer prices of liquid milk This prevented a rise in sales in the wake of comfortable availability and resulted in a drop in the price paid to milk producers Though the pinch of the surplus and heavy inventories is being felt by the dairy industry in most milk-surplus states the worst affected is Andhra Pradesh The state government went to the extent of mooting a &ldquomilk holiday&rdquo which would involve the stoppage of milk purchases for a few days every month The proposal predictably had to be shelved owing to the outcry against it from various quarters including milk producers who would have had to throw the milk down the drainppIndia&rsquos milk sector has seen decades of healthy growth and the country is now the world&rsquos largest milk producer Milk is now India&rsquos biggest agricultural product overtaking rice and wheat in terms of value Unsurprisingly nearly one-third of rural income now comes from the livestock sector As such animal husbandry has become the mainstay of Indian agriculture providing farmers with much-needed livelihood and income support when crops fail due to drought or other reasons If the current milk deluge is allowed to harm the interest of milk producers by reducing milk procurement and slashing procurement prices to unremunerative levels it is bound to prove counterproductive in the longer run SMP stocks in any case should not be viewed as a burden since these will come in handy to maintain the liquid reconstituted milk supplies next year during the summer when animals&rsquo milk yield usually declinesppThus what is needed to cope with the current surplus is to boost domestic milk offtake for which there is considerable scope Also one should wait for the export market to turn lucrative which seems likely soon given that global prices have already begun to firm up The local consumption of milk and milk products can obviously be stepped up if the industry shares the gains from softening milk procurement prices with consumers Besides new outlets too can be found for milk by introducing it in the government&rsquos welfare schemes such as the mid-day meal scheme But the most vital is the need for the government to put in place stable import and export policies and refrain from unwarranted interventions in the milk market Past mistakes should not be repeatedp


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