Amul forced to buy milk powder from Karnataka

AHMEDABAD: Impact of poor monsoon and soaring costs of cattle feed are taking toll on the dairy sector. The market is witnessing scarcity in the beginning of winter as dairy players are avoiding releasing their stocks fearing milk scarcity during the lean summer ahead. Industry sources are not ruling out price hike of dairy products by the end of winter.

The shortage of dairy products is so severe that the Rs 6,711-crore dairy giant Gujarat Cooperative Milk Marketing Federation Limited (GCMMF) is compelled to buy milk powder from Karnataka Co-operative Milk Producers' Federation Ltd.

It is learnt to have procured close to 1,000 tonne of skimmed milk powder on premium from Karnataka to supply to the cooperative dairies in urban areas that are expected to witness a deficit in summer.

The move comes despite the fact that GCMMF has an average milk collection of almost 85 lakh litre a day and has some of the country’s largest dairy plants under its control. The federation that markets Amul brand of dairy products now sells milk powder only in consumer packs while it has stopped trading in bulk.

National Dairy Development Board is too learnt to have procured powder from Karnataka Federation for its Delhi-based Mother Dairy.

Commenting on the availability of milk powder in the market, ice-cream major Vadilal Industries MD Rajesh Gandhi said, "Scarcity of milk powder has resulted in high prices. International market too is witnessing the same scenario."

He added that only those consumers who stocked milk powder in monsoon and winter would be at ease during summer.
Dairy majors are quoting highest ever prices of Rs 125-165 per kg of skimmed milk powder, depending on the grade and quality, to discourage buyers.

Whole milk powder too is being traded at very high price. According to industry estimates, milk procurement is growing at only about 3-5 per cent while demand for milk and milk products is going up by 8-10 per cent.

GCMMF MD BM Vyas did not rule out possibility of milk and milk produce prices hike after winter. "Cost of milk production for farmers has gone up and we need to compensate it amidst poor procurement. The Centre should take steps to ensure availability of fodder and cattle feed at affordable costs for farmers," Mr Vyas told ET.

Country’s largest milk powder exporter Sterling Agro is also not in a position to meet the demands. "Milk product prices in the international market are going up. But we do not have adequate supplies to cater to the even domestic market demands. Besides higher prices in the international markets, prevailing tax structure limits us from importing milk products when Indian dairy majors are falling short of supplies," said Sterling Agro MD Kuldeep Saluja.