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NDDB may import 10,000 t milk powder

Harish Damodaran

Analysts feel that imports may not be feasible, considering that world supplies are somewhat tight on account of drought in Australia and the unusual rise in temperatures in most parts of Europe.

New Delhi , Aug. 26

WITH domestic prices of skimmed milk powder (SMP) and ghee touching unprecedented levels, the market is rife with speculation over the National Dairy Development Board (NDDB) placing orders for import of up to 10,000 tonnes of SMP.

Bulk SMP is currently quoting at Rs 95-100 per kg in the Delhi market compared to Rs 65-70 per kg during this time last year. Wholesale prices of ghee have also scaled record highs, with most brands selling for Rs 2,350-2,450 per 15 kg tin, i.e Rs 157-160 per kg against last year's Rs 115-116 per kg.

On the other hand, international prices of western Europe and Oceania (New Zealand and Australia) are ruling at about $1,750 per tonne free-on-board or around Rs 80 per kg. India currently allows import of up to 10,000 tonnes annually (of both SMP and whole milk powder) at 15 per cent duty, with quantities beyond this attracting 60 per cent rate.

At existing rates, the final duty-paid price of imported SMP would work out to around Rs 95 per kg, which is close to the domestic levels.

Analysts, however, feel that imports may not be feasible, considering that world supplies are somewhat tight on account of drought in Australia and the unusual rise in temperatures in most parts of Europe. The only country with stocks is New Zealand, but even it has volumes adequate only to fulfil existing SMP contracts. The spot availability situation is not very comfortable and it may not be easy to find 10,000 tonnes in the world market today without further pushing up prices.

The other factor to be taken into account is the timing of imports. "There is no point in entering into contracts if the imported powder arrives in October or November because by then, the flush milking season would already have started here. Imports at that point would be disastrous as it would unduly depress prices at peak procurement time," the analysts added.

The last time, when the country imported large quantities, was in 1999-2000, when 17,252 tonnes of SMP and 5,224 tonnes of butter oil arrived in the country. SMP imports fell to 547 tonnes and 24 tonnes in the subsequent two years, even as butter oil imports touched 6,382 tonnes during 2001-02.

The country annually produces around 1.2 lakh tonnes of SMP, of which Amul accounts for 40,000 tonnes, with the rest being equally divided between other cooperatives and private dairies.

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