New Delhi, Jul 27: A massive milk glut in India could hit international prices for dry milk powder after government subsidies aimed at supporting local farmers look set to spur a ninefold surge in exports, industry officials said.
India’s skimmed milk powder (SMP) exports are expected to rise to 100,000 tonnes in the 2018/19 fiscal year as rare government incentives spur overseas sales and make shipments from the world’s biggest milk producer competitive on the global market.
The rise in shipments from India could weigh on global SMP prices that have more than halved in four years due to surplus supplies, according to analysts and industry officials.
The exports will also help India bring down inventories that have dragged local raw milk prices to three year lows and below cost of the production, sparking widespread farmer protests.
In the wake of the protests, the western states of Gujarat and Maharashtra, India’s leading milk producers, offered a 50,000 rupees ($727.86) a tonne subsidy for exports of SMP, while the central government approved a further subsidy of 10 percent of the export price.
“India was not exporting a big quantity. The government assistance will revive exports in coming months,” said R. S. Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation Ltd, the country’s biggest milk processor. The potential 100,000 tonnes of shipments expected in the 2018/19 year starting April 1 compare to 11,500 tonnes a year earlier, Sodhi and other industry officials said.
India rarely impacts the dried milk export market. The US Department of Agriculture recently forecast the country’s 2018 non-fat dry milk powder shipments to be only 15,000 tonnes, compared to 410,000 tonnes from New Zealand and 720,000 tonnes from the United States.