Indian dairy industry has been wary of the entry of foreign players and the country even decided to pull out of the RCEP deal after facing protests from the dairy players. While importing milk may decrease milk prices for the time being, the same will result into a monopoly of foreign players such as New Zealand and Australia, RS Sodhi, managing director, Amul, told Financial Express Online in an interview. He also talked about why the recent milk price hike is not much, India’s self-sufficiency in producing milk and how Indian farmers will suffer if the country allows imports.
Are dairy players looking to hike milk prices again?
In the last 3 years, milk prices have increased by only Rs 4 per litre and in the last 5 years, prices have increased by only Rs 8 per litre. This is less than 3% which is below food inflation and retail inflation.
Immediately, we have no plans of hiking prices again.
What about the dairy players’ meeting with the government?
We meet the government every 2 months to discuss the dairy industry and how to increase milk production in India. We don’t merely discuss price hike in the meeting. Issues such as consumption, feeding practices, milk inflow and growth and what to do in the future are discussed. This is not to decide or convey any price hike. It has been a regular exercise for 15 years.
In dairy, farmers have started to get remunerative prices after 3 years and they are encouraged to produce more. If farmers don’t get prices, they will exit the dairy sector. In fact, young farmers are not interested in dairy. Then we depend on imports.
Does it not make sense to import more if the country is producing less? There is some news about India witnessing a sluggish flush period in 2019.
The flush season starts after Diwali. Diwali was one month early last year. The flush season has started in December. Every day, we are getting 60 lakh litres more milk than the summer season. The season has just started and will continue till April. The delay happened because of extended monsoon. But, there is plenty of milk. Import should happen when there is a scarcity of milk.
What about the Skimmed Milk Powder?
Some milk processors were used to getting cheap milk powder because some people started desperate selling of Skimmed Milk Powder (SMP) last year. The cost was Rs 250-260 per kg, they sold it at Rs 150 per kg. They were selling it on loss because the stock was in plenty.
This will not continue. The Skimmed Milk used to sell for Rs 250 per kg in 2014-15. Now it sells for Rs 300 per kg. In the last 4-5 years, the powder rate has only increased by Rs 40-50 per kg. This is not much.
You should either think of the farmer or the consumer’s welfare. Farmers should get good prices for their produce so that he is encouraged to produce more or we will be dependent on imports. Consumers should also get products at the right price. 3% inflation is not much.
Certain sections of society might still not be able to afford milk. Won’t imports make milk cheaper for them?
Imports won’t be cheap. This will be a short-term thing. The day we start importing, Indian price will decrease. Farmers will stop producing, we will get dependent on imports. What will 10 crore farmers do? What will happen to the livelihood? This will become a monopoly of the foreign players. It will only help multinationals and big processors who will import and sell milk in India. India will become dependent on imports like we are dependent on edible oil. Till the 90s, we were more or less self-sufficient in edible oil. Now, 70% of our consumption is imported. The milk market is 7-8 times bigger than the edible oil industry.