NAME : PRABHA BANDI

ROLL NO : 05
MMS (FINANCE)
 INDIA'S MILK POWDER EXPORTS TO SURGE ON
SUBSIDIES, DAMPEN GLOBAL PRICES
India's dairy industry has been a lifeline for millions of small farmers across India, providing critical revenue especially during
poor crop years. Indian farmers earn more money from the sale of milk than from wheat and rice sales combined.

The country's milk production has grown at compound annual rate of 4.9 percent over the last decade and is expected to reach a
record 180 million tonnes this fiscal year.

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 nine fold surge in exports.

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.

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.
International Impact

India rarely impacts the dried milk export market. The U.S. 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.

Substantially larger-than-expected Indian exports could therefore weigh on global skimmed milk prices that only recently
recovered from all time lows plumbed in January of around $1,550 per tonne. Benchmark prices traded on the CME
Group are currently around $1,730 per tonne.

Indian dairies were not previously exporting SMP due to the wide gap between local and overseas prices, but with the
government subsidy, that difference has narrowed, said Devendra Shah, chairman of Parag Milk Foods, a diary firm based
in western state of Maharashtra.
Farmer Lifeline
A fall in raw milk prices this year has hammered farmers' earnings, which have already been squeezed by lower crop prices,
and added to pressure on authorities to act. Raw milk prices have fallen 20-25 percent in the last 18 months in India, even as
cattle feed and fodder prices have been rising,

The price fall also poses a challenge to Prime Minister Narendra Modi's government which is trying to woo the critical rural
vote ahead of key elections next year.

As raw milk prices dropped, farmers in Maharashtra tried to cut supplies to the country's financial capital Mumbai last
week.

Some activists from Swabhimani Shetakari Sanghatana, a farmer's organisation led by member of parliament Raju Shetty,
blocked tankers carrying milk to the city, while thousands of farmers poured milk on roads to register their protest.

India's SMP stockpile has already risen to more than 300,000 tonnes and increased exports may not be enough to reduce
inventory significantly, said Arun Narke, director at co-operative dairy Gokul in Maharashtra.

"Additional local demand can be created by including milk in government's midday meals scheme for school children. It
will help in bringing down malnutrition," Parag Milk's Shah said.
REFERENCES :
http://www.businessworld.in/article/India-s-Milk-Powder-Exports-To-Surge-On-Subsidies-Dampen-
Global-Prices/27-07-2018-156056/
https://www.financialexpress.com/economy/india-must-milk-its-dairy-opportunity/1218673/
https://in.reuters.com/article/india-milk-exports/exclusive-indias-milk-powder-exports-to-surge-on-
subsidies-dampen-global-prices-idINKBN1KH0GK
https://economictimes.indiatimes.com/news/economy/foreign-trade/indias-milk-powder-exports-to-surge-
on-subsidies-dampen-global-prices/articleshow/65159859.cms

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