Indian Dairy ; Trapped

under Flawed Policies
 Rahul Kumar  Uncategorized  June 24, 2020 2 Minutes

Ministry of Finance has issued notification on 23rd June on import of

some items under reduced Tariff Rate Quota (TRQ) . Surprisingly, in
the said notification, Govt of India has allowed 10,000 MT of
Skimmed Milk Powder ( SMP) with reduced import duty of 15% ! I
read twice , to believe this notification . Since November 2019 , there
has been representations to import some milk powder due to steep
increase in dairy commodities prices while SMP rates had surpassed
INR 300/kg ( USD 4000/MT) in Dec 2019 . It was tough situation
that time as India had no stocks of SMP even after flush season . The
ministry of agriculture kept the matter in abeyance & did not allow
SMP when India needed some import to stabilise the dairy market as
well as having some buffer stocks of SMP / Butter . During this period
India had no clue about Covid crisis grasping in next 2 months !

Now comes the Covid crisis & India implemented the world’s largest &
most severe lock down from 25th March . Things changed
dramatically & we witnessed the most severe social & economic crisis
of our life time .

Demand of milk & dairy products crashed , however milk production

has been continued with huge amount of excess milk at all dairies . All
excess milk has been converted into SMP & butter without any market
which has still no visibility after 90 days of lock down . India started
producing 1200-1500 MT of SMP per day & about 500 MT of butter
per day since beginning of April . Today SMP stocks in India must be
around 120,000 MT & shall continue to add 40,000 MT per month .
Entire dairy sector in India has shown great resilience while accepting
all milk produced & helped the millions of dairy farmers , inspite of
having huge pressure to finance the massive inventories .

Yes , it was blessing in disguise that no import was allowed . Corona

crisis camouflaged the lack of decision making in import of SMP .
Due to steep drop in milk demand , now we have excess SMP/ butter
stocks and milk prices across India has been dropped by 15-25% , so
the commodity prices ! Issuing notification of import of SMP at
reduced duty clearly shows that policy makers sitting in ivory towers
have no clue of ground realities . This notification would dampen the
market sentiments & dairies won’t be able to accept extra milk in
system & milk prices to farmers would collapse again resulting
irreparable damage to Indian dairying . It is difficult to understand the
logic of allowing SMP import now ?

Ministry of Finance must cancel this notification regarding SMP

import under reduced TRQ to avoid immediate damage which could
happen due to steep drop in accepting excess milk from the farmers .
We must question the role of NDDB which must keep government
informed ground realities so that we don’t make illogical policy
decisions every time .

It is also hard to understand the logic of allowing 10,000 MT now

when India has huge stocks of SMP , international prices are high &
flush season will arrive in next 3 months after good Monsoon ! The
decision is insane & defies all logics .

Kudos to Indian dairy players , be it cooperatives or private , we have

handled corona crisis very efficiently & helped milk producers by keep
accepting the milk . Let’s not allow the hard work of milk producers &
dairy companies go to drains .

Let’s push hard & represent Govt to immediate withdrawal of

notification & give clear and positive message to all stakeholders .

Stay safe & take care .

Indian Dairying in
Red Zone
 Rahul Kumar  Uncategorized  February 4, 2020 1 Minute

INDIA has witnessed unique milk flush season when milk production
never improved & milk prices kept rising . I have mentioned in
previous blogs to notice the symptoms in advance to assess the gravity
of the situation . Since last 2-3 months consumer prices of milk &
products have seen upwards trend & expected to continue the same
trajectory on the onset of lean season starting after couple of months.
There is very thin inventory of smp & fat which would put pressure on
prices of milk in coming months coinciding with lean season of
production of milk . We all in dairy fraternity must know the answers
of following ;

In year 19-20 , what is the estimated milk production in India ?

Whether it is less than 18-19 or more ?

Whether country has enough stocks of smp & fat to tide over demand
for coming lean season during April to August ?

Why selling prices of milk has increased twice in last 2-3 months in
flush season ? Is it due to increased cost of milk production or
shortage of milk ?

Do we see more price increase of milk & products in coming months ?

If this happens , It would lead to 15-20% hike in consumer milk prices
during previous 12 months !

There is no doubt about scarcity of milk but NDDB , Ministry of

Agriculture have turned blind eyes on the real situation at ground &
necessary actions have not been taken . This would be very costly for
Indian Consumers and in turn would subside the demand due to
extraordinary inflation of milk & products in coming time .

Telangana , Uttar Pradesh , Tamil Nadu , Rajasthan & many more

states have declared less milk production compared to last year , but
surprisingly Government of India & NDDB have no intention to accept
the facts ! It is inevitable to import milk solids to fill the genuine
deficit without hurting interest of dairy farmers but it is late now & we
must be prepared to witness tougher time ahead .

I raised Red Alerts earlier & now we are in Red Zone & let’s all hope
not to cry on spilled milk !

Indian Dairying ; Journey

under Lockdown
India has shown quite remarkable performance while implementing
the largest lock down in globe with very high population density .
After 30 days of lockdown , we could see massive disruption in various
walks of life . The most severely affected have been migrant workers ,
small business units , various service providers which has thrown
millions of people out of employment . This would take long time to
recover & we have to wait & see how things are unfolded in coming
months .

Coming to Indian dairy , we must feel proud of entire Indian dairy

sector which has handled the entire supply chain of Indian Dairying
quite well & efficiently . We have not come across any news regarding
milk producers facing procurement of milk all across India and any
incident of farmers throwing milk baring few initial sporadic incidents
. This has demonstrated the rugged & efficient procurement network
of Indian dairying . Most of the dairies are handling more milk than
pre lock down period & even more than last year ! Though , there is
massive erosion of demand due to complete shutdown of HoReCa &
milk used by informal system , Indian dairies have been preserving
milk solids by converting into SMP & Butter . As per estimate Indian
dairy companies are producing approx 1500 T of SMP & 500 T of
butter daily ! This shows , manufacturing plants are also showing
incredible performance like procurement teams . We can’t undermine
the money being blocked while ensuring uninterrupted procurement
& producing and holding huge volumes of commodities. This is close
to stocks worth 3000 Cr ie 450 million USD considering 2 months of
production of these 2 commodities !
Supply chain is intact though we have seen worsening situation after
lock down 1.0 started on March 24th . There has been some
inconveniences regarding distribution of milk in lock down areas
especially red zones & containment areas which must be improved by
better coordination between local authorities & dairy companies .
Hope things would be smooth in coming weeks . The flip side of the
journey we have travelled so far is , huge piling up of commodities
which need good working capital as well as ability to pay farmers in
time . As INDIA was facing shortage of commodities during pre
Corona period , now we have stocks which must be maintained for
future requirement of these commodities . To ease out this situation
Govt of India / NDDB should buy these commodities at fixed rates so
that there is no panic selling to trade which would result falling of milk
price to farmers and it must be avoided . Steep drop in farmers milk
prices due to liquidity problem would create major long term
productivity issues as farmers would cut required feed to cattle, which
must be avoided . Dairies have to take care cattle feed availability &
Artificial Insemination ( AI) services which is crucial for continuous
production of milk in coming season .

We have bumpy road ahead but Indian dairying has shown good track
record & we must appreciate our dairy warriors working in
procurement , chilling centres , logistics , plants & distribution in
tough market conditions . Kudos to all !

Indian dairying would not be same & massive disruptions can be seen
on plate & I would share my thoughts on this very soon .

Stay safe & take care of our dairy worriers . Proud of warriors shown
in snaps .

C(OW)ORONA effect on
Indian Dairying
Entire world is reeling under unprecedented & Unimaginable event of
corona virus effect creating havoc . India has also started feeling its
effect and complete lock down has severely blown the pace of
dynamism of India . Indian dairying connecting 90 million milk
producers to millions of consumers has been so far fighting bravely.
Milk producers are pouring milk with utmost discipline ensuring
social distancing , following hygienic practices & ensuring milk is
available for dairy plants and eventually to consumers . However it’s
not easy when government machineries are hell bent to ensure that
people don’t come out from homes . Farmers have to come out ,
chilling centres team , milk tanker drivers , dairy plant employees ,
logistics , distribution , , cash collection etc , all have to come out from
home to ensure milk deliveries . Kudos to these teams of all dairy
companies who have been working tirelessly to deliver the milk in
these hostile conditions . I wish to mention various scenario which
would be visible in coming days & as dairy fraternity we all have to
give our best to ensure farmers interest is protected .

1) Safety of People ; our first & foremost responsibility is to protect our

people whether on roll , off roll or contractual employees including
tanker drivers , logistics team & channel partners selling milk . All
should have proper awareness , dos & Don’t, masks and sanitiser etc .
All entering in plants must be checked for temperature & must be
given mask of appropriate type , minimum 2 per day . Random
checking of temperature of people working inside the plant esp who
work in cold storage should be done . Motivation of all employees
working is key & senior management must visit them , have selfies &
create positive vibes across all layers .

2) Milk Collection ; the complete lock down has put break on entire
supply chain & due to complete closure of HORECA and millions of
sweet shops , tea vendors , street food joints , there is extra milk in the
system & most of the dairies have started milk holiday which is the
worst nightmare for the milk producers ! We as responsible dairy
players must run our powder , butter plants more efficiently to ensure
we keep collecting milk without any disruption . May be we all shall
achieve our best potential in terms of handling milk during this crisis .

3) Market supplies ; There has been tremendous disruption in milk

supplies to the market due to complete lock down . All dairies have to
coordinate with local authorities & ensure milk is distributed by across
all milk selling outlets . E commerce companies doing good job & we
all have to use their platform to ensure supplies . The people
distributing milk including hawkers , home delivery boys should be
protected & given incentives .
4) Corporate Social Responsibility ( CSR ) ; all dairies must distribute
butter milk , milk & flavoured milk to those who are on street to
Protect & render immense service to us . Traffic police , police force ,
cooking has hawkers , sanitary workers etc needs our products under
tremendous heat ! Let’s ensure we don’t fail to serve them .

We must ensure close communication with all who work in our system
& ensure all help which is needed .

Post corona we can anticipate a new world which would be different in

terms of economy , trade , social and humanity . In India , we can
anticipate more milk consumption & huge switch from non vegetarian
to milk & dairy products can be seen .

Let’s all pray that our global family gets early solution to present
catastrophic situation & we enter into better world post corona very
soon .

Let’s all of us take care of our cows & consumers & demonstrate our
best efforts to run Indian dairies & support milk producers in this
crisis .

Indian Milk Consumers ;

Ready for hot summer
Red Alert in Dec , Red Zone in Feb , but nothing moved in right
direction. Government has ensured that milk will go onion way . There
is no doubt that Milk Production in India is lessor vs previous year
with very thin stocks of commodities eg; SMP & Butter . At the cost of
repetition , Indian Government would have accepted the facts
on ground about shortage of milk & allowed controlled
import of commodities to calm the market . Consumer prices of
milk is on rising spree & would not stop for coming 3-4 months .
Kerala , West Bangal , Orrisa & many other states which don’t produce
sufficient milk are mostly dependent on SMP & butter to reconstitute
as milk . These states shall be forced to increase milk selling prices
exponentially due to very high cost of SMP & Butter . NDDB has
miserably failed to assess the situation & could not convince
concerned ministry for some solution in short term without
hampering long term Indian Dairy Vision . As mentioned in my
previous blogs , farmers are getting 25-30% more prices vs last year
which is good but giving good prices won’t increase milk production in
next months so it was essential to import some limited quantity of
smp for the states which can’t afford expensive smp which is also not
available in required quantities . The consumers in these states shall
suffer with huge inflation in milk & milk products which shall put the
respective governments in tight spot ! Government of India , NDDB
has missed the bus & now importing would be more problematic as we
are late now , very late . All across milk prices are going to boil ,
however there will be no milk to boil . We must understand that in
India we have milk producing states & milk deficient states . Around
50% of the total milk produces in India comes from 5 states , rest are
dependent on milk or commodities from milk producing states . This
fact has been grossly neglected & right steps were not taken in time .
Damage has been done & middle class shall bear the burnt of
skyrocketing milk prices in coming 4-5 months till next flush season
knocks the door .

Keep following media on news regarding milk prices going up & up .

Hope good sense prevails , may be next time of such crisis .

Smp import
www.facebook.com/1782096119/posts/10212868157857033/
 Rahul Kumar  Uncategorized 1 Comment  February 13, 2020 1 Minute
Indian Dairying ; Red Alert 

While India struggles to contain onion prices recently , the last Sunday
saw another shocker by increase in milk prices across the many states
in India where major dairy brands corrected milk prices . Although it
seems a normal event , but it is extremely abnormal . In past several
decades , milk prices have not increased during flush season of milk
production during October to February when India produces
maximum milk as Buffalo which constitute 55% of Indian milch
animal population produce maximum milk during flush season and
normally milk purchase prices from farmers are reduced during the
flush season . This year surprisingly purchase prices have shoot up by
10-15% during ongoing flush season . This is not normal and we must
get red alert regarding milk availability post flush season . Milk
production in India has seen severe drop during 2019 . Reasons are
many like drought in Maharastra, Tamil Nadu , extended rains , high
cattle feed prices , low prices of milk prevailing last year etc ,
nevertheless we must understand the situation with back drop of last
year when milk prices to farmers were 20% lower than current prices
& major commodity ie Skim Milk Powder ( SMP ) rates were at Rs 150
per kg which is now prevailing at Rs 300 per kg at 100 % jump in one
year ! Last year India was carrying mountains of SMP & Government
of India even subsidised export of SMP during last quarter of 2018 .
India exported around 50,000 Metric Tonnes of SMP in panic .
Looking to the current situation there is possibility of acute milk
shortage in coming summer as Indian dairies do not have enough milk
in flush season to produce enough stocks of SMP and butter which
would be needed in coming summer . India need to have about
150,000 MT of SMP and roughly same amount of butter to cope up
the milk demand during lean season from May to August next year .
This precarious situation is due to our strategy to manage stocks of
dairy commodities as there is no inventory management system for
SMP and butter . Government intervenes when there is panic due to
either excess inventory or vice versa . In both cases Indian dairy
companies & eventually dairy farmers suffer . While India came out
just few weeks back from RCEP citing reasons for enough milk
availability to protect influx of SMP and butter from New Zealand ,
now it would be inevitable to import SMP and butter to ensure enough
availability of milk solids to avoid chaos in coming summer . India has
produced 186 million metric tonnes of milk during 2018-19 however
during 2019-20 the production would be less than previous year
which has never happened in last several decades . It is high time
Ministry of dairy & animal husbandry to assess the situation on
ground to take quick decision to allow import of SMP and butter
without impacting interest of Indian dairy farmers . In scarcity
situation , we can expect another round of milk price increase by
March 2020 while more cases of adulteration are not ruled out so
Food safety regulator FSSAI has to be extra vigilant in coming
months . We need to have proper strategy on Indian dairying
regarding handling excess inventories so that dairy market is
stabilised during rough patch and consumers as well as farmers
interests are protected . Last year it was dairy farmers who suffered
and now 2020 would be tougher for consumers due to frequent milk
rate hikes . The recent milk price hike in flush season is Red signal &
ignoring it would cost heavy for Indian dairying .