Create strategic reserve for milk powder says CII

NEW DELHI: Industry association Confederation of Indian Industry (CII) want government to create a strategic reserve for milk powder that can be distributed through public distribution system to help poorer section of India in terms of nutrition intake. CII suggested government to consider measures such as rationalization of GST on value added products such as butter and ghee to build market resilience. CII also suggested the government to distribute liquid milk through mid-day meal schemes to ensure nutrition availability for children.

The demand came on the back of 30-35% drop in liquid milk demand due to closure of HoReCa sector, quick service restaurant, sweetmeat shops besides the unorganized sector. CII estimated that apart from the sweetmeat and unorganized segment, the others are expected to require a minimum of 6-9 months to bounce back to pre-Covid level demand, post lockdown.

While other food sectors have also been impacted, dairy has seen a much harder hit because the products are highly perishable. CII director general Chandrajit Banerjee said, “India being the leading milk producing country in the world, timely interventions, would help the sector gain back its potential and reasonably insulate impact of the Covid-19 crisis on farmers as well as Industry”

Industries procuring milk to covert to skimmed milk powder (SMP) are running at 80-100% capacities as on date against 30-50% in normal lean milk production months - April to September. This excess production will lead to SMP prices crashing domestically. Further, SMP consumption by the ice cream industry will be minimal, as the industry is expected to be impacted significantly. Meanwhile, the global prices of SMP have also crashed from $ 3000 per tonne to $ 2514 per tonne between in January and April in current year. CII projected SMP prices to fall further— thus impacting export opportunity of excess SMP.

CII cited examples of other Covid-19 affected that have taken active measures to protect farmers and the industry. It said the US Government announced a USD3 billion relief package for the dairy industry. According to CII, the USDA has announced that USD100 million per month will be spent on purchasing dairy products for food banks.

In the Indian context, CII expected both the milk and processed milk product segments to be severely impacted by the COVID-19 Crisis, in terms of a demand crunch. While the demand-supply gap may impact farmers' prices significantly; the industry will also suffer from a diminished export market and conservative domestic demand.