The copious rain earlier this week, unfortunately, does not herald good for the Aavin and private dairies in the backdrop of crash in the price of skimmed milk powder in the global market.
A sudden abundance in the availability of green fodder fostered by the wetness in the coming weeks would lead to 20 to 30 per cent higher milk yield by cattle, causing additional complications for the dairies that are already unable to absorb even the normal production.
Production of skim milk powder by private dairies has come to a grinding halt, as the global price has crashed to almost half of what existed some months ago.
According to suppliers of milk to cooperative societies, they will have to brace themselves up for a drawn-out struggle as there is no quick solution in sight.
On the one hand, Aavin is unable to procure milk beyond its handling capacity and on the other private dairies, most of which are focussed on production of skim milk powder, find no reason to continue with their usual procurement. Aavin appears to bear the brunt since the regular suppliers to the private dairies who have been turned back look up to Aavin for procurement of their produce. The price of skimmed milk powder has crashed from Rs. 300 to less than Rs. 150 in the international market and the problem is only going to precipitate in the coming months and years, according to an owner of a private dairy in Erode.
Abolition of European Union milk quota system in 2015 is set to create a new context for international trade in milk products, analysts say, citing a research study indicating increase in EU milk production by 3.5 million tons (18.4 per cent) to 22.6 million tons in 2022 over time. Correspondingly, the EU exports of milk products are also expected to increase to 15.74 per cent from 13.7 per cent.
So far, dairies in India were able to export skimmed milk powder only because of the quota system that has been in existence for the last 30 years.
According to EU Commission forecast, exports of SMP will go up from 4, 50,000 tonnes to 6, 25,000 tonnes in 2017. After the lifting of the quota restrictions, the EU nations are set to dominate global market in milk production and exports owing to the favourable climatic conditions wherein green fodder is available all through the year in plenty and the high milk-yield, analysts say
