Feb 27, 2020
SMP prices going down gradually to ease the supply tension of milk during the summer season
With skimmed milk powder (SMP) prices starting to cool off from their recent peak, an anticipated onset of flush by mid-March is believed to ease the supply tension of milk during the summer season.
SMP prices in the domestic market have recently fallen to ₹310 a kg from the peak of ₹330-340 a kg seen in December-January. This is primarily attributed to the onset of the flush season (increased lactation of the milch animal) in the northern States. Also, experts believe the flush season in the key SMP producing regions of Maharashtra, Karnataka and Tamil Nadu is likely to set in by mid-March.
There was a delay in peak milk production due to the extended monsoon. But the dairy have now started reporting increase in milk procurement.
In its recent report, Crisil said the flush season that usually begins in November-December is estimated to have shifted by 1-2 months because of the extended monsoon. So milk production is expected to pick up from this month, which would limit any further fall (in milk production) this fiscal. Crisil has estimated this year’s milk production to be lower by 5-6 per cent over last year, at about 176 million tonnes.
Notably, in an unusual turn of events, the country’s dairy sector had witnessed 7-8 per cent dip in peak-season procurement this winter, raising concerns in the government. The decline in procurement triggered a price rise by dairy cooperatives and private players, including Amul and Mother Dairy.
The consuming sectors, led by the ice cream industry, had raised concerns over possible milk shortages during the peak summer season as the procurement had fallen, pushing up the SMP prices to record levels. SMP is consumed by ice-cream makers, besides other food industry, as a key ingredient.
Milk price inflation last hit double digits in 2011-12 and the then government at the Centre allowed strategic imports to arrest surging prices and ease the pressure. But this time, the opportunity to import SMP is already gone. There was a time when the import could have helped tame the price rise of SMP. The government didn’t act then. So, now if the government allows import, by the time imported SMP shipments land on Indian soil, flush of local SMP will already be available and will do more harm than good.