Government may blink on industry’s demand to create SMP buffer

January 4, 2020
Our Bureau | HBL

AHMEDABAD — After learning a lesson or two from the onion price-rise episodes, the government now appears to be receptive to the milk-consuming industry’s suggestions to create a buffer stock of Skimmed Milk Powder (SMP).

At the dairy stakeholders’ meeting in New Delhi on Friday (January 3), players including consuming sectors and a section of State Dairy Federations expressed apprehensions about the availability of milk during the lean period (summer), amid a decline in the milk procurement during the ongoing peak flush season.

Buffer creation, imports
But another section of dairy federations ruled out a possibility of milk shortage anytime in future and hinted that the situation may normalise soon. They opposed the consuming industry’s views of creating a buffer of SMP and allowing imports.

“Both the key points of buffer and imports of SMP were debated during the meeting. The point about creation of buffer stock was accepted by the government. The consuming industry had given a brief to the Ministry about their suggestions. Now the government has again asked them to give another brief with supporting facts and figures. A final decision will be taken based on that,” said a source who attended the meeting. “There is no word from the government on imports,” the source added.

Notably, the industry is debating about a possible milk shortage amid reduced procurement during the flush season, which is down by about 7-8 per cent from last year. This prompted major dairy players to hike procurement as well as retail prices for liquid milk and SMP.

The meeting — chaired by Secretary, Department of Animal Husbandry — was convened as a routine dialogue with the industry but with an agenda to discuss the availability of milk, procurement and consumer prices, and stocks of commodities such as SMP. The consuming industry has been pressing for a buffer stock of about 65,000 tonnes of SMP. Per the insiders, the SMP stock has drastically gone down in the country.

“The officials were positive in their dialogue with the stakeholders. The industry’s view point is practical. If the buffer is allowed to be created, it will be a practical solution for both the sides. During shortage, they may release it and ease the demand pressure, while during glut situations, they can sustain the prices from falling. The industry’s demands are not against the farmers’ interests. But at the same time consumers’ interests also need to be balanced simultaneously,” another source told BusinessLine.

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