Dairy News 7×7, 5 July 2020, Export subsidy in SMP

In a recently held auction at global dairy trade, the price index jumped up by 8.3%. The quantities of dairy products traded also increased by nearly 20% as compared to the last auction.

North Asia remained as the key buyer with almost 50% of the total traded quantities. A total of 25688 MT of dairy products were traded during the auction. The average price of dairy products traded became USD 3197 per MT.

Atma Nirbhar Dairying with government support

From Indian perspective prices of SMP, Butter and anhydrous fat plays an important role. India currently has huge stocks of Butter availability due to lockdown. Butter is traded at as low as Rs 220-230/kg in Indian market. The international price is around Rs 265-270 per Kgs. Indian government may intervene now while arranging refrigerated containers at Indian ports for butter exports. All Indian embassies and high commissions in potential importer countries could also play a role here.

SMP price is also moving up and has reached around Rs 190-195 per Kgs. In domestic market the manufacturers are forced to sell their SMP at as low as Rs 160-170 per kgs. The market sentiment suggest that these prices may go further low to Rs 130-140 per kgs. This SmP is produced on an average at around Rs 180-220 per kgs during the lockdown period.

Currently India might be having a stock of 125000-150000 MT of SMP. The government may offer an export subsidy of Rs 20 per kgs or 10%, which would help processors to clear their excess stocks. This would amount to Rs 200 Crore for stimulating 100000 MT of SMP exports.

Dairy industry in India will feel relieved if the excess stocks cleared with the support of the government. This would also open up opportunity for farmers to get better prices soon.