Dairy product makers of India are not so sure about how to react to the government’s decision to offer 10 percent export subsidy. According to Nitin Gadkari, India’s Union Minister, the government decided to provide 10 percent incentive to expand export of dairy products and also consider distributing milk through mid-day meals and anganwadis (rural mother and child care center) to earn more returns to producers. However, farmers and dairy product manufacturers have mixed opinion on the government’s decision.
“Too Little, Too Late”
India’s leading dairy company, Hatsun Agro Products Ltd., made a statement that these incentives are “too little too late” and Vivek Nirmal, the CEO of Prabhat Dairy believes that incentive may have a positive impact on the Indian dairy industry. The farmers across the country are facing low global prices, high production costs, and a rise in demand. In some areas, milk procurement prices have fallen to less than Rs.20 per liter owing to a build-up in stock, which forced farmers to sell their products at an awfully low price.
Bloomberg asked several leading dairies companies to comment on this situation. According to the chairman of Hatsun Agro, RG Chandramogan, “10 percent incentives will not be much help to the dairy industry in any way. If the current price of New Zealand powder is around Rs. 134 and milk production cost here is around Rs.180, what good is 10 percent subsidy?” According to him, the government needs to focus on how to gain 2 lakh ton of excess milk power out from the industry by giving it to African countries.
On the other hand, the Chairman and Director of Parag Milk Foods Ltd., Devendra Shah, said that government’s incentive is a good chance for Indian milk farmers. In addition, Vivek Nirmal also believes that this will help bridge the gap between Indian and global milk prices.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]