PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 17:27 UK, 1st May 2013, by Agrimoney.com
India seeks place among top world dairy exporters

India staked its claim as a dairy exporter with the announcement by its top dairy group that it is to sell through GlobalDairyTrade, the auction site, where prices stand at record highs.

The Gujarat Cooperative Milk Marketing Federation, the company behind India's Amul dairy label, said to be the country's top fast moving consumer goods brand, is from the June 4 GlobalDairyTrade event sell through the auction.

The decision adds the co-operative to a list including Europe's Arla, US-based Dairy America and Australia's Murray Goulburn besides New Zealand's Fonterra, which owns GlobalDairyTrade - to sell through the auction.

And it marks the entry in earnest of India, once a noted dairy importer, to the ranks of exporters, a reflection of the improvements in output thanks to improved herd genetics and the increasing scale of milk producers and processors.

Booming market

Although India has grown to be the leading milk producing nation - with 2013 output forecast by the US Department of Agriculture at 57.8m tonnes, up 30% over the last five years strong growth in domestic consumption has largely accounted for the increase.

Indeed, the growth prospects for the market have attracted the attention of the likes of Fonterra and French-based yoghurt giant Danone, which last year paid $355m for Wockhardt Nutrition, India's top-ranked baby food group.

However, the increasing surplus has prompted a long campaign by dairy giants, such as the Gujarat Cooperative Milk Marketing Federation, to lobby for access to the international market too, rendered especially lucrative by a recovery in prices.

GlobalDairyTrade values have doubled over the past year to the highest on records going back to the 1990s, spurred by strong demand from China and weak growth in world production, held back by high feed prices and poor weather in major exporters such as Europe, New Zealand and the US.

India's government in November ditched a ban on exports of dairy products including whole milk powder, which the Gujarat federation will sell through GlobalDairyTrade, with skim milk powder.

'On again, off again'

Nonetheless, some doubts remain over India's commitment to exports, with the US Department of Agriculture bureau in New Delhi in November cautioning over the country's "on again, off again" strategy towards trade curbs.

"Given that India exports little whole milk powder and that importers are hesitant to buy from India, the [November] export policy change appears to be of little consequence," the USDA bureau said.

India's export policy "changes frequently to adapt to market conditions and local political scenarios".

However, supporters of India's dairy trade prospects point to the country's growing surplus, which stands to widen further through a national dairy plan expected to double output in 15 years, and increase to 65%, from 30%, the proportion of the milk surplus handled by large dairy groups.

Mixed outlook

The announcement came ahead of Wednesday's GlobalDairyTrade auction, at which prices fell for the first time in 2013.

Values have been depressed by rains which have relieved drought in New Zealand, the top exporting country, where milk production fell year on year in February for the first time since 2010.

External companies selling through GlobalDairyTrade have found their product trading a discount to Fonterra's, with Arla and Dairy America skim milk powder going $1,000 a tonne more cheaply last month.

However, Fonterra product felt the brunt of Wednesday's sell-off, with the prices paid for its skim milk powder falling by up to 14.6%.

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