To address the issue of rising milk prices and low supply, dairy cooperatives and companies have asked the government to reduce GST on dairy products from 12 per cent to five per cent. Along with this, many dairy cooperative unions have advocated import of Skimmed Milk Powder (SMP) and butter oil.
These suggestions were put forward at a meeting convened by the Union Ministry of Animal Husbandry and Dairying on Monday to review the situation arising out of less supply of milk compared to its demand. According to sources, the dairy industry has also sought abolition of mandi tax imposed by some states on dairy products.
Highly placed sources told the Rural Voice that the Ministry of Animal Husbandry and Dairying has forwarded the suggestion for reduction in GST to the Finance Ministry. But, the Finance Ministry cannot take a decision on this as the issue comes under the GST Council. At the same time, talks with the states on the issue of mandi tax were also discussed in this meeting. A higher 12 per cent GST is applicable on Ghee, whose prices have registered a higher increase than that of milk.
As per data placed before the meeting, in the October to December 2022 quarter, there has been a decline of three per cent in the purchase of milk while the demand has increased by 10 per cent. Due to this, there has been a gap between demand and supply. However, the decline in the October-December quarter was less as compared to the July-September quarter. At the same time, the lean season is about to come, so the shortage in milk supply is certain.
Meanwhile, The Gujarat Cooperative Milk Marketing Federation (GCMMF) and The Rajasthan Cooperative Dairy Federation (RCDF) are not in favor of import. The two cooperatives conveyed this view at the meeting. On the other hand, the cooperative federation of Punjab, Haryana and some southern states has advocated import. Haryana has suggested import of SMP.
Industry sources say that the situation on the supply front is not very good, creating a situation of imports. In such a scenario, it is up to the government to decide on import of fat or SMP. But, the fact remains that such imports do not augur well for the domestic dairy industry and dairy farmers. At the same time, it could be very difficult to avoid imports so as to keep prices under check and also to maintain supply.
Interestingly, in the current year, India has exported dairy products worth about Rs 4,000 crore. The price of SMP in the domestic market is around Rs 330-340 per kg, though in the global market it costs less.