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Resource centre on India's rural distress
 
 

Milk dairies oppose import of skimmed powder, butter oil by Manas Dasgupta

To help farmers reeling under drought conditions 

AHMEDABAD: Cooperative milk dairies in Gujarat have submitted a joint memorandum to Prime Minister Manmohan Singh, requesting him to take immediate steps to discourage import of skimmed milk powder and butter oil and prevent export of ingredients used for manufacturing cattle feed.

Among measures they have suggested to achieve the same, are restoration of customs duty on import of milk powder to the earlier 15 per cent and 40 per cent on butter oil and imposing a 25 per cent duty on the export of oil meals, de-oiled cake and cattle feed.

The memorandum said discouraging import of milk powder and butter oil and prevention of export of cattlefeed was necessary to provide relief to the farmers reeling under drought conditions and reduction in the prices of milk and milk products.

For better financial health of the cooperative dairies, the memorandum also suggested reduction of income tax on milk cooperatives to the maximum level of 15 per cent, instead of the present 30 per cent. It also demanded abolition of the three per cent education and higher education cess.

The memorandum urged the Prime Minister to direct the State government to reduce the current12.5 per cent value added tax on all products made from the milk from the dairies to a flat rate of four per cent.

Pointing out that additional income from milch cattle was very important for the farmers to meet their financial requirements, the memorandum said the reported move by the National Dairy Development Board (NDDB) to import some 10,000 tonnes of skimmed milk powder to meet domestic demand, would hit milk producers in India, hard. Some private traders had already imported more than 11,000 tonnes of butter oil from New Zealand at throwaway prices. Another import by the NDDB would dampen the local market.

It pointed out that prior to April 2008, import of milk powder attracted customs duty of 15 per cent and butter oil 40 per cent, which were reduced to 5 per cent and 30 per cent respectively. Cautioning that the flush season for milk and milk products was about to begin in the country, it said additional imports at this stage from the European Union and the U.S., which were keen to dump their surplus products in the Indian markets, would hit the poor producers here hard. It suggested that the government consider imports, if necessary, only by March 2010, after the flush season is over.

The memorandum drew the Prime Minister’s attention to the fact that in the last three years, export of cattle feed inputs like de-oiled rice bran, molasses, jowar and other ingredients was dearer by 67 per cent to 143 per cent, making cattle feed very costly and resulting in increase of milk prices. It reminded the Prime Minister that during 1965 to 1989, when the dairy development was at its peak, the Central government levied a duty of Rs.125 per tonne on export of cattle feed inputs to help the country achieve white revolution.

The total tax burden on molasses, one of the most important inputs to manufacture cattle feed, was over 30 per cent, the memorandum said. It urged the government to allocate special quota of molasses from sugar factories to cattle feed manufacturing units.

The memorandum said it was not possible for the milk dairies, owned by poor farmers, to compete on the same footing with the corporate houses and that the level of income tax should not be the same for both.