New Delhi, Sept. 29 Hardening international prices may play spoiler in the National Dairy Development Board’s (NDDB) plans to import up to 10,000 tonnes of skimmed milk powder (SMP) at five per cent duty under the tariff rate quota (TRQ) regime.
The last one month or so has seen SMP prices firm up by $250-500 a tonne. SMP of Western Europe origin is currently quoting at $2,550-2,675 a tonne free-on-board, as against $2,300-2,400 levels a month ago and the February-March lows of $1,900-2,000 a tonne.
The hardening trend is even more visible in the case of powder from Oceania.
The average price of whole milk powder at globalDairyTrade – the Internet-based sales platform of the world’s largest dairy company, New Zealand’s Fonterra – for September stood at $2,858 a tonne. This is way above the average auction prices of $2,301 a tonne for August and $1,829 a tonne for July.
Even low-grade SMP from East Europe, which was available at $1,600-1,800 a tonne a couple of months ago, is now selling at $2,300-2,400. “After adding freight, port handling charges and the five per cent Customs duty, the imported powder will cost at least Rs 125 a kg, which is roughly the price of domestic powder now,” industry sources noted.
Flush season
Moreover, with the flush season round the corner (when animals begin producing more milk), domestic prices are likely to soften further. “Imports are not a viable option now, unlike the time when international SMP prices ruled at $1,600-1,800 a tonne,” the sources added.
There is also a procedural issue with regard to imports under TRQ. Under the TRQ regime, milk powder in general attracts an import duty of 60 per cent, with only the ‘in-quota’ quantity of 10,000 tonnes being chargeable to the lower (5 per cent) duty.
NDDB is one of the seven entities – the others being STC, PEC, MMTC, Nafed, National Cooperative Dairy Federation and Spices Trading Corporation Ltd – that are eligible to import the 10,000 tonnes ‘in-quota’ quantity.
But for availing themselves of the quota for a particular fiscal year (April-March), the organisations concerned are required to apply to the Directorate-General of Foreign Trade (DGFT) on or before March 1 of the preceding fiscal.
“In this case, nobody made an application for import under the TRQ during 2009-10 before March 1. Technically, therefore, imports cannot take place during the current fiscal,” the sources claimed.
Source : Business Line