The Telegraph
Since 1st March, 1999
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Dairy titans lock horns, milk dries up
- Bengal faces shortage and price increase as Pujas draw near
Patel and Kurien

Calcutta/New Delhi, Sept. 16: Production is down, supply is on the slide and prices are on the up — urban Bengal is on the brink of a major milk crisis.

Triggered by an acute shortage of skimmed milk powder —an essential ingredient for packaged milk to conform to the Prevention of Food Adulteration standard — across the country, the crisis might peak during the Pujas, just 15 days away.

The shortage has pushed milk powder prices from Rs 67 a kg to around Rs 110 in less than a month. With Britannia jacking up prices by Re 1 per litre and other producers also pushing for an upward revision, milk prices in the state are all set to go up.

“We have milk powder stock to support production till September 27, we don’t know what will happen after that,” said Sumit Deb, managing director, Metro Dairy. The World Bank-funded organisation produces 2.7 lakh litres of milk daily and caters to the Calcutta and adjoining suburban markets.

Milk industry insiders link the shortage in Bengal to the crisis in Delhi. Mother Dairy Delhi, managed by the National Dairy Development Board (NDDB), recently stopped buying from Amul and started aggressive procurement of milk powder from the open market following a war of words between NDDB chairperson Amrita Patel and Amul chairman Verghese Kurien.

The sudden surge in procurement has caused the bottleneck and jacked up prices, said industry observers. “The daily sale of milk from the organised sector in the city is around 9 lakh litres. Just 3.5 lakh litres of that is fresh liquid milk, and the rest 5.5 lakh litres is made of milk powder. The dairies procure milk powder from suppliers in north India, but none of the suppliers responded to the recent tender orders placed by the dairies like Mother Dairy and Metro Dairy,” said a source in the industry.

With the situation spinning out of control, state animal resource development minister Anisur Rahaman has rushed to Anand for an emergency meeting with Kurien’s Gujarat Co-operative Milk Marketing Federation.

“We have learnt that NDDB is importing over 6,000 million tonnes of milk powder from Australia and Ireland to stem the crisis. This is the only silver lining at this moment,” said Deb.

But the dairies are not taking any chances. Metro Dairy is trying to save milk powder for the festive season --- when demand goes up by around 25 per cent — by reducing daily production by 10 per cent from September 10. Mother Dairy is using lesser quantity of milk powder in production.

Metro’s strategy has resulted in shortage in the market and complaints of non-availability of milk have started pouring in from various parts of the city.

“We have felt an increased demand for milk in the past week following reduction in supply from some other players. We have tried our best to produce more and meet the demand. But Mother Dairy is also facing the shortage of milk powder and has stock to support production for another two weeks.

“We are trying to tackle the problem by using lesser amount of milk powder in the production process,” said Jayanta Dutta Gupta, managing director, Milk Federation, which manages Mother Dairy’s operations in the state. Mother Dairy sells around 4.5 lakh litres a day.

In Delhi, NDDB officials said milk powder was being imported to build a strategic reserve. “It is not only to meet the immediate shortage but to build a strategic stockpile till August 2004 to meet contingencies,” an official said.

But others insisted it was a knee-jerk reaction from the NDDB after it cancelled a contract with the Gujarat milk federation to supply milk to the capital, setting off the crisis.

Kurien has shot off letters to the dairy development secretary and agriculture minister Rajnath Singh, asking them to bar milk powder import, Gujarat federation officials said.

Dairy industry watchers said trouble first started when NDDB stopped Mother Dairy from buying milk and milk powder from the Gujarat federation. This was aggravated by adulteration checks carried out on milk arriving in Delhi from other states. Vendors then refused to bring milk to the city, creating a deficit of 6-7 lakh litres a day.

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