Even if the decision could be detrimental to all companies involved in the supply of milk, the government is not going to change its mind. Milk will cost less – the government means it. But as importers have not really “played the game” despite the government’ requests to reduce their mark-up (so that prices drop as well), the state will import milk from India on a trial basis.

The State Trading Corporation (STC) will import 75 tons of Amul powdered milk to test the market. The aim is to see if the quality of Indian milk is as good as that from Australia and New Zealand and if the public is receptive to such a change. If the response is positive, the state could well start importing this brand that would cost 20% less than those presently sold in supermarkets.

However, India should not be the only supplier on the local market. The STC is also thinking of importing milk from Australia, Argentina and the Netherlands at lower prices than those practiced by present suppliers.

Many of the local suppliers complain that this decision is unfair and will not allow them to compete – thus forcing them to lay off workers or close their factories. But the minister of Commerce is adamant: “We have estimated that milk is an essential foodstuff for the country. As importers and resellers have not been reasonable, we had to do something and get involved in the business.”

After the 14% drop in the importers’ margin, last August, the government has decided to go further. The winner will definitely be the consumer, as the price of milk will be reduced in a major way.

Inevitable redundancies </B>

New Zealand Milk has already announced that it won’t be able to stay in business with changes so detrimental to them. Since the implementation of new prices in August, the company manager claims that the company has already suffered losses of millions of rupees. It has warned that it will close down its packaging unit – which will lead to redundancies – to start importing packaged milk. The packaging costs too much and the company has to choose between its profitability and a certain number of jobs.

As for Happy World Foods, the manager looks more flexible. He admits he doesn’t mind importing milk from India if it costs less to the consumer but only if the quality is certified. If he has the guarantee that Indian milk is as good as the Australian product, he will not hesitate. The minister of Commerce, at least, is convinced that quality will not be a problem.

<B>Ups and downs</B>

As the ministry of Commerce was implementing a new measure to reduce the price of skimmed milk, the prices of other types of milk had increased. In fact, the low value of the rupee explains why milk prices, which had dropped in August have just gone up again. And this may well be just the beginning.

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