IICMA predicts hike in ice-creams and frozen desserts prices

The rising price and Scarcity of SMP (Skimmed Milk Powder) are being cited as the cause

Ice-cream and Frozen dessert manufacturers are facing difficulties in procurement of skimmed milk powder (SMP) as stock is not available in the market and there is sudden hike in its unit price. And this skimmed milk powder (SMP) is one of the vital ingredients in the making of ice-creams and frozen desserts. IICMA (Indian Ice Cream Manufacturers Association) has summarized few points to depict the current Ice-cream and Frozen dessert manufacturer’s situation:

• In 2018 average rate of SMP was Rs. 150/kg.
• The average rate of last 4-5 years ranges between Rs. 180 to Rs. 200/kg.
• From Jan-2019 onwards rates are increasing day by day from Rs. 180 to current rate of Rs. 330/kg.
• Current international rate of SMP is Rs. 200/kg.
• When India decided to opt out of RCEP, rate of SMP got increased by Rs. 20/kg in India.
• Members of IICMA stated that even after paying the current rate of Rs. 330/kg in India the Ice cream manufactures are still facing the shortage of SMP in the market.
• IICMA is concerned as, if this is the scenario in this flush season then what might be the situation of availability of SMP in Summer season
• They also stated that due to extended rainy season by two months in the country, there was great damage to the crop and fodder, which resulted in the reduction of procurement of milk and milk related products by 10 to 15%.

IICMA feels, if the current situation persists it would be very difficult for Ice Cream industry to sustain and might result in the below scenarios:

• The persisting current situation & steep price hike may result in rampant adulteration in SMP
• Loss of GST to Government might occur due to shutdown of various Ice Cream and Frozen dessert manufacturing
• They also say that Ice-cream manufacturing companies may have to suffer the following situations:
• Increment in the pricing of ice-creams and frozen deserts
• Daily fund flow would get affected 
• There would be slow down and less production of ice-cream and frozen desserts
• Hence, there may be many frozen desserts manufacturing companies, who might become defaulter with bank

Manufacturers of ice-cream would face huge losses. As a result, they might have to dismiss labors in huge numbers.

IICMA has proposed the creation of a buffer shock of 65000 MT which would be used to stabilise the market to maintain/reduce prices within acceptable levels. In period of glut when prices fall below remunerative levels, the Govt can step in to buy SMP and use buffer stock to provide stability to market to protect interest of farmers. This way the price of Milk and SMP can be maintained within an acceptable price band thereby taking care of interest of both – farmers and consumer and therefore creating a win-win situation for all stakeholders. IICMA felt that such buffer stock should be created within mid-Feb and widely published in media so that hoarding of SMP by manufacturers and traders is strongly discouraged.

IICMA therefore also requested Hon. Minister to immediately arrange import of 65000 MT of SMP which can start coming into country within 45 days approximately so that stocks would be probably available within country by mid of Feb 2020. And the ice-cream manufactures do not have to face situation like in case of onions where intervention came too late and prices already had reached very high levels before imports were organised.

On behalf of IICMA, the President of IICMA Mr. Rajesh Gandhi states that the following points can improve the current situation:

• “The demand and necessity of current time is economic liberalization such as Diary Sector to be made open for Global market by allowing it for import and export. As this would not only give chance to export but will encourage many people toward animal husbandry occupation and ultimately would be helping in increasing yearly income of farmers.”

• “It would be great help if the import of Skimmed Milk Powder (SMP), Whole Milk Powder (WMP), Butter and butter oil (fat) would be under duty free scheme. as non-availability of the stock is going to affect the whole Ice Cream and Frozen Dessert Industry of India“