Wellingon, Aug 15 NZPA - India's National Dairy Development Board (NDDB) say it will stockpile thousands of tonnes of skim milkpowder (SMP) and anhydrous milk fat (AMF) -- industrial butter oil -- it has bought from Fonterra until next dairy season.
The NDDB signed contracts for the import of 30,000 tonnes of SMP and 15,000 tonnes of AMF, but is now facing political flak for buying the imports amid a developing domestic glut.
The board will now only hold the controversial dairy imports "as buffer stock" to be "carried over (to) the next lean season", The Hindu newspaper reported.
But the imports have triggered violent protests.
Fonterra has clamped down on information about a shipment due to arrive in India on Wednesday, because Indian activists have threatened a terrorist-style attack when it docks at Mumbai.
The New Zealand dairy company said India had a poor monsoon last year, meaning local dairy production was down and insufficient to match domestic consumption.
"At the request of the Indian Government, Fonterra entered into commercial negotiations with the National Dairy Development Board, an agency of the Indian Government, on supply of milk powder and anhydrous milk fat," the company said.
But protests in India organised by Hindu nationalist political party Shiv Sena against the import of New Zealand dairy products turned ugly last month, with party activists and farmers draining thousands of litres of Indian milk from six road tankers.
India's financial capital, Mumbai, is a stronghold of the Shiv Sena party, which contains some hardline militants with a reputation for violence against Muslims and foreigners.
Farmers have demanded the government scrap the imports, but the NDDB will now supply the imported powder and fat to state dairy federations "only if they are not in a position to maintain supplies to consumers by using locally available fresh milk or surplus milk powder," according to a Union Agriculture Ministry statement, The Hindu reported.
The decision to hold the imported material as a buffer, rather than offload it in the market, had been taken "in view of recent reports coming from some states that the milk availability situation has improved and surplus milk is coming into the organised market due to good monsoon", the statement added.
Of the 45,000 tonnes of dairy produce for which NDDB signed contracts, 12,000 tonnes of skim milkpowder and 6500 tonnes of AMF have already arrived.
This week's Fonterra shipment will coincidentally land during the "flush" season when buffaloes, in particular, tend to produce more milk. Domestic dairy processors fear the imported material would depress their product prices.
Fear of the New Zealand imports has already led to ex-factory prices of SMP dropping from 150 rupees ($NZ4.55)/kg to 25 rupees/kg and the price for butter oil fell from 250 rupees/kg to 185 rupees/kg over the past three months.
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