The milk producing farmers under Gujarat Cooperative Milk Marketing Federation Limited (GCMMFL), in a recent petition to the Prime Minister Mamohan Singh, has requested him to take actions including restoring custom duty on milk powder, imposing export duty on oilmeals, reducing income tax on cooperatives and fix VAT at 4% on all dairy products.
The federation in its petition said that in today’s critical situation, the Union government should act and protect dairy farmers across the country, which will help in keeping control over input prices and ultimately help check in milk prices over a period of time.
Milk is the largest agri-produce in India in value terms of above Rs 225,000 crore and the milk group contributes highest to the total output of the agricultural sector surpassing the output value of wheat, rice and oilseeds. Given the unprecedented drought-like situation in India, it is imperative for the central government to take immediate steps to safeguard the industry from difficulties.
The federation said that the country is soon entering into flush milk season and any move to import skimmed milk powder will affect the farmers badly. The central government should postpone National Dairy Development Board?s (NDDB) plan to import 10,000 MT of skimmed milk powder till March 2010 and import decision should be taken after carefully reviewing the stocks at that time.
In order to arrest the dumping of dairy products into India by the EU and the US, who have been protected well by their respective governments through various subsidieis, the government should restore 15% custom duty on milk powders and 40% duty on butteroil with immediate effect, the federation maintained.
It is well-known that over the last one year there has been a severe increase in prices of several cattlefield inputs. The average price of cattlefield has gone to Rs 8,600 a tonne from earlier level of Rs 6,600 a tonne. Other products such as deoiled cakes, rice polish fine, jowar, maize, molasses have increased by over 25%. Moreover, the export of oilmeals has increased considerably in the last two years thereby led to a sharp rise in the domestic market.
In order to discourage export of valuable oilmeals, the government should impose 25% duty on oilmeals, deoiled cakes and cattlefield. The government should help in waiving cess on excise duty on molassess for usage in manufacturing of cattlefeed in view of the increasing cost pressures. The government should also ensure that the 15% VAT on molassess should be removed for usage in cattlefield on part with that of any agricultural product, the Federation pointed out.
At present, milk cooperatives are taxable in the highest bracket of 30% + 3% education and higher education cess. Milk cooperatives are primarily engaged in removing rural poverty and economic development of rural population in the country. Therefore, the government should reduce the existing income tax as well as education cess or allowing tax holidays to the farmers for two years. On the VAT side, the federations aid that given the dairy products nature of mass consumption across the country, it is important for the government to reduce the VAT rates from 12.5% to 4%l to increase the consumption level apart from help in improving the rural farmers income substantially.
