But the government's decision last week to ban SMP exports has put paid to those plans -- and sparked fresh debate about the wisdom of squeezing agricultural producers in order to protect consumers.

Not only is India the world's largest milk producer, milk powder exports have been a booming business. Total exports ballooned from 4,185 tonnes in 2003-04 to 28,200 tonnes the following year, and 50,510 tonnes last year. This year, the government stepped in when exports were about to touch 65,000 tonnes.

The government's argument is that exports are welcome, but fighting inflation takes priority. Retail milk prices had climbed in the past year from Rs 13 per litre to Rs 16; Mother Dairy, the capital's biggest milk retailer, increased its milk price by a rupee per litre last month. And the price of milk powder has increased from Rs 90 per kg to Rs 125 over the past year.

Finance Minister P Chidambaram, announcing the government's decision on the export ban, argued that the export of milk powder would have caused a domestic milk shortage in the summer, traditionally the lean season for milk production.

Source: Rediff News