Ghee says ‘Jai Ho’

By M H Ahssan

You know what’s the perfect symbol of India’s bindaas gung-ho spirit, its cussed refusal to mimic the West, and its unpredictability? It’s ghee. India has always loved ghee, or pure butterfat. Ayurveda says ghee is great for increasing self-awareness and intelligence, besides getting a complexion and voice to die for. Ghee is soothing and delicious. It evokes memories of dripping rotis, drenched rice, and bowls of dal with a half-inch layer floating on top. Those innocent days before we learnt to eat alien palm oil and soya bean oil.

At a time when jobs are toast, and household budgets stretched after salary cuts (a throbbing vein of personal pain currently), our ghee consumption is rising 8%. Instead of dropping dead like flies from heart disease and strokes, Indians eat more than 32,000 t ghee annually. It’s our favourite comfort food, that beats paneer, ice cream and mithai.

Ignoring the West’s horror of saturated fats, Indians now cheerfully pay 35% more for desi ghee. A 1-kilo tin that sold for Rs 140 in Delhi’s wholesale market last year, is now at Rs 190. Prices are expected to climb further in the next two months.

Love for ghee is universal, as widespread among the urban middle-class as the rural masses. Consumers clearly know the benefits of ghee because close rival vanaspati, that comes from vegetable fat, is no longer popular in the kitchen.

What’s more important, rising demand for ghee affects all of us. Milk is the raw material for ghee. And it’s a rare Indian household that doesn’t buy at least a few cups fresh milk daily. This tug-of-war between ghee and liquid milk means one has to give. The bet is on milk. Milk is going to become much more expensive this summer. The demand-supply dynamics makes it a dead cert. Look at the numbers. India is one of the world’s top milk producers, with 70 million dairy farmers selling 280 million litres daily. Supply is rising 4% annually. But equally divided, that still means each Indian’s daily share is much less than a 330-ml Diet Coke can.

So there is a huge pent-up demand for milk, even if it originates as a few teaspoons to stir into tea and coffee. Three quarters of the total supply is sold as liquid milk. As one out of every two litres is sold in cities, where consumers are relatively better off, often price becomes no object for an essential item like milk. Demand will heat further as more of India becomes urban.

The rest of India’s milk - about 40 mn t in a year- is used for making ghee, butter, skimmed milk powder, khoya, paneer, dahi, cheese, mithai. Ghee gets the lion’s share because it is most popular and also fetches the maximum premium. So when ghee demand rises, dairymen start grabbing a larger share of liquid milk for it. That squeezes liquid milk supply and further pushes prices.

This season there is an additional complication. Every four years, Indian milch cattle hits a lean patch, which reduces overall supply of milk. 2009 is one such ‘leap’ year. To worsen matters, fodder is scarce because poor rains and parched soil means there is very little grass for grazing. So milk supply, especially in the South, Andhra, and Maharshtra, will decline.

On the other hand, both milk and ghee demand will continue to rise. Dairies will buy full cream milk more aggressively to make ghee. This means consumers will have to outbid dairies if they want creamy milk. Full cream milk is certain to become more expensive fairly soon.

Luckily for the calorie-conscious, toned milk prices won’t rise as fast because it has no fat for ghee. Toned milk is simply a mix of water and skimmed milk powder, which is in ample supply, for now. Dairies consider toned milk a poor cousin of full cream milk because it’s demand is growing by an anemic 2% annually. We may be obsessed with our metrocentric food fads. Ultimately the creamy layer will dictate terms.

The other option before ghee manufacturers is to import butter oil, a close substitute, from New Zealand. That makes sense currently because overseas prices are low. Only around 8,000 t, or 25% of total demand, is expected to get shipped in. Yet that is enough to worry milk cooperatives, who fear it may slacken the tug-of-war between consumers and ghee brands over their milk. They want higher customs duty on butteroil to ‘protect’ farmers. Ghee guys say, protect consumers by allowing duty-free import.