February 26, 2020
President Donald Trump’s trip to India this week offered the tantalizing promise of agricultural and dairy exports to the subcontinent. It’s potentially a huge market, with a population second only to China at 1.355 billion people, and more than four times that of the United States. India’s population is projected to exceed that of China by 2030.
“Since [Indian] milk production is growing in tandem with domestic consumption, any uptick in future demand for milk-based products may encourage imports,” reports the United States Department of Agriculture’s Foreign Agricultural Service.
Keep in mind, though, India boasts the largest dairy industry in the world, forecast to produce 430 million pounds of milk in 2020, or roughly twice the output of the United States. Most Indian dairy farmers—there are 80 million of them—have only one to five cows, water buffalo or goats. Water buffalo account for about half of India’s milk production.
“[But] increasing disposable incomes, rapid urbanization, changing lifestyles, dual income households and other demographic shifts are driving the demand for processed or value-added dairy products,” says the FAS.
Demand for products such as yogurt, yogurt drinks, processed cheese and ice cream is growing. FAS also says dairy is the primary source of animal protein for the largely vegetarian population of the country.
Still, India has been a reluctant importer of dairy products and Indian dairy policy has been protective of its own dairy farmers. Through the first 9 months of 2019, India imported just $4 million worth of nonfat dry milk and butter. For all of 2018, it imported just $3.8 million worth of these products.
On February 1, 2020, the government released its annual budget for 2020/21, increasing tariffs on some dairy products. “Basic import duty on butter, ghee (clarified butter) and butter oil was raised from 30 percent to 40 percent,” notes FAS. But the same order did omit preferential duty rates for milk and cream.
Other analysts claim India is using the prospects of opening its dairy market to the United States as a bargaining chip for other U.S. concessions. “You want a deal, but you don’t want to concede anything. Please understand that the balance has to be struck, we are not looking at disadvantaging our dairy system but without disclosing more details –- the point is if you can concede a little bit, whether a fraction of the dairy industry can be opened which can be useful for other sectors – that’s what the negotiation is for,” says on India government official.
milkbusiness.com
