Friday, December 2nd, 2022 15:32:23

RCEP:  Death knell for  dairy in India

By Ashwani Mahajan
Updated: October 19, 2019 12:26 pm

Government is contemplating to finalise RCEP-FTA (Regional Comprehensive Economic Partnership -Free Trade Agreement), a trade block which includes China, Australia and New Zealand, apart from 10 ASEAN countries, Japan and South Korea. New Zealand and Australia are negotiating very hard with India to reduce duty on dairy products so that they can get an access to India which is the world’s largest market of dairy products.

It’s unfortunate that officials of Centre of Regional Trade (CRT) under Ministry of Commerce  have been supporting the offer to reduce tariffs on milk and its products, by twisting the data of India’s milk production and projecting a huge shortage of milk in India in coming 10 years. They are also projecting shortages of fodder, roughages and water for animal rearing and showing unrealistic export opportunity within RCEP countries despite huge non tarriff barriers and low price of New Zealand dairy products. Milk producers and processors have been pleading with the Ministry of Commerce, presenting some hard facts, which are deliberately ignored by bureaucrats and consultants, pushing the deal.

Niti Aayog’s Working Group Report (Feb 2018) on Demand and Supply Projections towards 2033 for Crops, livestock, Fisheries and Agricultural Inputs, the demand for milk will be 292 Million Metric Tonnes, against which India will produce 330 MMT milk. Thus, India will be surplus in milk products and the question of imports does not arise.  NDDB and even international organisations like FAO and IFCN have confirmed and have projected a similar trend.

The same NITI Aayog report further suggests very good agricultural production which will ensure availability of roughages and fodder for milch cattle  even in 2033.

NZ with population of 48 Lac produces 24 MMT milk by employing 10,000 farmers and exports 93% of it. On the other hand, 10 crore families in India depend on dairy industry for their livelihood.

Even if NZ exports only 5% of its produce, it will be equal to 30% of India’s production of  major dairy products like milk powder, butter, cheese etc.

Same holds true for Australia where less than 6000 farmers produce 10 MMT milk and the export more than 60% of it.

Then why should India include dairy products (HSN 0401 to 0406) in RCEP and allow import at lower duty? Is it to double income of farmers of Australia & NZ?

Interestingly, Indian consumers are getting milk at the cheapest rate globally and milk producers are getting highest share of consumer rupee (more than 80%). Our producer price of milk is comparable to Oceania’s producer prices.

It’s beyond doubt that signing of RCEP would mean death knell if dairy in India, because:

There will be reduction in procurement  price of milk from farmers due to cheap imported milk powder from NZ. Today, farmer gets nearly rupees 28-30 per litre of milk, from milk processors from cooperative and even other private players. Procurement price for farmers would come down drastically, if imports are allowed through RCEP.

This may result in approximately 50 million rural people losing their job as they will be forced to quit the unremunerative  dairying.

This will prove to be the most suicidal step by Government of India since independence. We must understand that once dairy industry is troubled, this step will result into the biggest food security threat as we will be permanently dependent on imports for dairy products like in case of edible oils

Respected Prime Minister must know that doubling of farmers income will remain only in dreams, Indian dairy farmers’ income will actually be halved, ultimately forcing to leave the milk production.



Further, we must know that dairy is mostly run and served by women folk. Impact on dairy would also shatter dream of women empowerment.

India’s dairy industry is worth US$100 billion currently and is projected to double this size in next decade if Government policy remains supportive towards the rural milk producers.

Milk, as the largest agricultural crop of India (150 million metric tonnes), certainly deserves better treatment at the hands of our Commerce Ministry negotiators. Signing of RCEP would cause a major unrest among our rural folk, as their livelihood will certainly get adversely affected. Government must understand that sacrificing the interests of the poor and vulnerable sections of the society, in the name of engaging in trade with rest of the world, is a bad politics. Honourable Prime Minister can ensure to avoid any unrest amongst our rural producers across the country and protect their future.

By Ashwani Mahajan

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