The country’s two major dairy cooperatives have urged the government to keep dairy products outside the ongoing trade negotiations with various blocs including hugely milk surplus regions such as European Union, Australia and New Zealand.
Cooperatives say that any cut in import duties would have adverse impact the livelihood of 15 crore farmers associated with milk procurement.
In a communication to commerce ministry, R S Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation (GCMMF) has stated, “India is producing more than 150 million tonne of milk valued at over R6 lakh crore which is more than any other agricultural crop production including wheat and rice.
“Allowing any import of dairy products into India at a concessional duty rate would be directly affect more than 15 million families who are dependent on same milk for the livelihood,”.
While calling upon the government to consider long term impact of providing import duty reduction on dairy sector, Sodhi has stated that necessary action should be taken against providing duty concessions and keep dairying completely out of ambit of free trade agreement with the Regional Comprehensive Economic Partnership (RCEP), a mega-regional economic agreement being negotiated between the 10 Association of South-East Asian Nations (ASEAN) countries and their six FTA partners: Australia, China, India, Japan, New Zealand and South Korea.
“If cheaper imports of milk products are allowed, we will be hit hard. Cooperatives’ overhead costs are much higher than foreign or private players as we have commitment to buy all the milk brought to procurement centres,” Rakesh Singh, managing director, Karnataka Cooperative Milk Producers’ Federation (KMF) told FE.
Currently the import duty on Skim Milk Powder (SMP) is 15% while in case of butter it is as high as 40%.
GCMMF, also known as ‘Amul’, and KMF, which sells its products under ‘Nandini’ brand, had daily processed 160 lakh and 65 lakh litres, respectively, of milk in FY16. While Amul reported a turnover of R23,000 crore, KMF reported sales of R11,779 crore last fiscal.
A couple of years back, India’s self-sufficiency index in dairy products was measured as 101, while of New Zealand was reported at more than 500, while that of Australia was recorded as 125. This implied that New Zealand and Australia have huge surplus milk output.
According to US department of agriculture report, New Zealand with a surplus of milk production is likely to witness a one per cent increase in milk production to around 21.6 million tonne in the current year out of which more than 70% of the milk had to be exported. EU at present has stocks of Skim Milk Powder (SMP) of about 4.2 lakh tonne, which is to be exported.
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Following the operation flood launched in 1980s, the dairy cooperative network includes 254 cooperative milk processing units, 177 milk unions covering 346 districts and over 1,55,634 village-level societies. More than 15 crore farmers have been brought under the ambit of village level dairy cooperatives who have around 650 lakh litres daily processing capacities. “Our cost of production is higher as large number of small farmers are associated with milk procurement,” said an official with National Dairy Development Board, the apex body of cooperatives.
Out of total annual milk production of 160 million tonne, around 50% is marketed. Cooperatives and private sector have a share of 50% of the marketable surplus and the rest is still to be sold by unorganised sector players.