New Zealand’s renewed effort to secure a preferential trade access to the Indian market has drawn the ire of the domestic dairy industry.

Dairy co-operatives and private sector players are against granting any preferential access in the Indian market through a free trade agreement (FTA) to New Zealand, the world’s largest exporter of milk products.

“We are resisting granting any free market access to New Zealand,” said RS Sodhi, Managing Director of Gujarat Co-operative Milk Marketing Federation (GCMMF), which owns the Amul brand. “Today, India is the only country in Asia that's self sufficient in milk production. Granting any free market access to New Zealand will not only hit our farmers hard, but will also expose the consumers to volatility of world markets,” Sodhi said.

Fonterra scare

New Zealand is in search of a large market for its dairy products, especially after the Fonterra contamination scare last year that led to slowdown in dairy exports to China, its largest buyer.

With the change in Government and the rising milk prices presenting an opportunity, New Zealand has renewed its efforts to gain a preferential market access to the Indian market. A high level New Zealand delegation is in Delhi exploring the opportunity.

At the India-New Zealand Dairy Dialogue, organised by the Agriculture Ministry early this week, the Indian players made it clear that the country was self sufficient in milk production and does not need any imports now. Some players were also surprised at the Ministry’s haste in arranging the dialogue without taking the domestic industry into confidence.

Chinese example

“We can take their help to enhance and boost productivity and skill development, but are against giving them a free market access,” Sodhi said. He further said that India could go the Chinese way, where growth in dairy sector has come down significantly after granting FTA to New Zealand some six years ago. China’s dairy sector growth has now been reduced to a mere 2 per cent against 25 per cent before granting FTA in 2008, Sodhi said.

“India’s dairy sector has grown at 4.2 per cent over the last decade, at twice the growth rate of world average. We have self-sufficiency. As a country, we don’t require imports,” said RG Chandramogan, Chairman and Managing Director, Hatsun Agro Product Ltd.

“If they see a market in India, let them export after paying the prevailing duties,” said Kuldeep Saluja, Managing Director of Sterling Agro. The skimmed milk powder imports attract a duty of 60 per cent. Imports of other products are levied 30 per cent duty.

Indian output, exports

India is among the fastest growing dairy markets and the rapid rise in milk prices – by 15-17 per cent over the past one year has been a concern. Milk production was estimated at 132.43 million tonnes in 2012-13 and was targeted to reach 139.67 mt in 2013-14.

India turned a net exporter of dairy products in 2013-14 with skimmed milk powder shipments of over 1.22 lakh tonnes. Total value of dairy products shipments were estimated at over ₹3,318 crore. But with the decline in global price on improved supplies, the exports of SMP from India are currently seen unviable as domestic prices are high.