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Indian Dairy industry: FTA Challenges
Contents–World dairy scenario
– Indian dairy scenario
–FTA Challenges
World Dairy Scenario
World Dairy Industry7.7 billion consumers
Provides livelihood to 1 billion through Dairy Farming
Projected Milk Production in Current Yr: 830 Million Metric
Tonne/year
390 billion ltrs of milk is processed across the globe
World Milk Production
World milk production: 830MMT
MMT: Million Metric Tonne
India is No. 1 Milk Producer
180 MMT (20% of world)Source: FAO
Milk production status since last 60 years
18
20
138
186
10 108
13 15
57
84
94
154
169
0
20
40
60
80
100
120
140
160
180
200
1961 1971 1981 1991 1996 1998 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2015 2016 2017
India Australia Netherlands USA European Union
CAGR India: 4.5%, USA: 1.8%, EU : 1.3%, AUS: 1.3% and Netherland: 2.7%In MMT/year
Milk production of India, Australia and Netherlands was almost similar
India
EU
USA
Netherland
Source: FAO
5 7 10 14 17 20
14 1312
13 1212
71 71 6858 56 52
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970 1980 1990 2000 2010 2017
India Australia Denmark New Zealand United States of America Brazil Pakistan Rest of the world
Source: FAO
Comparison with major countriesEUROPE USAINDIA
Milk Production (MMT per year)
~~
>
168 MMT176 MMT 95 MMT
Milk Solids (MMT per year)
159 MMT192 MMT 89 MMT
1 2 3
Source: IFCN
Growth in Milk Production : Last 5 years
Among highest growth in Milk Production
Status of self sufficiency for milk 2017
India is 100% self sufficient in Milk consumption.• Huge potential for export in neighboring milk deficit nations
% Share of Dairy sector in total Agricultural Production
India @ 26% is among the highest in the world
Source: IFCN
Average dairy farms
India: 2
Source: IFCN
Indian Dairy Scenario
•Agriculture: 18% contribution to GDP and employment to 60% ofpopulation
•Livestock sector-Largest contributor to Agriculture GDP ( ~ 30%)
•Milk is the largest ‘Agricultural Crop’ of India (INR 7 Lakh crores per year)
•Dairy is a supplementary source of income for >100 million families
70% of rural households have less than one hectare of land
SUSTAINABLE LIVELIHOOD
Cultivation
Dairying
Research studies have reported reduction in rural poverty being more responsive to growth in the livestock sector than growth in the crop sector
Average farm household income (Rs. /month)
In recent years, maximum growth in rural income has been from Livestocksector
Particulars Amount in Rs.
% of Income
% CAGR growth in income from Various sources during 2003 to 2013
Cultivation 3078 48 3.7Livestock 765 12 14.3
Wages/Salary 2069 32 1.4Non-Farm Business 514 8 -0.1
Total farmers income 6426 100 3.4
Source: NSSO
55% of total milk production
(97 MMT)
45% of total milk production(79 MMT)
Largest Bovine Population in the world : 300 Million
India: Small holder system
10 crores rural Households in India depend on dairying for livelihood.
77% Milk Production by small, marginal and landless farmers
0
100
200
300
400
500
600
700
800
900
1997
2000
2002
2003
2004
2006
2008
2009
2010
2011
2012
2014
2015
2018
World milk prodn 849 MMT
CAGR : 2%
0.0
50.0
100.0
150.0
200.0
India milk prodn 176 MMT
CAGR : 4.5%
World & India Milk Production
Milk Production: Total & Per Capita
Operation Flood (1970-1996)
17
20
21
23 3
2
54 6
6 69 72 8
1 93
12
2
14
6
17
6
130 126112
110 128
176195 200 205
217233
281
317
369
0
50
100
150
200
250
300
350
400
0
20
40
60
80
100
120
140
160
180
200
1950 1960 1968 1973 1980 1990 1995 1996 1997 2000 2004 2010 2014 2018
PE
R C
AP
ITA
AV
AIL
AB
ILIT
Y (
G/D
AY
)
MIL
K P
RO
DU
CT
ION
(M
MT
)
Milk Production in MMT
Milk Production growing at 4.5% CAGR in last 15 years
390 million
593 million
980 million
1342 million
Past Present Future
2000 +18 Years 2018 +15 Years 2033
World 560 270 830 247 1067
India 80 100 180 150 330
% Contribution by
India
14 20 31
Year
India’s Milk Production Situation and FutureAll data MMT/year
Source: IFCN
Competitiveness of Indian dairy products• Farmer’s share in consumer price :
Indian Farmer has the highest share of consumer price
Source: IFCN
Continuous higher price received by Indian farmers
Source: FAOSTAT
IndiaIndian dairy cooperativesensure that their farmersget 71 to 75% of ConsumersRupee spent on Milk & MilkProducts
NZ, AUS and EUIn NZ, producers get 30 %of consumers’ money spenton Milk and Milk productswhile in the Australia andin EU, producers get only27% and 40% respectively.
Dairy Cooperative ensures that 80% - 86% of consumer’s rupee goes back to its dairy
farmers
Supply and demand estimates as per NITI Aayog report
194
276
330
174
246
292
140
160
180
200
220
240
260
280
300
320
340
2016-17 2020-21 2021-22 2028-29 2029-30 2032-33
Supply of milk Demand of milk
Surplus of 38 MMT is estimated
Source: NITI Aayog's Working Group Report (Feb 2018) on Demand and Supply Projections towards 2033 for Crops, livestock, Fisheries and Agricultural Inputs indicates
World milk production estimate
Source: IFCN
FTA Challenges
Dairy Scenario in NZ – Over Producer of Milk
Item New Zealand India
Population 42 Lac 130 crore
Milk Production 22 MMT 180 MMT
Agriculture labour 3 Lac (7% of pop) 62 crore (52% of pop)
Dairy farmer 10,000 10 crore
Average farm size 419 1.8
Number of milch animals 50 Lac 131 million
Milk Yield (Lit per day) 13 LPD 3.5 LPD
GDP (PPP) US $ 189 billion US $ 5 trillion
Per Capita Income US $ 39,000 US$ 7,200
GDP from Agri 5.7% 17.4%
% of dairy product exported 93% (20.5 MMT ECM
exports)
Negligible
% Farmers’ share on consumer
price
30% 71%
Dairy Scenario in Australia – Over Producer of Milk
Item Australia India
Population 2.3 crore 130 crore
Milk Production 9 MMT 180 MMT
Agriculture labour 8 Lac (3.6% of pop) 62 crore (52% of pop)
Dairy farmer 6,300 10 crore
Average farm size 283 1.8
Number of milch animals 17 Lac 131 million
Milk Yield (Lit per day) 16 LPD 3.5 LPD
GDP (PPP) US $ 1.25 trillion US $ 5 trillion
Per Capita Income US $ 50,400 US$ 7,200
GDP from Agri 3.6% 17.4%
% of dairy product exported 25% (2.2 MMT ECM exports) Negligible
% Farmers’ share on consumer
price
27% 71%
Dairy Scenario in EU – Over Producer of MilkItem EU - 28 India
Population 51 crore 130 crore
Milk Production 166 MMT 180 MMT
Agriculture labour 80 Lac (1.6% of pop) 62 crore (52% of pop)
Dairy farmer 12.7 Lac 10 crore
Average farm size 19 1.8
Number of milch animals 23 million 131 million
Milk Yield (Lit per day) 19.5 LPD 3.5 LPD
GDP (PPP) US $ 20.85 trillion US $ 5 trillion
Per Capita Income US $ 40,900 US$ 7,200
GDP from Agri 1.6% 17.4%
% of dairy product exported 10% (15.8 MMT ECM exports) Negligible
% Farmers’ share on consumer
price
40% 71%
Impact of 5% of NZ Current export to IndiaProduct India Market Size
(MT) NZ current Export
(MT) Import from NZ (MT) % of market
SMP 300000 440000 22000 7%
WMP 12000 1400000 70000 583%
Total Powder 312000 1840000 92000 29%
Cheese 40000 320000 16000 40%
Butter / AMF 120000 500000 25000 21%
Total 472000 2660000 133000 28%
Value Added Product• The price of milk in Auckland is 2.5 times that of Delhi.
• Milk in Delhi is the most economical
Value Added Product• Developed world want to dump their surpluses in India
• And want lower duties to compensate their high cost
• With improving economy and increase in purchasing power,demand of value added product in India improving for Curd,Yogurt, Paneer, Cheese etc
• Indian dairy companies mfg all these to meet local taste anddemand – “Make In India” initiative
Value Added Product• Exotic cheese / GI cheese : Consumed by Elite class – why
reduce duty on it?
• Whey based high end / speciality products : Special purposeproduct
Feeding the Cattle• Small holder farming
• Use locally available resources
• Cattle feeding mainly on roughages & not free grazing
• No scarcity of roughages as India is likely to have healthygrowth in food grain & other crop production which will beresource for cattle
• Exaggerated claim of climate change and resource shortage
Learning 1 : India Edible Oil scenario
5.30
14.20
140.07
2829
61107
73039
0
10000
20000
30000
40000
50000
60000
70000
80000
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.001
980
-19
81
19
81-1
98
2
19
82-1
98
3
19
83-1
98
4
19
84-1
98
5
19
85-1
98
6
19
86-1
98
7
19
87-1
98
8
19
88-1
98
9
19
89-1
99
0
19
90-1
99
1
19
91-1
99
2
19
92-1
99
3
19
93-1
99
4
19
94-1
99
5
19
95-1
99
6
19
96-1
99
7
19
97-1
99
8
19
98-1
99
9
19
99-2
00
0
20
00-2
00
1
20
01-2
00
2
20
02-2
00
3
20
03-2
00
4
20
04-2
00
5
20
05-2
00
6
20
06-2
00
7
20
07-2
00
8
20
08-2
00
9
20
09-2
01
0
20
10-2
01
1
20
11-2
01
2
20
12-2
01
3
20
13-2
01
4
20
14-2
01
5
20
15-2
01
6
20
16-2
01
7
Quantity (In Lakh Tonne) Value (Rs. in Crore)
Quantity import in Lakh tonne
Value in Rs. Crores
Liberalizing edible oil imports post WTO implementation in 1996-97
The entire industry has moved from 91% self-sufficiency to 65% import dependence in just 2 decades
Learning 2 : China FTA impact on milk production
7
20
28
3133 32 32
5
10
15
20
25
30
35
2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2015 2016 2017
Milk production (Million t ECM)
China signed FTA with New Zealand in the year 2007-08
Milk production growth (CAGR%)Year 2000 to 2006: 22%Year 2006 to 2017: 0.06%
China FTA impact on import of dairy products
7.3
4.33.5
15.3
18.6
20.3
0.0
5.0
10.0
15.0
20.0
25.0
2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2015 2016 2017
import of National cosnumption (%)
China signed FTA with New Zealand in the year 2007-08
• Canada: Government imposed duty of 250% for all dairyproducts.
• EU: Non Tariff barrier with high residual and pesticides limit.
• Australia: Doesn't permit of Non-retorted dairy products fromIndia.
• USA: High import duty and removed MFN status for dairy
• South Africa/Mexico/Venezuela/Chille: Doesn’t permit import ofdairy products from India
• New Zealand: Demand specialize veterinary certificate
Learning 3 : How other country protecting their producers
Impact of Duty reduction• Dairy product price will fall
• Farmgate price will also reduced by 50%
• Loss of about INR 3.5 Lac crore to farmers
Doubling Farmers’ Income - 2022
• Hon’ble Prime Ministers’ main focus
• Dairy contributes to 25% (Rs 7 lac crore) of total farm produce of the country (Rs 28 Lac crore)
• With permitting import at lower duty, farmer income will reduce drastically as farmgate prices will be lowered
• How can we double farmers’ income from dairy?
THANK YOU
India’s Dairy Exports
• India is net dairy product exporter• Regularly exports to USA, Australia, New Zealand,
Singapore, UAE, Saudi Arabia, Egypt, Oman,Bahrain
• India exported dairy products worth US$ 356million (Amul = US$ 117 million) in 2018-19 toabout 105 countries
India’s Dairy Exports
Qty in MT Value in US$ MillionHSCod
eCommodity 2017-18 2018-19 %Gr 2017-18 2018-19 %Gr
401MILK AND CREAM, NOT CONCENTRATED NOR CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER
8,857 10,183 15 8 9 19
402MLK AND CRM CNCNTD/CONTNG SUGR/SWETNG MATR 14,765 47,987 225 46 95 114
403BUTTR MLK,CRDLD MLK AND CRM,YOGRT,KPHIR AND OTHR FRMNTD ACDFD MLK AND CRM 688 809 18 2 1 -22
404WHEY AND PRDCTS CONSTNG OF NTRL MLK CNSTITNTW/N CONTAINING ADDED SGR OR SWEETENG MATTR 183 917 402 1 5 883
405BUTTER AND OTHER FATS AND OILS DERIVED FROM MILK; DAIRY SPREADS 16,616 46,138 178 96 210 128
India’s Dairy Exports – 2019 in Million US$
UAE 45SAUDI 11QATAR 8OMAN 7KUWAIT 6BAHRAIN 5
USA 15AFGH 13PAK 7
SING 11MALASIYA 8PHI 2THIA 5HK 3
NEP 15BHU 13BAN 40EGY 43
TURKEY 52MOR 8
AUS 7NZ 2
INDIA EXPORTS DAIRY PRODUCTS TO 105 COUNTRIES ACROSS THE WORLD
Opportunity : India
• 43% of the incremental milk produced in theworld from now till 2025 will be from India.
• Indian Milk production growing at better pacethan World
Opportunity : 2
• India is a competitive producer of milk in theworld
• Giving highest returns to the farmers
• India is located in the area surrounded by MilkDeficit region
Opportunity : 3• India is the largest producer of A2 milk in the
world.• Can divert more milk to processing–Loose to Processed / Packaged–Value added product
• Productivity enhancement program going on
The Road Ahead• Milk is the largest Agricultural Crop with promising returns to
farmers
• India growing at faster pace than global milk production
• Traceability is thru Integrated SAP software
• Clearance of India as dairy product supplier and approving EICas Dairy Export Monitoring body
• Explore cooperation between old friends -India and Russia
480, 86%
80, 14%
Year 2000
650, 78%
180, 22%
Year 2018
737, 69%
330, 31%Year 2033
World India