“Corporate sector may enable linking of producers with dairy farmers.”
Dr. Rakesh Singh, Professor, Department of Agricultural Economics, Institute of Agricultural Sciences, BHU, debunks the view that bringing the dairy sector into RCEP negotiations will necessarily be disastrous for India. However, having said that, he dwells on the need to bring the sector into the organized segment of the economy in order to enhance its productivity and reap benefits from the country’s surplus milk production.
TPCI: What trends do you see in India’s consumption of dairy products in the near future?
Professor Rakesh Singh (RS): The consumption trend for dairy products in India will be positive. The FAO has also said that the consumption is likely to increase from 85 kg per year presently to 116 kg per year in the near future. So, the trend will be positive for dairy products as well as for milk consumption.
TPCI: RCEP is viewed as a threat to Indian dairy industry. Is India equipped to brace the challenges of dumping of milk products by New Zealand & Australia after the deal is concluded?
RS: Personally, I don’t see RCEP as a threat to Indian dairy, but I do see it as a sign of caution, because in India, the milk is produced either by small and marginal farmers or by landless labourers. The organized milk production is significantly low.
If you see the composition of the RCEP – 10 ASEAN nations & 6 other countries – & the recent data (2019-20) on exports of Indian dairy products, you will notice that our exports to Australia & New Zealand are also increasing. We have exported dairy products worth Rs 3 crores to New Zealand and Rs 5.26 crores to Australia in the first quarter of this year. As far as our imports are concerned, France, Denmark, Italy & UK feature as the major sources of imports for the country’s dairy sector. This indicates that the import from ASEAN of dairy products is very low. So, when there will be a comprehensive agreement, we may gain some trade from the exports; and new players may replace some of these existing players for dairy imports.
TPCI: Do you have any suggestions on how India’s dairy industry could be protected from stiff international competition post RCEP?
RS: For the most part, Indian dairy cooperatives have failed. At the same time, we have a very successful case – Amul. This shows that there is a need to improve competitiveness within the country itself. All these cooperatives should work efficiently like Amul. At the same time, I think that some farmer producer companies should be encouraged.
I think that the government should do something through its policy measures to promote the organized production of dairy products through some subsidy in infrastructure. Through infrastructure development, we can promote the organized farming sector. Corporate can also step in in bringing the sector’s development. They may enable the linking of producers with farmers. Take Amul for instance. All those farmers who are supplying milk are members of this cooperative. So, a cooperative can also manage it.
It also needs to be noted that when we compete with other countries in the international markets for our dairy products, we have very low surplus coming from small & marginal farmers and landless farmers. Moreover, the quality of the produce may not be in sync with the phyto-sanitary standards. Therefore, if it is organised, we will be able to comply with these international standards.
TPCI: What opportunities do you see under RCEP for Indian companies to connect to regional value chains?
RS: Yes, I do see such opportunities. When ASEAN was signed in 2009, there was this apprehension that it will be a threat for India & India should stay out of trade negotiations with ASEAN. But once the regional cooperation agreement was in place, there were a lot of advantages. Our location placed us in a favourable position. It brought down the transportation cost. When RCEP is signed, India can gain in all those sectors where it is the most competitive.
Dr. Rakesh Singh has served as Head, Agricultural Economics and Coordinator MABM at BHU. Before joining BHU in 2007, he has served IIM, Ahmedabad, VBS Purvanchal University and World Bank aided Project DASP. With more than 28 years experience of teaching, research & extension, Dr Singh has more than 86 publications, 2 Books, 4 Book Chapters and 4 Projects to his credit.