Dairy industry opposes RCEP

The domestic dairy industry is up in arms against the Regional Comprehensive Economic Partnership (RCEP) — a proposed free trade agreement or FTA involving the 10 ASEAN countries (Philippines Brunei, Indonesia, Malaysia, Singapore, Vietnam, Cambodia, Laos, Thailand and Myanmar) and six Indo-Pacific states (India, China, South Korea, Japan, Australia and New Zealand).



Unlike other industries that fear dumping from China (steel), South Korea (chemicals) or Indonesia and Malaysia (palm oil) in the event of an RCEP deal, the concerns of Indian dairies largely pertain to New Zealand and Australia. These two countries accounted for just 6.2% of the world’s cow milk production in 2018, but had a combined 72.1%, 21.5%, 58.3% and 24.8% share of the global trade in whole milk powder (WMP), skimmed milk powder (SMP), butter and cheese, respectively.


Why should we open our market for imports, when a NITI Aayog Working Group report of February 2018 has shown that India’s milk production in 2016-17, at 162.5 million tonnes (mt), exceeded the demand of 147.5 mt, with this gap projected to widen by 2032-33 (see chart)?, asked R.S. Sodhi, managing director of the Rs 33,150-crore Gujarat Cooperative Milk Marketing Federation, better known as Amul.


Liquid milk, being perishable, isn’t traded much in international markets. The bulk of the global dairy trade is in SMP, WMP, butter and cheese. The accompanying table shows that the total quantity of these milk solids exported by New Zealand is over five times their organised sector market size in India. In 2018, New Zealand exported 95.1% of its WMP production, with the corresponding ratios at 87.3% for SMP, 94.5% for butter and 83.6% for cheese.