Indian Dairy industry: FTA Challenges Contents World dairy scenario - - PowerPoint PPT Presentation

Indian Dairy industry: FTA Challenges

Contents

–World dairy scenario –Indian dairy scenario –FTA Challenges

World Dairy Scenario

World Dairy Industry

7.7 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 10 8 13 15 57 84 94 154 169

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 13 12 13 12 12

71 71 68 58 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 countries

EUROPE USA INDIA Milk Production (MMT per year)

~ ~ >

168 MMT 176 MMT 95 MMT Milk Solids (MMT per year) 159 MMT 192 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% of

population

• 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 Livestock sector

Particulars Amount in Rs. % of Income % CAGR growth in income from Various sources during 2003 to 2013 Cultivation 3078 48 3.7 Livestock 765 12 14.3 Wages/Salary 2069 32 1.4 Non-Farm Business 514 8

• 0.1

Total farmers income 6426 100 3.4

Source: NSSO

55%

• f total milk

production

(97 MMT)

45%

• f 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

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 32 54 66 69 72 81 93 122 146 176

130 126 112 110 128 176 195 200 205 217 233 281 317 369

50 100 150 200 250 300 350 400 20 40 60 80 100 120 140 160 180 200 1950 1960 1968 1973 1980 1990 1995 1996 1997 2000 2004 2010 2014 2018

PER CAPITA AVAILABILITY (G/DAY)

MILK PRODUCTION (MMT)

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 Future

All 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

India Indian dairy cooperatives ensure that their farmers get 71 to 75% of Consumers Rupee spent on Milk & Milk Products NZ, AUS and EU In NZ, producers get 30 %

• f consumers’ money spent
• n Milk and Milk products

while in the Australia and in EU, producers get only 27% and 40% respectively.

Dairy Cooperative ensures that 80% - 86%

• f 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 Milk

Item 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 India

Product 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 and

demand – “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 purpose

product

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 healthy

growth in food grain & other crop production which will be resource 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 10000 20000 30000 40000 50000 60000 70000 80000 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00

1980-1981 1981-1982 1982-1983 1983-1984 1984-1985 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

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 31 33 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 4.3 3.5 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 dairy

products.

• EU: Non Tariff barrier with high residual and pesticides limit.
• Australia: Doesn't permit of Non-retorted dairy products from

India.

• USA: High import duty and removed MFN status for dairy
• South Africa/Mexico/Venezuela/Chille: Doesn’t permit import of

dairy 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
• f 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$ 356

million (Amul = US$ 117 million) in 2018-19 to about 105 countries

India’s Dairy Exports

Qty in MT Value in US$ Million

HSCod e Commodity 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 45 SAUDI 11 QATAR 8 OMAN 7 KUWAIT 6 BAHRAIN 5 USA 15 AFGH 13 PAK 7 SING 11 MALASIYA 8 PHI 2 THIA 5HK 3 NEP 15 BHU 13 BAN 40 EGY 43 TURKEY 52 MOR 8 AUS 7 NZ 2

INDIA EXPORTS DAIRY PRODUCTS TO 105 COUNTRIES ACROSS THE WORLD

Opportunity : India

• 43% of the incremental milk produced in the

world from now till 2025 will be from India.

• Indian Milk production growing at better pace

than World

Opportunity : 2

• India is a competitive producer of milk in the

world

• Giving highest returns to the farmers
• India is located in the area surrounded by Milk

Deficit 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 EIC

as 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