India banks on higher milk product prices to push exports

Friday, 31 January 2003, 08:00 Hrs
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NEW DELHI: India is banking on a spurt in global prices and a cut in subsidy by major competing countries to push up exports of milk products.

During the first seven months of the 2002-03 fiscal ending March 31, India's milk product exports showed a substantia dip due to higher domestic prices and low global prices making overseas sales unviable.

The largest producer of milk, India's exports of milk products mainly to Bangladesh and the Middle East countries during April-October was just 766 million as against 1.14 billion in the corresponding period in the previous year, according to data compiled by the state-owned Agricultural and Processed Food Products Export Development Authority (APEDA).

"With global prices picking up, Indian exports of milk products have again become competitive. This will help Indian exporters to compete well against exports from Australia, New Zealand and the European Union countries in the Middle East markets," a senior APEDA official told IANS.

The global prices started moving higher after the European Union recently slashed its export subsidies by more than 40 percent, followed by the U.S. lowering its subsidy under the Dairy Export Incentive Programme (DEIP) to almost 50 percent.

"This move has helped to spurt the average dairy commodity prices from rock bottom level of $1,200-$1,300 per tonne a few months back to present level of around $1,700-$1,800 per tonne," said Animesh Banerjee, president of Indian Dairy Association (IDA).

"It is a welcome change as the Indian dairy commodity prices are again becoming competitive in the international markets," Banerjee told IANS.

While the move by the E.U and the U.S. is welcome, Banerjee stated that it is but a small relief as considerable amount of subsidies by the developed nations are still being passed on different counts to protect their domestic industry.

"If these countries really remove their subsidies, countries like India will certainly stand to gain," said Banerjee.

As against the global average of about 1.4 percent annual growth in milk production, India has been witnessing around 4.0-4.5 percent growth. This year too despite widespread drought in the country, the milk production is expected to record 4.5 percent, according to IDA.

The world milk production has grown to 594 million tonnes, with India's share estimated at 84 million tonnes. Out of total milk produced in India, 54 percent is buffalo milk.

With only 10 percent of the milk production in the organised sector, India's foray as a serious exporter started only a few years back, with record exports of around 20,000 tonnes worth 1.82 billion in 2001-02 as compared with 837.9 million in the previous fiscal.

"With prices picking up, we expect Indian milk product exports to look up in the coming months, though it may not match 2001-02 level," APEDA official said.

Banerjee concurred with the view that in view of the more favourable market scenario Indian exports should gain in the global trade, more so if the developed countries cut their subsidies further.
Source: IANS
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