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Will Indian dairy sector be crippled by RCEP concessions?

Mumbai: There are fears about the stand the Indian government will take in the forthcoming Regional Comprehensive Economic Partnership (RCEP) talks in Bangkok. The industry that may be impacted, both politically and commercially, the most could be the dairy sector.

With RCEP talks in final stages, India Prime Minister Narendra Modi is personally taking stock of this situation. The RCEP is a proposed free-trade agreement (FTA) between the 10-member states of the Association of Southeast Asian Nations (Asean) and its six FTA partners—China, India, Japan, South Korea, Australia and New Zealand.

Countries like Australia and New Zealand are looking at exporting their dairy products to India. With entry of imported duty-free milk powder and other milk products from Oceania countries, the prices of milk in the market will drop which will impact farmers directly

There are talks about the need for India to safeguard the interest of farmers, but if India blinks, it is expected to have a larger impact in a milk-surplus country. Today, the dairy industry accounts for 25% of total farm produce of the country.

The value of milk output for 2016-17 was Rs 6,144 billion at current prices, which was higher than combined value of paddy and wheat and sugarcane.

It is estimated that landless and marginal farmers earn about 25% of total household income from dairying. About 63 million households, primarily small and marginal, are associated with dairy industry.

NDDB, chairman, Dilip Rath, said, “Any decision to reduce the tariff barrier would encourage import of cheap milk powder in the country, particularly from the Oceania region.

This would result in putting the livelihood of our dairy farmers at peril and at the same time severely compromising our sovereign food and nutritional security.

Our country will be pushed into a state of import dependence, jeopardising our nutritional security as is the case in many Asian, particularly, South Asian and South East and Far East Asian countries.”

Rath adds, “Considering the huge and far reaching implications it will have on our dairy sector, on sovereign food and nutritional security and on the livelihoods of millions of small milk producers for whom dairying is an important source of livelihood, I am of the view that dairy sector must be excluded from the purview of RCEP.”

In the past, Amul's MD, R S Sodhi has also expressed discontent over the same including dairy in the deal.

Milk production in the country has increased with a CAGR of more than 6.5% in the last five years. Today India is the world’s largest producer of milk. It has also begun exporting milk to the world and could be a major exporter soon.

“In the 90s, after India opened up edible oil industry, there was a large impact in the sector in the country. This lead to India becoming depended on edible oil exports. If India opens up dairy, the industry will go the edible oil way,” stated an industry expert.

While commerce ministry is inclined towards signing the dotted line, there is opposition from the agriculture ministry. The Union agriculture minister Narendra Singh Tomar has demanded protection of farmer interests:

“Farmers' interest is foremost for us; we have already informed the Commerce Ministry about our stand.”

This could be a direct message to commerce minister Piyush Goyal who has favoured fast conclusion of the RCEP negotiations while safeguarding national interest.

The move to include dairy in RCEP was even opposed by Sangh Parivar-affiliated Swadesh Jagran Manch (SJM). The organisation has even urged the government to resist the pressure from Oceanic countries.

Just yesterday, even Mohan Bhagwat, head of the RSS, urged the government to ensure that farmers’ interests were protected. Many eyes will be riveted on developments in Bangkok next week.

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