Trump Talk : Uncle Sam To Milk India ?
BY
R.K.MISRA
There
is an element of irony as India and Gujarat roll out the red carpet to welcome US
President Donald Trump. The Narendra Modi government move to give the US access
to its dairy and poultry markets may help bail out the US milk industry but is
set to hurt Gujarat and consequently India
the most.
According
to a report in 2017 India contributed 21 per cent of the world’s milk
production making it the largest milk producer in the world. This was made
largely possible by 73 million marginal farmers and landless labourers working
in the dairy sector and possessing an average of one or two milch animals.
The
World Dairy Situation Report,2019 states that the US milk yield per cow is the
highest in the world at 10,500 litres per cow as against 1,715 litres per cow
in India which is the second lowest in the globe ,only after Pakistan.
As
a big-wig of the co-operative dairy sector in Gujarat put it on condition of
anonymity, a trade deal with India may help Trump in his election year, but it
will be detrimental to the Indian dairy industry and the livelihood of over 10
crore marginal farmers whose sustenance
depends on it.
Gujarat
remains the nurturing cradle of the dairy cooperative industry in the country.
Indian dairy cooperative company, Amul, a brand managed by the Gujarat Co-operative
Milk Marketing Federation(GCMMF) which has 3.6 million milk producers as it’s members enjoys a revenue of 380 billion
rupees(2018-19,US$ 5.3 billion).The bulk of these are small and marginal
farmers or landless labourers.
Political
chess moves are deceptive . ‘The Howdy Modi’ event in Houston last September
with the Indian Prime Minister exhorting- abki baar Trump Sarkar-to expat Indians was great optics but trade talks
between Washington and New Delhi have slowed down to a crawl thereafter. And
this despite a trade deal with New Delhi ensuring greater market access for
the US would bolster Trump’s position in
an elections year. He has already signed a phase one agreement with China and a
USMCA ( United States-Mexico-Canada) deal.
India
wants exemption from high duties imposed by the US on steel and aluminium
products and export benefits to some domestic products under the generalised
system of preferences among others . The
US, on the other hand, wants greater market access for its dairy products, farm
equipments , medical devices, and a host of others.
Sources
say India has yielded ground and made
known it’s willingness to give way on market access to US dairy products and a
cap on medical device prices, even a cut
in import duty on Harley-Davidson motor cycles. This does not bode well for the
domestic milk sector.
That
the US milk industry is in trouble is
borne out by a very recent Time magazine report about falling milk consumption
in Trump’s country necessitating urgent
bail-out measures. Americans each drank 146 lbs of fluid milk in
2018,according to the USDA s Economic Research Service, which is 26 per cent
down since 2000. It is such and other factors which have led to Dean Foods, America’s
largest milk producer, filing for bankruptcy protection last November. Borden
dairy, another big name has followed
suit thereafter. ”Declining sales in a thin margin business is not a good
recipe for success’, Mark Stephenson, director of dairy policy analysis at the university of Wisconsin has been
quoted by the magazine as saying in it’s January 20 issue. According to the
report there were 605 fluid milk plants in America in 1990 of which only 450
were left by 2018.
Indian
milk cooperatives and private dairies have been opposing opening Indian markets
to global milk producers at the cost of Indian farmers, even otherwise. They
had even petitioned the government to keep the sector out of the Free trade
Agreement(FTA) under the Regional Comprehensive
Economic Partnership(RCEP)which India chose to keep out of last year.
Niti
Aayog has projected India’s milk production to touch 330 mt by 2033 from the
current 180 mt and the demand projection is around 292 mt which proves that the
country does not require to import milk or milk products to take care of its
population even over the next ten years.
According
to available data US exports in dairy trade
with a global export share of 4.9 per cent as against an import share of 2.8 per cent in 2018. India, on the
other hand is liliputian in comparison with a share of 0.3 per cent and 0.06
per cent in global dairy exports and imports respectively in 2018.
As per a report by the Agriculture Skill Council of India while crop production generates 90 to 120 days employment to the
rural work force, the dairy sector provides alternative employment and income
throughout the year and accounts for 20.6 per cent of the combined output of
paddy, wheat and pulses.
Dairy
industry sources state that US farmers are large dairy farmers who benefit from economies of
scale but they get only 43 per cent of what the consumer pays which is 1:4
times lower than that of India. Notwithstanding the lower milk yield, India
still remains comfortably placed to produce milk at a cheaper rate.
Opinion
is strong that the US access in this sector is not only not in the interest of
the dairy industry in India but is bad news for
millions of poor and landless farmers, particularly women in the rural
areas who are its mainstay. Moreover it
will a setback to the Prime Minister’s stated resolve of doubling farmers income by 2022.
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