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India’s Dairy Exports To Remain Minimal Due to High Domestic Consumption
In 2018, the non-fat dairy milk (NFDM) exports have been forecasted to increase marginally to 15,000 metric tons mainly due to uncompetitive export prices
Photo Credit : Reuters
The global agriculture information network of USDA, India predicts that India would continue to hold back bench on the exports of dairy products. There are two reasons behind such estimates; first is high domestic consumption and second is uncompetitive global prices. In 2018, the non-fat dairy milk (NFDM) exports have been forecasted to increase marginally to 15,000 metric tons mainly due to uncompetitive export prices.
The dairy exports of India mainly include the non-fat dairy milk (NFDM), fats and oils derived from milk, cheese, lactose products, casein, butter, and ice-cream to countries such as Bangladesh, Pakistan, Nepal, Afghanistan, Bhutan, United Arab Emirates, United States and Singapore. In 2016, India’s dairy exports were valued at 172 million USD, which was up five percent in comparison to previous year. From Crop Year 2011 to Crop Year 2016, the value of India’s dairy exports increased at a compound annual growth rate (CAGR) of 10.1 percent.
The Imports of India’s Dairy Needs
On the other hand, the imports of India’s dairy needs are insignificant. The major dairy product imports include milk powder, fats, and oils, casein, butter, whey, cheese, and lactose. The imports of milk powder and butter are irregular and depend on the domestic supply situation. India’s imports in the year 2016 were valued at 110 million USD, 5.3 percent less than the previous year. However, imports in terms of volume increased by 26 percent to 58,595 metric tons in the year 2016. India’s veterinary health certificate requirements currently restrict dairy imports from the United States.
The Domestic Prices
The dairy cooperatives and private milk processors review their milk procurement prices periodically based on the supply-demand situation and other factors such as increases in feed and input costs. The farm gate prices offered by government-supported state level dairy cooperatives are the benchmark prices which are generally followed by the private dairies. Apparently, a few state governments also provide financial subsidies to dairy cooperatives so that they can offer remunerative milk prices to the farmers.
The input costs in terms of fodder and oil cake prices (Mustard oil cake) from the fiscal year 2012-13 to 2016-17, increased at a CAGR of nine and 10 percent respectively while milk prices increased by only 6 percent limiting the farmer’s profits. The average farm-gate prices for milk in September 2017 reportedly ranged between INR 40 to 48 per litre (0.61USD to 0.73 USD per litre) for water buffalo milk (six percent fat and nine percent solids no fat), and INR 28 to 35 per litre (0.43 USD to 0.53 USD per litre) for cow milk (four percent fat and eight-and-a-half percent solids non-fat).