Health norms needed to boost dairy exports: Rabo

The government should pass laws on the prevention of infectious and contagious diseases in the dairy and livestock sector at the earliest, to comply with sanitary and phytosanitary measures (SPSM) under the World Trade Organisation (WTO). This would help Indian industry do better in world markets.

According to Adrie Zwanenberg, head of global food and agri-business research at Rabo Bank, India has to undertake measures to improve its image to increase its share in the world dairy market.

"The quality perception of Indian products in overseas markets is poor and this image needs to be improved," he said.

His views were mirrored by Indian dairy industry experts at the recently held conference, Agricorp 2004.

Though India ranks first in milk production and has the highest growth rate with low subsidies, its share of world trade stands at just about 0.2 per cent.

Zwanenberg pointed out that the initiative taken by the National Dairy Development Board under its Perspective 2010 plan, to map the future of the Indian dairy industry to improve the quality perception of Indian dairy products overseas was working well. He said more such steps should be taken.

India could tap foreign markets with bulk products like skimmed milk and also ethnic food that could cater to demand from the roughly 200 million expatriate Indians the world over.

Major multi-national companies were eyeing the enormous potential of India in the dairy industry as well as the growing size of the organised dairy sector. Zwanenberg said with proper planning, India could become the production centre for Asia.

Deals which have already been inked include joint ventures between Mother Dairy and state co-operatives, Britannia and Fonterra and Dabur and Bongrain.

Acquisition include that of Pfizer's Proteinex by EAC, the Gujarat Co-operative Milk Marketing Federation's acquisition of the Jaipuria-owned ice cream plant in Nagpur and Hatsun Dairy's acquisition of Ajith Dairy in southern India.

So long, restrictions on investments in collection and distribution machinery and domination of the unorganised sector had hindered development. Unorganised producers controlled 42 per cent of the milk market compared to 13 per cent market share of the organised sector.

Indian dairy experts said the government should slowly step out of the dairy sector. Deepak Jain, managing director of Devashree Foods, said, "Seventy million farming families are involved in the production of dairy and milk products. To encourage entrepreneurship, the government should get out of the milk sector."

He pointed out the need to rationalise sales tax and octroi on domestic produce.

On the trade front, industry players are suggesting renegotiation of the reduction and eventual elimination of export subsidies and domestic support mechanism under the WTO to create a level playing field.

Though the export subsidies had declined in some major exporting countries, the decline was because rising global dairy product prices had lessened the need for subsidies.