US-India Trade Deal, A Threat To Dairy Sector

Opening up the dairy market to the US will place India at an economic disadvantage and hurt small farmers, businesses in the sector

- Yashobanta Parida/ Parul Bhardwaj

The upcoming visit of US President Donald Trump to India may see the contours of the Indo-US deal being finalised in specific sectors, which is also likely to include allowing for market access for US dairy products in India. This move is likely to have significant adverse consequences on the prospects of the fledgling Indian dairy industry. Let’s first set a brief context by highlighting the importance of the dairy sector in India’s overall economic schema.

The dairy sector not only provides employment to the rural workforce, but is also a significant contributor to the national economy. While the share of agriculture and allied (A&A) sector in the gross value added (GVA) has consistently declined from 18.2 per cent in 2014 to 17.2 per cent in 2017, the share of livestock to GVA has increased from 4.4 per cent to 4.9 per cent during the same period. Importantly, within the A&A sector, among the key livestock products, milk and milk products have the highest share, at around 67.2 per cent in 2017.

The dairy sector plays a pivotal role in aiding the reduction of rural poverty and inequity, in addition to ensuring the food security of millions of rural households. Notably, according to a report by the Agriculture Skill Council of India, while crop production generates employment for the rural workforce for an average of 90-120 days in a year; the dairy sector plays a major role in providing alternative employment opportunities throughout the year.

In fact, in the recent years, milk and milk products have become the largest agricultural commodity, with their output standing at more than 20.6 per cent of the combined output of paddy, wheat and pulses. Thus, there is no gainsaying the importance of the dairy sector as one of the important sectors of the Indian economy.