Senior General Manager RCEP: Impact on Indian Milk Producers RCEP Business Stakeholders Consultation Hyderabad Jayen Mehta Senior General Manager GCMMF Ltd. (Amul), Anand July 2017

Points to Ponder Dairy Scenario Dairy : RCEP V/s India The Road Ahead Global V/s India Production Global V/s India Prices India Today - Dairy Dairy and Farmers’ Income Dairy : RCEP V/s India Status ASEAN Oceania The Road Ahead

Milk Production RCEP 240 MMT World 800 MMT (65% of RCEP) INDIA 156 MMT Organized Dairy 27 MMT (17% of India) (65% of RCEP) (30% of WORLD) MMT: Million Metric Tons

Milk Production: India (MMT) Operation Flood (1970-1996) Graph not to scale

Per Capita Availability India (Gms. Per Day) World average: 229 gm/day

Creating structure - Institution CAPACITY BUILDING TOOL Traditional Wisdom Professional Support Nutrition Income Employment Creating structure - Institution NEED Owned by farmers Managed by professionals

212 District Unions in India 18 District Unions in Gujarat Amul Model 28 State Fedns. in India SALES REVENUE SALES REVENUE GCMMF in Gujarat 212 District Unions in India 18 District Unions in Gujarat Addl. Price Diff. Bonus Rural Health Schemes Cattle Feed Dividend on Shares Vet. & AH Services 1,70,992 VDCS in India 18,545 VDCS in Gujarat 3.6 million in Gujarat 15.8 million in India

All figure in MMT

India : Milk Production Projection 2015-16: 155.5 MMT

Milk Production Outlook 2025 Region Past Present Future   2000 +15 Years 2016 +10 Years 2025 World Milk Production 560 Million MT 240 (43%) 800 180* (23%) 980 India Milk Production 80 76 (95%) 156 75** (44%) 225-230 * FAO Estimates, **GCMMF Analysis

India: Importance of Agriculture 1.3 Billion 1.2% Gr Rural: 70% Urban: 30% 60% of population dependent on Agriculture 18% of GDP from Agriculture (of which 30% from Livestock)

Largest bovine population in world : 300 Mn Largest milk producer in World : 156 MMT per annum (18.5% of the world’s milk production) CAGR: 4.3% Per annum (last 10 years) Market Value of Total Milk produced: US$ 80 billion annually. <20% milk comes to organized sector 12 12

Dairy is a supplementary source of income for >75 million families Milk is the largest ‘Agricultural Crop’ of India Dairy is a supplementary source of income for >75 million families 13

Cost of Milk production In terms of Cost of Milk Production, India is competitive as compared to EU & US and is at par with Oceania

Global Prices Major Dairy trade happens in commodity (SMP, WMP, Butter / Butteroil and Cheese) Dairy commodity prices are much lower than India Difficult to compete in Commodity market for India Australia / NZ controls more than 35% of Global Dairy Trade and more than 50% in RCEP area

Current Avg International SMP Price in was $2024/ MT (Rs.130/Kg) SMP - WORLD PRICE ($/MT) Current Avg International SMP Price in was $2024/ MT (Rs.130/Kg)

Current Avg International Price $6577/ MT (Rs. 420/Kg) Butteroil - WORLD PRICE ($/MT) Current Avg International Price $6577/ MT (Rs. 420/Kg) Fonterra Auctions

World Farm-gate Prices Fig in $/100 Lit Milk

Indian Farmer’s income from milk increased 2.5 times in last 10 years in US- $ in Indian Rupee Per 100kg 4% fat and 3,3% protein USD/100kg ECM Source: IFCN Monthly Real Time Data

Farmer’s share in consumer price : Indian Farmer has the highest share of consumer price

Milk and farmers Milk: “Make in Rural India” is the surest bet for doubling farmers’ income by 2022. Need to ensure that their income from milk is protected To ensure availability of market for the milk at remunerative prices

RCEP Countries

Dairy : RCEP V/s India China – largest dairy importer of the World – does not allow Indian dairy imports Indonesia does not allow dairy imports from India (FMD affected), MUEI Halal certification required Malaysia – Restrictive market, Halal inspection, Very limited plants approved Vietnam, Thailand, Myanmar, Philippines, Cambodia, Laos etc – Cumbersome procedure

Dairy : RCEP V/s India Japan – Large importer but High Tariff Korea – High duty on normal dairy products but Imports blend products with lower duties Singapore – Large market but very strict Aflatoxin norms

RCEP – Milk Scenario 30.5 80% 1375 Negligible 0 % 4 15 0.79 49 % 260 Country Milk prodn in MMT % Self Sufficiency Population Mil Brunei Darussalam Negligible 0 % 4 Cambodia 15 Indonesia 0.79 49 % 260 Japan 7.23 77 % 126 Korea 2.18 68 % 50 Laos 7 Malaysia 0.07 8 % 30 Myanmar/Burma 54 Philippines 0.02 1 % 102 Singapore 6 Thailand 1.12 69 % 68 Vietnam 0.53 33 % 94 China 30.5 80% 1375 INDIA 156 101 % 1300

India V/s Oceania Population 24 million 4.2 million 1300 million Item Australia New Zealand India Population 24 million 4.2 million 1300 million Milk Production 15 MMT 22 MMT 150 MMT Agriculture labour 8 lac (3.6% of pop) 3 lac (7% of pop) 62 crore (52% of pop) Dairy farmers 6,300 12,000 15 crore GDP US $ 1.5 trillion US $ 0.17 trillion US $ 5 trillion GDP from Agri 3.7% 4.1% 17.4% % of dairy product exported 26% 86% < 0.3% Export of Dairy products in Milk Equi 4 MMT 19 MMT < 0.5 MMT Market share of global dairy trade 5% 25% Negligible

Indian Dairy : Non Tariff Barriers Australia classify India as FMD affected country and restrict the import of dairy products from India. Amul group has a sturdy system of veterinary services and the cattle are free from FMD but still dairy products are not being allowed in these countries. Australia also has a specific clause of ‘retorting of dairy products’ for issuance of import license to the dairy products excluding cheese.

Indian Dairy: Non Tariff Barriers Indonesia also classify India as FMD affected country and restrict the import of dairy products from India. China does not allow import of dairy products of Indian origin NZ requires many veterinary documentation to clear dairy products

Indian Dairy : Non Tariff Barriers Even in a country like Myanmar, Vietnam, Laos, Cambodia, Thailand etc where domestic production of fresh milk is currently underdeveloped, the country imports large volumes to meet this growing demand. The licensing process is too exhaustive requiring certification of each and every SKU to be exported getting samples analyzed and certified from the local FDA.

Expectations from our Government India is the largest producer and consumer of milk in the world. Milk is the largest Agricultural Crop with promising returns to farmers consistently since last 70 years India growing at faster pace then global milk production Food security and Livelihood are two most important issues for India. However, need a Cautious approach for FTA and any duty concession for Dairy Imports under Chapter 4 Policy support from Government for import protection

India Dairy Success Story : Learnings for RCEP Nations Value-chain control with farmers Value for money to consumers Affordable nutrition Employment with dignity Role of dairy cooperatives Maximum percentage of consumer’s rupee to farmers Sustainable income Women Empowerment Technological & Marketing innovations Remunerative prices to farmers

And Finally . . . “We have traversed a path that few have dared to. We are continuing on a path that still fewer have the courage to follow. We must pursue a path that even fewer can dream to pursue. Yet, we must, because we hold trust in the aims and aspirations of millions of our countrymen.” - Dr. V. Kurien 1921-2012

Thank you ***** jayen@amul.coop