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| Wednesday, 4 February 2004 |
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Indo-Lanka FTA will hit Lanka's dairy industry - NAC Director General Director General of National Agribusiness Council (NAC) Dr. U.P. de S. Waidyanatha expressed concern that under the Indo-Sri Lanka Free Trade Agreement, milk and milk products are to be eliminated from Sri Lanka's negative list. The importation of milk and milk products under low or zero tariff from India to Sri Lanka, will obviously affect the local dairy industry, he said. The Dairy Development Milk Procurement & Processor Association (DDMPPA) has already protested against this decision. There are nine major milk processing organisations under the Dairy Development Milk Procurement and Processor Association (DDMPPA). Over the past eight years this Association has assisted the small dairy farmers scattered throughout Sri Lanka by promoting the supply of fresh milk to the market. This has in some measure contributed to dairy development in this country, in recent times. The removal of the milk and milk products from the negative list will be a major disincentive to Sri Lankan dairy farmers to produce fresh milk, as under zero duty, cheap milk products from India will flood the local market. It will in fact lead to the closure of many small-scale farmer dairy operations, who constitute the backbone of the dairy industry of this country. A recent DDMPA SWOT analysis has established the high potential to develop the domestic fresh milk industry, if only the Government heeds. The current trend indicates an increasing interest among indigenous companies to invest in commercial dairy farming and this trend will disappear, if the market is to be flooded with cheaper Indian milk at this juncture. Dr. Waidyanatha said that the Indian farm-gate price of milk which is about Sri Lankan Rs.19/40 is possibly the lowest in the world, giving India a competitive edge over other major milk producing countries. Our farm-gate prices are still lower (Rs. 14-18 litre). However, our cost of production at small farm level in Rs. 16/50 as against about Rs. 14 for India. Although the Indian dairy farmer does not receive direct subsidies, there are hidden subsidies by way of cheap electricity, low interest loans and excellent government veterinary services (breeding services and health care). Most importantly, a highly balanced and nutritious feed comprising some 19 ingredients of agricultural residues (not consumable by humans) is provided by the state at subsidised costs. All of them have lead to a national average of 10 litres/day per milch cow in India as against 3 litres in our situation. So there is no question of a level playing field for our farmers with their Indian counter parts, he said. As per recent data, cost of milk per 100 kg was US$14.75 in India as compared to US$ 15.50 in New Zealand and US$ 33 in USA and EU Countries. Thus India has a tremendous competitive advantage for introducing low cost milk products that will have serious negative consequences on our dairy industry. It is unfortunate that successive governments have only paid lip service to this Industry, which has tremendous potential to alleviate rural poverty, given conducive policy support for local milk production. |
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