Milk prices in India could drop atleast 15%, causing potential annual loss of Rs 1.03 lakh crore to dairy farmers and increase milk imports by 25 million tonnes if the dairy sector is opened up to the US as part of the proposed trade deal, State Bank of India (SBI) said Monday.
“If we assume 15% drop in domestic milk price then total revenue loss would be Rs 1.8 lakh crore. Assuming farmer’s share as 60% and adjusting for change in supply due to price drop the annual loss to farmers comes around Rs 1.03 lakh crore,” SBI said in a report by its Economic Research Department, adding that the GVA loss can be approximated to 50% of the total loss or Rs 0.51 lakh crore.
A 15% decline in price of milk will lead to higher demand for milk amounting to 14 million tonnes while supply will decline by around 11 million tonnes, it said. This gap of around 25 million tonnes will be fulfilled by imports
The bank also cautioned that one of the “significant costs” by opening up the Indian agri and dairy sectors to the US would be threat to livelihoods of the Indian farmers, especially the small ones engaged in dairy production as the dairy sector is heavily subsidized in the US.
GM concerns
“The use of growth hormones and genetically modified organisms in dairy in the US is another area of conflict. The influx of GM foods in India will also increase once the sector is opened up. This could pose public health standards conflict,” it said.
Opening of agriculture and dairy sector are the sticking points between India and the US.
“Thus, India’s quest to safeguard its strategic interests, aligned to welfare of the bottom strata appears to be a prudent rationale, in sync with safeguarding of rural livelihoods,” SBI said.
India’s gains
As per the report, since Japan, Malaysia and South Korea face higher tariff than India, India can try to capture some of their chemicals export share. India can seize another 1% share from these countries in chemical exports to the US, which can add 0.1% to its GDP.
Currently, India’s share of apparel exports in the US imports is 6% and if it can capture another 5% from these countries, then it can add 0.1% to its GDP, it said.
Access to US market for high-value agri products such as organic foods and spices to the US market is one of the potential benefits of the pact, SBI said.
India exports less than $1 billion of these goods and has potential to export more than $3 billion based on the US demand for these.
“Currently, non-tariff barriers limit Ayush and generics exports, once lifted it can increase exports of these by $1-2 billion,” it said.
Moreover, easier visa norms or outsourcing access can further increase our exports of IT and services.
“If we assume 15% drop in domestic milk price then total revenue loss would be Rs 1.8 lakh crore. Assuming farmer’s share as 60% and adjusting for change in supply due to price drop the annual loss to farmers comes around Rs 1.03 lakh crore,” SBI said in a report by its Economic Research Department, adding that the GVA loss can be approximated to 50% of the total loss or Rs 0.51 lakh crore.
A 15% decline in price of milk will lead to higher demand for milk amounting to 14 million tonnes while supply will decline by around 11 million tonnes, it said. This gap of around 25 million tonnes will be fulfilled by imports
The bank also cautioned that one of the “significant costs” by opening up the Indian agri and dairy sectors to the US would be threat to livelihoods of the Indian farmers, especially the small ones engaged in dairy production as the dairy sector is heavily subsidized in the US.
GM concerns
“The use of growth hormones and genetically modified organisms in dairy in the US is another area of conflict. The influx of GM foods in India will also increase once the sector is opened up. This could pose public health standards conflict,” it said.
Opening of agriculture and dairy sector are the sticking points between India and the US.
“Thus, India’s quest to safeguard its strategic interests, aligned to welfare of the bottom strata appears to be a prudent rationale, in sync with safeguarding of rural livelihoods,” SBI said.
India’s gains
As per the report, since Japan, Malaysia and South Korea face higher tariff than India, India can try to capture some of their chemicals export share. India can seize another 1% share from these countries in chemical exports to the US, which can add 0.1% to its GDP.
Currently, India’s share of apparel exports in the US imports is 6% and if it can capture another 5% from these countries, then it can add 0.1% to its GDP, it said.
Access to US market for high-value agri products such as organic foods and spices to the US market is one of the potential benefits of the pact, SBI said.
India exports less than $1 billion of these goods and has potential to export more than $3 billion based on the US demand for these.
“Currently, non-tariff barriers limit Ayush and generics exports, once lifted it can increase exports of these by $1-2 billion,” it said.
Moreover, easier visa norms or outsourcing access can further increase our exports of IT and services.
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