India dairy sector faces pressures from EU

 

 

India is facing strong pressure to open up its markets to dairy produce from Europe, even though the New Delhi government has expressed fears about how small farmers could be forced into deeper poverty as a result.

 

India has advocated that milk be excluded from the scope of the free trade agreement (FTA) under negotiation with the EU.

 

EU officials nonetheless stepped up their efforts to have India's agricultural markets liberalised during the latest round of talks, which took place in the last week of April. According to sources, moves to open up all agricultural sectors are under discussion.

 

Anti-poverty activists complain, however, that the EU has displayed scant concern for the plight of India's rural poor until now.

 

While India's dairy sector is of critical importance in providing work and income to farmers, particularly those who do not own land, Europe's cheese-makers have been adamant that protections offered to India's poor should be dismantled.

 

In 2007 - the year that talks aimed at reaching an EU-India FTA were launched - the European Dairy Association contended that the taxes levied by the Delhi authorities on imported food were "unrealistically high."

 

But critics of the EU's trade strategies argue that scrapping such tariffs would leave India's farmers unable to withstand competition from European imports. Often those imports have been highly subsidised and can be sold at lower prices than domestically-produced food.

 

Both the EU and India have set themselves an objective of removing 90% of the tariffs they apply to trade in goods between them in an eventual agreement. Negotiators are seeking to have this accord completed in time for a high-level EU-India meeting in October.

 

Despite being one of the world's most populous countries, India absorbs less than 0.5% of the EU's total agricultural exports. Europe's dairy companies have identified the high tariffs as the main obstacle to expanding their commercial ties with India.

 

Trade analysts say that EU officials have stepped up their efforts to include dairy within the scope of an agreement with India because of the crisis facing Europe's milk farmers, who have been badly hurt by a decrease in the prices they are being paid in the past few years.

 

Paul Goodison from the European Research Office, a watchdog on trade relations, noted that the EU has provided EUR1.6 billion (US$2 billion) in assistance to dairy exporters over the past 10 months. The sum is in addition to the EUR5 billion per year already earmarked to the dairy sector under the Union's common agricultural policy.