Fonterra is New Zealand's biggest business, collecting nearly 80 per cent of the country's raw milk. Photo / Michael Craig
Fonterra is New Zealand's biggest business, collecting nearly 80 per cent of the country's raw milk. Photo / Michael Craig
Fonterra says it sees “genuine” opportunities to build bridges with India on dairy issues for mutual benefit, as New Zealand’s biggest business prepares to join a trade delegation to what is likely to become the world’s third-largest economy.
The 50-person delegation departs on August 27 on what is thought tobe the largest NZ Inc visit to India, whose economy is bucking the global trend by growing at 6 per cent-plus a year. The country is thought to offer big trade opportunities despite New Zealand’s failure so far to secure a free trade agreement.
The trip is being led by the India-NZ Business Council and includes leaders of the five main business advocate organisations including the Auckland Business Chamber. Trade Minister Damien O’Connor is understood to be travelling to India too.
Delegation leaders have emphasised the visit is not an attempt to progress an FTA, but to rebuild a neglected relationship with India, currently the world’s fifth-biggest economy, with a population of 1.4 billion.
For the first time, the India-NZ Business Council will hold its annual summit in India.
“This includes building understanding around the complementarity of our sectors, including exploring a role for New Zealand in helping India to meet its increasing demand/supply gap and food security objectives, and collaborating in areas of mutual interest.”
New Zealand’s dairy exports to India were “modest”, Arroll said, but there was potential for growth in the longer term. Fonterra, the world’s sixth biggest dairy company by revenue, said current dairy exports to India were valued at around US$30m ($50.4m).
India is the world’s largest milk producer and demand for dairy products there was growing faster than domestic supply, Arroll said.
“India is forecast to have an annual dairy consumption rate of almost 15 per cent to 2027 and a dairy deficit of about 10 million metric tons of milk equivalent by 2050.
“This would make India the second largest dairy deficit market globally after China,” she said.
A hard-talking report this year by the India-New Zealand Business Council urged NZ Inc and the Government to “get serious about India”.
The report said dairy exports had been held up as roadblocks to a successful FTA, but the failure was “more to do with New Zealand trying to fit its high-quality FTA model to a unique Indian environment”. The report cited big opportunities in non-commodity trade including aviation, tourism and travel, healthcare and technology - sectors that will be represented in next week’s delegation.
It said India’s main trading partners were the US and China, with Australia its 10th largest with more than US$25b in bilateral trade. Multiple forecasts said India, thought to have passed China’s population, would be the world’s third-largest economy within five years, providing high GDP growth that would outstrip China’s.
The report said “15 years of trying to negotiate a conventional trade agreement with India has “delivered nothing”, noting India “is different, accordingly it requires a different approach”.
Then-council chair Earl Rattray told the Herald at the time “You cannot copy and paste” trade agreements typical of those with Europe, the UK and North Asia for India.
Kiwifruit exporter Zespri will join the delegation.
Another export heavyweight on the delegation will be global kiwifruit marketer Zespri.
Representative Michael Fox, who chairs the India-NZ Business Council, said India “presents huge opportunity for New Zealand...”
“It’s also a challenging market to crack but an FTA isn’t on the horizon and we’re going to have to approach the market differently to others we have in the past.
“That includes showing up to shake hands and build relationships and demonstrate a commitment as well as looking for ways to strengthen the trade and wider relationship over time.”
Fox said New Zealand was “coming from a ways behind” but there was positive momentum in the Government and business relationship.
New Zealand kiwifruit growers faced a 33 per cent tariff on exports to India, he said. Around $15m of kiwifruit was sold into India last year.
“The tariff significantly constrains our ability to grow the market but it has immense potential given its size, the level of demand and the growth of the wider kiwifruit category. Unlocking it would present a significant opportunity.”
Zespri, which has the statutory right to export all New Zealand kiwifruit, except to Australia, has had a presence in India for 10 years.
Fox said there were around 5000 hectares of kiwifruit growing in India, producing about 3.4 tonnes/ha.
Zespri did not aspire to a growing business in India, he said. The exporter has around 1500 contracted seasonal growers in the Northern Hemisphere to try to ensure the brand is available on retail shelves all year round.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
