Why India is an important market for Fonterra

Photo / Christine Cornege

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Fonterra’s, GM Trade Strategy & Stakeholder Affairs, Justine Arroll, has just returned from India as part of a New Zealand business delegation to the subcontinent.

The Country Sport Breakfast’s, Brian Kelly, asked, “India is a big market for dairy, the country is also the largest milk producer in the world, where’s the opportunities for Fonterra?”

“India is the world’s largest dairy producer, accounting for approximately 23 per cent of all the milk produced globally – in comparison to NZ at 2 to 3 per cent. In there, is really an important part of the global dairy outlook,” Arroll said.

“New Zealand’s current dairy exports to India are relatively modest, totalling around 7000 metric tonnes,” she said.

“For Fonterra, India is an important market for our ingredients business where we are complementing local supply with specialist advanced proteins that are not produced in India and which are used in a range of applications. For example, our WPC80 is used as an egg replacement in a range of baked goods.”

“How about Fonterra dairy products made in Australia given the trade agreement between India and Australia?” Kelly asked.

“The recently signed Australia-India Economic Cooperation and Trade Agreement mostly excluded core dairy products, with a few minor exceptions, such as infant formula, Arroll said.

“Our business in Australia is actively looking at the opportunities for Fonterra under this agreement.”

Kelly asked,” What is the strategy from here then for India? Keep looking for those opportunities?”

“India has a large, growing and increasingly sophisticated dairy-consuming population. However, dairy imports from all sources are limited due to high tariffs of between 30-60 per cent,” Arroll said.

“While it is currently the world’s largest producer of dairy, dairy consumption in India is expected to grow faster than supply, which means that at some point imports will likely be needed to meet demand.”

A trade agreement between New Zealand and India that delivers for all sectors and improves dairy market access remains a long-term priority for Fonterra.

The co-op recognises this is not on the cards in the short term.

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In the meantime, Fonterra is keen to play its role in a joined-up industry-government approach to enhancing this critical relationship.

From a commercial point of view, the co-op will continue to look for opportunities to complement domestic supply with high-value products and to engage with the Indian dairy sector where they have shared interests as dairy producers.