Jordbrukare

The belea­guered neigh­bour had in the past restric­ted dairy imports from India to favour local car­tels

Tables have turned for Sri Lanka. Once opposed to allow­ing access to Indian dairy play­ers, the island nation is now des­per­ately giv­ing feel­ers to dairy play­ers and the policymakers in New Delhi to bail it out from the cur­rent milk crisis.

Market commentators suggest that the trade part­ners from the island coun­try are look­ing to strike a deal with India to ease its dairy products short­age. Indian cooper­at­ive dair­ies, on the other hand, have expressed their will­ing­ness to sup­ply the required quant­it­ies to the belea­guered neigh­bour, but not so eas­ily.

Faced with a severe eco­nomic crisis, Sri Lanka is run­ning short on all essen­tial items, most of which are impor­ted, includ­ing milk powder. The prices have sky-rock­eted to Sri Lankan rupee 1,500-2,000 (USD 4.69 - 6.25) a kg in retail mar­kets, prac­tic­ally going out of the reach of com­mon man.

Not­ably, insiders informed that Sri Lanka had imposed bar­ri­ers on Indian dairy products imports to pro­tect its local mar­ket and car­tels. The estim­ated size of the Sri Lankan dairy mar­ket is $400 mil­lion, of which the major­ity is catered to by New Zea­l­and and Aus­tralia’s dair­ies. This has left only narrow, product-specific space for Indian sup­pli­ers.

Tem­por­ary oppor­tun­ity?

India’s most significant dairy player Amul sees a pos­sib­il­ity to reach out to the Sri Lankan mar­ket, but with strings attached. “As far as com­mod­it­ies (WMP or skimmed milk powder) are con­cerned, we have no issue (to sup­ply). But we need to think long term as they have Free Trade Agree­ments with other sup­plier coun­tries. We can’t go there (Sri Lanka) as a tem­por­ary meas­ure,” said RS Sodhi, Man­aging Dir­ector, Gujarat Cooper­at­ive Milk Mar­ket­ing Fed­er­a­tion Ltd (GCMMF), Amul mar­keter.

Not­ably, in the late 1990s, Sri Lanka had pushed away National Dairy Devel­op­ment Board (NDDB), which had exten­ded a help­ing hand to the coun­try in build­ing their dairy cooper­at­ive struc­ture.

Advoc­ate and policy expert Vijay Sard­ana stated that while India has exten­ded a $1 bil­lion credit line to Sri Lanka for daily neces­sit­ies like medicines etc., “they can approach the Com­merce Min­istry and NDDB to allow the pur­chase of dairy products through this line of credit.

“Sri Lanka must know that the trade will not be the same any­more. They will have to change their policies from what they did in the past,” he said, adding that it would require India to make a bar­gain for the susten­ance of Indian dairy Play­ers in the Sri Lankan mar­ket in future after things turn nor­mal.

Cau­tious play­ers

NDDB Chair­man Meenesh Shah believes that a coun­try like Sri Lanka can’t depend for long on impor­ted dairy products. “NDDB was given the task of devel­op­ing a dairy cooper­at­ive model in Sri Lanka. Ini­tially, it went well, but the pro­gramme had to be sus­pen­ded due to vari­ous factors includ­ing strong local res­ist­ance,” said Shah, who was part of the NDDB team over­see­ing the Sri Lankan Joint Ven­ture of NDDB and Kir­iya Milk Indus­tries of Lanka Ltd.

“Now, only a gov­ern­ment-to-gov­ern­ment chan­nel can decide about the fate of dairy products sup­plies and the future of Sri Lanka’s dairy sec­tor. Indian dair­ies can access that mar­ket but only if there is a level-play­ing field,” said Shah.

However, neither NDDB nor Amul or other dair­ies have received any com­mu­nic­a­tion as yet from the Indian author­it­ies regard­ing pos­sible dairy products demand from Sri Lanka.

Source: The article adapts the original post from Business Line.

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