Saturday, February 26, 2011


NEW DELHI – The Indian government's annual economic survey has warned that the country could become a milk importer by 2022 if local production doesn't keep pace with growing demand.

India is the world's largest producer of milk, and according to earlier estimates by the government, its output in the last fiscal year ended March 31 was 112.5 million metric tons. The government informed parliament last year that its target for the current fiscal year was 116.2 million tons.

The economic survey for fiscal 2011, released Friday, said India's milk production is rising by about 3.5 million tons a year, while demand is growing by an estimated 6.0 million tons.

In case the country is unable to raise its production to 180 million tons by 2021-22 to meet its local demand, "India may need to resort to imports from the world market," the survey said.

Last year, Rabobank said demand from India and China, which account for more than a third of the world's population, has been the engine for global dairy growth in recent years.

India's food inflation, which had shown signs of declining after remaining stubbornly high for most of 2010, accelerated to 11.49% in the week to Feb. 12 from 11.05% in the previous week, mainly driven by a rise in milk prices.

Demand for high protein sources like milk, egg, meat and fish has grown with higher income levels.

"Recent hikes in prices of milk and milk products have been a matter of concern," the economic survey said, adding that a gap between local demand and supply of milk has put "upward pressure on milk prices in the country."

There are,at present three comments which are interesting. The third,correctly recognizes India cannot feed high priced grains to produce milk. India also has been able to produce a great deal of milk because there have been no "opportunity costs" associated with milk production. Now, there are jobs in the cities and the labor is not going to be there to produce milk.

India has a GDP per capita of $3,290. A total of 37% live below poverty levels. Hard to figure how the U.S. can feed grain at the present rates, and then ship dairy products to India at a profit.

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