Indian FTA 'opens doors for dairy'

Prem Maan, executive chairman of Southern Pastures LP, says he takes “a huge positive” from the FTA announced earlier this week.

Southern Pastures owns and operates 20 farms encompassing over 6,600ha in New Zealand and owns Lewis Road Creamery, the maker of awarding-winning dairy products for local and export markets.

Maan thanked Prime Minister Christopher Luxon and Agriculture and Trade Minister Todd McClay for getting the FTA across the line. He also acknowledged the work done by McClay’s predecessor, Labour’s Damien O’Connor.

Not everyone in the dairy sector is celebrating the deal. The organisation representing NZ dairy processors – Dairy Companies of NZ (DCANZ) – has expressed disappointment with the FTA.

DCANZ says negotiations with India have been unable to secure a bigger step towards dairy trade liberalisation and wants a fresh strategy to address the trade challenges faced by New Zealand’s biggest export sector.

Maan, a Fijian of Indian descent, noted that he has never been to India and his view is purely one of economic opportunity.

“As noted elsewhere, demanding full tariff-free access for core dairy was always an impossibility; it would have been political suicide for the Indian government and unfair to hold up other NZ industries by sticking to our guns.

“However, widely overlooked doors have opened for our sector.

“Infant formula and value-added dairy ingredients will now see lowered tariffs, eventually becoming tariff-free.

“Crucially, the deal includes a "re-export" clause, allowing our ingredients to enter India duty-free for processing and export, a massive opportunity to integrate into global value chains. I know from colleagues in Australia that their niche dairy exports to India have mushroomed since signing their own agreement.

“Let’s focus on these wins. The future isn't in bulk commodities; it's in growing our value-add exports. This deal lets us start doing exactly that.”

The Indian FTA allows duty-free access for dairy and other food ingredients for re-export from day one. 

It also allows duty-free access for bulk infant formula and other high-value dairy preparations over seven years.

Also included is a 50% tariff cut for high value milk albumins within a NZ-specific quota equal to current export volumes.

McClay says the FTA future-proofs New Zealand’s dairy access by offering a right to negotiate should India give better access to comparable countries, by triggering an automatic consultation process to consult and upgrade.

“New Zealand exporters will enjoy duty-free access for dairy and other food ingredients for re-export through the FTA, opening door to greater collaboration and processing, and offer access to India’s growing number of FTA partners through a dedicated fast-track mechanism,” McClay says.

But DCANZ chairman Guy Roper says that DCANZ is disappointed that India has been unwilling to deliver more than small changes.

However, he does acknowledge that New Zealand trade officials and McClay have worked tirelessly to conclude this agreement in a tight timeframe, and the deal will benefit a range of other New Zealand export sectors.

“Looking forward, and with tariffs now being largely resolved for other sectors, it's time to ramp up focused efforts and creative approaches to bring down trade barriers for dairy,” says Roper.