Rather than pine over the export potential of inaccessible India, the US dairy industry should focus on the opportunities that lie in South East Asia, former US Trade Representative, Ron Kirk, told sector stakeholders last week.
Speaking at the International Dairy Foods Association (IDFA) Dairy Forum 2014 in Palm Springs last week, Kirk admitted that during his time as US Trade Representative, he and his team became “extraordinarily frustrated” when trying to overcome trade barriers with India.
He was appointed as US Trade Representative by President Barack Obama in March 2009, and remained the President’s principal trade advisor, negotiator, and spokesperson on trade issues until February 2013. Over the four years, he oversaw and advanced negotiations with the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) with the European Union (EU).
Kirk said that during his tenure, “one of the biggest questions” he faced from the US dairy industry was: “How can you get our products into India?”
“I am proud of the progress I made in just about every area,” Kirk told the packed Dairy Forum 2014 Chairman’s Lecture.
“I am not proud of the fact that we have just not been able to advance the ball with India.”
India, with a population estimated at 1.27bn, is the world’s largest market for dairy products. The US is, however, currently banned from exporting dairy products into India.
According to the US Dairy Export Council (USDEC), which represents the global trade interests of the US dairy industry, India requires a health certificate from exporters - something the US government has so far refused to sign up to. Talks between the US and India to negotiate “a health certificate acceptable to both countries” have been going on “for more than seven years with little progress,” said an USDEC spokesperson.
On top of this, competition fears in India plays a large part, said Kirk.
“The single biggest common denominator of every elected official in the world is that they represent a farm," he said. "There is no constituent that gets more attention, particularly in the emerging world, than the farmer."
"In India, 80% of those who vote are subsistence farmers. These are people who cannot feed themselves, much less compete with you.”
“But they are an extraordinary political power. And every decision that is made by their government is made with ‘Now what does it mean to those farmers that are going to vote in the next election?’."
“Better to push on an open door”
In the meantime, Kirk said, the "smart thing" for the US dairy industry to do is take advantage of the opportunities that lie in South East Asia.
“There are so many other markets now that you can go into,” he said. “We’re not going to give up on India, but short term I think you’ve got great growth possibilities in other parts of the world.”
“I know many of you have been involved in taking advantage of the opportunities Korea, and I think there is great growth potential for us in South East Asia.”
According to USDEC, the value of US dairy shipments to South East Asia between January and November 2013 was $1.179bn, a year-on-year increase of 40%. Dairy exports to South Korea also increased by 31% to $247m.
Quoting his father, Kirk said: “It’s always better to push on an open door.”
“...in the interim, we can work together to open up the markets, provide opportunities, and find new consumers for your products as you continue to innovate, as we continue to seek export as a strong potential to drive your business today.”