Fonterra is keen to act on a report by the Foreign Affairs, Defence and Trade Committee that recommends a push beyond major cities in India by both the New Zealand government and private sector.
The Inquiry into New Zealand’s relationship with India identifies New Zealand’s role as a co-host of the 2015 Cricket World Cup as an opportunity and potential for the film, education and technology industries.
But dairying stands out as the big area of opportunity because India’s protected dairy industry may struggle to supply a market that is already the largest consumer of dairy products and is forecast to double over the next 15 years.
“We were told that the Indian dairy market has multi-billion-dollar potential for New Zealand, but only if tariff and regulatory barriers are removed,” the report said.
New Zealand exported $136.9 million worth of dairy products to India in the year to March 2011. India’s tariffs on dairy products range between 20 and 60 percent.
Fonterra, which is investigating the feasibility of dairy farming in India, submitted that New Zealand will need to make the running to advance its relationship with India.
“Fonterra is prepared to contribute resources for this purpose alongside the Government,” the report said.
The benefits of this for New Zealand and India ought to be obvious, but the Green Party has reservations.
“The Green Party is for stronger national interest tests on foreign investment in New Zealand, and a level of protection for New Zealand industry and services, particularly from low-wage competition. We also sympathise with efforts by Indian farmers to protect their domestic agriculture, which could be undermined by a rapid and substantial removal of tariffs on imported food.”
Protection helps a few producers and the politicians who provide the protection.
It comes at the cost of lower production and higher prices which hurt the poor and hungry the most.
Any move back to protectionism would also undermine the years of work New Zealand has put in to negotiating the free trade agreements which help us earn our keep and stop us turning into a third world nation.