Required Report - public distribution

**Date:** 11/5/2008

**GAIN Report Number:** IN8131

IN8131

**India**

**Dairy and Products**

**Annual**

**2008**

**Approved by:**

![](media/image1.wmf)Holly Higgins

U.S. Embassy

**Prepared by:**

Deepa Dhankhar

**Report Highlights:**

MY 2009/10 fluid milk production is forecast to reach 108 million tons
from a forecast of 105 million tons in MY 2008/09. Strong farm-gate
prices along with rising domestic demand for a variety of milk products,
supported by growth of the Indian economy, are the primary factors
driving increased production. The Government of India's sanitary
conditions governing the import of dairy products effectively prohibit
dairy imports from the United States.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

New Delhi \[IN1\]

\[IN\]

Table of Contents

[SECTION I: SITUATION AND OUTLOOK 3](#section-i-situation-and-outlook)

[MARKET OVERVIEW 3](#market-overview)

[*PRODUCTION* 3](#production)

[*PRODUCTION DEVELOPMENTS AND POLICY*
4](#production-developments-and-policy)

[*CONSUMPTION* 4](#consumption)

[*TRADE* 5](#trade)

[*TRADE POLICY* 7](#trade-policy)

[Annexure I: Tariff Structure for various dairy products
9](#__RefHeading___Toc213475894)

[SECTION II: STATISTICAL TABLES 10](#section-ii-statistical-tables)

[Table 1: Commodity, Dairy, Milk, Fluid, PSD
10](#table-1-commodity-dairy-milk-fluid-psd)

[Table 2: Commodity, Dairy, Milk, Nonfat Dry, PSD
11](#table-2-commodity-dairy-milk-nonfat-dry-psd)

[Table 3: Commodity, Dairy, Butter, PSD
12](#table-3-commodity-dairy-butter-psd)

# SECTION I: SITUATION AND OUTLOOK

## MARKET OVERVIEW

### PRODUCTION

Post forecasts fluid milk production in MY 2009/10 to increase by 2.8
percent to 108 million tons compared to MY 2008/09 milk production of
105 million tons. The milk production estimate for MY 2007/08[^1] has
been revised higher to 102 million tons based on the latest Government
of India (GOI) estimates. Strong farm-gate prices and rising domestic
demand for a variety of milk products, supported by growing disposable
income of India's sizable middle class population are factors driving
increased milk production. The states of Punjab, Karnataka, Gujarat and
Andhra Pradesh are giving special emphasis to cross-breed cow
development programs and as a result the average milk productivity rate
in those states is improving. Furthermore, average performance rates of
cross-bred animals (mostly local breeds with Holstein Friesian) in the
state of Punjab are quite encouraging (up to 40-55 liters per dairy
animal per day). However, the productivity levels of most indigenous cow
breeds are very low.

Post forecasts NFDM powder production in MY 2009/10 to increase by seven
percent to 370,000 tons primarily due to increased demand for
reconstituted milk during the lean production season. Furthermore, MY
2009/10 butter production is forecast up by ten percent at 4.06 million
tons because of growing domestic demand and the greater purchasing power
of the average Indian consumer. The change in work culture (a growing
number of women in the workforce) and demographics (smaller families and
cosmopolitan culture) in the urban areas are driving the growth of many
processed dairy products like milk powder, cheese, butter, yogurt,
flavored milk, ice-creams, cottage cheese (Indian paneer), dairy
whitener, ethnic milk sweets, etc. Cheese production in India is
estimated to be about 26,000 tons and is growing at a rate of 8 to 10
percent per year. Cottage cheese (paneer) is considered as a delicacy
among the majority of Indian consumers. However, cottage cheese is
largely manufactured by the unorganized sector and many households also
produce fresh cottage cheese for their own consumption.

India is the world's largest producer of bovine milk. Buffaloes
contribute around 57 percent to total milk production and are
increasingly preferred as dairy animals over cows. Buffaloes can be used
for milk production, meat, and also as a work animal for small farmers.
Additionally, buffalo milk has a higher fat content than cow's milk
resulting in higher prices per litre. Dairy production is an important
direct and supplementary source of income for around 70 million small
farmers and landless laborers (17 percent of which are grouped into milk
marketing cooperatives at the village level). More than 90 percent of
India's milk production is sourced from 14 states (with the top five
states being Uttar Pradesh, Punjab, Rajasthan, Andhra Pradesh and
Maharashtra) accounting for 80 percent of the country's villages.

Industry sources confirm that a milk producer retains around 34 percent
of farm milk production and the rest, 66 percent, is sold. Out of this
66 percent of milk sold by producers, around 16 percent is procured by
cooperatives and the remaining 50 percent is procured by the unorganized
sector. Various state cooperatives have well established milk brands and
market milk in a standardized package design (blue for toned with three
percent fat and 8.5 percent SNF, orange for full-cream with six percent
fat and nine percent SNF, yellow for double-toned with 1.5 percent fat
and nine percent SNF, and purple for skimmed milk with not more than 0.5
percent fat and 8.7 percent SNF). These package colors remain common for
all dairy cooperatives and are characterized on the basis of different
fat and solids-not-fats (SNF) percentages as prescribed by the
Prevention of Food Adulteration Act. Several organized players like the
Gujarat Cooperative Milk and Marketing Federation (GCMMF), Mother Dairy,
Britannia, Nestle and other state cooperatives and private companies
produce many processed milk products under the popular brands of Amul,
Mother Dairy, Verka, Vita, Britannia, Nestle, etc.

### PRODUCTION DEVELOPMENTS AND POLICY

Despite substantial milk production growth, the Indian dairy sector
still needs to overcome challenges like low productivity of dairy
animals, lack of effective quality and hygiene control systems, and an
enhanced network of cold chain infrastructure from the production area
to the consumer. Around 70-75 percent of the indigenous cattle and
buffalo population cannot be categorized under any well-defined breed or
are non-descript and their milk yield levels are much lower than that of
pure dairy breeds available in India. Additionally, the productivity
level of most defined indigenous breeds in India is less than 1,000 kgs
per head. Please see IN8098 for additional data on comparative milk
productivity levels of dairy animals among the major milk producing
nations of the world. The Ministry of Agriculture has developed a new
import protocol for bovine germplasm, but various conditions specified
under this protocol will significantly raise the cost of imported semen.
Therefore, many low-income producers will not have an access to quality
imported semen, which could benefit their herd health and production.

The GOI's Milk and Milk Products Order
(<http://www.dahd.nic.in/order/mmpo.doc>) / MMPO released in the year
1992, regulates the marketing and processing of milk and milk products.
According to the MMPO, any person or dairy plant handling more than
10,000 liters of milk or 500 MT of milk solids per year needs to be
registered with the registering authority designated by the central
government. The MMPO is aimed at ensuring the maintenance and supply of
liquid milk and specifies the rules for production, processing and
distribution of milk and milk products. The GOI has designated the
National Productivity Council (NPC) and the Export Inspection council
(EIC) as quality auditors for conducting periodic inspection of units
registered under the MMPO to ensure compliance with sanitary, hygienic
and food safety measures.

Additionally, the Ministry of Health and Family Welfare (MOHFW)
regulates both domestic production and importation of milk and milk
products, through the standards laid out in the Prevention of Food
Adulteration Act and Rules
([http://mohfw.nic.in/pfa%20acts%20and%20rules.pdf](http://mohfw.nic.in/pfa acts and rules.pdf)).

### CONSUMPTION

Total consumption of fluid milk in MY 2009/10 is forecast to increase by
around 2.9 percent to 107 million tons due to the growing population,
higher demand for value-added milk products and the increasing
purchasing power of a significant section of the consuming class. India
is not only the world's largest producer of milk but also one of the
largest consumers. Milk and milk products are a significant part of the
daily diets (particularly for the vegetarian population). The per capita
consumption of milk during 2007/08 is estimated to be around 250 grams
per day, still below the world's average of 265 grams per day indicating
scope for further increases in per capita consumption.

The unorganized sector processes approximately five times as much milk
for value added milk products as does the organized sector. The share of
the unorganized dairy sector in milk processing is substantial because
they are able to operate without large initial investments and their
daily milk procurement and sales operations are small in scale.
Additionally, many consumers in India prefer to buy fresh milk and milk
products. This preference for fresh products favors increased purchase
of processed dairy products like fresh cheese, yogurt etc. from the
unorganized players, who sell whatever they produce on a daily basis due
to lack of sufficient cold storage. Also, the products handled by the
unorganized sector are not covered under government regulations of
quality assurance, taxation, etc. Nevertheless, with rising incomes and
improving lifestyles, the demand for branded dairy products has started
gaining momentum and these products are viewed as a symbol of quality.
Furthermore, more and more consumers are increasingly becoming health
conscious and prefer to buy hygienically packed milk and milk products.
Consumption of processed cheese (mozzarella, cheddar, gouda etc.) is
mainly driven by a western style food culture and restaurants.
Introduction of various probiotic dairy products (flavored milk and
yogurt) is another recent development in the changing consumption
patterns, driven by consumer health preferences.

The entry of various renowned Indian business players in organized food
retail is also expected to boost demand for branded dairy products. Big
Indian dairy brands like Amul have already started expansion work on
their exclusive sales outlets (in many states of India) in order to gain
direct sale margins and to offer better services to their customers.
Various state dairy cooperatives have also developed popular dairy brand
and some of these brands have a multi-state presence or even national
availability (like Amul). Another Indian conglomerate 'Reliance
Industries Limited' has ventured into the dairy business recently in the
state of Punjab with a project in the pilot stage.

### TRADE

Exports of non-fat dry milk (NFDM) for MY 2009/10 is forecast by post at
the same level of the current year (MY 2008/09) at 38,000 tons, assuming
strong domestic demand. The MY 2007/08 export figure for NFDM is revised
down to 40 tons to reflect data published by the Ministry of Commerce,
GOI.

Data Source: Directorate General of Commercial Intelligence & Statistics
(DGCIS), Ministry of Commerce and Industry

India was a net exporter of dairy products during MY 2007/08, with the
value of exports equating to USD 215.3 million and 69,415 tons in volume
terms. India exported various categories of milk products (mainly
skimmed milk powder, other milk powder, melted butter). Milk powder and
baby food exports constituted around 60 percent of the total dairy
exports in value terms, followed by melted butter (ghee), milk cream,
and other processed dairy products. Fluid milk exports for MY 2009/10
are forecast at the same level as this year (MY 2008/09) at 5,000 tons
due to strong domestic demand. India exported more than 40 percent of
its total dairy product shipments to Egypt, U.A.E. and Bangladesh during
2006/07.

![](media/image2.wmf){width="5.999305555555556in" height="2.9375in"}

Data Source: Agricultural and Processed Food Products Export Development
Authority (APEDA), Ministry of Commerce and Industry, GOI

The import[^2] of dairy products by the United States from India during
2007/08 declined by around 30 percent to 14,945 tons compared to 21,394
tons in 2006/07. The decline was 34 percent in value terms from USD
71.74 million in 2006/07 to USD 47.05 million in 2007/08. The U.S. dairy
product import figures mentioned above includes casein (HS Code
3501105000) and the import of casein from India equated around 69
percent and 77 percent of total dairy imports from India (in value
terms) during 2007/08 and 2006/07 respectively. India's dairy product
trade balance with the United States is asymmetrical as imports of dairy
products from the United Stated are effectively prohibited. The United
States cannot export dairy products to India because the dairy sanitary
import protocol is overly restrictive.

### TRADE POLICY

Imports of milk and cream, infant formula, whole milk, condensed milk,
yogurt, buttermilk, whey, dairy spreads, ghee, cheese (fresh/grated,
powdered, processed, blue veined) are permitted without any quantitative
restrictions. However, in most cases import permits are required. The
detailed procedures for obtaining a sanitary permit are discussed in
GAIN Report IN7094, dated Oct 1, 2007. Skimmed milk, infant formula,
whole milk, milk for babies, and condensed milk should also adhere to
standards set by the Bureau of Indian Standards. While current GOI
sanitary conditions effectively block imports of dairy products from the
U.S. and many other countries, however, if this issue is resolved, there
is potential to export U.S. dairy products to India. The demand for
processed cheese and various high quality dairy products (butter, dairy
spread, etc) by luxury hotels, retail stores and fast-food chains is
expected to grow in India, which should provide an opportunity for U.S.
exporters. The expanding health food segment and functional needs of the
baking industry should provide increased export opportunities for
intermediate dairy products (whey and milk powders etc).

The Ministry of Health and Family Welfare (MOHFW) regulates both
domestic production and importation of milk and milk products, through
the standards laid out in the Prevention of Food Adulteration Act and
Rules
([http://mohfw.nic.in/pfa%20acts%20and%20rules.pdf](http://mohfw.nic.in/pfa acts and rules.pdf)).
However, with the introduction of a new Food Safety and Standards Act in
2006 (<http://mofpi.nic.in/fsnstds.pdf>), a consolidated food law is
expected to be implemented. The main objective of this legislation is to
bring about a single statute relating to food safety in place of the
existing multiplicity of food laws and to establish a Food Safety and
Standards Authority \[Food Authority\] with a view to: a) lay down food
standards, b) effectively regulate the manufacture, import, storage,
distribution and sale of food to ensure consumer safety and promote
global trade, c) pool infrastructure, manpower, testing facilities, and
d) rationalize and strengthen the existing enforcement mechanism. The
administrative control of this Authority will be with the Ministry of
Health and Family Welfare. The implementation of the Act is in progress
although it is not yet clear exactly when it would come into force. The
GOI appointed the Chairperson and the Chief Executive Officer of the
Authority in mid-2008. Once the new Food Safety Act comes into effect,
the following food laws would be rescinded: Prevention of Food
Adulteration Act, Milk and Milks Products Order, Fruit Products Order,
Meat Products Order, etc. The full text of the legislation is available
at:
[www.mohfw.nic.in/Food%20Safety%20Standard%20Act.pdf](http://www.mohfw.nic.in/Food Safety Standard Act.pdf).
For additional details on the Food Safety Standards Act (FSSA), 2006,
please refer to IN7033.

The Ministry of Commerce released a notification on September 24, 2008
(46/ (RE-2008)/2004-2009) to prohibit the import of dairy products
(including milk and milk products) from China for three months. The
import ban was based on the recommendation of the Food

Safety and Standards Authority (FSSA) and was taken as a precautionary
measure after the findings of melamine adulteration in the Chinese milk
powder.

High international prices led to increased exports of specific Indian
milk products in MY 2005/06 and MY 2006/07. However, the Government of
India imposed an export ban on certain milk and milk products including
milk powder in February 2007 to control increasing milk powder prices in
India. The export ban continued until September 30, 2007, primarily to
cover the lean milk production season (April to August). The export ban
decision was strongly opposed by the leading dairy cooperatives and
other private exporters, as the ban did not allow them to meet their
trade commitments and further reap profits when international prices
were lucrative for exports.

Furthermore, even after the lifting of the export ban, the GOI continued
efforts to control rising food inflation in the domestic market.
Therefore, the Ministry of Commerce issued a notification on April 24,
2008, wherein specific milk and milk products were no longer entitled to
benefits under an export subsidy scheme[^3] 'Focus Market Scheme/FMS'
(DGFT Notification No 6(RE-2008), which can be accessed at
<http://dgft.delhi.nic.in/>). This export subsidy scheme is not specific
to dairy products. The decision was deliberately imposed as India
exports most of its milk and milk products to African and CIS countries,
thus availing the duty benefits under the FMS. Only milk/milk products
were pulled out of the FMS back in April 2008. The dairy industry is
against the subsidy withdrawal of this scheme as such a measure will
cause trade disruptions and will affect their export competitiveness
especially in price-sensitive international markets.

[]{#__RefHeading___Toc213475894 .anchor}**Annexure I: Tariff Structure
for various dairy products**

+--------+-------------------------+----+---+----+----+-------+-------+
| **HS   | **ITEM DESCRIPTION**    | *  |   | *  | *  | **    | **I   |
| CODE** |                         | *B |   | *C | *S | TOTAL | MPORT |
|        |                         | AS |   | VD | PL | DUTY  | POL   |
|        |                         | IC |   | ** | C  | WITH  | ICY** |
|        |                         | ** |   |    | VD | 2+1%  |       |
|        |                         |    |   |    | ** | EC**  |       |
+--------+-------------------------+----+---+----+----+-------+-------+
|        |                         |    |   |    |    |       |       |
+--------+-------------------------+----+---+----+----+-------+-------+
| 0401   | Milk and cream, not     | 30 |   | 0  | 0  | 30.9  | Free  |
| 1000 - | concentrated nor        |    |   |    |    |       | San   |
| 04     | containing added sugar  |    |   |    |    |       | P^1/^ |
| 013000 | or other sweetening     |    |   |    |    |       |       |
|        | matter                  |    |   |    |    |       |       |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04     | Milk and cream,         | 60 |   | 0  | 4  | 6     | Free  |
| 021010 | concentrated or         |    |   | \* |    | 8.272 | San   |
|        | containing added sugar  |    |   |    |    |       | P^1/^ |
|        | or other sweetening     |    |   |    |    |       |       |
|        | matter                  |    |   |    |    |       |       |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04     | Milk and cream,         | 60 |   | 0  | 4  | 6     | Free  |
| 021020 | concentrated or         |    |   |    |    | 8.272 | San   |
| --     | containing added sugar  |    |   |    |    |       | P^1/^ |
| 040    | or other sweetening     |    |   |    |    |       |       |
| 21090, | matter                  |    |   |    |    |       |       |
| 04     |                         |    |   |    |    |       |       |
| 022100 |                         |    |   |    |    |       |       |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04022  | whole milk, milk for    | 30 |   | 0  | 4  | 3     | Free  |
| 910-04 | babies, other           |    |   |    |    | 6.136 | San   |
| 022990 |                         |    |   |    |    |       | P^1/^ |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04     | Condensed milk          | 30 |   | 14 | 4  | 5     | Free  |
| 029110 |                         |    |   | .4 |    | 8.863 | San   |
|        |                         |    |   |    |    |       | P^1/^ |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04     | Other                   | 30 |   | 0  | 4  | 3     | Free  |
| 029190 |                         |    |   |    |    | 6.136 | San   |
|        |                         |    |   |    |    |       | P^1/^ |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04029  | whole milk, condensed   | 30 |   | 0  | 4  | 3     | Free  |
| 910-04 | milk, other             |    |   |    |    | 6.136 | San   |
| 029990 |                         |    |   |    |    |       | P^1/^ |
+--------+-------------------------+----+---+----+----+-------+-------+
| 0403   | Buttermilk, curdled     | 30 |   | 0  | 0  | 30.9  | Free  |
|        | milk and cream, yogurt, |    |   |    |    |       | San   |
|        | kephir & other          |    |   |    |    |       | P^1/^ |
|        | fermented or acidified  |    |   |    |    |       |       |
|        | milk & cream, whether   |    |   |    |    |       |       |
|        | or not concentrated or  |    |   |    |    |       |       |
|        | containing added sugar  |    |   |    |    |       |       |
|        | or other sweetening     |    |   |    |    |       |       |
|        | matter or flavored or   |    |   |    |    |       |       |
|        | containing added        |    |   |    |    |       |       |
|        | fruits, nuts or coco    |    |   |    |    |       |       |
+--------+-------------------------+----+---+----+----+-------+-------+
| 0404   | Whey, whether or not    | 30 |   | 0  | 4  | 3     | Free  |
|        | concentrated or         |    |   |    |    | 6.136 | San   |
|        | containing added sugar  |    |   |    |    |       | P^1/^ |
|        | or other sweetening     |    |   |    |    |       |       |
|        | matter; products        |    |   |    |    |       |       |
|        | consisting of natural   |    |   |    |    |       |       |
|        | milk constituents,      |    |   |    |    |       |       |
|        | whether or not          |    |   |    |    |       |       |
|        | containing added sugar  |    |   |    |    |       |       |
|        | or other sweetening     |    |   |    |    |       |       |
|        | matter, not elsewhere   |    |   |    |    |       |       |
|        | specified or include    |    |   |    |    |       |       |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04     | Butter and other fats   | 40 |   | 0  | 4  | 4     | Free  |
| 05\*\* | and oils derived from   |    |   |    |    | 6.848 | San   |
|        | milk; dairy spreads     |    |   |    |    |       | P^1/^ |
+--------+-------------------------+----+---+----+----+-------+-------+
| 0406   | Fresh (unripened or     | 30 |   | 0  | 0  | 30.9  | Free  |
|        | uncured) cheese,        |    |   |    |    |       | San   |
| 1000   | including whey cheese & |    |   |    |    |       | P^1/^ |
|        | curd                    |    |   |    |    |       |       |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04     | Grated or powdered      | 30 |   | 0  | 4  | 3     | Free  |
| 062000 | cheese of all kinds     |    |   |    |    | 6.136 | San   |
|        |                         |    |   |    |    |       | P^1/^ |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04     | Processed cheese not    | 30 |   | 0  | 4  | 3     | Free  |
| 063000 | grated or powdered      |    |   |    |    | 6.136 | San   |
|        |                         |    |   |    |    |       | P^1/^ |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04     | Blue-veined cheese and  | 30 |   | 0  | 4  | 3     | Free  |
| 064000 | other cheese containing |    |   |    |    | 6.136 | San   |
|        | veins produced by       |    |   |    |    |       | P^1/^ |
|        | Pencillium roqueforti   |    |   |    |    |       |       |
+--------+-------------------------+----+---+----+----+-------+-------+
| 04     | Other cheese            | 40 |   | 0  | 4  | 4     | Free  |
| 069000 |                         |    |   |    |    | 6.848 | San   |
|        |                         |    |   |    |    |       | P^1/^ |
+--------+-------------------------+----+---+----+----+-------+-------+
|        | *All goods falling      | 30 |   | 0  | 4  | 3     |       |
|        | under subheading        |    |   |    |    | 6.136 |       |
|        | 0406.90 00*             |    |   |    |    |       |       |
+--------+-------------------------+----+---+----+----+-------+-------+

\* - Education Cess of 2% on customs exempted on 0402 10, 0402 2100,
0405 1000 & 0405 90

\*\* - Education Cess of 2% exempted on dairy spread with a milk fat
content at least 75% but less than 80% by weight, falling under tariff
item 0405 20 00

1/ - Sanitary Permit, CVD -- Countervailing Duty, EC -- Education Cess

## SECTION II: STATISTICAL TABLES

## Table 1: Commodity, Dairy, Milk, Fluid, PSD

  -------------- ------------- ------- ---------- ------------- -------- ---------- ------------- ---- ---------- ----------
  **Dairy, Milk, **2007**                         **2008**                          **2009**                      
  Fluid India**                                                                                                   

                 **2007**                         **2008**                          **2009**                      

                 **Market Year                    **Market Year                     **Market Year                 
                 Begin: Apr                       Begin: Apr                        Begin: Apr                    
                 2007**                           2008**                            2009**                        

                 **Annual Data         **New      **Annual Data          **New      **Annual Data      **Jan**    
                 Displayed**           Post**     Displayed**            Post**     Displayed**                   

                                       **Data**                          **Data**                      **Data**   

  Cows In Milk   38000         38000   38000      38500         38500    38500                         38500      (1000
                                                                                                                  HEAD)

  Cows Milk      42140         42140   42890      42890         42890    44100                         45140      (1000 MT)
  Production                                                                                                      

  Other Milk     56960         56960   59210      59210         59210    60900                         62860      (1000 MT)
  Production                                                                                                      

  Total          99100         99100   102100     102100        102100   105000                        108000     (1000 MT)
  Production                                                                                                      

  Other Imports  0             0       0          0             0        0                             0          (1000 MT)

  Total Imports  0             0       0          0             0        0                             0          (1000 MT)

  Total Supply   99100         99100   102100     102100        102100   105000                        108000     (1000 MT)

  Other Exports  0             0       0          0             0        0                             0          (1000 MT)

  Total Exports  5             5       8          5             5        5                             5          (1000 MT)

  Fluid Use Dom. 41130         41130   42680      42680         42680    43885                         45035      (1000 MT)
  Consum.                                                                                                         

  Factory Use    57965         57965   59412      59415         59415    61110                         62960      (1000 MT)
  Consum.                                                                                                         

  Feed Use Dom.  0             0       0          0             0        0                             0          (1000 MT)
  Consum.                                                                                                         

  Total Dom.     99095         99095   102092     102095        102095   104995                        107995     (1000 MT)
  Consumption                                                                                                     

  Total          99100         99100   102100     102100        102100   105000                        108000     (1000 MT)
  Distribution                                                                                                    
  -------------- ------------- ------- ---------- ------------- -------- ---------- ------------- ---- ---------- ----------

## Table 2: Commodity, Dairy, Milk, Nonfat Dry, PSD

  -------------- ------------- ----- ---------- ------------- ----- ---------- ------------- ----- ---------- ----------
  **Dairy, Milk, **2007**                       **2008**                       **2009**                       
  Nonfat Dry                                                                                                  
  India**                                                                                                     

                 **2007**                       **2008**                       **2009**                       

                 **Market Year                  **Market Year                  **Market Year                  
                 Begin: Apr                     Begin: Apr                     Begin: Apr                     
                 2007**                         2008**                         2009**                         

                 **Annual Data       **New      **Annual Data       **New      **Annual Data       **Jan**    
                 Displayed**         Post**     Displayed**         Post**     Displayed**                    

                                     **Data**                       **Data**                       **Data**   

  Beginning      5             5     5          15            15    15                             15         (1000 MT)
  Stocks                                                                                                      

  Production     320           320   320        345           345   345                            370        (1000 MT)

  Other Imports  0             0     0          0             0     0                              0          (1000 MT)

  Total Imports  0             0     0          0             0     0                              0          (1000 MT)

  Total Supply   325           325   325        360           360   360                            385        (1000 MT)

  Other Exports  60            60    40         60            60    38                             38         (1000 MT)

  Total Exports  60            60    40         60            60    38                             38         (1000 MT)

  Human Dom.     250           250   270        285           285   307                            337        (1000 MT)
  Consumption                                                                                                 

  Other Use,     0             0     0          0             0     0                              0          (1000 MT)
  Losses                                                                                                      

  Total Dom.     250           250   270        285           285   307                            337        (1000 MT)
  Consumption                                                                                                 

  Total Use      310           310   310        345           345   345                            375        (1000 MT)

  Ending Stocks  15            15    15         15            15    15                             10         (1000 MT)

  Total          325           325   325        360           360   360                            385        (1000 MT)
  Distribution                                                                                                
  -------------- ------------- ----- ---------- ------------- ----- ---------- ------------- ----- ---------- ----------

## Table 3: Commodity, Dairy, Butter, PSD

  -------------- ------------- ------ ---------- ------------- ------ ---------- ------------- ----- ---------- ----------
  **Dairy,       **2007**                        **2008**                        **2009**                       
  Butter India**                                                                                                

                 **2007**                        **2008**                        **2009**                       

                 **Market Year                   **Market Year                   **Market Year                  
                 Begin: Apr                      Begin: Apr                      Begin: Apr                     
                 2007**                          2008**                          2009**                         

                 **Annual Data        **New      **Annual Data        **New      **Annual Data       **Jan**    
                 Displayed**          Post**     Displayed**          Post**     Displayed**                    

                                      **Data**                        **Data**                       **Data**   

  Beginning      0             0      0          0             0      0                              0          (1000 MT)
  Stocks                                                                                                        

  Production     3360          3360   3360       3610          3610   3695                           4065       (1000 MT)

  Other Imports  10            10     10         15            15     0                              5          (1000 MT)

  Total Imports  10            10     10         15            15     0                              5          (1000 MT)

  Total Supply   3370          3370   3370       3625          3625   3695                           4070       (1000 MT)

  Other Exports  10            10     10         10            10     8                              8          (1000 MT)

  Total Exports  10            10     10         10            10     8                              8          (1000 MT)

  Domestic       3360          3360   3360       3615          3615   3687                           4062       (1000 MT)
  Consumption                                                                                                   

  Total Use      3370          3370   3370       3625          3625   3695                           4070       (1000 MT)

  Ending Stocks  0             0      0          0             0      0                              0          (1000 MT)

  Total          3370          3370   3370       3625          3625   3695                           4070       (1000 MT)
  Distribution                                                                                                  
  -------------- ------------- ------ ---------- ------------- ------ ---------- ------------- ----- ---------- ----------

[^1]: The fluid milk production estimate is based on the provisional
    data released by the GOI. However, the final estimates for milk
    production are still not published. The revised figure for MY
    2007/08 show six percent growth over MY 2006/07. However, the
    historical year-to-year growth rates for fluid milk production are
    in the range of around 3-4 percent. Therefore, Post may revise
    production estimates after the final GOI statistics are received.

[^2]: As per the data sourced from the Department of Commerce, U.S.
    Census Bureau

[^3]: The export subsidy covers exports of all goods to focus market
    countries (Latin America, Africa and CIS etc.). The objective of the
    scheme is to offset high freight costs and other externalities to
    select international markets with a view to enhance export
    competitiveness in these countries.  Exporters of all products to
    these notified countries are entitled to payment of the duty credit
    scrip equivalent of 2.5 percent of the FOB value of exports.  Indian
    importers can avail the duty drawback on imports equivalent to the
    value of duty credit scrip.