By Jared Lynch
AS WE say, there's no use crying over spilt milk - especially when we can pop down to Coles or Woolworths supermarket and buy it for $1 a litre.
But while fresh milk is so plentiful here that it can be sold below cost, spare a thought for the Indians. Touted as one of the world's next superpowers, India is facing milk shortages of up to 3 million tonnes a year as it struggles to feed a rapidly expanding middle class.
Milk processing company Fonterra has its eyes firmly on the prize.Credit: Steven Siewert
The country's National Dairy Development Board has forecast milk demand to hit 180-200 million tonnes by the end of 2020.
While this is a challenge for the Indian government, it gives Australian milk processors a ''great growth story'', and trans-Tasman company Fonterra already has its eyes firmly on the prize.
Australian dairy exports to India have soared 70 per cent in the past 10 years, according to National Australia Bank figures.
Indian exports are worth about $200 million annually to Fonterra, which supplies milk powders and pharmaceutical-grade lactose among other dairy products.
But trade strategy manager James McVitty said Australia and New Zealand could only supply a ''small slice'' of India's booming milk demand. Trans-Tasman milk production totals almost 30 million tonnes a year, compared with India's 112 million tonnes. India's import taxes are also high, between 20-60 per cent.
''The vast majority of that demand growth in India will have to be met by their own growth in local milk production,'' Mr McVitty said.
Fonterra is partnering with the Indian Farmers Fertiliser Co-operative and Global Dairy Health to complete the feasibility study. The trio hope to establish a pilot farm for 3000 cows, at a reported cost of $40 million.
India's National Dairy Development board is understood to be supportive of the deal.
The World Bank granted the board almost $4 billion to streamline India's fragmented dairy sector. There are about 70 million dairy farmers in the country, milking an average of two cows each, and of that milk about 20 per cent is formally processed.
''So 80 per cent is consumed on the farm or in the local village,'' Mr McVitty said.
National Australia Bank agribusiness economist Michael Creed said improving farm productivity could ease milk shortages in developing countries.
''A lot of talk and analysis around this tends to discount the fact that a lot of these developing countries can and will increase productivity to meet their consumption requirements,'' Mr Creed said.
''But I still think there will be a shortfall, these things tend to take a bit of time to be implemented.''
The results of Fonterra's feasibility study are expected to be released in coming months.
The listed Warrnambool Cheese and Butter also has plans for the sub-continent.