Fonterra wants assurances after Indian incidents

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Fonterra is seeking assurances from the Indian government that any future export sales are safe after a tanker load of milk was dumped and threats were made to set fire to a vessel during protests over a shipment of New Zealand dairy products.

Trade Minister Tim Groser said Fonterra ended up "the meat in the sandwich" after responding to a request from the Indian government for the New Zealand dairy products.

A milk tanker was attacked at Pune, south of Mumbai this week in a protest at the National Dairy Development Board's importation of 30,000 tonnes of milk powder and 15,000 tonnes of ghee from New Zealand.

Groser said the Indian government acted after a poor monsoon drove up dairy prices in India so it was an opportunist trade of "tens of thousands of tonnes" of product.

It still only amounted to 0.5 percent of India's consumption.

The subcontinent is the world's biggest producer of milk, though the industry could best be described as 'peasant farming' without New Zealand's production skills, he said.

Fonterra was aware of the protests in India, it said in an emailed, bullet-point statement. It concurred that poor rains meant their was a shortfall of production in India.

"At the request of the Indian government Fonterra entered into commercial negotiations with the National Dairy Development Board, an agency of the Indian Government, on supply of milk powder and anhydrous milk fat," the statement said.

"All product was sold on full commercial terms at international prices prevailing at the time, it said.

"As there are security considerations we will not be releasing any details of our shipping movements or cargoes in these waters, it said.

The Indian state of Uttar Pradesh produces "slightly more milk" than New Zealand, Groser said.

"We're not interested in supplying the Indian liquid milk market. We're being caught in a political play," Groser said. Very poor Indian farmers were easily provoked into declaiming against imports.

"Even suicide is blamed on trade liberalisation."

Indian authorities "made a balanced decision" in allowing the importation of the consignment.

The ensuing protests mean "Fonterra has to watch this extremely closely," Groser said.

"Fonterra is working very closely to secure the security of the people involved."

India has bigger challenges for New Zealand as an export market than even China in terms of its stage of develop, Groser said.

Some 50,000 litres of milk was spilled this week by farmers and the Shiv Sena political party, India Today reported this week.

They were angry at the prospect of imported milk competing with home-grown product.

Local purchases of milk had been cut by 20 percent, the report said.

The attack was the second in as many weeks, after 45,000 litres of milk was dumped in Satara by a farmer group linked to Shiv Sena.

"The matter is one for the Indian authorities to manage and we are confident they will do so appropriately," Fonterra said.

- BusinessDesk