This is the second part of a study on the global dairy sector and developing countries. The first part provided an overview of the global dairy sector, its development trends over the past twenty years and the main international dairy trade flows as background information and overall context. This part aims to address the question of whether and to what extent dairy sectors in developing countries have been harmed by the practice of some OECD countries to dispose of surplus milk powder by 'dumping' it on the world market.
The paper adopts a case-study approach and six countries, Thailand, Bangladesh, Tanzania, Senegal, Peru and Jamaica were selected for a detailed analysis of their dairy sector. The individual country studies review national dairy production, consumption and trade; marketing and processing; dairy policies and finally provide a qualitative assessment of the likely impact of milk powder imports on the dairy sector. The study concludes by summing up the findings on the likely effects of milk powder imports in each of the six countries.
While subsidised milk powder imports in some cases are likely to have contributed to difficulties of dairy sector development, in none of them do they appear to have been the major constraint. As in developing countries climatic conditions for dairy production are often unfavourable for high-yielding breeds, production volumes are low and long-distance distribution costs high while demand for dairy products, particularly from urban centres substantially exceeds domestic production, dairy product imports mainly serve to bridge the gap between domestic demand and production, particularly in the lean season.
The claim of 'dairy dumping' appears to frequently be mis-used an opportune explanation for slow development and lack in competitiveness of domestic dairy sectors that frees policy makers from the necessity to address home made obstacles for dairy development. A forward looking strategy for national dairy production should focus on improving competitiveness of production and processing and prevent concentration of a few large companies that control the whole sector.
A two page executive summary is available in addition to this paper.
PPLPI, FAO, Rome, Italy, vi+82 pp.