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This paper
examines the effect of recent economic recession on dairy
sector. The changes in dairy production, consumption, trade
and prices of milk, feed and value added dairy products have
been examined for world as a whole and in the Indian context
during 2000-06 (normal situation) and after 2006 (under
economic crisis). The Indian dairy sector has witnessed some
disquiet trends in terms of slow down in export performance,
but, the price trends have not shown volatility similar to
the international markets as the sector largely caters to
the domestic market where demand is also positively
influenced by factors other than income growth. In case of
total demand for value added industrial dairy products, that
have greater relationship with prevalent economic
conditions, the effect of economic turndown is discernible
in terms of declining import demand. The decline in exports,
possible fall in domestic consumption of processed dairy
products and declining trend in production of important
dairy products may have adversely affected the economic
performance of organized dairy processing sector in the
country. In nutshell, under the existing dairy production
system, as the synergy between international price trends
and domestic production is somewhat weak, the susceptibility
of dairy sector to current economic crisis has not been
profound. However, the darker side of this implies that
gains to the Indian dairy sector, especially the dairy
farmers would be marginal once the world economy follows the
recovery path.
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