Durham E-Theses International dairy product aid & trade 1960s1990s: focusing on the EU and India in operation ood Scholten, Bruce Allen How to cite: Scholten, Bruce Allen (1997) International dairy product aid & trade 1960s1990s: focusing on the EU and India in operation ood, Durham theses, Durham University. Available at Durham E-Theses Online: http://etheses.dur.ac.uk/4682/ Use policy The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that: • a full bibliographic reference is made to the original source • a link is made to the metadata record in Durham E-Theses • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders. Please consult the full Durham E-Theses policy for further details. Academic Support Oce, Durham University, University Oce, Old Elvet, Durham DH1 3HP e-mail: [email protected] Tel: +44 0191 334 6107 http://etheses.dur.ac.uk 2 INTERNATIONAL DAIRY PRODUCT AID & TRADE 1960s~1990s: Focusing on the EU and India in Operation Flood By Bruce Allen Schoiten The copyright of this thesis rests with the author. No quotation Q from it should be published without the written consent of the author and information derived from it should be aciaiowledged. A Dissertation Submitted to the Department of Geography In Candidacy for the Degree of Master of Arts Faculty of Social Sciences University of Durham United Kingdom 1997 - 4 HAR 1998 University of Durham Department of Geography 1997 INTERNATIONAL DAIRY PRODUCT AID & TRADE 1960s~1990s: Focusing on the EU and India in Operation Flood By Bruce A. Scholten Key words: aid, dairy, India, Operation Flood, White Revolution, GAIT, WTO ABSTRACT This thesis investigates the interrelationship between dairy aid and trade. After WW-II US dairy aid contributed to rises in consumption and sales in the Pacific; US domestic politics and Cold War strategy influenced aid programmes. Similarly, when dairy surpluses in the EEC (also known as the EC; currently the EU) coincided with shortages in India in the 1960s, the EEC sought to: maintain the CAP status quo, dispose of its "Butter Mountain", and earn political cachet such as the US enjoyed via PL 480 food aid - while assisting India. Proceeds fi^om "monetised" EEC butter oil and milk powder donations were to be invested in Indian dairy infi-astructure. As the largest Asian country with a "dairy culture", India was a suitable setting for Operation Flood (OF), the world's largest dairy development programme ca. 1970- 1996. Because so much debate on aid, trade and development can be illustrated by OF, this thesis chose India as its case study. Claims that dairying could benefit women and minorities attracted World Bank loans, but subjected OF to virulent charges of immet goals. Worse, warned OF detractors, India could become permanently dependent on Europe's lactic largess. OF officials countered that they were successfully carrying out their original mission to improve the dairy marketing system of India. Thesis maps and charts based on the Agrostat-PC database (FAO) show India increased dairy production and consumption significantly during OF. As some comparable coim- tries declined, India moved toward self-sufficiency and status as the world's number two milk producer. Proper pricing by Indian authorities ensured that dairy aid was not a long-term disincentive to farmers and, in the end, increased dairy autonomy. Prospects for "replication" of Operation Flood are limited by a lack of settings suitable for such programmes, and by reduced stocks available for aid. But dairy aid will have a continued role in emergency aid, and in structural adjustment in those poor countries whose food security declines as GATTAVTO liberalises international agricultural trade. lU TABLE OF CONTENTS Abstract ii Table of Contents iii List of Illustrations: Charts, Maps, Tables, etc. iv Declaration vi Statement of Copyright vi Frontal Quote vii Acknowledgements viii Glossary ix Introduction xi Chapter 1: Expansion of international food trade, dairy trade & development programmes from Mercantilism to the GATTA\nrO-1994 agreement 23 Chapter 2: Post-WW-II origins of international food & dairy aid. Notes on selections from a review of the literatxire 71 Chapter 3: 1961-1990s dairy performance of India & other countries. Notes on selection of a country comparison group 114 Chapter 4: The case history of Operation Flood (OF) in India 151 Chapter 5: Conclusions on dairy aid & trade 204 Bibliography 209 Appendix: Additional charts, maps and photos 216 IV ILLUSTRATIONS Charts & Maps Figure 1/Chart: LDCs outpaced by ICs in world agricultural trade 55 Figure 2/Chart: World Milk & Population 1961-1990 (log) 125 Figure 3/Chart: World Milk & Population 1961-1990 (standard/appendix) 217 Figure 4/Chart: Imports Selected Third World Milk ex. Butter 1961-1989 127 Figure 5/Chart: Imports World Milk (ex. Butter) 1961-89 128 Figure 6/Chart: Continents Milk Production: 1961 -70-80-90 (horiz) 130 Figure 7/Chart: Continents Milk Production: 1961-70-80-90 (vert/stats/appendix) 218 Figure 8/Chart: Continents Milk 1961,1970,1980 and 1990 (4-pies/stats) 132 Figure 9/Chart: DC/LDC Milk 1961,1970, 1980, 1990 (4-pies/stats) 133 Figure 10/Chart: World Milk (ex. Butter) Intake 1961-1989 (continents/stats) 135 Figure 11/Chart: Select LDC, LLDC, LIFD Milk (ex. But.) Intake '61-'89 136 Figure 12/Chart: Select DC, LDC, LLDC, LIFD Milk (ex. But.) Intake (appendix) 219 Figure 13/Chart: Selected DC, LDC, LLDC, LIFD Butter & Ghee Intake '61- 138 Figure 14/Map: Butter & Ghee pc Consumption exp.gr. 1961-92 (India focus) 140 Figure 15/Map; Butter &. Ghee pc Consumption exp. gr. 1961 -92 (all/appendix) 220 Figure 16/Map: Butter & Ghee kilograms per capita Intake 1961 (India focus) 143 Figure 17/Map: Butter & Ghee kilograms per capita Intake 1961 (all/appendix) 221 Figure 18/Map: Butter & Ghee kilograms per capita Intake 1992 (India focus) 144 Figure 19/Map: Butter & Ghee kilograms per capita Intake 1992 (all/appendix) 222 Figure 20/Map: Milk ex. Butter pc Consumption exp.gr. 1961-92 (India focus) 146 Figure 21/Map: Milk ex. Butter pc Consumption exp.gr. 1961 -92 (all/appendix) 223 Figure 22/Map: Milk ex. Butter kilograms per capita Intake 1961 (India focus) 148 Figure 23/Map: Milk ex. Butter kilograms per capita Intake 1961 (all/appendix) 224 Figure 24/Map: Milk ex. Butter kilograms per capita Intake 1989 (India focus) 149 Figure 25/Map: Milk ex. Butter kilograms per capita Intake 1989 (all/appendix) 225 Figure 26/Map: OF's National Milk Grid 1988 159 Figure 27/Map: OF's National Milk Grid 1990-91 160 Figure 28/Chart: OF's Final form of the Anand Pattern in the NMGS 163 Tables Table 1: Indian & Nigerian dairy & cereals imports: 1961,1986,1992 51 Table 2: Anderson & Tyers show ICs eroded exports share of Eastbloc & LDCs 54 Table 3: Agrostat/FAO supports Anderson & Tyers' claim on IC/LDC trade 55 Table 4: Agrostat shows ICs outpacing LDCs in food trade 56 Table 5: Three Scenarios for Liberalisation Effects on LDCs 61 Table 6: Motivations: factors in expansion of international dairy trade & aid 69 Table 7: Constraints: potential limitations on international dairy aid & trade 70 Table 8: A Brief History of PL 480 81 Table 9: EEC dairy aid commitments & deliveries to India: 1978-83 107 Table 10: Landmarks in food aid & development 113 Table 11: Agrostat shows milk growth in India's Operation Flood 165 Table 12: Agrostat FAO: India: commodity compos, of non-cereal aid: 1977-88 170 Table 13: India's positive trends coincide with the Operation Flood era 187 Table/Figure 14: EEC dairy aid to India dwindles 202 Illustrations Photo 1: This Darigold coop plant in the Northwest US is fundamentally similar to plants in the EU {aka EEC or EC), India and elsewhere vii Photo 2: One operator fills eight 25 kg. SMP bags/minute with the rotary filler 226 Photo 3: Dairy equipment from New Zealand is used worldwide 226 Photo 4: US coops use more refrigerated trucks than India. Both rely on railways 227 Photo 5: Warehouse workers at the Darigold coop plant, which can process 2 million kg. milk into 182,000 kg. SMP per day. Much is exported internationally. 227 VI DECLARATION This work is based upon the individual research of Bruce A. Scholten, under the supervision of thesis advisor Dr. Peter J. Atkins. This thesis has not been submitted for a degree at any other institution. STATEMENT OF COPYRIGHT The copyright of this thesis rests with the author No quotation from it should be published without proper citation, and information derived from it should be acknowledged. [123 This facility in Lynden, Washington, USA can process 2.04 million kilograms of milk per day into skim milk powder (SMP). Owned by the farmers' cooperative Darigold, the largest single producer of SMP in the US, it is a prime source of milk powder exports to Africa, Asia and South America. It is fimdamentally similar to plants in the EEC that produced dairy aid for India, where it was "monetised" to fund such plants and transport infrastructure, so Indian farmers' cooperatives could process and distribute powder, etc. from cow and buffalo milk in the programme called Operation Flood. The cow is the foster mother of the human race. From the time of the ancient Hindoo to this time have the thoughts of men turned to this kindly and beneficent creature as one of the chief sustaining forces of human life.