SA Imports Scuttle Dairy Industry

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By Wezi Tjaronda WINDHOEK Studies into the Dairy Industry in Namibia have proposed that a political solution be found to solve the problems arising from an upsurge of dairy product imports into the country. Due to the import surge, at least one dairy plant, Rietfontein in the Otjozon-djupa region, closed in November last year, resulting in the loss of around 47 jobs, an impact that the study says is likely to escalate. Last year in April, the Dairy Producers Association warned that unless some drastic measures were taken, the industry would collapse because of the competitively priced dairy products sourced from neighbouring South Africa. Nine months after the warning was sounded, the situation in the industry has not improved. “It is very critical,” said Harald Marg-graff, Manager of Commodities at the Namibia Dairy Producers Association. Apart from the closure of one of the plants and four other milk producers in the Grootfontein area, the industry has stagnated because of the imports. Margraff said this week although the industry could easily expand its production, some sectors such as Nami-bia Dairies were hesitant because of fears that the surplus milk will not be used. “The industry is stagnating and there is no growth at the moment,” he said. Following these concerns, a preliminary assessment of increased imports of dairy products into Namibia was done, which found that the trade data indicated that there was a distinct upward trend in the imports specifically of Ultra Heat Treatment (UHT) milk and cheese products from South Africa. Although it could be contested that the increasing imports could be described as an upsurge, it was evident that there was a long-term upward trend in imports of dairy products and UHT milk. The assessment said although UHT milk (long life) enjoys infant industry protection until 2008, an assessment should be done to determine whether the protectionist measures have assisted the development of the niche market. It also noted that there could be a significant impact of the Trade Development and Cooperation Agreement (TDCA) that South Africa has with the European Union on the Namibian dairy industry, which could mean that South African producers were searching a “vent for surplus” for their products. “This matter alone may provide grounds for temporary protection of the Namibian dairy industry until such a time the full nature and extent of such impact may be assessed,” said the study. In addition, the Trade Law Centre for Southern Africa (Tralac) in an analysis that was prepared for the government and the Namibia Dairy Producers Association, said a political solution would offer the most feasible route to resolve the matter because Article 15 of the SACU Agreement provides for a direct approach by the Namibian government to the South African government to discuss the impact of the import surge on the local dairy industry. Namibia, added Tralac, could also use Article 39, which provides at least some scope for action as the country could propose action in SACU in order to adopt a joint policy for the coordinated development of the dairy sector within the customs union. But for it to do this, Namibia will have to activate Article 39 as a matter of urgency because “as long as Article 39 is not activated, serious problems will continue to exist within this particular agricultural sector in Namibia and also elsewhere,” Tralac said. Namibia has 15 dairy producers in Mariental, Gobabis and Windhoek areas. Windhoek has four producers; Mariental has three; while Gobabis, with nine producers has the majority. Marggraff said the industry could easily meet demand for fresh and UHT milk. Apart from these two, the industry also produces yoghurts, cottage cheese, cheese, cream, Oshikandela and Oshitaka. The industry’s output in a month is 1.75 million litres. Meanwhile, the chairperson of the association, Japie Engelbrecht says to address the threat, his association is negotiating with the Ministry of Finance not to include value added tax (VAT) on prices of local cheese and milk products. “We believe that if VAT on fresh milk is not added to the price, products will be more affordable to consumers,” he said. Engelbrecht lamented the fact that the current situation did not improve compared to last year, expressing concern that if high imports of milk and cheese continue this year, nothing will change in the industry. According to the Group Manager: Public Relations of the Ohlthaver and List Group of Companies, Patrick Hashingola, although there has been an improvement, “the onslaught from South Africa has increased.” (Additional reporting by Nampa.)