Dairy Industry Still on the Edge

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By Wezi Tjaronda WINDHOEK The dairy industry has applied for an extension of the Infant Industry Protection for UHT (long- life) milk and an increase in imported UHT milk tariffs to prevent the industry from collapsing. The application, which was made through the Ministry of Trade and Industry to the SACU Secretariat, will be discussed at the secretariat’s meeting this month. This is one way of rescuing the industry from what is termed an ‘onslaught’ from competitively priced dairy products from neighbouring South Africa. The industry wants the protection, which is to expire in 2008, to be extended to 2012 and the tariff to be changed from an import duty of 42.5 cents to 40 percent of the value of the import. The industry says it is baffled by the low cost of imported milk even when it has other costs such as import duty, transport costs as well as payments which due to the supermarkets for selling the milk. “We levy the milk per litre and they have to pay transport and the milk is still cheaper. That is why the industry is in trouble,” said Japie Engel-brecht, chairman of the Dairy Producers Association. Although the country has applied for the extension of the Infant Industry Protection, MTI Permanent Secretary, Andrew Ndishishi says the industry also needs to look into export diversification to be more competitive. Namibian milk is exported to Botswana and Angola. With the SADC free trade protocol, the PS said the country’s milk could find markets in other SADC countries. More than a year after the industry sounded warning bells about an industry that would collapse unless the government intervenes, the situation, they say, has not changed much. “We are sitting on a time bomb,” said Harald Marggraff, the Namibia Agricultural Union’s Manager of Commodities. If the situation does not change by the end of 2006, Engelbrecht says many farmers will close down their operations and more people will lose their jobs. The other option would be for dairy farmers to start selling their milk on their own, he added. Instead of producing the 1.7 million litres quota the industry had since January 2005, the farmers can only produce 1.5 million litres per month. Due to the floods in Mariental, the industry was also negatively affected and production dropped to 1.3 million litres in February, March and April. “The 1.5 million litres is too much because there is already a surplus,” said Engelbrecht. He said it was time the industry started thinking strategically to deal with the situation, which last year saw the closure of one dairy plant. Apart from dairy farmers reconsidering their positions on how to improve their products and their farming units, processors also need to think more strategically and streamline their operations. “If we can process more milk, the more cost effective we will be, and if an opportunity turns up, we can trade with our neighbours,” said Marggraff. In the next few months, Marggraff said the industry will also be looking at consolidating some dairy farms into bigger units to make them more cost effective. To find alternative markets to Namibian products, Ndishishi said his ministry has organised a tour of a number of companies to showcase their products in other countries considering that it has negotiated for a preferential access for meat, fish, beverages, milk and other industrial goods. Some of the companies that will undertake the tour are Neo Paints, Namibia Breweries, Namibia Dairies, Namib Mills and some fishing companies.