Milk and Pasta’s Protection Extended

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By Wezi Tjaronda WINDHOEK The Infant Industry Protection (IIP) for both pasta and UHT (ultra-high temperature processing) milk have been extended to 2012 and 2014 respectively. This follows submissions made by Namibia Mills, the sole manufacturer of pasta, and the Dairy Producers Association of Namibia to the Ministry of Trade and Industry (MTI) requesting the extension and amendment to the current IIP. MTI has now written to the Ministry of Finance requesting it to gazette the extension, which was approved by the Southern African Customs Union (SACU) Council of Ministers. Stakeholders in the businesses have it that even with the protection measure in place, imports that are more competitive due to economies of scale in those countries are able to circumvent the IIP and can undermine competitiveness of the local industries. With this in place, the 40 percent protection of pasta has been extended until 2014, while IIP for local UHT milk at 42 cents per litre has also been increased to 40 percent of the import value. MTI feels that the 42 cents per litre is inadequate under the current dairy market situation and that it should be converted to 40 percent in line with WTO decisions in the July framework agreement. The industry believes that this will bring some relief to the dairy industry, which is currently under tremendous strain due to cheaper imports from neighbouring South Africa. The SACU council approved the IIP for milk, which was to expire in 2008, for another three years from beginning 2009 until 2012 with a duty of 40 percent and with a downscaling formula of 33 percent in 2010 and 2011, and the remainder 34 percent in 2012. Speaking to New Era yesterday, MTI Permanent Secretary, Andrew Ndishishi, said the extension was a positive development even though the importers of dairy products were against the move. In July, some importers through their attorney asked the government not to introduce the increased tariff until they were fully informed about the basis for the application and also to have sight of any supporting documents presented to the ministry in this regard. In a letter written to the PS, their attorney said their clients, who represent 46 percent of the sale of dairy products in Namibia, were not consulted and were not given an opportunity to respond to the reasons made to support an increase. The PS said the ministry had to balance the interests of importers of dairy products, the short-term benefits of consumers and the long-term sustainability of the industry as a whole in making its decisions. “We also had to look at the potential of jobs to be created in the industry and the potential for many small-scale and emerging farmers to participate in an expanded dairy industry, as well as the potential economic value of the UHT milk,” he added. Apart from the IIP extensions, the ministry is also looking into conducting a sectoral study to understand the industry more and to monitor developments. Ndishishi added that the ministry was happy there were serious measures in the offing to expand and modernize the operations of the industry pertaining to modern equipment that will enable the industry compete with others when the IPP comes to an end. Last month, Namibia Dairies implemented a turnaround strategy aimed at achieving an efficient and cost-effective distribution network, which will involve the merger of the Rehoboth and Gobabis depots with the Windhoek depot, effective 31 December 2006. The company said it was required to improve its business processes and structures to ensure its economic viability and ability to further sustain the country’s dairy industry. An expert in the industry yesterday said the extension gave the industry an opportunity to become more efficient and produce milk cheaper. “After 2012 we are supposed to be competitive,” said the expert who did not want to be named. He added that there was a just small possibility that the industry would achieve competitiveness due to the fact that the feeding component of livestock remains very expensive. Namibia does not produce its own animal feed and has to rely on its neighbour South Africa.